It's been a while people talked about utility, it's almost like nobody cares about these things anymore.
But we cannot ignore that there was a time this was all we discussed and more importantly, utility is crucial if we want sustainability and stability.
What makes a utility token?
A utility token is a digital asset that provides access to a specific product or service within a particular blockchain ecosystem.
For example, they can be used for paying transaction fees, accessing premium content, or participating in governance.
Sometimes people call them "access tokens" so it really just depends on what's being focused upon, what makes a utility token is rather broad and that can make it difficult to determine what crypto tokens qualify as one.
Utility can either be directly tied to the projects or deployed by third-parties. So you see, one can argue that "token X" which was created as an airdrop is not a utility token, and another can argue against that by highlighting that said token is accepted for payments and collateral in specific lending markets, making it in fact useful.
As a result, when someone asks:
Can utility drive demand without yield for crypto assets?
It is a funny question with not a very straightforward answer because:
How do we define utility (usefulness?)
How do we measure impact?
Are we simply interested in demand alone, or demand that exerts upward pressure on token prices?
Is yield not utility?
In my experience, when people talk about utility creating demand, It's usually about token prices going up. They have no understanding or care for the fact that demand might be up without necessarily causing prices to surge.
Liquidity providers could be actively trading a token market within specific price range, and if demand isn't significant enough to break through their capital strength and risk levels, prices will not move upwards significantly.
Also, there may be a lot of investors exiting the market and their supply may outweigh demand.
But let's ignore the obvious, can utility drive demand without yield?
The answer is yes, I suppose that too should be obvious because that's how markets work. When something is useful, people demand it (buy it) and that usually increases market value, pushing future cost price up.
Besides yield, ETH has demand because people have to pay for transaction fees in the native asset, being the ETH token.
That said, this is a question that's less about trying to figure out if crypto utility assets has demands for what they are and more about discovering if yield is the primary motivation behind crypto token purchases and how the ecosystem would perform without it.
Personally, I think that yield is utility, which makes the initial question stupid, but we know that this isn't about demand alone, but sustainability beyond yield.
One thing about utility is that one is not enough if sustainability is the goal.
Crypto utility tokens need yield solutions as much as they need anything else. Wanting to have demands that leads to consistent price appreciation without yield is like saying that you want an economy to produce and sell a single product, when having more is where sustainability lies.
Now I know that having yield products does not necessarily mean that they are net positive to a token or ecosystem, impact isn't what we are discussing here, that sorely depends on the project's design.
In general, utility can drive demand without yield, but yield is also a utility, probably more so when native and building towards sustainability requires as much utility as possible. The ecosystem could still survive and grow without yield products, but it will perform better with them.