@charlottewalker

Task-based rewards incentivize users to perform specific actions, such as testing features, providing liquidity, or engaging in governance. These encourage active participation and expand the ecosystem’s functionality. However, they can attract opportunistic behavior if tasks are too simple. Holding-based rewards, by contrast, allocate tokens based on wallet balances or staking, rewarding loyalty and capital commitment. While holding-based systems build financial stability, they may favor wealthier users, reducing inclusivity. Many projects combine both models, rewarding engagement through tasks while ensuring long-term holders benefit as well. The key difference lies in user behavior: task-based rewards encourage activity, while holding-based rewards emphasize stability. Evaluating a project’s mix of both mechanisms reveals whether it prioritizes growth, fairness, or long-term retention.

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