Tokenomics Are Broken And Only Contribution Can Fix This

Opinion by: Naman Kabra, co-founder and CEO of NodeOps

​​For years, staking was the gold standard in crypto. Stake tokens, secure the network and earn simple, elegant and trustless rewards. Somewhere along the way, we drifted.

Staking stopped being about contribution and started being about capital. Rewards ballooned, emissions exploded and tokenomics shifted from supporting long-term infrastructure to chasing short-term yield.

The hard questions were forgotten. What’s truly being rewarded — and at what cost? What real work is being done? And what happens when the rewards run out?

We’ve seen this play out up close. DeFi protocols are promising sky-high APYs. Layer 1s are flooding the market with incentives to bootstrap usage. The pattern is always the same: Capital gets rewarded, contribution does not. It works until it doesn’t. Capital can spark activity, but it can’t sustain ecosystems. That takes value creation. Without it, all you’re building is a bubble.

When capital-only incentives aren’t enough

The logic is easy to sell: If users lock tokens, they’re “committed.” If they stake, they’re “securing.” But staking alone doesn’t tell you anything about participation. It doesn’t say who’s running infrastructure, who’s onboarding users, who’s building real apps or who’s solving real problems. Capital is passive. Networks don’t run on passivity; they run on performance.

The core flaw in some token economies is that value is extracted, not created. Early users get paid with emissions funded by new entrants. There’s no underlying productivity. And when demand slows, the whole model collapses under its own weight.

A better model exists; it just needs to be built.

Rethinking network incentives

What if, instead of staking capital, we began staking effort? What if tokens were distributed not based on wallet size, but on meaningful contribution?

That’s the vision behind performance-based tokenomics. Participants who compute, maintain uptime, process transactions reliably or onboard developers and users are directly rewarded for their influence. The objective isn’t just to distribute tokens; it’s to align incentives with the network’s actual growth and utility.

This shift is already visible across parts of the decentralized physical infrastructure network (DePIN) ecosystem. Operators are compensated not for locking tokens but for staying online, meeting reliability benchmarks and delivering infrastructure. It’s a more…