Tokenomics

About this publication

Dmitry Kotov writes an article on VC.ru, a Russian startup and venture capital platform, explaining the basics of tokenomics. It covers token design principles, economic models for crypto projects, and frameworks for evaluating token utility and value.

Background

VC.ru is the largest Russian-language platform for startup founders and investors, and its expert-authored posts function as a working reference for its community. This piece is an explainer on tokenomics, published in May 2022 — weeks after the Terra collapse had made the subject urgent.

Tokenomics is the design of a token's supply, distribution, and incentives: how many exist, who receives them and on what schedule, what holding one entitles you to, and what forces the price to reflect any of that. Most failed crypto projects failed here rather than in their engineering — a token with no source of demand beyond speculation, unlock schedules that let insiders exit into retail buying, or a yield paid in newly minted supply. Reading a token's design before its marketing is the whole of the discipline.