Tokenomics
Dividendgrowth.eth a Core Curious Cosmonaut Researcher covers basic things to think about when evaluating a project and it's tokenomics.
Author: Dividendgrowth.eth a Core Curious Cosmonaut Researcher
Date: December 18, 2022
Basic terms
- Total Supply: Total tokens that will exist
- Market Cap: Total value in $ of tokens in circulation
- Fully Diluted Value (FDV): Total value in $ of total supply
More advanced terms
- Emissions- Rate of inflation/release of token
- TGE- This means token generation event, this is essentially the day the token is released
- Cliff periods- This is the amount of time that passes before vesting begins to be released
Where to find it
- Example given was Coingecko & whitepaper
Indepth/red flag
- A large difference in supply versus circulating supply could be risky
- Team: 15% or less - how much the core team gets
- Advisors: Less than 10% - they provide expert advice/guidance to projects and are rewarded with tokens.
- Early investors - less than 25% usually referred to as seed, VC, private, strategic, KOL, or angel rounds.
- Public sale -less than 10% this is the ICO/IEO price.
- Marketing - 10% or less this is the general marketing budget.
- Ecosystem - at least 10% - this is what the community gets through staking, yield farming, airdrops, rewards etc.
- Treasury - at least 15% this is essential working capital for the project for things like paying employees, securing partnerships, and day-to-day expenses.
- Liquidity - 20% or less (**more below) tokens given to DEXs/CEXs for liquidity.
The key things you want to look for when assessing vesting:
<10% released at TGE for early investors, cliffs of at least three months, and allocation distribution over a few years.
Options for projects (give & take)
Loose verse strict vesting
Main drivers for demand
Incentives for holding
- Store of value
- Community
- Utility
Figuring out demand
- Check blockchain for cag holders
Figuring out future value
- Deflation
- Locking mechanism
- Utility expansion
- APY and yield
When evaluating a project, these are the key aspects
- A finite supply that is preferably deflationary.
- Strong demand from things like incentivized holding, community, and utility.
- Value accrual mechanisms (deflation, APY etc)
Almost everything you need to research a token's tokenomics will be in its whitepaper or website.
If you cannot find the info join their telegram or discord and ask on there. Although a project not being open with tokenomics info is a red flag!