Every token has its own unique (or not so unique) tokenomics, that sets the project’s value for investors and regular users. However, we found out many people misunderstand the meaning and the rating criteria of the tokenomics term.
Tokenomics themselves are a thing answering the question of which token to use in certain conditions and situations, that end up reaching some goal - whether it is profit or project development. A governance coin could be a great investment to gain power over some prospective project, while some coins are straight up loyalty makers with absolutely no other purpose.
However, each token will most certainly have an outcome. Financial, influential or even aesthetical (yes, that’s about non-profit NFTs). Aesthetic pleasure is obviously nice, though we are trying to make some money here.
Back to the outcome. Best tokens are the ones that create hype around them with minimal advertising. Lively and nuanced conversations, open-minded communities and interactive users - all that can be achieved if you make your token truly valuable.
When choosing a project to invest into, the first question to ask yourself while explaining tokenomics should sound something like “What outcome might the token give, considering it’s qualities and founders’ expectations?”. If you instantly find an answer to that question then you are not just very smart and creative, but the project doesn’t lack uniqueness either.
The type of token will also matter a lot in making a decision because those do vary a lot. Inflationary tokens can have additional supply when all the coins are sold out meaning, while deflationary don’t. ERC20 and 1155 tokens are generally faster than 721, while 721 is faster than scarcity ERC20. All those factors make a huge difference on how the project will develop itself. As an example, ERC20 scarcity coins can help the project grow years in advance, while regular ERC20 would most probably give the project instant growth with low scalability afterwards.
Another key idea to understanding the tokenomics of the project better is to look at them from a perspective of a developer, who isn’t interested in making money - they are chasing their dreams of making the net decentralised. Most whales are mad about crypto and not about making money, conscientious developers are the same.
That is why most NFT collections fail, that is why most shitcoins fail - zero ideas and close to zero dedication with no future plans and no planned tokenomics consequently.
We would also recommend reading whitepapers of the project that are already showing or have already shown success in developing their tokens - even Bitcoin and Ethereum early WPs could tell you loads of interesting info that could be easily used nowadays. And the list goes on to PolkaDot, Fantom, Terra, Cardano, BNB and others (the more papers you read - the better understanding of the situation you have).
And lastly, practice makes perfect. Investing small amounts of money into different coins and monitoring the future movement of the project is definitely the best way to explore the connection between tokenomics and outcome, because no one could understand your way of thinking and analysis capabilities better than yourself.
That’s how we see tokenomics as a term and those are the criteria we follow when choosing which project to list on our website. Obviously, it isn’t just about token economics, but those do also play a huge role in the project’s success.