Blockchain: Research and Applications 3 (2022) 100069

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Blockchain: Research and Applications

journal homepage: www.journals.elsevier.com/blockchain-research-and-applications

Tokenomics and blockchain tokens: A design-oriented

morphological framework
Pierluigi Freni *, Enrico Ferro, Roberto Moncada
Business Model Innovation, LINKS Foundation, Turin, 10138, Italy

A R T I C L E I N F O A B S T R A C T

Keywords: Blockchain technology has been around for more than ten years, nevertheless, the knowledge about its economic
Blockchain and business implications is still fragmented and heterogeneous. The present article intends to tackle this issue
Tokenization with a twofold contribution. The first is an analysis of the shift from economics to tokenomics highlighting the
Tokenomics
central role played by tokens within blockchain-based ecosystems. The second is a framework for tokens design
Classification framework
Token design
leveraging a morphological analysis deeply grounded in the literature. As blockchain becomes a mainstream
phenomenon, the value of the work proposed lies in lowering the cognitive barriers and in clarifying the space of
available options for private and public actors willing to leverage tokenization in their daily operations.

1. Introduction Talking about “univocal truth” and “centralized guarantors” may

sound theoretical and far from daily life, but it is rather the contrary. The
Over a decade has passed since Satoshi Nakamoto published an most fundamental aspects of people's lives rely on a centralized
innovative solution to the double-spending problem [1] based on a source of truth that acts as a guarantor, starting with their identity.
peer-to-peer disintermediated network [2]. The whitepaper gave birth to The supreme act of one's self-determination needs to be certified by a
the first blockchain and the first cryptocurrency, Bitcoin. Since then, the third-party (such as a state administration) to be generally acknowl-
underlying Distributed Ledger Technology (DLT) has been acknowledged edged. Countless are the scenarios in which a birth certificate, an ID, or a
as a foundational technology [3], with a potential impact likely to match passport is needed to carry out daily activities, and the central govern-
or outstrip the revolution brought by the Internet in the Nineties [4,5]. ment issues all those documents. The same applies to finance manage-
Even if blockchain technology has been around for a decade, a shared ment: when someone makes a payment, their bank (or credit card issuer)
understanding of some fundamental mechanisms is still lacking [6]. In guarantees that the funds in their account cover the expense (or that it is
particular, if, on one hand, the technical aspects have been thoroughly suited to their credit-score).
explored, defined, and branched out into different deployments, on the Tracing back to the roots of money, the vast majority of economic
other hand, the business and social implications are still blurred. transactions are performed using a currency, in particular, a fiat cur-
Keeping aside the technical details (covered by extensive literature), rency (fiat in Latin means “let it be done”). Fiat currencies do not have
one of the grounding pillars of the blockchain technology is the possi- intrinsic value, and they can be used since a central authority (the
bility to reach a shared consensus on a univocal truth describing the Central Bank) establishes and maintains its value [7]. The
history of states of a digital ecosystem, in the form of a transactions' ground-breaking innovation introduced by Nakamoto, from a
ledger. A mathematical algorithm mediates the achievement of such a non-technical perspective, is the decentralization of the source of truth
consensus on a unique source of authenticity. The ultimate implication in handling currency-based transactions, de facto offering an opportu-
of relying on a consensus algorithm is overcoming the need for a nity to ensure reliable peer-to-peer payments without the need for a
central authority that is entitled to provide a univocal truth. system of intermediaries acting as guarantors for the validity of
Therefore, the first paradigmatic shift originates from decentralizing the transactions. Decentralization applies throughout the monetary system,
source of truth and cutting off centralized guarantors. and Bitcoin is a decentralized and disintermediated currency that is not

* Corresponding author.
E-mail addresses: [email protected] (P. Freni), [email protected] (E. Ferro), [email protected] (R. Moncada).

https://doi.org/10.1016/j.bcra.2022.100069
Received 29 November 2020; Received in revised form 23 November 2021; Accepted 21 February 2022
2096-7209/© 2022 The Authors. Published by Elsevier B.V. on behalf of Zhejiang University Press. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
P. Freni et al. Blockchain: Research and Applications 3 (2022) 100069

issued and managed by central authorities, but instead, it is algorith- light of this, the tokenization process can be further described as the
mically governed. creation of a self-governed (tok)economic system, whose rules are
The path outlined by Nakamoto, detouring centralized sources of programmed by the token designer.
truth, paved the way to the overall shift of numerous economic activities. Here comes the second paradigmatic shift, namely from economics to
In the years following the launch of Bitcoin, a large number of crypto- tokenomics. In economics, innovation proceeds and propagates by
currencies emerged, and a diverse cosmos of blockchains has been introducing a change in the context of set rules and observing how such a
developed. Thanks to immutability and transparency, blockchain relatively rigid framework reacts to the change. Therefore, the outcome
offers individuals prerogatives previously available only to in- of the proposed innovation is assessed, at first, on a predictive basis.
stitutions, transforming actions into transactions and triggering Conversely, in tokenomics, innovation is put forward by designing
virtuous behaviors. Furthermore, decentralization has been applied the rules governing the playground in a way that the stakeholders'
way beyond the mere monetary context, embracing different value-based behavior aligns with the goal pursued. In other words, the second
scenarios, through tokenization. paradigmatic shift moves from the passive observation of the ecosystem's
In such a heterogeneous context, there is a need to shed light on the reaction to a change to the active design of the ecosystem constituent
actual role that blockchain tokens play in decentralized ecosystems. This laws, aimed at reaching the desired outcome.
paper aims at addressing such a need and is an extension of the work The tokenization process, as well as the shift to tokenomics, revolves
originally presented in the 2020 IEEE Symposium on Computers and around the token. Without neglecting the importance of the underlying
Communications (ISCC) [8]. In particular, the token classification infrastructure and its technical features, a deep understanding of the
framework there introduced is here revised, enriched, and thoroughly token nature is fundamental to effectively unleashing the disruptive
explained in all its dimensions. potential of blockchain technology.
Section 2 describes what a tokenization process is and what in-
novations it brings. Section 3 shifts the focus towards the fundamental 3. The underlying rationale to tokens classification
unit of said process, the token, distilling its nature and explaining the
rationale underlying the demand for a comprehensive guiding frame- A deep understanding of the nature of the token, and the capability to
work to design and classify tokens. Section 4 analyzes the state of the art comprehensively describe it, is as crucial as challenging. Given the
in terms of existing approaches present in the literature. Section 5 pre- cornerstone role played by tokens in a tokenization process, their
sents the methodology adopted for the generation of the new framework meaning is intimately related to the very concept of tokenization.
proposed. Section 6 includes the results of the analysis conducted. Sec- Following this approach, the token definition moves along two
tion 7, illustrates the article's core contribution by providing a walk- strands: on one hand, it addresses the function performed by to-
through of the proposed framework whose ambition is to provide a kens, and, on the other hand, it drills to the very essence of what
simple and intuitive tool for the extensive and complete description of a they represent.
token that may be used for both design and classification purposes. Looking at the function performed by tokens in economic terms, a
Section 8 details the evolution of the framework discussed in this article token can be described as “a unit of value that an organization creates to
from the previous version presented in a workshop contribution. Section self-govern its business model, and empower its users to interact with its
9 contains some conclusions and next steps that the authors intend to products while facilitating the distribution and sharing of rewards and
take to further strengthen the validation of the framework proposed. benefits to all its stakeholders” [11]. In simplistic terms, tokens can be
Finally, the reader can refer to the Appendix to find three example ap- seen as privately issued currencies used to exchange value within an
plications of the framework. ecosystem (e.g., Bitcoin). In reality, their usage has gone far beyond mere
currency applications. The roles that a token may play are manifold and
2. The shift from economics to tokenomics include, among others, giving access to a service, granting the right to
contribute to a community, regulating the governance through voting
The tokenization process can be described as the encapsulation of rights. More generally, a token can be intended as a socio-economic tool
value in tradeable units of account, called tokens or coins [8]. The to promote the coordination of the actors in a regulated ecosystem to-
disruptive potential lies in expanding the concept of value that can be wards the pursuit of a network objective function [12], through a set of
partitioned and traded beyond purely economic terms, including repu- incentive systems.
tation, work, copyright, utility, and voting rights. Once tokenized, all The token, being a unit of account, doesn't have an intrinsic and self-
these manifestations of value can be detected, accounted for, and lever- standing definition, but its nature is determined by what it represents.
aged in the context of a system of incentives that may promote fair levels Sticking to the concept of tokenization as an encapsulation of value, the
of wealth and power redistribution. token is the representation of such value. Therefore, the deep under-
In other words, tokenization represents a form of digitalization of value standing of the encapsulated value provides the key to distilling the
and, just like the Internet enabled free and fast circulation of digitized essence of tokens.
information, the blockchain is allowing the “almost free” [9] and bor- The value represented by the tokens observable in the wild is diver-
derless flow of digitized value. The blockchain made it possible to algo- sified and cannot be described univocally: it can be either the right to
rithmically solve the double-spending problem and introduced the concept have a discount on an exchange rate, or the proof of ownership of a gold
of digital scarcity, as opposed to the digital abundance characterizing the ingot, or the reward for solving a mathematical problem to validate the
Internet of information [10]. In particular, digital scarcity will act as a key next block of the chain, or many other examples. The challenge is to
enabler of a new digital economy relying on assets that are liquid, divis- generalize the definition of token-represented value by chasing a com-
ible, borderless (easily transportable and quickly transferable), and, unlike mon trait that all these expressions of value share. Looking deeply into
currencies, have the potential to appreciate over time. The controlled in- the source of token-encapsulated value, the concept of trust
flationary nature of some of these assets may have deep implications in emerges as a cornerstone.
helping our society to migrate from a debt-based economy, producing When tokens represent the holder's right, for example, to access a
significant improvements in people's lives and the democratic processes. service or benefit from a discount or express a vote, within a regulated
Once tokenized, every kind of value (in a broad sense) can be ecosystem, the token holder grants trust to the token issuer. In particular,
managed as a digital asset, whose unit of account is a dedicated virtual the holder trusts that the right represented and originating from the
token. Such virtual tokens can be minted by any individual or organi- token holds and is enforceable. Ultimately, the holder trusts the token
zation that defines the set of rules governing them. These include the issuer and its capability to honor the obligation associated with the right
token features, the monetary policy, and the users' incentive system. In represented by the token. When tokens represent an underlying asset (or

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better a real right—ius in re—on an underlying asset), the token holder nature of tokens. William Mougayar provided another relevant contri-
trusts that the token issuer ensures the enforceability of the right itself bution to the collective effort in capturing the nature of tokens [11,15].
and, at the same time, that the underlying asset is adequately managed His framework revolves around 3 classification dimensions: role, fea-
and holds (or increases) its value. When tokens are the reward for the tures, and purpose. It focuses primarily on the business-related aspects of
block validation activity, their value is the direct representation of the tokens, with particular reference to their entanglement with the token
level of trust towards the token holder community and its disin- issuer's business model and the incentives arising for the token holders.
termediated and decentralized consensus, enabled by the underlying Looking at the contributions in the field of token classification and
blockchain infrastructure. Keeping along this road, it is always possible to taxonomy coming from companies and business practitioners, the “Tax-
bring back the source of value of a token to the concept of trust. Ulti- onomy Report on Cryptoassets” by CryptoCompare [16] is an extensive
mately, it is possible to define tokens as quantifiable representations analysis that provides several valuable approaches to the classification of
of decentralized and disintermediated trust. tokens. More than 200 tokens have been examined and classified using
Many tokens have been conceived and deployed in a relatively short 30 unique attributes, covering economic, legal, and technological fea-
time frame: their flourishing has been chaotic, highly experimental, and tures. In particular, two grouping criteria are of particular interest:
iterative. At the same time, their adoption and growth followed an Rationale to Possess and Economic Value Drivers. The former classifies
evolutionary pattern with many tokens that didn't survive the process of tokens according to the main reason that drives token holders to acquire
natural selection. Given the early stage and the broad scope of token- and keep their tokens, while the latter groups them based on the mech-
driven innovation, the nature of tokens is still taking shape, and its anisms underlying their price trends and fluctuations. These grouping
definition should be approached with a dynamic and iterative mindset. criteria represent a well-structured approach to tokens' classification
Their highly diverse features and applications pose another challenge in relating to the incentive system that they convey and the behavior they
defining the nature of tokens. The extent of this diversity requires a intend to induce into token holders.
comprehensive taxonomy, similar to what applies to living organ- More recently, in November 2019, the Token Taxonomy Initiative
isms, resulting from evolution. So far, a relevant number of classifi- (now InterWork Alliance) published the first version of the “Token
cations have been already proposed. Nevertheless, the transition from the Taxonomy Framework” [17], resulting from a broad cross-industry effort
initial unruled chaos to an ordered, yet dynamic, taxonomy is still far to define a common standard to describe and design tokens. In particular,
from being mature and requires a collective effort of scholars, experts, such a framework [18] aims at introducing not another standard, but
and practitioners. rather to create a “metastandard”. Its role is to bridge token protocols and
The goal of this work is to propose a comprehensive approach to platforms to ensure effective interoperability, lay the foundation of a
tokens classification that accurately maps all the different branches of collective understanding of tokens, and create a shared language that can
value representations that tokens can convey. The resulting framework is empower communication among technology experts and business prac-
intended as a tool for non-technical decision-makers to orient themselves titioners. Proceeding on first-principles thinking, the Token Taxonomy
in the tokenomics space and to make informed strategic decisions when Framework classifies tokens along with five characteristics: Token Type,
approaching a token design process, lowering the existing cognitive Token Unit, Value Type, Representation Type, and Template Type [18,
barriers. Such a tool can be used as a compass to define the requirements 19]. Those characteristics are intended to describe the nature of a token
and the guidelines for the creation and development of a new token, also and the role it plays within a business model. Furthermore, the Token
allowing for a convenient comparison among different design intentions Taxonomy Framework's description approach is particularly interesting,
and outcomes. since it represents each token through a formula combining base types,
behaviors, and property sets of the token. It is a promising modular
4. Related works approach that can reuse and combine token features, even if it is at an
early conceptual stage.
4.1. Tokens classification From this overview of the most relevant token classifications and
taxonomies available in the literature, it results that the approaches
As previously mentioned, to reach an overall understanding of the adopted are very diverse and the methodology heterogeneous. It is
multiform nature of tokens, a comprehensive taxonomy approach is important to highlight that a de facto standard has not emerged yet
needed. If, in general terms, tokens can be described as a quantifiable probably since each classification focuses on a specific perspective and no
representation of decentralized and disintermediated trust, an opera- prior work has managed to capture an all-round representation of the
tional definition of existing (and future) tokens must include all the phenomenon. This leaves a gap in the literature that the work presented
diverse shades of trust they convey. One of the main goals of this paper is intends to fill by providing a useful tool for both theory and practice. As a
to expand the definition of tokens by means of a systematic and ordered starting point, normalization is needed to perform a comparative
procedure, based on the concept of taxonomy, borrowed from natural assessment of the classification frameworks.
science. It follows a comprehensive analysis of the existing literature
related to this work. 4.2. Game theoretical aspects
A fair number of token classifications and taxonomies have been
proposed so far. Oliveira et al. [13] presented one of the most compre- As previously explained, the potential functions of tokens span a wide
hensive studies on the topic, combining extensive literature research range of possibilities. Token design choices not only impact the plat-
with insights collected through 16 interviews with experts and practi- form's users and what they can accomplish within it, but also on the
tioners. The resulting classification characterizes tokens using 13 underlying functioning of the blockchains themselves and the economic
different parameters, describing both their technical features and incentives that drive their evolution. As a consequence, this work is also
business-related aspects. Furthermore, mapping 18 tokens against those linked to the emerging literature on game theoretical aspects related to
parameters, 8 token archetypes were identified by analyzing recurring blockchains which aims to investigate the economic properties and im-
feature patterns. The work of Oliveira et al. [13] is grounded on several plications of blockchains. Specifically, a relevant area of research on
classifications previously proposed, two of which are worth being blockchain is focusing on the general process of consensus generation,
mentioned. “The Token Classification Framework” presented by Thomas investigating the trade-offs in decentralization and the direct impact of
Euler [14] classifies tokens along 5 dimensions: purpose, utility, legal blockchain technology on the real economy. Cong and He [20] analyzed
status, underlying value, and technical layer. Such a framework has the how decentralization relates to consensus quality by means of a holistic
goal to look at a single token from different perspectives simultaneously, approach useful to examine universal features of blockchains. Their focus
and it is the first tentative to capture and summarize the polyhedric is on how the information distribution that comes with decentralization

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interacts with the quality of consensus generation. Their results suggest the possible configurations of the problem complex is the product of
that blockchain can deliver higher social welfare and consumer surplus the number of conditions (values) under each parameter
through enhanced entry and competition. Sockin and Xiong [21], (dimension).
instead, analyzed the properties of utility tokens, contributing to the
emerging literature on digital assets. In particular, they modeled a The GMA methodology is used in the first place to perform a
cryptocurrency as membership in a blockchain platform highlighting the comparative analysis of the token classification frameworks. In partic-
risk of market breakdowns caused by the rigidity induced by digital asset ular, this procedure is leveraged to address the need for normalization
price clearing among membership demand and token supply driven by previously highlighted, and all the frameworks are traced back to a
speculators. Chiu and Koeppl [22] investigated the optimal design of a morphological field representation to make them comparable. Once
cryptocurrency, emphasizing the importance of scale in deterring normalized, the different token classification frameworks are critically
double-spending limitations. Their focus is primarily on understanding analyzed to identify recurring morphological dimensions and values,
how the design of a cryptocurrency influences the interactions among detect gaps and eventually uncover token properties, and dismiss
participants and their incentives to cheat, deriving from the redundant or misleading definitions.
double-spending problem. The results show the presence of a trade-off
between transaction speed and the guarantee of their settlement. Cata- 6. A classification of classifications
lini and Gans [23] explored the initial coin offerings (ICOs) funding
mechanism in comparison with traditional equity financing, trying to An extensive analysis of both scientific and grey literature has been
understand how tokens can have any value given that the venture issuing performed. Eight token classification frameworks have been selected
them controls both their technological evolution as well as their mone- based on their relevance, comprehensiveness, and role of the respective
tary policy. Catalini et al. [24] modeled the market for tokens, deter- issuer, considered as a proxy of the potential normative impact. Some of
mining how the cost of attacking the system depends on the level and the selected frameworks have been described previously in the overview
shape of token supply and demand. One of their main results indicates of related works. Fig. 1 presents a summary of the GMA-normalized token
that tokens' appreciation as a consequence of attackers' demand does not classification frameworks with the indication of the respective identified
play a relevant role in securing the system. On the other hand, stablecoins dimensions (i.e., mapping parameters of the token).
are characterized by a lower level of vulnerability to attack with respect Furthermore, for each framework, the number of dimensions and the
to digital assets that can freely fluctuate. Beyond the key papers pre- average number of values that each dimension can assume are reported
sented above, the literature expands over several streams strongly related in Table 1.
to the nature of tokens and their classification framework. Some papers Analyzing the metrics presented in Table 1, it is clear that different
examine the role of digital assets in the adoption of platforms [25,26], authors adopt different approaches in the creation of the respective token
while others focus on the conditions for which the enforcement of classification framework. Some give priority to a multi-dimensional
cryptocurrency commitments can be helped by blockchain technology outlook (higher number of dimensions). In contrast, others limit the
[27]. description to a small number of parameters, but they dive deep into the
The analysis of the literature on game theoretical aspects of the detailed alternatives for the selected dimensions (a higher number of
blockchain highlights the strong connection with the present work on the values). The map of the classification frameworks (Fig. 2) allows an
token classification framework. The comprehensive token morphological immediate understanding of such heterogeneity.
framework presented in this work complements the technological back- It is significant to highlight that the number of dimensions provides a
ground of every theoretical analysis. Specifically, it allows to better quantification of the multi-dimensionality of the framework, i.e., the
characterize the blockchain environment by enhancing the comprehen- variety of points of view that are concurrently adopted in the token
sion of tokens' design and their classification. description. The average number of values that each dimension can as-
sume is a proxy of the level of detail of the non-quantitative alternatives
5. Methodology available for the representation of the token. Finally, the number of all
possible configurations (i.e., the product of the number of values under
Both tokens and their classifications show a high degree of variety, as each dimension) represents the overall size of the resulting morpholog-
previously discussed. To handle this heterogeneity a structured meth- ical field. In general, the size of the morphological field scales faster with
odology is required, and, in the context of this work, General Morpho- the number of dimensions, so multi-dimensionality is to be prioritized
logical Analysis (GMA) has been chosen. GMA was developed by Fritz over the level of detail, to obtain the most comprehensive
Zwicky [28,29] as a method to describe and assess problem complexes, framework.
characterized by non-quantifiable and multi-dimensional properties, by
mapping all the possible relationships, or configurations, occurring in the 7. Proposal of a morphological token classification framework
given problem complex. Such a morphological approach is eventually
aimed at identifying recurring patterns and building non-quantified On top of the comparative assessment performed, the GMA-
inference models [30–32]. normalized token classification frameworks are exploited to draft the
Given its characteristics and previous applications, GMA represents a proposal for a new framework.
comprehensive methodology that can be effectively applied to the As a starting point, the cumulative 42 dimensions identified in the 8
description of tokens, comprising all their non-quantifiable and multi- frameworks are thoroughly and critically analyzed. Then, the most
dimensional properties. In particular, a token classification framework meaningful ones are selected and filtered to isolate a subset of adequate
can be represented using a morphological field, resulting from the and sufficient dimensions to describe a token altogether. To structure
following steps: such a selection process, at first, the dimensions are grouped into 5 sig-
nificant domains:
 identify and adequately define the dimensions of the problem, i.e., the
parameters along which each token can be mapped;  Technology domain, including all the technical characteristics of the
 for each dimension of the problem, a spectrum of values must be token, referring to the level of integration along with the technolog-
defined. These values represent the relevant states or conditions that ical stack, the blockchain infrastructure, and protocol;
each dimension can assume;  Behavior domain, containing all the inherent functional character-
 a morphological field is generated, including all the possible com- istics of the token that rule the possible actions that can be performed
binations of values assumed for each dimension. The number of all with the token (capabilities or restrictions);

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Fig. 1. Classification dimensions identified in the analyzed frameworks.

Table 1 dimensions and values that define the incentive scheme are reor-
Summary of GMA-normalized token classification frameworksa. ganized, grouping them into Incentive Enablers and Incentive Drivers.
Finally, the spectrum of values for each dimension is revised, filling
Token Number of Average Number of all Reference
Classification dimensions number of possible the lacks identified and improving the uniformity and consistency of
Framework values for configurations the terms used.
each The outcome is the morphological token classification framework
dimension presented in Fig. 3.
AmaZix 4 3 72 [33] The proposed Morphological Token Classification Framework is
CryptoCompare 6 5 8448 [16] characterized by 14 dimensions, grouped into 3 domains, and almost 5
Euler 5 3 243 [14]
million possible configurations, creating an extensive morphological
Ferro 3 6 88 [34]
FINMA 2 3 8 [35] field.
Mougayar 3 12 828 [11] As initially stated, the purpose of the token classification framework
Oliveira 13 3 1244160 [13] is to provide guidance in the description of a token, ensuring complete-
TTI 6 4 648 [18] ness, consistency, and adequate comparability. In the following, a com-
a plete and detailed walkthrough of the framework is presented.
GMA: general morphological analysis
Furthermore, the Appendix presents the applications of the framework to
 Inherent Value domain, counting the dimensions that describe the three tokens (Fig. A.1, Fig. A.2 and Fig. A.3).
economic value of the token itself and, in particular, how this value is
originated, which factors influence it and cause price fluctuations; 8. Morphological token classification framework walkthrough
 Coordination domain, including all the token dimensions that
enable coordination among the actors of the token-based ecosystem; The walkthrough here presented aims at guiding the reader across
 Pseudo-archetypes, consisting of token dimensions that anticipate a the framework to make it actionable in the actual process of tokens
set of token archetypes since they implicitly combine different token classification and token design. The section is divided according to the
characteristics. three domains that constitute the proposed framework, namely Tech-
nology, Behavior, and Coordination domains. For each domain, a
The subdivision of the dimensions among the domains they belong to detailed overview of its dimensions is provided, describing the set of
is functional to streamline the identification of redundant elements, i.e., values that are available for the token description.
superimposable dimensions appearing in different frameworks. When approaching the classification of a token, the best starting point
Furthermore, this approach allows the identification and dismissal of is the token whitepaper. This somewhat-technical document usually
pseudo-archetypes, which implicitly summarize a set of token charac- contains a detailed description of the blockchain-based ecosystem, the
teristics and therefore may generate confusion. token characteristics, and its underlying functional mechanisms. Once all
Out of the initial 42 dimensions, 11 are selected and retained. One the token's information is collected, the morphological framework can be
further dimension, belonging to the Technology Domain, is added to used to classify it, considering one dimension at a time. For each
fill a gap related to the nature of the underlying blockchain, with dimension, the set of values provides qualitative alternatives among
particular reference to the accessibility to transaction validation, i.e., which to choose the one(s) that best apply to the token under analysis.
permissionless vs. permissioned blockchain. Afterwards, the Inherent Generally, as far as the Technology and Behavior domains are concerned,
Value domain is merged with the Coordination one since the di- one single value should be selected for each dimension. In contrast, in the
mensions representing the economic value of the token, and its dy- Coordination domain, some dimensions require more values to be thor-
namics, have a direct impact on the actors' behavior. Moreover, the oughly described.

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Fig. 2. Maps of classification frameworks. The size of the bubble represents the number of all possible configurations (Oliveira is out of scale).

Fig. 3. Proposed morphological token classification framework. Detailed frameworks are presented in Figs. 4-6.

8.1. Technology Domain some parameters (e.g., Dogecoin [37], ZCash [38]). The latter value is used
when a chain results from a “hard fork” (e.g., Ethereum Classic [39]).
The Technology Domain (Fig. 4) comprises four dimensions: Chain, Finally, a token can also be issued on top of an existing protocol, leveraging
Permission, Number of Blockchains, and Representation Type. an existing blockchain (e.g., ERC20 tokens [40]).
Generally, within this domain, the values assigned to each dimension
are straightforward since they are retraceable either within the white- 8.1.2. Permission
paper or in the token's information. This dimension is more related to a characteristic of the token's un-
derlying blockchain. When the possibility to participate in the network
8.1.1. Chain (either validating blocks, performing transactions, or reading the ledger)
This dimension indicates the characteristics of the blockchain on which is open to everybody, then the underlying blockchain is “permissionless”.
the token is issued. In particular, a token can be chain-native, which means Conversely, when the nodes of the network must be accredited to join it,
that it is created together with the respective blockchain, and it is essential the blockchain is “permissioned” [41].
to the functioning of the infrastructure and the consensus protocol (e.g.,
Bitcoin, Ether). When the token is chain-native, but the respective block- 8.1.3. Number of Blockchains
chain results from a “fork” [36], either “New Chain, Forked Code” or This dimension indicates if the token can be used on a single chain or
“Forked Chain, Forked Code” applies. In detail, the former value refers to across different chains. Cross-chain tokens are still in their early days, but
new blockchains that replicate the codebase of an existing chain, changing they are expected to play a fundamental role in Decentralized Finance

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Fig. 4. Morphological token classification framework—technology domain.

(DeFi) [42,43]. Some examples of tokens that may be exchanged across create artificial scarcity, terminate a right, or revoke access. Since this
different blockchains are BNB [44], Polygon [45], and MIMO [46]. token behavior can be used to adjust the overall token supply, it typically
relates to the ecosystem's monetary policy. Tokens burning is achieved by
8.1.4. Representation Type sending them into a special type of smart contract that, due to the lack of
This technical dimension is quite subtle and distinguishes between a private key, cannot let tokens out once received. Examples of tokens
“Common” and “Unique” tokens. It relates to the possibility to trace a that leverage burning to achieve programmable scarcity are BNB [44],
token that is characterized by a distinctive and unique representation. CHSB [47], and XLM [48].
In most cases, the tokens of a blockchain-based ecosystem are
“common”, in the sense that they share the same set of properties, and 8.2.2. Expirability
their representation is a balance (or quantity) assigned to the account This is a binary dimension (“Expirable” or “Non-expirable”), and it
addresses of the respective owners. This way, a change of one of the says if the token can expire, that means that it will be programmatically
token's properties (e.g., the price) automatically applies to all the tokens burned after some time. For example, expirability suits well tokens that
issued. Therefore, if a token has a “common” representation, it is possible provide a discount or temporary access to a service.
to trace only their balances in owners' accounts. On the contrary, the
tokens with a “unique” representation can be individually identified and 8.2.3. Spendability
tracked, and do not benefit from bulk property changes. This is a binary dimension (“Spendable” or “Non-spendable”), and
It is essential not to mistake the “Representation Type” dimension it indicates if the token can be spent within the ecosystem, for
with the “Fungibility” one (described later). The concept of fungibility instance, to gain access to services or to pay fees. Conversely, tokens
refers to the interchangeability of tokens based on their value, although that are used to account for users' reputations or to distribute voting
they may have other unique properties. A very clear example is bank- power are generally non-spendable, to avoid misbehaviors and crook-
notes: they are fungible, since they have the same value, and are unique edness in the ecosystem's governance. An example of non-spendable
since they have a serial number to trace each of them. tokens can come from the tokens used to certify training processes
or academic recognition.
8.2. Behavior domain
8.2.4. Fungibility
The behavior domain (Fig. 5) includes six dimensions: Burnability, This dimension refers to the possibility to interchange a token with
Expirability, Spendability, Fungibility, Divisibility, and Tradability. any other alike, with specific reference to its value, or value represen-
All these dimensions refer to the token's inherent functional charac- tation. As anticipated, fungibility has not to be confused with the “Rep-
teristics, defining what can (or can not) be done with the token. Here the resentation Type” because “Unique” tokens can be fungible. In addition
behavior of the token itself is considered, not the token holders' one. to “Fungible” and “Non-Fungible” tokens, also “Hybrid” tokens exist.
Usually, the abilities of the token are well defined in the whitepaper. They are tokens whose fungibility is limited to a subset of all the available
Those behaviors can be invoked either by a stakeholder of the ecosystem supply. Music concert tickets provide a clear example. In the case of a
or a smart contract. performance repeated for three dates in a row, a ticket for one date can be
swapped indifferently for another on the same date (they are perfectly
8.2.1. Burnability fungible), but not for a ticket on a different date. So, even if all the tickets
This is a binary dimension (“Burnable” or “Non-burnable”), and it have equal value, their perfect fungibility is restricted to their date, and
indicates if the token can be burned (generally by the token issuer) to they are, therefore, “hybrid”. This peculiar “hybrid” fungibility usually

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P. Freni et al. Blockchain: Research and Applications 3 (2022) 100069

Fig. 5. Morphological token classification framework—behavior domain.

occurs in tokens representing partitioned real assets, such as real estate, these dimensions, whose values are the result of the token design pro-
cars, and boats. cess, as framed within the concept of tokenomics.
If the characterization of the Technology and Behavior domains is
8.2.5. Divisibility straightforward and relatively easy to derive from the whitepaper, the
This dimension defines if the token can be split into sub-units (“Frac- Coordination domain presents a few more challenges.
tional”) or if it represents an indivisible “Whole”. In the first case, decimal In the analysis of a token, all the previous dimensions are invariant with
figures are allowed in counting an amount of tokens (for example, in an respect to the actors: those token's characteristics are intrinsic, and their
account balance or a transaction), while in the latter, token's quantities can definition can be achieved by looking only at the token itself. On the con-
be measured using only integer numbers. Finally, “Singleton” tokens admit trary, the Coordination domain's dimensions are defined in relation to
a quantity of 1, with no subdivision, which means that there is just one the incentivized actors' behavior. It follows that selecting the most suit-
token, and it cannot be partitioned. Such tokens are quite rare, and they able values for those dimensions requires a more in-depth assessment of the
can be found, for example, in gaming contexts or the digital representation ecosystems, including the relevant stakeholders, their motivations and be-
of art pieces. Non-fungible tokens such as CryptoPunks [49] or Bored Ape haviors, and the elementary cooperation that they establish.
[50] are good examples of indivisible tokens.
8.3.1. Underlying value
8.2.6. Tradability This dimension describes the source of the token inherent value and
This dimension illustrates if the token can change ownership, both the dynamics that drive value fluctuations (appreciation/depreciation of
within a platform or on secondary markets. Most of the tokens at present the token). The available classification values are three:
are “Tradable”. In general terms, their swift and cheap exchangeability
constitute one of the most significant advantages in DeFi applications  Asset-based: the underlying value is tied to the value of real-world
[51]. Nevertheless, there are cases in which tokens are “Non-Tradable”. assets, such as, for example, gold, real estate, traditional financial
In line with the considerations drafted for the “Spendability” dimension, products (market stocks, bonds, and shares), and art pieces. The un-
tokens that represent users' reputations or give voting rights are usually derlying asset can also be another crypto asset: that's the case of
non-tradable for the very same reasons they are not spendable. Wrapped Bitcoins [55], an ERC20 token whose market price is
Finally, the utility of a token can be transferred with no change in anchored to BTC's value. The price fluctuations of asset-based tokens
ownership. In this case, the token is “Delegable”, which means that a reflect the changes in the value of the underlying assets. On a side
token owner can transfer the rights deriving from holding (or staking) the note, most of the stablecoins [56] are asset-based.
token to a third party. This specific token behavior is essential in the  Network Value: the underlying value is the representation of the
blockchain ecosystems relying on the Delegated Proof of Stake consensus level of trust towards the network itself and the utility that the token
protocol [52], such as Tezos [53] and EOS [54]. can provide to token holders. The Metcalfe's Law [57,58] can be
recalled as a notable, still simplified, example of the network's value
assessment. In this case, price fluctuations are driven by the token
8.3. Coordination domain supply and demand equilibrium. Network-driven demand may arise,
for example, from the token's usage to access services and, in the case
The coordination domain (Fig. 6) includes four dimensions: Under- of fixed supply, this leads to a price increase. On the other side, to-
lying Value, Supply Strategy, Incentive Enablers, and Incentive kens' supply can be adjusted by the token issuer to create inflationary
Drivers. or deflationary trends with direct consequences on the token value.
The dimensions belonging to this domain describe how the token is So, the supply strategy has a significant impact on the price of
leveraged to promote specific behaviors in the actors (stakeholders) of Network Value tokens.
the ecosystem. Recalling the definition introduced in Section 3, a token  Share-like: the underlying value and the price fluctuations follow
can be intended as a socio-economic dummy tool to promote the the same principles behind traditional market shares. Here, it must
coordination of the actors in a regulated ecosystem towards the be evaluated if the (present/future) value of the token is gener-
pursuit of a network objective function through a set of incentive ated by the work of token holders or third parties' work. In the
systems. How the token can promote such coordination is described by former case, the token falls back into the Network Value

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P. Freni et al. Blockchain: Research and Applications 3 (2022) 100069

Fig. 6. Morphological token classification framework—coordination domain.

classification, while, in the latter, it behaves like a share. Such an Finally, it is essential to stress that the supply strategy plays a
analysis is, in fact, the Howey Test [59], which identifies as an fundamental role in defining the Token Velocity, which is a measure of
“investment contract” a transaction that “involves an investment how often the owner of the token changes in a set period. The concept of
of money in a common enterprise with profits to come solely from Token Velocity is non-trivial, and it deserves a dedicated focus [62,63].
the efforts of others” [60]. This test's outcome has critical regu- The classification values that can be chosen are:
latory implications since, in several countries, share-like tokens
are considered actual securities, and they must comply with the  Schedule-based: tokens are minted and distributed based on a pro-
same laws that safeguard investors in traditional markets. The U.S. grammatically defined schedule. This supply strategy can be
Security and Exchange Commission (SEC) provides a relevant embedded directly in the consensus protocol (as it happens for Bit-
reference on the matter [61]. coin) or implemented via one or more smart contracts governing the
ecosystem.
8.3.2. Supply strategy  Pre-mined scheduled distribution: tokens are all minted at the eco-
This dimension illustrates the tokens supply structure adopted by the system's birth (Token Generation Event) and distributed afterwards,
token issuer, being an organization, or a set of smart contracts. according to a set of rules defined by the token issuer and implemented
Furthermore, it provides a summary of the monetary policy put in place via smart contracts. If the Token Generation Event is leveraged as a
and is crucial in shaping the token's dynamics. This influence holds fundraising opportunity, it may be referred to as an ICO, security token
especially in the case of Network Value tokens, as previously anticipated. offering (STO), or initial exchange offering (IEO) [64].

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P. Freni et al. Blockchain: Research and Applications 3 (2022) 100069

 Pre-mined one-off distribution: tokens are all minted at the eco-  Store of value: tokens represent an asset that keeps its value and
system's birth (Token Generation Event) and distributed afterwards purchasing power over time, fulfilling the same corresponding func-
altogether. In this case, the Token Generation Event can be an ICO, tion of money. Therefore, they can be held by stakeholders as a liquid
STO, or IEO. financial reservoir. Again, quite a dose of trust is implied.
 Discretionary: tokens are minted and distributed with no predefined
schedule, but according to the will, or need, of the token issuer. This Apart from these six values for the Incentive Enablers dimension, it is
kind of supply strategy is typical of non-fungible tokens that are likely to incur tokens that alter the impact of a stakeholder's action within
created on-purpose to represent a real-asset. the ecosystem. For example, there are multi-tokens ecosystems in which
 Matching demand: tokens are minted and distributed, or burned, if a user stakes an amount of a dedicated token, its voting/working in-
according to the current demand. This way, the level of supply is fluence increases (e.g., Steem [71]). This kind of token is a modifier and
“artificially” kept in line with the platform's objectives. This strategy can be considered a “weighting coefficient” applied to actions performed
can be put in place, for instance, either to limit the token price fluc- using other tokens in the ecosystem. Since they have an ancillary func-
tuations or to stimulate demand. tion, those tokens inherit the Incentive Enablers' value of the incentivized
behavior they alter.
8.3.3. Incentive Enablers
This dimension is core to the coordination domain since it is one of 8.3.4. Incentive Drivers
the two building blocks' categories of token-based incentive schemes. In This dimension is complementary to the previous one and represents
particular, Incentive Enablers are those characteristics of the token the other cornerstone building blocks' category of token-based incentive
needed for the incentivized behaviors to happen. They indicate what an schemes. In detail, Incentive Drivers are those token characteristics that
ecosystem's stakeholder can potentially do with the token. Therefore, actively promote the actors' incentivized behaviors. If, on one hand,
they are an essential pre-requisite for the incentive to be effective, but Incentive Enablers describe what can be done with a token, on the other
they are not sufficient to trigger the actual behavior of the actors hand, Incentive Drivers express why an ecosystem's stakeholder engages
involved. In a way, it can be said that these features play a “passive role” the incentivized behavior. As such, this dimension's values are conceived
in the incentive scheme. as the triggers that push the actual behavior of the actors involved.
To identify the suitable values describing the Incentive Enablers Therefore, these features play an “active role” in the incentive scheme, as
dimension, the question to answer is: “What are the reasons for the opposed to the function of Incentive Enablers.
ecosystem's stakeholders to acquire the token? Why are they buying or To identify the suitable values describing the Incentive Drivers
earning them?”. dimension, the question to answer is: “What are the reasons for the
The answers may be one or more of the following: ecosystem's stakeholders to use the token? Why are they spending,
staking, selling, or burning them?”.
 Right to work: the stakeholders must hold or stake tokens to be able The answers may be one or more of the following:
to contribute to the ecosystem, generally by providing a service,
implying direct work, or sharing resources, such as computing power  Get access: the token grants access to services and content within the
in a distributed network. Staking-based participation is leveraged to ecosystem. Generally, token holders need to spend or stake their to-
ensure that network contributors have “skin in the game” and to kens, activating the incentivized behavior enabled by the “right to
disincentivize selfish behavior. Network validation in Tezos [53] or work/use”. “Get access” is one of the most common Incentive Drivers
block production in EOS [54] leverage this functionality. occurring in token-based ecosystems, and it is often leveraged in
 Right to use: tokens are needed to access services and content made ICOs, STOs, or IEOs [23].
available within the ecosystem. Since only stakeholders owning to-  Get discount: token holders can benefit from a discount on services/
kens can “use” the services provided, this feature is particularly useful content available in the ecosystem. Redeeming such a discount re-
in jump-starting adoption, overcoming bootstrapping issues [65], and quires stakeholders to hold or stake some tokens for a minimum
fundraising. Regarding the last point, ICOs (or STOs, IEOs) have period or spend tokens to buy the services/content instead of using
heavily relied on decoupling the purchase of a service from its actual other currencies. These mechanisms are usually put in place by the
availability, which is postponed in time. The token is a sort of token issuer to boost early adoption and control the token velocity
“coupon” that future users buy in advance (de facto financing a (which plays a significant role in defining the overall value of a token-
project) and that they will be able to redeem when the corresponding based ecosystem).
service is delivered.  Get revenue: the token acts as a substitute for fiat currencies in the
 Right to vote: in this case, holding or staking tokens is a requirement intermediation of economic transactions, and it is, therefore, used to
to influence the decisions that shape the rules of the ecosystem. collect payments for services/content. Either the token issuer or other
Token-based voting is fundamental in decentralized governance stakeholders in the ecosystem can be paid using tokens. In the former
contexts and DAOs (Decentralized Autonomous Organizations) [66, case, the token-based payment is associated with a price reduction, so
67]. Some examples of projects leveraging this functionality are: the prevailing Incentive Driver is to “get a discount”. Conversely, in
Klima DAO [68], MIMO [46], and Defibox [69]. the latter case, the ecosystem's actors can monetize the “right to
 Unit of account: tokens can measure the value of something (e.g., work” that they gained by acquiring tokens, providing services/con-
services, assets, labor, liabilities), fulfilling the same corresponding tent to other stakeholders. Such a scenario is typical of blockchain-
function of money. A good example of this functionality is the Basic based platforms that can be framed within the “gig economy” [72],
Attention Token [70] that represents a unit of account of focused or classified as multi-side marketplaces. Finally, attention must be
mental engagement online. paid to the fact that the “get revenue” Incentive Driver applies when
 Medium of exchange: tokens can be used to intermediate the ex- such revenue results from the direct effort of the actor who is cashing
change of services or goods, fulfilling the same corresponding func- in the tokens. If the earning originates from others' effort, different
tion of money. Incentive Drivers apply, namely “Dividend/Earning Potential”. This

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distinction follows the Howey Test, previously mentioned, to identify 9. Conclusions and next steps
share-like tokens.
 Get reward: again, the token replaces fiat currencies in the inter- The framework proposed in this work constitutes a synoptic and
mediation of economic transactions. Unlike the previous Incentive functional representation of the complexity surrounding tokens as value-
Driver, in this case, tokens are paid in exchange for actions that are capturing incentive systems. The framework, in fact, sheds light on all the
not usually valued economically. Social media and social networks key elements necessary to consider in designing an incentive system that
provide a perfect example: traditional platforms don't recognize the may orient the behavior of a network of actors towards a shared objective
work their users do in producing, sharing, and curating (liking or function. In this respect, we believe it represents a step forwards in the
commenting) content. On the contrary, the corresponding token- process of understanding how these incentive systems may be composed,
based platforms reward users for their contribution to the which choices need to be made and the first range of options available.
ecosystem. In this regard, the token promotes a new economy crea- For what concerns the limitations of the work proposed, the
tion that someway expands and blurs the boundaries of the “gig morphological token classification framework designed in this work is an
economy”. One particularly significant variety of such token- initial version, majorly built on top of the literature and the study of a
generated economies is the “attention economy” [73]. limited number of token-based ecosystems. To further refine this
 Dividend/Earning potential: token holders benefit from the eco- framework, an empirical and iterative approach is planned. In particular,
system's success and can get a share of the profits by staking, or the framework will be applied to classify a set of diverse tokens to further
holding, some tokens. As previously mentioned, in this scenario, the validate its applicability and suitability, and to eventually update di-
earning of the token holder originates from the work of a third party mensions and value sets. In particular, the coordination domain will be
and, therefore, share-like tokens generally leverage this Incentive tested to prove its effectiveness in describing the incentive systems that
Driver. In this context, the token issuer may pay token holders by are deployed in token-based ecosystems. Afterwards, the framework will
minting new tokens, unlocking some tokens from a reserve pool, or be used to identify recurring patterns in token descriptions. This is ex-
sharing part of the profits using other currencies (either crypto or pected to lead to the identification of groups of alike tokens and, ulti-
fiat). In analogy with traditional financial instruments, it is possible to mately, to the definition of token archetypes. Those will be characterized
refer to Dividend potential in the first two cases and Earning potential by a more or less extensive overlap of the values assumed in different
in the last one. dimensions. Finally, according to the degree of overlapping, a hierar-
 Appreciation potential: token holders expect a price increase on the chical arrangement of the identified token archetypes will be performed,
tokens they own. In this case, the Incentive Driver induces stake- resulting in a proper token taxonomy.
holders to keep their tokens (reducing token velocity) as they On a closing note, it is important to be aware that, since we are
consider them a store of value whose market price is foreseen to grow. dealing with sociotechnical ecosystems, the design of effective incentive
The appreciation potential is particularly powerful on crypto in- schemes depends both on the pursued objective function, and the spec-
vestors who are moved by a financial speculation purpose. ificities of the community of individuals whose behavior needs to be
 Participate in governance: the token can be used by the stake- oriented. In this respect, further developments of a truly holistic token
holders to shape the ecosystem's rules, influencing its evolution and design toolkit should also account for the human side, considering as-
being actively involved in the governance. This Incentive Driver is pects such as cultural beliefs, values, and priorities, that may greatly
usually coupled with the “right to vote” enabler. Furthermore, differ from community to community, and play a key role in influencing
participation in governance is crucial in some consensus protocols, the response to a given incentive system.
such as Proof of Stake (PoS) and Delegated Proof of Stake (DPoS).
 Gain reputation: the token is a way to quantify and account for an Declaration of interests
actor's reputation in the ecosystem. Reputation can be viewed as a
non-monetary reward for contributing to the ecosystem. It is funda- The authors declare that they have no known competing financial
mental in counteracting misbehaviors and helps to reinforce wide- interests or personal relationships that could have appeared to influence
spread trust among the stakeholders. the work reported in this paper.

The eight listed Incentive Drivers are often combined, and the Funding
resulting incentive scheme can be quite elaborate. Moreover, other un-
derlying drivers take part in the incentivization of stakeholders' behavior. This work was conducted in the context of the HELIOS Project, a
These further drivers are somewhat secondary, non-specific, and shared Horizon 2020 initiative funded by the European Commission (Grant
among the ones previously identified. Stakeholders may be induced to- Agreement No. 825585). Furthermore, this research activity is part of an
wards desired behaviors also by the possibility to exclude others and extensive and ongoing effort to understand and map the innovation po-
leverage smart contracts. tential of Distributed Ledger Technologies (DLTs) carried out by
Excluding others is made possible because token-based ecosystems OverTheBlock io, a permanent observatory on Blockchain technology
are “closed”, in the sense that some specific tokens are needed to operate powered by LINKS Foundation.
and benefit from them. This fact, combined with the controlled supply
and distribution of tokens, can create exclusivity dynamics, that are Appendix
especially compelling for innovators and early adopters [74,75]. At the
same time, smart contracts [76,77] are a peculiar feature of most In the following, the proposed Morphological Token Classification
blockchains. They can be themselves a sufficient reason for some stake- Framework is applied to analytically describe three tokens with very
holders to join and act within a token-based ecosystem. different characteristics, namely Bitcoin (Fig. A.1), SwissBorg (Fig. A.2),
and Basic Attention Token (Fig. A.3).

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Blockchain: Research and Applications 3 (2022) 100069

Fig. A.1. Morphological Token Classification Framework applied: Bitcoin (BTC)
 P. Freni et al.
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Blockchain: Research and Applications 3 (2022) 100069

Fig. A.2. Morphological Token Classification Framework applied: SwissBorg (CHSB)
 P. Freni et al.
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Blockchain: Research and Applications 3 (2022) 100069

Fig. A.3. Morphological Token Classification Framework applied: Basic Attention Token (BAT)
P. Freni et al. Blockchain: Research and Applications 3 (2022) 100069

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