Tokenomics
Tokenomics is the economic framework that governs how cryptocurrencies function and evolve within their blockchain ecosystems and encompasses the economic model and principles that determine the token's value, utility, and longevity.
Analysis
Understanding tokenomics
- Value Capture
- Demand Drivers
- Business Model
Track their fundamental data side growth.
Map out HTF support levels on charts.
Design
Tokenomics offers marketing a powerful go-to-market strategy for creating loyal customers and bootstrapping critical mass in the Web3 era.
Community Building
- Leverage digital identity and reputation systems to create community belonging
- Implement tokengated commerce for exclusive product/content access
- Create tiered membership levels based on token holdings
- Develop community-driven governance mechanisms
Incentive Structure
- Early adoption rewards with higher token allocations
- Referral programs with token incentives
- Loyalty rewards for consistent engagement
- Content creation and curation incentives
Web3 Integration Points
- Personalize experiences based on on-chain transaction history
- Implement AR/VR experiences accessible through token ownership
- Create cross-platform token utility across multiple devices
- Develop metaverse presence with token-based access
Measurement Framework
- Track token velocity (how quickly tokens circulate)
- Measure community engagement metrics tied to token holdings
- Monitor token distribution equity across stakeholder groups
- Analyze retention rates of token holders vs. non-holders
Distribution
Tokenomics distribution and flow analysis.
Communities create tokens, tokens don't create communities.
Metrics
Understand the balance and flow of protocol supply vs demand from fundamentals.
- Supply & Demand
- Maximum & Circulating Supply
- Inflation
- Deflation
- Rule of Thumb for Inflation
- Market Cap
- Unit Bias
- Fully Diluted Value
- Trading Volume
- Initial Distribution
- Vesting Schedule
- Current Distribution
- Demand-side Tokenomics
- Token Utility
- Financial Incentives
- Growth & Marketing Allocation
Token Generation Events
The trend of extensive private fundraising and inflated valuations has made many new token launches unattractive for public investors, as the potential upside has already been captured by insiders before the token is publicly tradable.
Key Insights:
- The majority of upside for new tokens is now being captured privately before the public launch.
- Founders are accepting private deals that inflate their personal wealth without requiring market validation.
- Private investors ("team players") who get in early often end up being net negative for the project.
- The privatization of price discovery and inflated valuations from VC markets have made many new token launches un-investable.
Key Terms:
- Low float, high FDV: Refers to tokens that have a small circulating supply (float) relative to their fully diluted valuation (FDV). This can lead to price volatility.
- Private capture: The phenomenon where private investors capture most of a token's value before public launch, leaving less upside for retail investors.
- Phantom pricing: Unrealistic valuations assigned to tokens based on private deals rather than market demand.
- Team players: Private investors who get into a project early, but often provide little value or even have a net negative impact.
- Price discovery: The process of determining the market price of an asset through trading between buyers and sellers. This is increasingly happening privately for new tokens.
Research
| TOKEN | TYPE | ANALYSIS |
|---|---|---|
| $FLUID | DeFI | Todo |
| $TAO | AI | Todo |
| $AAVE | DeFI | Todo |
| $S | L1 | Todo |
| $GEOD | DePIN | Todo |
| $KAITO | SOCIAL | Todo |