In recent years, the cryptocurrency market has undergone significant growth and transformation. Ever since Bitcoin was created, this spawned the development of more digital tokens, many of which have tried to address one issue or the other when it comes to traditional finance.
As you would imagine, many of these tokens are unique in their own way. And that uniqueness boils down in many cases to their tokenomics. Essentially, an asset’s tokenomics refers to the dynamics of how it is to be distributed and - if the need arises - destroyed from circulation.
When a token is listed, one of the major criteria for investment is its tokenomics. Essentially, investors want to know how its developers plan to manage it - how many tokens will they list? How many do they plan to destroy from circulation? When do they plan to burn them? Insights like these help to form a basis for understanding their plans for it - and when an asset’s tokenomics are solid, it looks much more attractive to investors.
Traditional tokenomics typically relies on mechanisms such as supply and demand dynamics, token utility, and token distribution to determine the value and behavior of digital assets. Coins like Bitcoin and Ethereum solidified the earlier stages of asset tokenomics, but critics have also pointed out several shortcomings in this approach, including issues related to scalability, sustainability, and centralization.
Interestingly, several token developers have already understood this and are looking to incorporate fresh and innovative ideas regarding how their tokens should function. We spoke with Riff Goatski, the CEO of Degen Express - a platform for token builders to list and launch their projects - to understand how this new market segment is taking shape.
1. What innovations are you seeing in the evolution of crypto tokenomics?
DeFi is in complete metamorphosis from one cycle to another. For us, one of the pillars is trust. We are seeing more and more fair launches with vested tokens for teams, audited contracts by renowned companies and more transparency towards the community. By itself, this is an innovation of crypto as a whole and a milestone that needs to be solved to achieve mass adoption.
2. Are there still worries about issues such as inflation?
Yes. Depending on the project, inflation can become an issue and mechanisms against permanent loss should be implemented. It's not enough to add burning mechanisms to your tokenomics, but to organically control the direction, supply and development. We still see many projects lacking this or adding some sort of deflationary strategy often too late.
3. Should developers stick with the norm, or do you encourage them to explore new tokenomic models?
Never stick to the norm. Always challenge the status quo. A project economy should be seen as a vascular system of the whole and the community its heart. We got here only by exploring, testing and thinking out of the box. Why should we ever stop?
4. What criteria does Degen Express put forward when considering token listings across the board?
Degen Express was built from the need of creating a safer environment for all. Both users and creators are protected as we provide a turn-key solution. Users are now protected from scams, snipers and shady tokenomics. Creators can benefit from an ever-growing community without worrying about smart contracts audits, liquidity and so forth.
From automated market making to DEX listings, whitelisting proportionally with a member involvement in the project, fully renounced erc-20 token deployments, open on Fantom, Base and BSC with many more to come, etc.
5. Do you believe that regulation in the crypto industry could affect tokenomic models in the future?
This is a very hot topic, isn’t it? The way I see it is this, either you understand the cultural nature of crypto and its particularities or any attempt to regulate it will be futile. While you can try regulating centralized aspects of crypto, the decentralized communities and projects will have to see any regulations as an opportunity to grow, to trade safer, to enjoy this space without constant need to verify contracts and fear of scams. If this will be achieved by “The Authority” ( I have great doubts to be honest) then there is a chance for the community to accept its rules.
Conclusion
The crypto market is one that has never shied away from innovation. And once again, it appears that it is time to innovate around how we see tokenomics on a general level.
Fortunately, new tokenomic structures are being developed that will transform the market and provide a fresh perspective to how we see tokens - especially as the market looks to expand going forward.