Token Classification Framework: Considering the Origins of Value and their Mechanisms of Manifestation

This article presents the original Token Classification Framework for digital assets (tokens), focusing on the intrinsic value of tokens and acknowledging the significance of demand-side considerations. Traditional classification frameworks overlook these aspects, often assessing tokens based on a wide range of properties, including non-economic ones, without positing a hierarchical structure. In contrast, this work introduces a novel framework that classifies tokens based on their value-capturing roles arising from involved actors’ coordination and primary pathways through which value is realised in the system. In particular, a hierarchical three-level model is developed, wherein a token is attributed several origins of value, and interacting origins of value are grouped by a common pathway they are realised through (termed the Value-Capturing Mechanism). Specific technical implementations of these pathways are recognised. In addition, a method of systematic token design is proposed, and criteria for recognising novel Value-Capturing Mechanisms are given. Application of the novel framework is demonstrated for both token design for a model system and the decomposition of an extant token according to its origins of value and Value-Capturing Mechanisms