How To Design Tokenomics For Your Cryptocurrency: The Basics Of Creating Your Token

ICO guide on token economics and token utility with examples

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When thinking about the token launch, many teams and token creators underappreciate the importance of a critical aspect of every blockchain project — token design.

No matter which chain and technology you use to create a token, it can be doomed to failure without properly designed token economics.

This article aims to explain the basics of the token design process, and it will serve equally well if you want to launch an ICO or have an existing product/concept/idea and want to integrate a token into it.

Crypto Tokenomics

Creating a token and building a product around it is a task that will require flexing your mental muscles.

First, you have to understand the basics of the common token properties and the ones shared by your token.

Token Properties For Your ICO

In the blockchain world, there are many different types of tokens for various purposes and use cases. For example, there are Layer 1 and Layer 2 tokens, fungible tokens and NFTs, security and utility tokens, and other species.

However, when people talk about launching a token (doing an ICO), the token is most likely to have the following properties.

Layer 2 Token

Layer 2 tokens are the tokens built on top of the existing blockchains.

For simplicity, nowadays, you don’t need to build your own blockchain from scratch when launching a token. Instead, you can use existing blockchains such as Ethereum, Binance Smart Chain, Polygon for token creation.

These Layer 1 networks allow creating tokens on top of them with a few lines of code using smart contracts. For example, tokens built on top of the Ethereum network are called ERC-20 tokens.

Fungible Token

Fungible tokens are the opposite of non-fungible tokens (NFTs) that are unique, non-divisible…