# Token Utility

EAI is the foundational token of Cypher, unlocking core functionalities within the decentralized AI ecosystem.

**1. Gas Token for Cypher Network**

* $EAI is required for transaction fees and gas costs on the Cypher FHE-EVM Layer, supporting secure, privacy-preserving AI computations.

**2. Staking for Network Security**

* Validators and delegators lock $EAI tokens as collateral to secure the network, ensuring trustless validation.
* Stakers earn rewards for participation, fostering decentralized governance and economic incentives.

**3. Governance Participation**

* $EAI holders gain voting rights, enabling them to participate in key decisions such as protocol upgrades, parameter adjustments, and ecosystem development.

**4. Access to Cypher Nodes**

* Existing $EAI holders can operate Cypher Nodes to validate blocks and earn rewards, or delegate tokens to nodes for passive incentives.
* Cypher Nodes leverage FHE and PoS to provide fast, secure, and affordable infrastructure for AI-driven dApps.

**5. Deflationary Mechanisms**

* A portion of transaction and staking fees is permanently burned, reducing token supply and creating deflationary pressure.
* Validators face penalties for downtime or malicious activity, with a portion of penalties burned, further enhancing long-term value.
