Tokenomics 103: Evaluating Token Utility

1. UtilityThe utility is probably the most important factor in a crypto project’s tokenomics.Even if a token is deflationary, has the best price stability mechanisms, distribution, as well as a decentralized and highly efficient on-chain governance process, it won’t be worth too much if it is not used for anything.

Many cryptoassets today, particularly those within DeFi, also grant holders claims on a portion of protocol cash flows. This gives the tokens very quantifiable value, which can even be modeled by discounted cash flow analyses favored by traditional financial institutions. However, this has left many to wonder whether "pure" governance tokens, which... See more

Utility tokens are fungible tokens that unlock functionality in a smart contract or off-chain system (like a Discord community). Utility tokens are difficult to enforce off-chain, so they tend to be most valuable when their functionality is enforced purely on-chain, through smart contracts.