What Is the Token Economy?

Chapter 2. Token Use Cases

This chapter covers a selection of use cases to showcase different token types as well as select industries that might be disrupted as a result of tokenizing their business models. Some of these use cases are already operational, but many of them are still in a conceptual phase. However, the selection of use cases is intended to give an overview and insight into the state of a potential token economy.

Stable Tokens

As you will see in the next chapter, stability of value is one of the most important functions of money in order for it to serve as a medium of exchange. The aim of stable tokens is therefore to provide a stable store of value, unit of exchange, and unit of account represented by a cryptographic token that maintains a stable value against a target price, like the dollar or euro. These stable tokens are designed to replace or complement current fiat currencies and are therefore designed as fungible and transferable with a circular token flow. The success of stable tokens could potentially resolve one of the biggest bottlenecks to mass adoption of tokens as a medium of exchange. For a token to fulfill the role of a medium of exchange, it therefore needs to be stable in its purchasing power, or slightly inflationary so that token holders are incentivized to spend their tokens rather than holding on to them. Over the years, various attempts have been made to achieve stable tokens:

• Fiat-collateralized or commodity-collateralized stable tokens ...