The POSEIDON token is the governance token of the H2O protocol. It has two main functions inside the protocol:

• Backstop mechanism: POSEIDON stakers are the first line of defense in case the H2O protocol goes underwater. The second line of defense is with debt auctions that mint new POSEIDON and auction it in exchange for H2O.
• Ungovernance: once governance minimization is finalized, POSEIDON holders will be able to remove control from any remaining components in H2O or, if needed, continue to manage components that may be challenging to ungovern (such as oracles or any other component interacting with other protocols).

H2O is the first non-pegged stable asset for the Web3 Data Economy. Initially, it is backed by the OCEAN token but in Q3 it will also be backed by other next-generation data tokens. H2O serves as a medium of exchange and unit of account in data marketplaces. The governing token of the protocol is POSEIDON, which will be used to govern the initial parameters of the protocol, bootstrap ecosystem development, and incentivize the liquidity of the protocol.