@plains
Token incentive overcompetition is particularly dangerous in highly competitive sectors like DeFi or GameFi, where projects often compete by offering unsustainably high rewards. While this may temporarily attract liquidity and users, it undermines long-term stability. Inflationary pressure devalues the token, and once rewards are lowered, participants may abandon the ecosystem. This cycle discourages genuine users and encourages speculative migration. To reduce this risk, projects must prioritize intrinsic value creation, ensuring that incentives complement rather than dominate engagement. Carefully designed mechanisms, such as capped rewards or milestone-based incentives, can balance user attraction with sustainable growth, preventing destructive competition that erodes token credibility.
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