Good tokenomics = 1,000% gain during bull run š
But still, 99% of the crypto people don't understand that.
A full guide on finding projects with good tokenomics so that you don't get rekt
š§µš
In #crypto, most people lose money simply because they invest in the wrong alts.
This is why I'm sharing this informative content so that you don't commit the same mistake, which can cost you $1,000+ or even $10,000+.
But before I start, I want you to bookmark this thread so that you don't miss this valuable content.
Investing in a crypto project without understanding tokenomics is a sure shot way of getting rekt
There are 4 main components needed to completely understand tokenomics.
āŖļø Market Cap (Circulating Supply Ć Token Price)
āŖļø Circulating Supply (Total tokens in circulation)
āŖļø Total Supply (Total tokens that'll ever be in circulation)
āŖļø FDV (Market Cap of the project if all tokens enter circulation)
Since the BTC inception, millions of crypto tokens have been launched, but only 400-500 of them have become successful.
Now, the big question is: what determines the success of a crypto project?
Well, there are a few factors; let's look at each one of them in detail.
1ļøā£Issuance
There are 2 ways crypto projects do that.
1) Fair launch: POW Cryptos use this; everyone gets an equal opportunity.
2) Pre-mined: POS projects do that; tokens are mined before TGE and distributed to early investors and teams.
Since the 2017 ICO boom, most of the newly launched crypto projects have pre-mined supply.
Are pre-mined projects bad?
Most of the projects with pre-mined supply have turned out to be disastrous, but a few of them have also resulted in huge returns.
Projects like $ETH, $SOL, and $BNB all had pre-mined supply, but they gave 1000x returns.
Now, the question is: what differentiates these projects from the failed ones?
To understand that, you first need to learn 3 things.
1) TGE (Token generation event; the token is generated and made available for the public to trade)
2) Cliff (A pause after the TGE before remaining tokens start coming into circulation)
3) Vesting ( A predetermined timeline for releasing the remaining tokens, mostly monthly or quarterly)
By looking at these 3 factors, you can also determine token yearly inflation, which is very crucial for investing.
2ļøā£ Supply Distribution
Every project token distribution doesn't happen in the same way.
In some, the community is the top priority, while in others, VCs or hedge funds are the top priority.
Most tokens have their supply distributed in a few categories.
āŖļø Public and Private Sale
āŖļø Airdrop
āŖļø Treasury
āŖļø Team
āŖļø Liquidity
āŖļø KOLs and partnerships
I personally prefer projects which have < 20% supply allocated to VCs or seed sale investors.
In case allocation is > 20%, I must look at the vesting as if it's 3 years or more; it's probably good.
Nowadays, most projects have 15%-20% tokens at their TGE, and the remaining gets vested over the next 3-4 years.
Now, I have seen many crypto projects that had fair distribution, but they still failed.
Reason?
No demand, which is the most important part to understand before investing
A crypto project with no demand is just a slow rug.
Now, what factors drive demand for a token?
Let's take a look at them.
1) Utility
ā«ļø Every good project has tons of utility, which directly impacts their tokens.
ā«ļø For example, SOL has pumped over 20x since November 2022 bottom, primarily due to utility.
ā«ļø Solana memecoin hype has grown, NFTs volume has skyrocketed, DEX volume is hitting new highs, and all these things need SOL tokens for gas fees.
2) Token burn
ā«ļø This is also one of the ways to impact the token price.
ā«ļø If a token has consistent demand but supply is getting lower, the token price will rise in value.
ā«ļø Tokens like BNB and INJ have pumped many multiples due to their deflationary tokenomics.
3) Community
ā«ļø Memecoins are the perfect example of this.
ā«ļø They have no tech, no VCs, but have still reached $1B+ valuation solely due to the big community.
ā«ļø For every crypto project to succeed, it needs community
4) Limited vs. Unlimited supply
ā«ļø This factor is very crucial for driving demand as it creates a new narrative.
ā«ļø For crypto projects with limited supply, they are seen as a store of value, which adds another demand factor.
ā«ļø #BTC has reached $1T+ in MCap, mostly due to limited supply and low inflation.
Conclusion
Crypto is a wild west, so nothing will be 100% true.
Tokens with the worst tokenomics can pump to oblivion, while projects with decent tokenomics can go to zero.
But if you consider these 5 factors
- MCap and FDV
- Token distribution and vesting
- Demand factors
- Community
You'll be able to find most of those alts that will outperform this cycle.
SOURCE: Sjuul | AltCryptoGems on X
BONUS CONTENT FOR AIRDROP HUNTERS:
Boinker Airdrop Is Coming In October 2024.
This is your last chance to Farm The š©š© Coins.
AIRDROP LINK: https://tinyurl.com/5n7vnfnt
SIMPLY COPY-PASTE THE URL IN YOUR BROWSER
Why I'm Farming ..
1. Unique Ticker Name
2. Active Community
3. No Extra Tasks
4. Game Is Dumb Fun
5. Easy To Understand & Play
That's the wrap
If you find this Article helpful š
- Hit like and COMMENT , Always DYOR before investing
Follow @Crypto PM for consistent quality crypto content
Thanks for reading! For more insightful crypto content,
Stay updated with the latest trends and analyses in the crypto world!
#Whale.Alert #WhaleAlert #cryptopm #CryptoMarketMoves #BinanceBlockchainWeek
