Solving the Classic Crypto Assets Dilemma: Advantages of the Dual Token Model

In the blockchain field, the choice of token model has always been a focus for developers. Although mainstream blockchain networks are unlikely to change the existing model in the short term, the dual-token model, as an emerging solution, is receiving increasing attention.

The traditional single-token model, while simple and efficient, struggles to resolve the long-standing economic contradictions of blockchain - that is, the actual use of the network may hinder network growth. In contrast, the dual-token model provides a viable solution to this dilemma.

The Paradox of a Single Token Model

Essentially, all blockchains have similar goals: reliably recording transactions, storing value, and facilitating network development. Currently, most blockchain ecosystems rely on a single token that serves both as a store of value and as a medium of exchange, mining rewards, and payment of transaction fees.

This model presents a contradiction: token holders want the project to succeed, but if they use the tokens to pay for Gas fees, it will reduce their own share in the ecosystem; conversely, if they refuse to use them, they cannot actively participate in network activities. This is a hard-to-reconcile paradox.

Another issue is that in certain ecosystems, users spending tokens will lead to a reduction in their governance rights. This further decreases users' willingness to participate in on-chain activities.

Advantages of Dual Token Model

The dual-token economic model can effectively solve the above problems. In this model, one token is responsible for governance, while the other is solely used for paying Gas fees. This way, holders of the governance token can be regarded as the "owners" of the network, while the token used for paying Gas is completely separate from the primary asset.

This design eliminates the contradiction of "using the protocol will reduce rights." Users no longer have to spend valuable governance tokens for transactions, which is as unreasonable as using shares of Apple Inc. to purchase an iPhone.

Although the dual-token system is still rare at present, more and more new-generation blockchain projects are beginning to adopt this model. Many GameFi projects, stablecoin protocols, and lending platforms have also adopted the dual-token system, allowing users to no longer have to make trade-offs between liquidity and on-chain resources.

Characteristics of the Dual Token Model

The dual-token system usually has the following characteristics:

1. The main token supply is limited, used for governance, voice, or dividends. Usually distributed through public sales or giveaways.

2. Auxiliary token ( or utility token ) supplies flexibility, used for on-chain payments and Gas fees, rewarding ecosystem participants or main coin holders.

3. When the growth rate of economic activity exceeds the inflation rate, the price of utility tokens rises. As the yield of utility tokens increases, the demand and price of the main tokens will also rise until a new equilibrium is reached.

4. Practical tokens provide positive feedback to the main token through economic activities.

This model resolves the contradiction between users actively using the protocol and long-term investment. Utility tokens are used for continuous incentives and system growth, while main token holders are also encouraged to participate in on-chain activities and protect the network.

Conclusion

In cutting-edge technology fields like blockchain, we need to embrace innovative thinking. The dual-token model is no longer a fanciful idea, but a feasible solution to the classic Crypto Assets dilemma. In terms of blockchain economy, the dual-token model indeed outperforms the single-token model.