What is tokenomics?
Tokenomics (from English token + economics) is a set of rules and mechanisms that define how the token's economy functions within a crypto project. It covers everything from token emission and distribution to their use and incentives for network participants.
Key elements of tokenomics:
1. Total supply
How many tokens will be created in total? For example, Bitcoin has a maximum supply of 21 million.
2. Token distribution
How tokens are distributed among the team, investors, users, development funds, etc.
3. Emission mechanism
Pre-mined — all tokens are created at once (often in Ethereum projects).
Mining/Proof-of-Work — new tokens are generated as a reward for a block.
Staking/Proof-of-Stake — tokens are distributed to validators.
4. Token use case (Utility)
Why is the token needed at all? For example:
Fee payments
Participation in voting
Access to products/features
5. Incentives
How the token motivates participants:
Rewards for activity
Staking rewards
Loyalty program, etc.
6. Inflation control mechanisms
Emission restriction
Token burning
Vesting (lock-up)
Why is this important?
Without a well-thought-out tokenomics, a project either overheats (too many tokens — price drops) or fails to attract users (no motivation to participate). Proper tokenomics makes the ecosystem alive and sustainable.
