Quote from: dnpotter on July 19, 2019, 10:35:34 AM

I've been trying to describe tokenomics of a utility token to a non-techie crypto-noob friend. The description is targeted at a specific project but it might be helpful for others too. I'm trying to get to the underlying concepts while deliberately keeping it as simple as I can and avoiding describing the technology. Here's what I've got so far - if anyone has any ideas for improvement I'd love to hear them.

Description of a utility token economy:

The economy is an open market with three actors: users, token holders and miners.
Users buy tokens on the open market so they can use services on the network.*
Token holders are owners of a portion of tokens within an economy.
Token holders provide liquidity on the open market - they provide a pool from which users can buy tokens to use the network.
Miners run the network in return for fees from all transactions that users make on the network**. These fees are paid in tokens which the miners may sell on the open market.

As in any economy the interactions between actors and the effect on the price is hugely complex. Some points worth noting in very high level terms:

As the platform matures more users join the economy, raising demand for tokens. This has the effect of pushing up the price of the token since the total number of tokens is fixed. Token holders can benefit from this price gain.
The supply of tokens depends on how many token holders and miners are willing to sell at the given price, given the demand and market fundamentals etc.

* actually, application providers may buy tokens in bulk then supply them to users as part of a traditional paid service. In this case the tokens (and the token price) will likely be invisible to the users as developers build application layers on top of the platform. Note, application providers who buy tokens in bulk while the price of tokens is low will have a competitive advantage over others.

** Note: in the early years of platform development, when there are few users and few transactions, miners are encouraged to help run the network in exchange for minted coins. The number of minted coins available to miners reduces algorithmically over time based on the economic model coded into the underlying blockchain software. The reduction is designed to reflect the increasing number of transactions over time as more users join the economy.

I think that it is hard for a newbie in the crypto space to understand those terms.
They don't have in their mind the concept and the environment where tokens are created thus even the simplest terms are hard to understand.
In my opinion, you have cover all the major topics. Maybe a good idea is to describe them with examples of how the tokenization happens.= in order to support your theory.