Why Do NFT Projects Need Their Own Tokens?

A staple of NFT projects is launching a native token — think of Bored Ape Yacht Club's ApeCoin, or Decentraland's MANA, or The Sandbox's, unsurprisingly, SAND. But why?

Some are worried that ApeCoin represents an unregistered security, and the SEC is investigating that possibility — it's easier to say you're buying collectible art when you buy an Ape JPEG, but when you're buying tokens that are tied to the success of the Yuga Labs ecosystem, that explanation becomes harder to accept.

In July, ZED, along with Future Future Labs, launched the ZED token, a governance token that runs on both Ethereum and Polygon. Zed Run envisions the token as a way to participate in the Zed economy and create incentives to encourage participation from their community. Zed Run also airdropped some of its tokens to community members who own horses and participate in races, as a way to reward the community.

"What's good for the community is good for Zed Run, and what's good for Zed Run is good for the community," said Chris Ebeling, co-founder of Zed Run, in our community extra. "So it's like this circular kind of collaborative effort that we and the community share and we and our users share."

Ebeling also addresses whether Zed's token would be used for governance the way many other tokens are. With ApeCoin, for example, anyone can submit a proposal for a change in the Yuga Labs ecosystem which ApeCoin holders then vote on.

As far as Zed Run is concerned, however, the project isn't ready to hand over control to the community just yet. The game was created by Virtually Human Studios and thus, is not community-owned. NFT creators have faced pressure to give their owners more rights, and games aren't immune, either. Many have shifted to become decentralized autonomous organizations, or DAOs, which are controlled by token or NFT holders.

"If you're mentioning DAO systems, I mean that's still under discussion," said Ebeling. "However, those are things that are still being discussed internally and we have to wait and see."

For more of Chris Ebeling's thoughts on the ZED Token, check out our Community Extra above, exclusive to Coinage NFT holders.

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