Tokenomics: A Guaranteed Headache

in LeoFinance2 months ago

Understanding Tokenomics.jfif

I promised the community that I would provide some updates during the process of creating a new tribe. When it comes to things like drafting whitepapers and timelines for the project I think that things can be quite easy as there are a lot of quality projects on the Hive blockchain to base your writing off of.

I have used the Leopedia and the @threespeak light paper as inspiration for organizing my thoughts and have found the writing to be going quite smoothly thus far.

However, there is one topic that is absolutely shrouded with ambiguity: tokenomics.

problem.jfif

The Problem:

The problem with tokenomics is that is is such a vague field. I have had to do a lot of background research to even begin to understand the complexities of the topic because the reality is that every token is completely different.

It is not as if I can just find a paper explaining the exact tokenomics of successful coins on the Hive blockchain, because there is a lot of subjectivity in the process from the token issuer.

The issuer has the ability to release supply of the token whenever they would like, so as the issuer you need to know when and how many tokens need to be released to guarantee your ecosystem being healthy and successful for users and investors.

Solution.jfif

Questions That Must Be Answered:

In talking with @silverstackerUK I have compiled a list of questions that must be answered to create a token. Many of the questions were his as he is experienced in this field (and does quite well @lbi-token) but I formulated a few myself as well.

  • What do you plan to do with your supply? airdrop it? sell it and just from 0?
  • Do you want inflation to be slow are fast? (and how the hell do you determine the rate of inflation!!??)
  • Do you want a reduction in your inflation after a certain amount of time has passed are blocks processed?
  • Do you have any token burn ideas?
  • Do you want miners?
  • How much of your inflation go towards posts rewards, curation, team members, promotion, miners, etc?
  • What is your total supply?
  • How much of your supply will you release initially?
  • What will be the distribution schedule for your supply?
  • What is the rewards curve for posts on your platform?
  • What benefits will staking provide users?
  • What percentage of rewards will be automatically staked?
  • What is the window for voting? (i.e. 7 days)
  • What is the trajectory of your project? How will you provide value to users?

Takeaways

Tokenomics is the study of token value driven by supply and demand. There are fundamentals of course but it seems that each project is so innovative and new that it is hard to get a really firm sense that what you are going to be doing will work. If you do it wrong you may find your project screwed with massive inflation or have an uneven distribution. There is a lot to think about but it is really powerful because we are pioneers in this new field, the rules are vague because nobody has really written them.

If anyone has some good tips for me please share, I have to answer all of these questions and more to create my platform!

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Who I am:
My name is Rob and I am a college student doing my best to get involved in the crypto world. I have enjoyed blogging thus far and thank you for reading my article! Give me a follow and let’s build the community together through consistent engagement.

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Sounds complicated so keep us updated. Because there are probably no rules, it means you can try something new. We even saw PoB appear with tokenomics similar to BTC so I would say that you should write down what you come up with and then share it with people who have created their own tribes. Take the various opinions and fix it up as needed.

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That's been the idea thus far, I feel like I'm annoying people by sending them so many questions LOL there are a lot of ways to go with this, I just need to be sure of things before moving forward so there is a ton to think about first

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That's a really exhaustive list of questions Rob. Great job on compiling that.

Now that you have mentioned @silverstackerUK, I would suggest you talk to as many Tribe owners/ Token creators as you can. That would help you to cover a range of problems and their probable solutions.

I would also suggest you to get in touch with a few devs like @themarkymark who are in Crypto & Blockchain space for a long a very long time. It would help you to learn from their technical & functional experiences.

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Marky has been absolutely awesome, dude is crazy smart!

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I found most explanations of tokenomics to be vague when I started looking into it as well. Seems there needs to be a lot more written about the topic, with specific examples illustrating the use of tokenomics in different projects.

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I agree completely, once I develop a better understanding of it I could see myself working on something like that to help the next person

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Your content has been voted as a part of Encouragement program. Keep up the good work!

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