@ridleysinclair

The phenomenon of token incentive overcompetition occurs when ecosystems prioritize short-term participation at the cost of long-term sustainability. If rewards are disproportionately high compared to token utility, participants behave opportunistically, extracting value without contributing to the project. Over time, this weakens community trust and destabilizes token economics. Effective projects design token models that integrate rewards with ecosystem use cases, such as requiring tokens for services, governance, or in-game actions. This ensures that participation is driven by utility rather than pure reward hunting. By fostering balanced engagement, projects can avoid the downward spiral of incentive overcompetition and maintain a stable, loyal user base.

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