I) WHAT IS THE CONCEPT OF TOKENOMICS ?
Tokenomics pertains to the economic principles governing the behavior of digital tokens, particularly those operating on blockchain technology. It involves the analysis of various factors influencing a token’s value, such as its distribution, usage, and market demand.
II) WHAT DOES TOKENOMICS ENCOMPASS ?
- Initial token supply and allocation to the team, investors, and community.
- Distribution methods, including purchases, airdrops, grants, and partnerships.
- Emission schedule, inflation, mint/burn rights, and supply caps.
- Treasury size, structure, and intended uses.
- Coin governance, voting, escrow, and vesting.
- Seed/Strategic round: Limit the unlock to no more than 10% at the time of Token Generation Event (TGE), with a price not significantly lower than other rounds.
- Private round: The unlock for this round should be at least 12 months, and the price should be reasonable compared to the seed and public rounds.
- Public round: Generally, it should not exceed 12-15% of the total project raise to prevent uncontrollable supply. A price in this round that is more than 3 times the earliest round price raises concerns.
- Team & Advisors: Advisors typically have a cliff period of 4-5 months, while the team’s cliff period is a year.
IV) FDV & MARKET CAPITALIZATION
- Market capitalization: Calculated by multiplying the circulating supply with the current token market price.
- FDV (Fully Diluted Valuation): Calculated by multiplying the maximum supply with the current token market price.
V) TOKEN UTILITY
- Utility refers to the purpose of a token within a project and its necessity. If a token is useless, its price should be zero.
- Token utility creates organic demand, driving increased value and liquidity in the market.
It’s important to note that while projects should align their actions with TOKENOMICS , there is no one who can prevent them from acting contrary to these principles.