What Can Tokens Do?
This was first published as a Twitter thread.
\What are some things you can do with tokens? Here are a few ideas.
- Secure a network, such as via staking (e.g. PoS)
- Bootstrap supply sides of networks (e.g. Helium, DIMO)
- Create a tangible incentive for coordination among dispersed parties (e.g. what we see with many DAOs)
- Decentralize/distribute governance
- Fund public goods (e.g. what Optimism is doing)
- Incentivize positive externalities within an ecosystem (I would love to talk to anyone experimenting with this! Think it’s different than directly funding public goods)
- Reward participants for contributions to a network
- Coordinate and create insurance pools
- Form digitally-native units of account (“internet money”)
- Track and build on-chain reputation (e.g. via SBTs)
- Create new digital identities (e.g. NFTs: will likely see this expand as NFT infrastructure — such as sign-in with NFTs — builds out)
- Give users a share of ownership in the network (with the interpretation of “ownership” an open frontier!)
What are other exciting things you’ve seen or are thinking about doing with tokens? Feel free to DM me. And if you’re in the process of designing a token, I highly recommend referencing Spencer Noon’s thoughts on great token design.
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Originally published on Twitter on August 3, 2022
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