Today, in the world of cryptocurrencies and blockchain technologies, tokens occupy a central place. However, the question arises: why does the project need a token? In fact, most projects that build "technology" don't need it. But there are times where it can be used.
Firstly, a token is something like a share on the stock market. Thanks to this, projects can raise funding. This allows startups to bypass traditional funding routes such as venture capital or bank loans that were used before the advent of governance tokens. Investors, in turn, receive tokens that can increase in value if the project is successful. There are projects without tokens, which means you can do without this point.
Tokens are often used for decentralized project management. Nonsense that blurs the eyes. A huge number of coins remain with the team and in unknown wallets. Very few projects create a decentralized autonomous governance (DAO) model where the community plays an active role in the development of the project. These projects mainly include various DeFi protocols and blockchains. Why memcoins and thousands of altcoins came here is unclear.
Tokens are used to create a model based on Proof-of-Stake (PoS). Users who hold and stake their tokens are rewarded with additional tokens. This encourages users to hold onto their tokens and actively participate in the life of the project. This encourages a small percentage of hamsters not to sell the token by the glass at the first opportunity.
Tokens can play the role of internal currency in the project ecosystem. They are used to pay for services, transactions or purchase goods within the platform. This creates a closed economic system, where the token becomes the main means of exchange and settlement. However, a project with such economics often becomes a Ponzi scheme, and the token becomes worthless when funding is completed or there is insufficient influx of users.
The token gives a project the opportunity to go public on exchanges, gain valuation, and attract liquidity. This is probably the only thing that gives advantages to everyone. The team earns by providing themselves with a good pension on TGE, the community sells tokens to buy a hot dog, investors sell to exit beautifully and return equally beautifully. In the end, everyone wins, except for the hard workers who will buy this dummy on the listing for their portfolio.
The most successful launch was made by Ethereum, all the rest are copies that cannot come up with their own sustainable financial model and collect tokenomics on their knees, so that in a couple of years their token will be divided and safely forgotten. There are many more examples of application, but all of them are just made up and are similar to each other.
I like the shift towards having your own recognizable ticker and coin picture. I am not satisfied with the deception, speculation and the amount of scam due to this. I have yet to see any tokenomics that beat BTC. The simpler, the more reliable and understandable.
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