The initial coin offering (ICO) boom of 2017 demonstrated how projects associated with "Web 3.0" could raise billions. While these funds helped develop infrastructure and ecosystems, a key question emerged: how many of these tokens were actually used as originally intended?
Research from platforms like dAppRadar suggests that successful tokens allow users to perform specific actions—enabling them to earn extra income (through transaction fees or rewards) or save money (via discounts). Often, these tokens are burned or destroyed after use, reducing supply as demand increases and potentially raising the token’s value.
Let’s explore nine Ethereum-based projects that have effectively utilized their ICO tokens.
Binance Coin (BNB)
Binance’s value proposition was simple: reduce trading fees. At a time when major exchanges charged at least 0.2% per trade, Binance offered 0.1%—and further slashed it to 0.05% if users paid with BNB. Holders also enjoyed benefits like early access to new tokens, exclusive discounts, and airdrops, making BNB the platform’s most active medium of exchange.
Binance also committed to using 20% of its quarterly profits to buy back and burn BNB tokens—capped at 100 million—to increase scarcity. Combined with skillful listing strategies and operational agility, these measures helped BNB deliver value through both fee discounts and exclusive platform opportunities.
Bancor (BNT)
Bancor introduced a network and protocol for fast, automatic, and low-cost token exchanges. It allows users to send and receive tokens from on-chain liquidity pools at algorithmically determined rates, eliminating counterparty risk. These pools are managed via smart contracts owned by token creators.
To join the network, token creators deposit BNT and their own token into a pool. The smart contract automatically exchanges tokens when deposits are made, simplifying the entire process. BNT gains value by making it easier for new token economies to launch and grow without relying exclusively on exchanges.
Decentraland (MANA)
Decentraland is a virtual reality platform built on Ethereum. Users buy land parcels (called LAND) and develop them to create value within the ecosystem. Common tools like SketchUp, Blender, and Maya allow users to design 3D models and import them into Decentraland.
While some argue MANA should serve as a medium of exchange for digital goods, it is primarily used to acquire LAND—a non-fungible, transferable, and scarce digital asset stored in Ethereum smart contracts. This mechanism allows MANA to capture value as the sole entry point to a limited virtual resource.
Maker (MKR)
The MKR token serves two main functions. First, it is a utility token: users pay fees in MKR when generating DAI through Collateralized Debt Positions (CDPs). These MKR tokens are burned, reducing total supply. Rising demand for CDPs and DAI increases demand for MKR while reducing its availability.
Second, MKR acts as a governance token. Holders vote on risk parameters for each collateral type and CDP. Proposals with the most votes are activated after a built-in delay, giving the community time to respond. As DAI continues to thrive as a stablecoin, more developers create CDPs and integrate with dApps—increasing demand for MKR while reducing its supply.
0x (ZRX)
0x is an open-source protocol for decentralized exchange on Ethereum. Participants known as "relayers" provide liquidity and act as counterparts in peer-to-peer trades, earning fees paid in ZRX.
Although ZRX is used to pay relayers, its core function is governance: holders influence protocol upgrades. This offers clear value to relayers, who can propose improvements to enhance the system. This feedback loop helps 0x continue delivering maximum value to its users.
Origin Protocol (OGN)
The "peer economy" has enabled new business models that coordinate thousands of independent service providers in areas like transport, delivery, and crafts. Origin Protocol creates decentralized, peer-to-peer marketplaces on Ethereum, removing intermediaries from these ecosystems.
Origin allows individuals to build marketplaces and earn OGN tokens by promoting sellers’ products. This creates a free market where the most favorable conditions for sellers drive growth. The model rewards participation and promotes organic expansion.
Kyber Network (KNC)
Kyber is an on-chain liquidity protocol that aggregates reserves to enable instant, secure token swaps for any decentralized application. Users pay small fees in KNC to liquidity pools, covering operational costs and rewarding contributors for generating volume. In return, reserve managers earn spreads from network activity.
After transactions, a portion of fees is converted to KNC and burned, reducing total supply. As demand for token swaps increases, this deflationary mechanism can enhance the token’s value over time.
Augur (REP)
Augur is a decentralized oracle and prediction market protocol on Ethereum. Users earn rewards for accurately predicting events and ensuring the system’s oracle remains honest.
When creating a prediction market, the creator must post a bond in REP. A designated reporter (either the creator or a third party) must report the outcome within a set period. REP, short for Reputation, is at stake: users risk their tokens to report accurately. If they fail, others can claim the bond by reporting correctly.
After the initial report, outcomes can be challenged during a dispute period. Successful challengers share the original bond. REP derives value from its role in maintaining truthful reporting—a need that grows as the network expands.
Numeraire (NMR)
Numeraire is a hedge fund built by a network of data scientists. The platform tokenizes Kaggle-like competitions, initially airdropping NMR tokens to Kaggle users to bootstrap participation.
Users stake NMR on predictive models they believe will perform well. Incorrect predictions lead to burned tokens, while accurate ones earn rewards and return the stake. This model taps into an existing community of data scientists and offers a compelling value proposition: top performers can capture more value. NMR serves as both a stake and an entry ticket to the network.
Conclusion
The successful tokens profiled here allow users to perform actions that help them earn income or save money. Even governance tokens like MKR and ZRX derive value from their practical use: MKR holders help prevent CDP dilution, and 0x relayers work to increase network utility and their own profits.
This utility is often reinforced by token burns, which reduce supply as demand rises. Projects that offer clear value to large communities—and avoid overly technical token mechanics—are best positioned to succeed. As the field of token economics continues to evolve, these models offer a foundation for future innovation.
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Frequently Asked Questions
What is token burning?
Token burning is the process of permanently removing tokens from circulation. This is often done to create scarcity, which can increase the value of remaining tokens if demand remains constant or grows.
How do governance tokens work?
Governance tokens give holders voting rights on protocol upgrades, parameter changes, and other key decisions. This decentralized approach allows users to shape the project’s future.
Why are some tokens used only for specific actions?
Limiting a token’s use cases can create focused demand and avoid dilution of utility. For example, MANA is used primarily to buy virtual land, which helps maintain its value.
Can token burns guarantee price increases?
Not necessarily. While reducing supply can support price appreciation, token value also depends on demand, market sentiment, utility, and overall ecosystem health.
What makes a token successful?
Success depends on clear utility, active community engagement, sustainable tokenomics, and the ability to solve real problems. Tokens that offer tangible benefits to users are more likely to thrive.
How do deflationary mechanisms work?
Deflationary mechanisms reduce token supply over time through burns or other methods. This can increase scarcity and, if demand is present, support long-term value appreciation.