Tokenomics are broken, and only contribution can fix this

Key Points

1. Staking, once the gold standard in crypto, has led to inflated rewards and emissions, shifting tokenomics away from supporting real value creation.

2. Current models reward passive capital rather than active contribution, leading to unsustainable ecosystems that collapse when demand slows.

3. A better model, exemplified by DePIN, compensates operators based on verifiable contributions like uptime, latency, and reliability, aligning incentives with real utility.

4. Research from Messari’s 2023 report highlights the fragility of emission-driven rewards, showing protocols like OlympusDAO and early SushiSwap declined once incentives dried up, while those tied to real utility, like Aave, saw higher user retention.

5. The future of tokenomics should encode performance metrics directly into token flows, moving beyond artificial incentives to reward actual problem-solving and network improvement.