I am working on an application that would use a Stellar Token as a reward system. I am a bit confused on how I would be able to give these tokens an XLM value. I know I would have to create a sell offer but we only want these tokens to be used within the application.

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If you want to control who can hold your token, you'll want to use the auth_required flag on your token. See the flags section here: https://developers.stellar.org/docs/issuing-assets/control-asset-access/

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