Tokenomics 103: Utility

This third part of a tokenomics series argues that a token needs real utility to create demand, and it frames utility around four questions: whether a token is meant to be spent or held, whether it generates cash flows, whether it confers governance rights, and whether it can be used as collateral. The article uses Chainlink as an example of a spending token: LINK is primarily used to pay for Chainlink services, and it had lost 50-90% of its value against ETH for anyone who bought after July 2019 and held. Among cash-flow examples, it says Convex was paying a 44% APR on locked Convex, while SUSHI stakers receiving xSUSHI earned fees at about 10% APR. It also notes that AAVE governance votes often attract 250,000 to 400,000 votes.