Tokenomics

Tokenomics, a blend of "token" and "economics", describes how a cryptocurrency's supply and incentives are designed. It covers how many tokens exist and will exist, how they are distributed, how new tokens are issued or burned, what the token is used for, and what rewards or penalties encourage people to hold, stake or spend it.

Key questions when assessing tokenomics include: What share of supply went to the team, early investors and the treasury, compared with the community? When do locked tokens unlock? Is there ongoing inflation from staking or mining rewards, and is any of it offset by fee burning? Does the token have real uses, such as paying fees or securing the network, or does its value rely on speculation alone?

Tokens with a small circulating supply, a huge fully diluted valuation and large unlocks coming soon often face heavy selling pressure. Bitcoin's simple, fixed schedule is the benchmark many investors compare others against.