Definition ∞ Token economics failure describes a situation where the design and implementation of a digital asset’s economic model do not achieve its intended goals, leading to unsustainable price action, lack of utility, or an inability to incentivize network participants effectively. This can result from flawed supply mechanisms, inadequate demand drivers, or poor governance structures. Such failures undermine the long-term viability of a project.
Context ∞ Token economics failure is a frequent subject of debate among investors and project developers, particularly when discussing the sustainability and long-term value of digital assets. News often highlights projects struggling due to poorly conceived economic models. A critical future development involves more sophisticated and data-driven approaches to token design, incorporating game theory and behavioral economics to create resilient and effective incentive structures.
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