Abstract
Utility tokens are digital currencies that serve as the only accepted means of payment for services and products provided through a blockchain-based platform. They finance the development of their product or service, reward and incentivize early adopters and network promoters, align economic incentives between supply, demand, and the marketplace, and enhance network effects among all participants. Their tokenomic design consists of the rules and regulations governing a token's issuance, distribution, allocation, and potential destruction. The chapter describes utility tokens, compares them with other types of cryptoassets, and discusses their value creation process and role in network economics. It also reviews common tokenomic designs, discusses different regulatory approaches, and provides examples of current utility token applications in decentralized applications such as decentralized finance and virtual reality platforms (metaverses).
| Original language | English |
|---|---|
| Title of host publication | The Emerald Handbook on Cryptoassets |
| Subtitle of host publication | Investment Opportunities and Challenges |
| Publisher | Emerald Group Publishing Ltd. |
| Pages | 79-92 |
| Number of pages | 14 |
| ISBN (Electronic) | 9781804553206 |
| ISBN (Print) | 9781804553213 |
| DOIs | |
| State | Published - 16 Jan 2023 |
Bibliographical note
Publisher Copyright:© 2023 by Emerald Publishing Limited. All rights reserved.
Keywords
- Cryptoassets
- Decentralized finance
- Metaverse
- Network effects
- Tokenomics
- Utility tokens