The creation and sale of tokens have become a popular method for raising funds in crypto projects, yet it is not always justified. Token hype often leads to a loss of trust and value.

What Makes a Digital Token Valuable

A truly valuable token has practical use within its project's ecosystem. For instance, Basic Attention Token (BAT) in the Brave browser rewards users for viewing ads while Chainlink (LINK) provides decentralized oracles and data for smart contracts. These tokens are integral to a platform's operations: like ETH for running smart contracts or UNI for governance in Uniswap.

Tokens Lacking Genuine Utility Lose Value Quickly

Tokens without clear functions become speculative assets. Investors lose interest without practical use, and values drop. Axie Infinity’s tokens, which suffered rapid value loss after initial hype, serve as a stark example.

Transparency is key

It is crucial for crypto projects to be open about their goals and token usage. Projects like Cardano and Polkadot build trust through transparent development and clear token roles. Lack of information and transparency, as seen with BitConnect and Centra Tech, can cause severe trust damage.

Tokens are essential to the crypto ecosystem, but not every platform needs one. Focusing on real utility, transparency, and user-friendliness can build user trust and contribute to the industry’s long-term health.