Introduction to Tokenomics
Understand economic rules that influence behaviors within blockchain ecosystems
What is Tokenomics?
"Token economics is the distribution and production of tokens to allocate to users. It encourages participation, transactions, interaction in a marketplace or protocol."
— Lisa JY Tan, Founder and Founding Economist at Economics Design and Author of “Economics and Math of Token Engineering and DeFi"
Tokenomics represents the economic rules and laws that influence behaviors within a blockchain ecosystem. It encompasses both incentives for positive actions (such as participation and staking) and disincentives for negative behaviors (like transaction validation failures).
At its core, tokenomics is a fundamental part of a Web3 startup's business model, strategy, and revenue streams. It goes beyond just technology or protocol design to create a growing economy that facilitates transactions within your ecosystem.
"Economics is part of the entire business model, not a standalone consideration."
— Lisa JY Tan, Founder and Founding Economist at Economics Design and Author of “Economics and Math of Token Engineering and DeFi”
Token economics specifically addresses how tokens are distributed and produced to allocate value to users. This framework encourages participation, transactions, and interaction in your marketplace or protocol.
Like country laws, tokenomic models can evolve over time. Rules relevant today may differ as your ecosystem grows over decades. Mechanisms for updating tokenomics in the future should be considered while maintaining clear guidelines for the current phase.
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