Pay the work, not the gate.

A token is a promise. Hold this, do that, and you’ll be rewarded.

So the first question about any token is not its price. It is who it pays, and for what.

Communities create tokens. Tokens don’t create communities.

A supply schedule is not an economy

Most token plans start with numbers. How many. Who gets them. When they unlock. That is a schedule.

An economy is a loop. Value comes in, work gets done, value goes out, and the next round gets better or worse. There are three kinds:

• Runaway. No target. Each round rewards whoever got in earlier, and late arrivals pay for it.
• Corrective. A fixed target, like a peg. It holds steady. It doesn’t compound.
• Virtuous. It serves something beyond itself. Fees pay for the work that makes the service worth paying for.

Which one is yours? You find out when the first incentive runs out.

What the failures share

Terra. One UST could be swapped for a dollar’s worth of LUNA. When people ran, LUNA’s supply went from 1 billion to 6 trillion in three days, and its price fell from $80 to almost nothing. The wealthier, better-informed holders ran first and lost far less (Liu, Makarov and Schoar).

Axie Infinity. Players earned a reward token faster than the game burned it. From late 2021 its price slid, and people who came to earn left (The Block).

Airdrops. Free tokens are meant to build a community. Researchers found that up to 66% of them were sold, often in the first move after claiming (Messias, Yaish and Livshits).

Paying contributors after the fact. Optimism spent two years rewarding public goods retroactively. Its own review found success hard to measure, big rounds turning into popularity contests, and teams splitting work to collect more (Optimism, 2024).

Different projects, one pattern. Rewards paid from new issuance or new buyers, not from outside value. Rewards for signals that are cheap to fake. And the people nearest the gate came out ahead.

The gate

Every shared system has a gate. A seat. A list. A platform. A vote.

The people doing the work rarely spend their time holding the gate. The people who want the gate do. Over time, they hold it.

A token can make that worse, when rewards follow the pile of tokens. It can make it better, when rewards follow outcomes someone can check.

What we think now

A shared system stays healthy only while doing the work earns more than controlling the gate to it.

For a token, that means two things. Value comes in from outside, from people paying for something useful, not from the next buyer. And rewards follow checked work, not closeness to the decision.

The same question is coming for AI. Pay per model token and you reward activity. Pay per job done and you reward an outcome someone can check. That is our working idea, not yet tested.

What we’re unsure of

• Do buybacks pay the work? Some projects now use fees to buy back their own token. Whether that beats the new tokens they keep issuing, no good study says yet.
• Can contribution be measured without a popularity contest? The best-documented attempt found it hard.
• Can reputation you can’t sell still motivate? Non-transferable tokens remove the speculative spiral. They also remove the main reason most people showed up.
• Where will the law land? Rules differ by country and are still moving. New Zealand has no crypto-specific law yet (NBR, March 2026).

What would change our mind

• A dated case where a supply schedule alone built a lasting economy, with no community and no loop where work pays more than the gate.
• Evidence that buybacks, net of new issuance, consistently return value to the people doing the work.
• A contribution reward that held up at scale without being gamed.

Your turn

Pick one token, points scheme or loyalty programme you belong to. Ask four questions:

• Does it still work if you remove the token?
• Where does the money come from: outside users, or later buyers?
• Who got it before you could?
• Does voice follow the work, or the pile?

If the answer to the second is “later buyers”, you are not in an economy. You are in a queue.

Read it with Tokenization: one word, three meanings, on what a token stands in for.

Published 3 November 2026. A reflection on how systems are changing, not financial or legal advice.