double tokens

What Is Dual-token (Dual-token) Model?

A dual-token model refers to a crypto project that issues two distinct tokens simultaneously.

Typically, one token serves as a governance token, responsible for voting rights and capturing long-term value; the other is a utility or reward token, used for paying transaction fees, fueling operations, or incentivizing users. For example, in public blockchains, the governance token secures the network through staking and enables validator participation, while the utility token covers on-chain gas fees. In GameFi projects, governance tokens represent a stake in decision-making (similar to “equity”), while reward tokens function like in-game points. Notable examples include VeChain’s VET and VTHO, NEO and GAS, MakerDAO’s DAI and MKR, and Axie Infinity’s AXS and SLP.

Why Should You Understand Dual-token Models?

Understanding dual-token models is essential for accurately assessing a project’s sustainability and the value proposition of both tokens.

Focusing on only one token can lead to misjudging both risks and opportunities. Governance tokens are akin to “shareholder rights,” often linked to voting, fee distribution, or buyback mechanisms. In contrast, reward or utility tokens are more influenced by usage volume and issuance schedules, which can make them more inflationary and volatile. Grasping the roles of each helps you decide whether to participate in governance and staking, or to engage in short-term trading of utility tokens.

How Does the Dual-token Model Work?

In dual-token systems, each token has a clearly defined function and they interact synergistically—most commonly, one is a governance token and the other is a utility or reward token.

In public blockchains, the governance token is used for staking and securing the network, acting like a “shareholder vote.” The utility token pays for gas fees, similar to mobile airtime credits that are consumed with every transaction. For example, holding VeChain’s VET generates VTHO, which is used for transaction fees; NEO’s GAS covers on-chain operational costs.

In DeFi scenarios, separating the stablecoin from the governance token helps maintain a stable peg. MakerDAO uses DAI as its stablecoin, while MKR serves as the governance token—major protocol parameters are decided by MKR holders via voting. MKR can be bought back or burned depending on risk fees and system adjustments, linking system health to the value of the governance token.

In GameFi, governance tokens handle decisions and long-term incentives, while reward tokens are distributed as daily rewards or consumed for in-game items. To control inflation, projects may adjust token emissions, increase burn rates, or set supply caps to maintain balanced gameplay and economic cycles.

Where Do Dual-token Models Appear in Crypto?

Dual-token structures are widely adopted across public blockchains, DeFi protocols, GameFi projects, and NFT platforms.

On public blockchains, the utility token serves as fuel (gas fees), while the governance token is used for staking and validator voting; their market prices reflect distinct supply-demand dynamics. Examples include VET/VTHO and NEO/GAS, where fuel token consumption correlates directly with on-chain activity.

In DeFi, stablecoins focus on collateralization and reserves while governance tokens focus on protocol decisions and value accrual. The DAI/MKR combination allows users to mint stablecoins through collateral while major decisions regarding fees and risk parameters are managed through governance.

In GameFi, pairs like AXS/SLP or GMT/GST are common: governance tokens are more scarce and used for voting or long-term incentives; reward tokens are produced through player activity and consumed for upgrades or crafting. Controlling inflation is critical—otherwise, reward token prices tend to decline.

On exchanges such as Gate, you will often find both governance and reward tokens listed as spot trading pairs (e.g., AXS/USDT and SLP/USDT). When participating in liquidity mining or market making, reward token emissions affect nominal APY; however, high inflation or weak prices can dilute actual returns, so ongoing risk assessment is essential.

How Can You Mitigate Risks with Dual-token Models?

Understand both tokens’ use cases and emission schedules before deciding your involvement strategy.

Step 1: Identify roles. Read whitepapers and official documentation to clarify which is the governance token and which is the utility/reward token; understand their respective use cases and value drivers.

Step 2: Analyze issuance and inflation. Monitor reward token emission rates, burn mechanisms, and supply caps; check if the governance token has buyback/burn mechanisms or fee distribution.

Step 3: Review vesting schedules and fund allocation. Investigate team and early investor vesting timelines to assess potential sell pressure; understand how treasury funds are utilized.

Step 4: Evaluate real demand. Utility/fuel tokens require analysis of on-chain transaction volume; reward tokens should be evaluated based on game/platform activity and burn mechanisms.

Step 5: Choose the right strategy. Governance tokens suit long-term staking and participation; reward tokens may be better for short-term trades based on emission/burn cycles. If participating on Gate via market making or yield products, monitor project announcements and actual distribution schedules—regularly review yields versus risks.

What Are the Latest Trends or Data About Dual-token Models?

Recently, projects have placed greater emphasis on controlling reward inflation and establishing sustainable value loops; exchanges have also improved information transparency.

Throughout 2025, leading public blockchains and GameFi projects with dual-token designs have continued to grow. As of Q4 2025, the number of projects listed with both tokens on major spot exchanges has significantly increased compared to 2024—with industry reports showing double-digit percentage growth—primarily due to clearer separation between governance and user incentives.

In H2 2025, several GameFi projects and blockchains announced reward token emission reductions or dynamic output strategies aimed at controlling annualized inflation rates more effectively. They also increased in-game consumption scenarios such as task rewards and item synthesis to drive utility. As inflation converges, price volatility of reward tokens has decreased over recent months but remains higher than that of governance tokens.

By Q3-Q4 2025, fuel-type token consumption continues to closely track on-chain activity; during periods of heightened network use, daily fuel token burn increases significantly. When network utilization drops, fuel consumption and prices adjust downward. Investors should focus on “real usage” metrics rather than simply chasing headline APRs.

How Do Dual-token and Single-token Models Differ?

The main distinction lies in whether responsibilities are concentrated or risks diversified.

Single-token models consolidate governance, incentives, and fuel into one asset—this simplifies design and value accrual but centralizes all pressures onto a single token. For example, some public blockchains use a single coin for both gas fees and staking.

Dual-token models separate governance value from usage costs: governance tokens target long-term stakeholders while utility/reward tokens serve day-to-day operations and incentives. This allows greater flexibility in managing participation rates and inflation but increases complexity—requiring users to evaluate pricing dynamics for each asset independently.

Key Terms

• Dual-token: A project structure where two distinct tokens are issued—typically one for governance and one for value distribution or utility.
• Governance Token: Tokens granting holders participation rights in project decisions and voting power over protocol upgrades.
• Yield Token: Tokens representing rights to project revenues; holders may receive a share of protocol fees or income.
• Tokenomics: The economic model governing token issuance, allocation, incentive mechanisms, and burning rules.
• Smart Contract: Self-executing programs on blockchain used to manage dual-token minting, transfers, and governance logic.
• Staking: Mechanism by which users lock up tokens to earn rewards, participate in governance, or help secure the network.

FAQ

What are the roles of governance and utility tokens in dual-token models?

Governance tokens enable holders to participate in project decisions through voting on major issues such as protocol upgrades or parameter changes. Utility tokens are mainly used for paying transaction fees, incentivizing user actions, or accessing platform services. Together they ensure decentralized governance while facilitating economic activity within the ecosystem.

Do dual-token models increase price volatility?

Dual-token structures can amplify price volatility since each token’s supply, demand drivers, and market expectations operate independently. Investors should assess risks associated with each asset separately—pay attention to unlock schedules, liquidity depth, project fundamentals, and select trading pairs with ample liquidity (such as those offered on Gate) to minimize slippage risk.

Why do some projects abandon dual-token models for single-token models?

While dual-token designs offer flexibility, they can also create management complexity, user confusion, and fragmented liquidity. Many teams find single-token models easier for users to understand and less costly to maintain—reflecting market preference for streamlined token economics.

How can users manage both tokens on an exchange?

Most exchanges like Gate allow users to trade both tokens independently. It’s advisable to create separate portfolios for each asset to track individual performance. Always check liquidity when trading—some pairs may have lower depth resulting in higher slippage.

How can you evaluate if a dual-token project's allocation is reasonable?

Focus on the initial allocation ratios for both tokens, vesting schedules, and their intended uses. Reasonable distribution ensures sufficient decentralization of governance tokens and robust liquidity for utility tokens; long-term unlock schedules help prevent early-stage dumping by insiders. Use resources like Gate’s project info pages or whitepapers for thorough due diligence.