What is it ?
The idea of tokenomics emerges from the writings of a Harvard psychologist B.F. Skinner in 1972. He was of the view that a token based economic model could control behaviour. That is giving some unit of recognizable value would incentivize positive actions and vice versa.
In short tokenomics is the science of token economy. It covers all aspects of what we call tokenization. It involves coin creation, management, distribution and removal of the said coin from a given network.
Below we'll discuss each of these concepts in detail.
Distribution and Creation
All crypto projects thrive on networks, and should be able to distribute their token to potential users.
There are many ways this can be done. The chain rewards early adopters, miners and validators.
Others may sell a portion of their tokens to prospective users in an ICO, or may choose to reward users for verifying facts like Augur.
Stability and Management
Crypto is notorious for being very volatile. This can actually be mitigated by ensuring that there are enough coins in supply. Doing this builds stability, and a robust network effect emerges as a result which enables folks to use the said token for the usecase that it is designed for.
Governance and Removal
Folks can be incentivized to own or hold tokens, thus preventing them from HODLing coins.
It may also become necessary to alter or remove the token, as and when intended as the network grows. For this purpose setting up a DAO, would be the most effective way to let the users vote through the changes they wish to see reflected. Developers must thus be aware of when and how a certain change must be introduced, allowing the network to grow, and thus profit from in the long run.
Examples of Tokenomics
° Bitcoin
° Etherum
° Hive
° Cardano
° Hashgraph
and many more to come...
This is the future cometh to the present, wake up to the brave new world folks.
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Boy holding a bitcoin
Meeting in a physical DAO
Note: All images have been generated using A.I tool to show a potential future.
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