Native tokens are fundamental to the creation of secure, scalable, and useful decentralized infrastructure protocols on why tokens for core Web3 infra are in-fact needed

Tokens solve the chicken or egg problem

A two sided marketplace can be bootstrapped into existence via subsidies (demand + supply side) in a credibly neutral manner before user fees reach sustainable levels to fully cover service provider operating costs + profit margin

Tokens facilitate implicit + explicit incentives

The economic incentives of infra service providers are aligned with that of the network as they have financial exposure to the network’s health via token payments, staking, holdings, and/or hardware specific to that token


Tokens make infra more anti-fragile

The cryptoeconomic security of tokenized infrastructure is isolated from any unrelated tokens or networks, which could be devalued for unrelated reasons, especially important when the infra is blockchain and/or system agnostic


Tokens facilitate scalable security

With a flywheel of value capture (dividends, burn, treasury control,etc), the network’s token-backed cryptoeconomic security increases at the time it’s needed most to super greater user demand and value secured


Tokens enable scalable growth

An increase in value capture grows the per-unit utility of the issued subsidy allocation used for fueling non-debt based growth, facilitating new value creation and capture opportunities, growing market share


Tokens provide neutral initial funding

Avoid the need to seed control of infra protocols to centralized capital allocators via traditional direct equity sales or raising debt, which would place additional up-charge on services, making the infra more competitive and neutral


Tokens facilities social network effects

Creation of an economically aligned community of services providers, holders, and users with individual incentives to seek the infra’s adoption and usage for greater value creation and capture


Tokens enable distributed governance control

Tokenized infra can have programmatic on-chain control or off-chain economic signaling regarding the infra’s future development direction through the use of the token, more direct skin in the game



Decentralized infrastructure protocols without a token simply can’t compete against tokenized infrastructure counterparts

Unfortunately there still seems to be a fundamental misunderstanding regarding the key role of tokens, but results speak for themselves

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