Need for a strong tokenomics

By Bala | Bala | 29 Jan 2024

If we are working on a crypto project or if we would like to get started with a crypto project, we might need to create a token and an economy around the token. For any project to become successful tokenomics is very important. During the initial days maybe the token value might be sustained but in the long run, the token shouldn't lose its value, and in most of the projects that's what is happening. The project would then mint some more extra tokens to compensate but that's not a long-lasting solution.


Stability and value of the token is important

When we plan to create a token, it is important to define the faucet or the minting and at the same time it is also important to define the sink of the token. If we look at how water flows, it starts from somewhere flows through something, and then finally reaches somewhere. The rain cycle also represents the same thing where the rain starts from the ocean in the form of evaporated water and from there, it is transported as rain to the plain surface or mountains and after the rain is over, the water is again flown back to the ocean itself and this cycle continues.

The stability of the token becomes good if the mining and sink work very well. The token should be created somewhere and based on the use cases, it should also be taken out of supply in the form of burning. The value of the token would also stay still only then otherwise when it is starting, the value would be very good but gradually when more tokens are circulating the value of the token would keep going down.


Creating more use ceases

token's price for a token to sustain in the market for a longer period, it is important to have good tokenomics. When the token is created and it is circulating, there should be more utility for the token inside the project. Some of the perks or extra things in the project should be available for purchase using the token itself. This way a use case is created for circulating the token from one place to another. Having more use cases for the token is important because even if there is not enough sink for a token, the price of the token will not be affected if the token is circulating properly from one wallet to another in the form of some concrete use ceases.

Governance with the token

When many people hold the token, governance is created for the token holders or stalkers. People are allowed to vote on a project decision. There is a facility for this. If a particular user is holding a huge amount of tokens, they would get more opportunities to participate in the decision-making. Sometimes it is based on the amount of stake or just based on the number of tokens held. For people who are interested in more power or for people who would like to be a part of some of the decisions, they purchase a lot of tokens and stake them just to influence. This is another way to lock up the token from circulation and keep the price of the tokens stable.

If you like what I'm doing on Hive, you can vote me as a witness with the links below.

Vote @balaz as a Hive Witness


Vote @kanibot as a Hive Engine Witness


qjrE4yyfw5pJD9LKQ1BG3NbSyKTowh8wnMyt99dK1UPEkAAsgygincveTbT6c9mQn2FjHQKTrSCy4VodV2BeGrrUYhYALXcPP7zMVVgpzvwiX1ZGczXYyQXp.webp?format=webp&mode=fit 8SzwQc8j2KJa5zNbRVVrXnjUH7HeFHWfeS6aA81JxfFe6qdWqg5LTFpmft9g9sJnTThvVGirtRvu3qSwkxJvgPc7wEE69pJp5rZ2ZXnZnPkqJDYcHEE.webp?format=webp&mode=fit FUkUE5bzkAZT3HzV5tJDiU2ik81PCd4JCyhWnRcDN8XJsVFY3UNB8DCRUuhCDN66wiMnTycF4W5TM6SbQHGDwYmP1FStMmkUvfPEVxYfXyDTCmU2bEwm3fiku8ti6aos9RroLdtDQHPhjEDFeNyzYWy7k1g6WcZGHHGJ.webp?format=webp&mode=fit 3W72119s5BjW4PvRk9nXC1RsHWxNoWjhqsdMpcQrTsuSz5KpfZW7qpxhpoSQZvFhxkRRmq1UF41U8uxdrJDzJnoJ8ZxCS5GvqdJLbrGYbMeySF4iXYaEXp.webp?format=webp&mode=fit 2gsjgna1uruvGBHDnRaj2zVCcpeJW4jyLMe4SBCGvYRn4kXTQGFWvCLdiA9W4zv1tZV6Yvh46bKBawf8GCSfXvVWPUrg2zxTdRztPy74sCAg9ZZK3k.webp?format=webp&mode=fit 3W72119s5BjW4PvRk9nXC1RsHWxNoWjhqsdMpcQqzxxkgPuJFq7EcFz1sUUCcJwEk8zQ2zYKBtbXBrdJEjCpw1YuaREa8cBFZpYhib711zbJgapbJQZrwx.webp?format=webp&mode=fit

How do you rate this article?



Developer | Writer | Blogger | Gamer | Blockchain Enthusiast


This is my general blog. I share different articles I write every single day.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.