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Lesson # 3
Utility vs Governance vs Incentive Tokens
Blockchain Basics
1. What is a common risk associated with reward tokens?
A. They usually have fixed supply and no inflation
B. They are often held long-term due to staking incentives
C. They are typically used only for governance voting
D. They can be highly inflationary, creating constant sell pressure
2. Which of the following would most likely increase sustainable demand for a token?
A. High airdrop volume and short vesting
B. Use in a low-volume DEX with no incentives
C. Being required to pay gas fees on a widely used blockchain
D. Serving only as a meme token with no utility
3. Which governance token design is most likely to encourage long-term holding and alignment with protocol success?
A. Tokens are unlocked immediately and offer symbolic voting rights only
B. Tokens are distributed via airdrops with no usage requirements
C. Governance power increases with longer token lock durations and offers utility incentives
D. Voting is conducted off-chain with no enforcement mechanisms
4. What is an example of a sustainable token design that rewards holders without inflation?
A. Tokens printed regularly to attract more liquidity
B. Tokens that earn a share of real protocol revenue without increasing total supply
C. Tokens that rely solely on staking APY with high emissions
D. Tokens that unlock in large lump sums at regular intervals
5. What is a key red flag when evaluating the effectiveness of a governance token?
A. Token holders are required to lock tokens for years
B. Proposals directly change treasury or risk parameters
C. Voting participation is under 1% and dominated by whales
D. Token has no inflation and fixed total supply