Tokenomics is the design of the token ecosystem. Correct tokenomics can quite simply make the difference between a successful ICO and one that fails to raise the amount required. Yet many ICOs fail to realise this. However, it is not easy to find a proper tokenomics advisor. Tokenomics is a new skill that is not older than in a couple of years. After all, ICOs are not much older than that. At E&S, we are a team of Financial Experts, Accountants and Business advisors. To be a tokenomics expert you require a mix of all 3 skills, plus experience in the Crypto Ecomony. At E&S, we have been involved in the Blockchain and Crypto World for over a year.
Many so called advisors declare themselves as Tokenomics experts. However, few are able to describe what are the main pillars of tokenomics. There are 4 main areas of consideration when it comes to your token design. These are:
We have all heard of the Utility token. In fact, through our ICO legal services, we are always correcting clients’ misconceptions on the utility of their token. You need to ensure you allow enough attention to the utility of your token. We see many ICOs that clearly have forgotten to give their token a utility worthy of a token ecosystem!
Prior to considering your raise, you need to look at potential token utilisation. If your project projects a token utilisation of USD Y million, how can you expect to raise 2Y million. Founders need to spend time analysing the potential market penetration and token utilisation prior to deciding on their raise.
Token Supply and Demand
One of the major things to consider when designing your tokens is the token supply and demand. Creating a token with too much supply will actually backfire. Too much supply, in terms of fiat value, will put off purchasers as demand would be enough to fill the supply. We all know what happens when supply is higher than demand. The value drops. Yet many ICOs seem not to consider this vital part of their tokenomics.
Token distribution is central to your ICO’s tokenomics. Designing your token distribution is vital to achieve your objectives. Ensuring you create value, for your project, contributors, community and founders is vital. This is only achievable by creating the perfect token distribution model.
You only have 1 shot at getting it right. Get your tokenomics wrong and your project is burnt forever. Either you tried collecting too much, or simply, too little and in both cases your project with suffer, possible fail. Hiring a tokenomics expert is thus central to any successful ICO.
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