Tokens Aren't Fungible

Open-source LLMs are roughly 90% cheaper than closed-source models at the same benchmarked intelligence level. Yet they capture less than 30% of token share. If intelligence were the only thing users cared about, the cheaper model should win. If price were the main thing users cared about, the cheaper model should win even faster. It has not. That is the puzzle. The LLM market looks like a commodity market from far away — tokens in, tokens out, benchmark scores, price sheets — but users are behaving as if each token carries hidden attributes. Reliability. Trust. Workflow fit. Safety posture. Privacy. Brand. Ecosystem integration. Latency. Support. The stuff that is hard to summarize in a leaderboard. Working definition. Tokens are fungible only if a user is close to indifferent between two providers at the same measured intelligence, latency, reliability, policy, trust, integration, and price. The market evidence says users are not indifferent. The puzzle: the cheap intelligence does…