Crypto projects are becoming increasingly complex, and simply having a good idea no longer guarantees success. Investors are paying attention to tokenomics, a system that explains how a token in a project works, how it is created, distributed, and used. Strong tokenomics can be the foundation for a project’s long-term growth and popularity.

What is tokenomics?

Tokenomics is the economic model of a crypto project. It includes:

  1. Token supply: how many tokens have been created, how many are in circulation, and whether there are any limits (e.g., a maximum number of tokens, like in Bitcoin).

  2. Token utility: how the token is used in projects (for payments, voting, staking, etc.).

  3. Token distribution: who owns the tokens (team, investors, community) and how they are put into circulation.

  4. Value retention mechanisms: how the project ensures token price growth — through deflation, token burning, or staking.

Signs of a good project with next-generation tokenomics

  1. Balanced supply and demand
    Projects that limit the supply of tokens and incentivize their use tend to generate interest from investors. For example, tokens that are required to access unique features or a project’s product create ongoing demand.

  2. Clear token distribution
    If the majority of tokens are to the team or early investors, this can increase concerns. Successful projects allocate a significant portion of tokens to the community or reward users.

  3. Deflationary mechanisms
    Projects that burn a portion of tokens or offer staking with rewards help preserve the value of tokens.

  4. Token utility
    The token must be necessary for the operation of the project ecosystem. For example, the token is used to pay fees, vote, or access exclusive features.

Examples of projects with strong tokenomics

  1. Binance Coin ($BNB )

  • Usefulness: used to pay commissions on the Binance exchange, participate in launchpads, and receive discounts.

  • Deflation: Binance regularly burns a portion of its tokens, which reduces their supply.

  • Result: steady price growth due to high demand and limited supply.

  1. Axie Infinity ($AXS )

  • Utility: The token is used for gaming, voting, and receiving rewards.

  • Deflation: some tokens are destroyed when new game assets are created.

  • Result: The token gained great popularity through game mechanics and the Play-to-Earn ecosystem.

  1. Polygon ( $POL ) ex. MATIC

  • Utility: used to pay fees and ensure the operation of the blockchain.

  • Deflation: after switching to the Proof-of-Stake mechanism, some of the tokens are burned.

  • Result: Thanks to the growing popularity of Layer 2, POL has become one of the most stable tokens.

How to find a project for investment?

  1. Study the project documents (Whitepaper)
    It should clearly explain why the token was created and how it is used.

  2. Look at the token distribution
    It is important that the team and early investors do not hold too large a share of the tokens, as they may sell them and cause the price to collapse.

  3. Evaluate the ecosystem
    The more partners and projects collaborate with a token, the higher its demand.

  4. Check the cost-saving mechanisms
    Deflation, staking, or other incentives can help the token retain value in the long term.

Conclusion

Next-generation tokenomics is the foundation of a crypto project’s success. Investors should choose projects with well-thought-out economic models that ensure token demand and long-term stability. Examples of such projects include Binance Coin, Axie Infinity, and Polygon. The main thing is to thoroughly study the information and pay attention to the utility of the token and the economic incentives of the project.

Always remember the DYOR rule or do your own research!

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