Token Utility Model

Definition ∞ 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.