Why does every new project have to come out with their own token instead of just utilising existing tokens?

Every new project always comes out with a new token which acts as the governance token or “fuel” for the platform/network. Why can’t they just use existing tokens though instead of coming out with their own token? For example, AMP is an ERC20 token, but even though ETH is already used for the gas fees, people have to buy and stake AMP to provide collateral for the Flexa network. Why? Why can’t we just set dedicate some ETH to the network as collateral? We’re paying ETH gas fees anyways so why does it need a separate token?

That was just an example, but there are countless examples as well for pretty much anything built on ETH, SOL, ADA, DOT, etc. Why not just use the coin the gas fees are paid in as fuel for the network instead of having to buy a separate token? For normal computer software and apps you don’t have to convert to a separate currency for every single microtransaction, so why is this necessary in crypto?

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26 thoughts on “Why does every new project have to come out with their own token instead of just utilising existing tokens?”

  1. Well, the very obvious reason is: Those projects need funding and acquiring an existing token instead of releasing their own will cost money instead of providing funding for project development.

    This is a short term situation in my opinion though. Most projects and services will converge in regards to utilisation of currencies within the industry. You can already see it with some services accepting multiple currencies as well as their own and that trend will continue as protocols that want to remain relevant will have to adjust to the most trustworthy currencies at some point as people won’t be willing to hold or acquire every shitcoin just to utilise a service. We are not yet at that point but I strongly assume it to happen within the next 2-3 years.

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  2. Because it makes money for the founders and insider whales. Amazingly there are now 70,000 plus coins and tokens on the market. There needs to be a proper shake out.

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  3. Raises money. The extent to which that is to enrich the founders or fund the project development without relying on VCs will vary from project to project.

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  4. Thats good for the crypto space when new ecosystems come out that are improving the current ones (Assuming it improves it, not copy it).
    Personally none of the stated above can replace the current bank system, each one with its failures. Ada super slow, eth high gas fees etc and with very low tps you dont go anywhere.

    Some day a new blockchain will come up eventually with high tps and cheap gas fees and fully decentralized, not like solana but a better version of it.

    Just my thoughts, nobody has to agree with me 🙂

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  5. I had this idea about AGIX the coin or token or whatever that was meant for the AI in robots. Why do they need their own coin? I should sell it I guess.

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  6. Because if they make their own token…..and control it’s distribution….then they own all the made up money. Give them all your BTC/ETH for their shittoken that they still control 80% of. A quick pump and dump and they’ve made even more BTC/ETH off the project. After that? string it along a while as it’s value slowly sinks to nothing. Walk off with all that btc/eth then rinse/repeat. Welcome to being a multi-millionaire

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  7. It is a great incentive mechanism and a market gimmick to some extent. Most retail investors do not care much about inflationary tokens, decentralisation etc. Most of them have FOMO and regret about not investing in ETH and Bitcoin in the past. New tokens add fuel to the get rich quick narrative.

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  8. I think one of the first reasons for this is to make money, but I think one of the other reasons is to increase competition as a result, a market without competition cannot develop, I don’t think it’s a bad thing that everyone is involved in the game

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