The $TOKE token powers the Tokemak protocol by directing available liquidity on the platform. Apart from that, the token accrues value generated by the protocol, and votes on which token reactors can launch on the protocol.

Most of the demand for the $TOKE token comes from the desire to direct liquidity, i.e., secure liquidity in a capital-efficient, sustainable manner. Apart from that, the amount of liquidity secured on the platform has a direct effect on the demand for the $TOKE token, since the token now has more liquidity to direct. 

The Tokemak protocol creates value for a myriad of parties. For protocols/DAOs wanting to secure liquidity, it allows them to do so sustainably and capital-efficiently and earn a yield on their treasury assets; for liquidity providers, it allows them to provide single-sided liquidity, i.e., no impermanent loss; and for $TOKE holders through governance (over which token reactor can set up shop).

The Tokemak protocol captures value by taking 100% of the trading fees generated by deployed liquidity. Apart from that, the protocol also captures value by generating a yield on the assets held in the treasury. 

The protocol uses the native token ($TOKE) to incentivize liquidity deposits on the platform, and using these deposits, it forms liquidity pairs that generate revenue (in the form of trading fees), which the protocol takes all of. Using these fees, the protocol accumulates a treasury that earns a yield on the underlying assets and, at some point, is large enough to provide liquidity to the platform.