How to Сreate an Effective Tokenomics
Being a buzz word in the world of Blockchain, tokenomics is not rocket science as it might seem. However, this industry is a new one and its ideas just started going viral at the moment. Tokenomics is the set of economic rules and models, ensuring the functioning of the economic project, based on tokens.
If the project lacks clear and understandable tokenomics for the investors, honestly speaking, such a project is bound to fail. Not an option, right? For that reason, the implementation of effective tokenomics is the most important part of the successful IEO (Initial coin offering) procedure.
The IEO provides the company with the investments to the project and contributes to its development. Digital tokens, released during the IEO, allow the customers of your product or service not only using them inside the ecosystem but also benefit from them at the cryptocurrency stock market.
Tokens As The Essential Part Of The Blockchain Economics
Let’s get to the point and learn more about the tokens. A token is a unit cost, existing in a particular ecosystem in the cryptocurrency world and facilitating the benefits, received by all the stakeholders. Also, a token can be represented as the digital obligation which has the following specifications:
- A token is a counterpart of traditional financial resources. It can be used as a means for payment.
- Being a digital investment asset, a token has the legislative reinforcement in the real world. So, it is totally legit and is trusted by the stakeholders.
- A token has its practical use. It can be easily used inside the Blockchain system, ensuring its efficiency.
- Having its digital obligation, a token can be used for the exchange to any real product or service.
What are the features of the well-built token?
There are several criteria that define the well-developed token:
- A token should be useful in the ecosystem. For example, short-term tokens, that are stored for little time have no value for the whole system.
- Offers resistance to inflation.
- Is denominational and scalable.
- Represents a value.
- Can be sold or exchanged on the market.
- Stimulates its usage.
Understanding these characteristics, a person, responsible for the tokenomics strategy implementation, can think of it in the right way.
Principles of an Effective Tokenomics Model
Tokenomics is a quickly evolving concept. Frankly speaking, it has some room for improvement. However, a proper tokenomics plan for a particular project can be crucial for a successful IEO.
Tokenomics strategy is efficient when it is responsible for the following actions:
- Considers how the tokens are distributed and which percentage of them go to the market, how many will be distributed during the Airdrop or Bounty campaigns and how many will be reserved for the future. For example, one of the Blockchain-based companies failed to consider the strategy accurately, so they had to buy the tokens from their users back when they had mindlessly sold-out all the collected tokens because without these tokens their system couldn’t function as expected.
- The expenses review in the early stages. Some IEOs describe various scenarios depending on the volumes of the attracted investments. They explain the goals of the project and forecast for further stages of investors’ financial contributions until the maximum amount claimed is collected. This approach is the best way to gain credibility from investors.
- In which way tokens can be used on the platform and how does it align to customer needs.
- Considers the utility factors as the transaction fee, its speed, and privacy configurations.
- Takes into account the inflation rate and demand for the tokens.
Tokenomics is the new industry and there is no single strategy of how to develop it equally effective for all the projects. So, take into account the principles described above, build your tokenomics plan according to your project needs and the success with the IEO comes soon!
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