99% of projects don’t actually need a token.

Study Base, Arbitrum, LayerZero, and Wormhole (pre-token launch) to name a few.

All amazing products – all fully functional without the need for a token (Base is still around, and thriving).

But let me add a few more nuances.

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The arguments in favor of having a token are obvious (decentralization, governance, bootstrapping, liquidity, community building, etc.)

These are undoubtedly important factors.

But the reality is that from a retail perspective, these factors are often secondary, as the fundamental principle is that it is much easier to raise money/earn profits than with traditional revenue models.

Without this dynamic, many crypto products would not be able to raise money (and thus be built) (because these businesses simply cannot make enough profit from revenue alone).

So do these products need a token to function? No.

But does the industry rely on new tokens to innovate? Yes.

The obvious downsides are: private > public market arbitrage (retail extraction), token dilution, fragmented liquidity, etc.

But the obvious pros are: more innovation as teams are able to raise funds to build, and developers are incentivized to build new products/dApps.

I’d like to see more infrastructure products introduce more interesting/dynamic token utility - like we’re seeing across the DeFi market. However, I think regulation etc does limit this a bit - but at the expense of value accrual.

This is indeed an interesting discussion, and I’d love to hear your thoughts. #MegadropLista