Tokenomics Explained: The Science of Crypto Value 🚀
💬 Picture this: You have a token — would you rather see it get burnt to become scare, halved to become rare, or staked to earn a price? Let’s take a closer look at these models 👇
🔥 Burn
Token burn is when projects permanently remove tokens from circulation. For instance, Shiba Inu (SHIB) has burnt billions of tokens in community-driven and automated processes. The idea is very simple: lower token supply, means token scarcity, which may improve value, as long as demand remains consistent.
⏳ Halving
Bitcoin (BTC) has a built-in, halving cycle every ~ 4 years, to cut-the total-block reward given to miners by half. This process slows new supply and it historically comes before strong bull runs, as investors expect scarcity. This process is a large part of why BTC is viewed as “digital gold.”
💸 Staking
There are opportunities in the many networks to stake tokens, including Ethereum(ETH) and Solana(SOL). Other networks use a Proof-of-Stake model. Users lock their tokens, to help secure the chain and receive passive income for their efforts. Staking can create an incentive to hold tokens longer and also dis-incentivize tokens from circulating, while assisting in securing the ecosystem.
⚙️ Supply
The BTC 21M cap will ensure there is certainty in the supply mechanics of the token. Other tokens may have models that are inflationary. Such tokens can mint a new supply, to fund growth or rewards. However, the supply could become problematic if demand declines.
👉 Your turn: Which tokenomics model do you believe drives the most sustainable growth — burning 🔥, halving ⏳, or staking 💸?
