Tokenomics focuses on the supply and demand of the token in an ecosystem.

Supply and demand determine the price of the token. Increasing the supply of tokens generates inflation of the price while decreasing the supply causes deflation.

The demand side is determined by how the market views the token.

The market assesses the potential return on investment for the token.

The ability of the token to generate revenue through yield farming would increase the token’s ROI.

Additional utilities such as governance capabilities, access to community resources, and access to revenue streams increase the token’s ROI.

In some cases, pure speculation will drive the price of the token.

Vesting schedules, lockups, and other tools can be used to increase the demand for the token.

Airdrops can be used to establish an initial community of token holders.

Tokens can be burned to increase the value of the token by increasing scarcity.

The goal is to create a stable price for the token and provide incentives to encourage others to become token holders.

These are the basic elements of tokenomics for managing the token supply and demand.  

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.