Ever wondered why some of your holdings are performing worse than others? A major factor behind this that is often overlooked is tokenomics. A project with a good team or big investment can perform poorly if their Tokenomics plan is not executed properly.
What is Tokenomics?
Tokenomics is an acronym for Token + Economics. So, this is a token or coin related idea. You can think of Tokenomics as the economic environment of each project's token. But this idea works against the regular economy of society which is usually controlled by government or bankers. The crypto economy is completely regulated by code. So, it means some terms like, "What is the token used for? What is the underlying protocol? Who receives the token as a reward? All the terms are based on the code of the project. Crypto projects basically create their own micro-economy system with their goal which is Tokenomics. Also known as Tokenomics is very important for any crypto project to reveal its position.
Matrix 1: Market Cap
Most of us in the crypto market are familiar with this term.
Token Price * Circulating Supply = Market Cap
Looking at the market cap of any crypto token, rather than looking at its market price, is considered a better focusing point. For example:
Both Loopering and Cardano cost around $1, but on one hand, LRP market cap is around $1.13 billion, and on the other hand, ADA market cap is around $30 billion market cap. Marketcap is an indicator of how easily the token price can be manipulated. Although the market cap of LRP is less than that of ADA, it is possible to pump and dump the market of LRP easily compared to ADA.
Matrix 2: Max Supply
Many tokens do not have a full supply at the time of project launch, and projects lock up some for future distributions to prevent early investors from dumping all at once or to keep the market environment stable for a long time.
Basically, this matrix gives investors an idea of how many tokens are yet to hit the market in the future or how many tokens currently exist. Note that some projects do not have maximum supply (ie unlimited supply).
Matrix 3: Token distribution
Token distribution refers to how a token is distributed within its ecosystem. One can visualize each token supply in a pie chart.

Each part represents a token for the team, investors or stakers. The matrix helped us to know how the tokens were distributed during the launch (initial token distribution). If a small number of insiders hold a lot of tokens, the price is much more vulnerable to manipulation like sudden dumps and pumps. Ideally, each project will be a fully fair launch meaning everyone will have the opportunity to purchase tokens at real value. In this case, the tokens are widely distributed from the start.
Matrix 4: Private Cell
Each project raises funds differently before launching its token, which is done in several steps. They often do the raising round multiple times with different rules. Early rounds are usually reserved for private investors and they can raise the lowest price per token. This matrix shows us what price these private investors got and how many tokens they got in return; We can use this information to estimate how much profit they are willing to sell at any given price level. For example, we are in the middle of a bear market, and all of our portfolios are Tide. But private investors can still make huge profits. They entered at such a low price; They also profit in deep bear markets.
Matrix 6: Token utility
Any token project is usually based on six general things. For example:
• Payment
Basically, such a token aims to be a currency that can be used to pay for goods and services. (Bitcoin, Litecoin)
• Transaction costs
In such projects, project team users are charged some tokens to perform on the network. Ethereum, Binance chain would be a good example of this.
• Access to Services
Many projects require payment in their tokens to use their services. Example: Paying in project tokens to store and retrieve data. Such as Filecoin and Storj.
• Discount or cashback
We usually see these types of projects with exchanges where if you hold or use their tokens, you get some discount on trading fees or cashback on their tokens. For example: Binance waives you fees for holding BNB and crypto.com's debit card gives its users cashback in CRO tokens.
• Stacking
In proof-of-stake blockchains, you can use their tokens and become a validator, and this helps increase network security and decentralization. Stakers and validators are usually rewarded in the form of more tokens.
• Governance
These are projects where token holders collectively manage the network and change protocol proposals by voting on different proposals. Nowadays, we often see these DeFi projects, where token holders can control staking rewards or decide which assets to add or remove. Generally speaking, the more tokens you hold, the more weight your vote will have.
last word
Many may have a better idea of what to look for when evaluating project toconomics. In fact no project can be perfect for it in all the sections, in some parts the project has its back side. So you evaluate them holistically. Tokenomics is very important because not all super Tokenomics guarantees the success of a project. The success of any project depends on many other factors. If we look at the market, many projects do well even with terrible tokenomics because they are protected from other factors. (But I'm not talking about Dogecoin here).
Tokenomics offers real utility within an ideal token ecosystem. When a user does any research about Tokenomics of a project, they can use many websites like Coinmarketcap, Coingecko, ICOdrop and Messari to find the information they need. If certain information is missing, ask the project team, but if they refuse to share it, that could be a red signal.