Token Incentives

Definition ∞ Token incentives are rewards distributed through a project’s native digital token to encourage specific behaviors within its ecosystem. These incentives are designed to motivate participants, such as users, developers, or validators, to contribute positively to the network’s growth, security, or utility. Properly structured token incentives are fundamental to aligning the interests of all stakeholders.
Context ∞ The design and implementation of token incentives are central to the economic models of many decentralized applications and blockchain protocols. Discussions frequently center on mechanisms like staking rewards, liquidity provision bonuses, and governance participation rewards, aiming to foster user engagement and network security. The long-term sustainability and fairness of these incentive structures are critical considerations for the continued development of decentralized ecosystems.