These are interesting tokens with a long history. Originally struck as patterns for Federal coinage, after being rejected, the design was used for privately struck tokens in Birmingham, England by way of a joint partnership with the aim of counteracting both a shortage of useful small change -- they were intended to pass at a halfpenny each, although underweight enough to earn a small profit -- and at the same time being of sufficient value as to drive out the poor-quality and badly underweight counterfeit British halfpence from circulation. While they did circulate in quantity in the US, they did not stop the British counterfeits.
In the case of the one you post, the heavy die rust and unusual sawtooth denticles, combined with the pointed ray that ends just below the I in TIO, indicates that the dies are Crosby 3-B, the late die state with crumbling. I would grade your example above-average VF.
For a higher grade example of the same coin/die state, see
https://coins.ha.com/itm/colonials/.../1272-3026.s
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