A successful cryptocurrency protocol has never relied solely on technology. What truly determines its survival is whether the token economic model can effectively incentivize participants, allowing network security and prosperity to emerge naturally.

Take a well-known protocol as an example; its token design is quite interesting. First, the most basic component—transaction fees. All core operations on the network, such as data publishing, cross-chain message verification, and forwarding, require payment settlements. This is the most direct source of demand for the token; the more it is used, the higher the fees. The most brilliant aspect is that these fees are linked to real network usage, not just virtual metrics.

Next is the staking mechanism. Validators and relayers need to stake tokens to participate in network operations and earn fee rewards. The cleverness of this design lies in several aspects: the higher the total staked amount, the greater the cost for attackers to compromise the network, thereby increasing security. Meanwhile, a large amount of tokens are locked up, naturally reducing market sell pressure. Stakers can also earn stable passive income, giving long-term holders a reason to hold onto their tokens.

Additionally, governance rights are included. Token holders can vote on key parameters such as fee structures, supported chains, and treasury usage. This upgrades the token from a simple financial instrument to a governance right, making it more attractive to long-term participants.

The entire value chain operates as follows: increased network usage → skyrocketing transaction fees → relatively fixed supply, driving prices upward. Or it can be viewed this way: rising prices → increased staking demand → reduced circulating supply → further pushing up prices. When both mechanisms work together, they form a self-sustaining growth flywheel.