When the economy of the #tokens crumbles
A clear example of the fragile token economy was the rise of pay-to-play games. Projects like Axie Infinity attracted millions of users at their peak, drawn by the promise of great rewards for playing. However, the game tokens were issued in such massive quantities that their value quickly diluted. In the case of Axie Infinity, the reward token SLP lost more than 90% of its value in a matter of months, dropping from about $0.40 in summer to about $0.01. The rapid collapse of the game's economy illustrated that uncontrolled issuance, without smart burning or utility mechanisms, inevitably leads to price drops and user exodus.
Similar stories emerged during the "yield farming" era of 2020-2021. Projects #DeFi competed to offer high token rewards to attract liquidity. But once the initial excitement faded, markets became oversaturated with devalued tokens. Investors, lured by promises of sky-high returns, were left empty-handed. The lesson is clear: without a sustainable supply and demand model, even the most publicized launch ends in decline. Enthusiasm can provide a short-term boost, but only a solid economic design can sustain a project long-term.
It is important to highlight that the problem often does not lie in the lack of value itself, but in a misaligned distribution and incentives. If early investors or founders control too large a proportion of the supply, community trust erodes. If token issuance is unlimited and solely based on speculation, inflationary pressure becomes inevitable. These mistakes of the #tokenomics are not abstract: they have caused hundreds of projects to lose their market capitalization, relegating their tokens to the graveyard of exchange listings.
