🤓 Tokenomics: what it is and why it matters
It's time to understand how tokens work and what factors influence their value and sustainability.
Tokenomics is the economics of tokens. It covers everything from issuance and distribution to usage and governance.
Simply put, it's a set of rules and mechanisms by which tokens operate within a project and how their value is formed.
Without well-thought-out tokenomics, no crypto project can develop effectively. It’s just as important as the project’s technical documentation and roadmap.
Fundamentals of tokenomics
1. Token Supply
· Total Supply – This is the total number of tokens that have been issued. For example, Bitcoin's maximum supply is 21 million, while NOT's is 102 billion.
Having a supply limit creates scarcity, which supports the token's value.
There are also unlimited tokens like USDT and USDC, whose supply can continuously increase.
· Circulating Supply – The number of tokens currently being traded on the market.
This figure helps assess the potential increase in token supply in the future.
2. Token Distribution
This refers to who receives the tokens and in what quantity:
· Team and Developers – They receive a portion of the tokens as compensation for their work on the project.
· Investors – They receive tokens in exchange for funding the project.
· Community – A portion of the tokens is allocated to active users.
· Treasury – Tokens reserved for the project's future needs.
3. Token Utility
This refers to their functions within the project. For example, tokens can be used for voting, paying for services, or supporting the network.
Each system has its unique use cases for tokens. The broader and more useful the token's functions, the greater its potential.
4. Token Burning
This mechanism reduces the number of tokens on the market, increasing their value.
Burning can be done regularly or on an as-needed basis.
The Importance of tokenomics
Tokenomics directly influences the token's value and stability. A well-designed tokenomics plan helps avoid excessive inflation or deflation.
Tokenomics is also important for investors. By studying it, they can see how the project plans to use its tokens and assess the associated risks of investing.
A project's long-term development heavily depends on how balanced its tokenomics is.
Conclusion
Tokenomics is not just about numbers. It’s a strategy that defines the economy of tokens and the future development of a project.
Therefore, before investing, always study the tokenomics. This will help you understand the concept, evaluate the risks, and identify the benefits.
#advanced | Not Guide
It's time to understand how tokens work and what factors influence their value and sustainability.
Tokenomics is the economics of tokens. It covers everything from issuance and distribution to usage and governance.
Simply put, it's a set of rules and mechanisms by which tokens operate within a project and how their value is formed.
Without well-thought-out tokenomics, no crypto project can develop effectively. It’s just as important as the project’s technical documentation and roadmap.
Fundamentals of tokenomics
1. Token Supply
· Total Supply – This is the total number of tokens that have been issued. For example, Bitcoin's maximum supply is 21 million, while NOT's is 102 billion.
Having a supply limit creates scarcity, which supports the token's value.
There are also unlimited tokens like USDT and USDC, whose supply can continuously increase.
· Circulating Supply – The number of tokens currently being traded on the market.
This figure helps assess the potential increase in token supply in the future.
2. Token Distribution
This refers to who receives the tokens and in what quantity:
· Team and Developers – They receive a portion of the tokens as compensation for their work on the project.
· Investors – They receive tokens in exchange for funding the project.
· Community – A portion of the tokens is allocated to active users.
· Treasury – Tokens reserved for the project's future needs.
3. Token Utility
This refers to their functions within the project. For example, tokens can be used for voting, paying for services, or supporting the network.
Each system has its unique use cases for tokens. The broader and more useful the token's functions, the greater its potential.
4. Token Burning
This mechanism reduces the number of tokens on the market, increasing their value.
Burning can be done regularly or on an as-needed basis.
The Importance of tokenomics
Tokenomics directly influences the token's value and stability. A well-designed tokenomics plan helps avoid excessive inflation or deflation.
Tokenomics is also important for investors. By studying it, they can see how the project plans to use its tokens and assess the associated risks of investing.
A project's long-term development heavily depends on how balanced its tokenomics is.
Conclusion
Tokenomics is not just about numbers. It’s a strategy that defines the economy of tokens and the future development of a project.
Therefore, before investing, always study the tokenomics. This will help you understand the concept, evaluate the risks, and identify the benefits.
#advanced | Not Guide