A Glimpse into Token Economics

Security Token Academy Host, Amy Wan interviews Dr. Stephanie Hurder, partner and founding economist at Prysm Group about token economics and tokenizated assets.

Token economics, also known as crypto economics, is the study and design of economic systems based on blockchain technology.

Hurder express the importance of understanding the rights and governance of what a token provides.

There are two primary types of tokens:

1) Security tokens
2) Utility tokens

The major difference is the intended use and functionality of the tokens. Security tokens are created as investments. Users holding the security token also get ownership of the company.

Utility tokens, on the other hand, are not intended to give their holders the ability to control how decisions are made in a company. They merely enable users to interact with a company’s services.

However, both security and utility tokens can increase in value, hence some people may find it difficult to differentiate them.

Hurder talks about the tension inherent within a utility token when people are desiring that it go up in value, vs the stability required for its use of value exchange.

Token economics includes designing a token as a functioning part of an overall economic platform. In other words, ‘what’ do you tokenize so that everything works well together?