A token utility model describes the specific functions and uses of a digital token within its associated blockchain ecosystem. This model defines how a token provides value to its holders, such as granting access to services, facilitating governance votes, serving as a medium of exchange, or providing staking rewards. It outlines the economic purpose and demand drivers for the token. A well-designed utility model is crucial for the long-term sustainability and adoption of a decentralized application or protocol.
Context
News and analyses frequently scrutinize the token utility models of new and existing digital assets to assess their viability and investment appeal. Discussions often focus on whether a token’s utility is genuinely integral to its protocol’s operation or if it serves primarily as a speculative instrument.
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