Tokenomics

Dividendgrowth.eth a Core Curious Cosmonaut Researcher covers basic things to think about when evaluating a project and it's tokenomics.

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

@Ladyofcrypto1 Ideal

  • 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!