Understanding Token Economics

By Justin Barlow
October 19, 2023
  • Inflationary Rewards- ie Staking or Mining 
  • Fundraising Events - ie ICOs and Presales
  • Airdrops

  1. Users search for yield and look to take advantage of high yield rewards, when rewards drop, demand drops, and thus price drops.
  2. Buy and burns put upward pressure on asset prices and create an artificial sense of demand
  3. Institutional investors are more likely to hold onto tokens that generate large amounts of yield or that they were able to buy at presale prices
  4. Premines, as well as founder and team allocations, do not appear to affect price performance as long as they face lockup periods
  5. Tokens with very little outstanding circulating supply do better than those with a large outstanding circulating supply (in % terms) over the short term, but often struggle once they reach their scheduled unlocks due to the steep increase in supply.
  6. Fixed yield rewards (inflation) can actually promote long-term growth by incentivizing users to continue holding despite the lack of a hard cap.
Stay up to date

Sign up to receive an email when we release a new post


Justin Barlow

Justin Barlow

Justin Barlow, Author at The Tie

See Additional Posts By Justin