Tokenomics: The Economics Behind Decentralized Coins and Tokens

Nagaya Technologies
6 min readOct 5, 2024

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For everybody involved within the DeFI Space, the concept of Tokenomics or sometimes referred to as Coinomics is not something new in your mind. It is a concept that is frequently looked into every time a new project comes around in the DeFI Space and provides a glimpse of fundamentals for the project itself to its new holders. But is it just a glimpse of fundamentals or there is more to this concept that we can analyze? Let us take a look at the word “Tokenomics” and its significance for the Projects within the DeFI Space!

Tokenomics/Coinomics = Coin/Token + Economics

Everybody was intrigued with “Bitcoin” when its whitepaper was first introduced in 2008 even though most don’t really understand how it works. The Bitcoin whitepaper entails that it is an electronic payment system with the support of decentralized network of Blockchain Technology but nobody really knows what its application is for or how much each Bitcoin was actually worth when in exchange with goods/services in our daily lives.

Source: https://www.jpnn.com/news/ini-faktor-faktor-penting-untuk-menyusun-tokenomics-proyek-blockchain

Though its correlation might be unclear, Bitcoin came around the same time as the Great Recession in 2008 where the mistakes from the Banking sector plunged the whole economy into a crash. The effects of this crash was spread around the world as Rising Unemployment and inflation became a norm during these times. Bailouts then presented itself as the only option to boost the morale of the community and stabilize the economy to the right direction.

Bailouts as we can see over the years have been a temporary aid and a far from perfect solution for long term prospects of any economy. The concern of a continuous rise in Money Supply could rise as a Hyperinflation if not utilized and administered with care just like what we saw in Zimbabwe where Trillions of Dollars became worthless as price of goods/service continues to outpace the solution for handling it.

Over the last 15 years since the crash of 2008, the United States Money Supply has grown by more than double its figure in Jan 2008 of $7.5 Trillion but it has slightly improved from its peak in Mid 2022. This may be a problem with the U.S Economy who currently act as the World Reserve Economy in which a simple turnaround may spread around the world. Much of the disagreement might be presented in the heavy centralization of the authority where people are left clueless of what is happening.

These concerns might be the reasoning behind the idea for Bitcoin and even though its purpose might sway to the Digital Asset side instead of Digital Currency, it still has all the amazing capabilities to perform both functions really well. Bitcoin not only has been adopted as a legal tender in El Salvador but has also become a worldwide phenomenon for many different Digital Assets to come after it and establishing the Decentralized Finance Space.

The Decentralized Space has also steadily grown its market cap because of the massive interest from the community from a few hundreds of people to encompass more 425 Million in 2024. In this growing Decentralized Economy with hundreds of projects continuing to be added into the ranks, the word “Tokenomics” is frequently in everybody’s mind in deciding its interest and looking forward to the long term of the project.

What is “Tokenomics” you might ask? “Tokenomics” or sometimes referred to as “Coinomics” highlight the important concepts behind the project creation and how it may perform within the future. Some of the important features of a great tokenomic include the project name, its ticker within exchanges and listing sites, the amount of supply the coin/token has, the network it is operated on and details about token allocations & vesting periods.

These details are developed by the project developer and inscribed usually on its whitepaper as a reference for intrigued communities to be a part for the success of the project. Tokenomics are like the roadmap for the fundamentals of the project because ultimately a project that has smart and well-designed incentives to buy and hold tokens for the long haul is more likely to outlast and do better than a project that hasn’t built an ecosystem around its token.

Tokenomics are also sometimes referred to as Coinomics as it depends on the kind of digital asset the project is developing whether its a coin or a token. Coin and Token might be uncanny at first glance but the main difference is while Coins are operated on its Blockchain Network for accessibility and security, Token on the other hand operated on a different Blockchain Network in order to provide the project with better reach and interoperability with other networks.

With plenty of Projects that are introduced to you via social media or listing sites, tokenomic has been a powerful tool to sift through the masses and pick out the gem that resonates with you. In the midst of the Pandemic era where the DeFI Space is booming and many different projects aim to replicate the success of Bitcoins and Etheruem, Coins like Cardano, Solana and Tron rise into popularity with its innovative features to challenge the status quo.

Many of them have had challenges so far to dethrone the might of Bitcoin and Ethereum due to its superior tokenomics that continues to attract new interest. In a world that is Decentralized and aim to revolutionize the Financial Sector, Tokenomics becomes a significant part in keeping the fundamentals of projects in check and guiding all of you to the right projects that will hold its place within the next decades or so.

Its Significance within the DeFI Space

Tokenomics perform its functions as a manual to understand the project better and determine its potential over the long haul. Doing your research is obviously the most important thing in this vast new world of the DeFI Space and there are plenty of things you can analyze from the tokenomics of a certain project. Firstly is the Name and Ticker of the project which will help you find more details on them through listing sites or exchanges if they are listed.

Source: https://www.linkedin.com/pulse/existence-cryptocurrency-before-bitcoin-nigam-the-blockchain-guy-

Another part is obviously the Blockchain Network they operate on and this will help look towards the accessibility of this project with the networks present in the DeFI Space. If they operate on Massive Networks such as Ethereum or Binance Smart Chain then you can possibly access many different Decentralized Exchange or Decentralized Apps present but if they are listed on their Networks, then you can explore the project vision to interact with other networks. After all, the DeFI Space is a world that is interconnected with each other so find out how much access you have within this vast new space.

The crucial part within Tokenomics is obviously the Supply and Allocation that are created by the project as DeFI Space aims to be better than TradFI. Does the Project have limited or unlimited supply as it may matter to determine the value that the project holds if the demand cannot keep up with the supply level it operates on. If the Supply is unlimited, You will have to constantly check the Burning Mechanism that the project has to understand the supply level.

Finally the Mining and Staking mechanism may also be a topic of interest for you who want to be a part of the community more than just holding your token/coins. This may offer you an inside perspective on how the Blockchain Network while earning some yields in the process that will engage you with the project community. All in All, next time you find a great opportunity within the space, do your research on its fundamentals within the Tokenomics as it may help you to make an informed decision in this growing DeFI Space. Keep your DYOR spirits alive and HODL On!

We in Nagaya Technologies Pte. Ltd believe that fundamentals is an important part of every HODLers journey within the DeFI Space. That is why we encourage everyone to Do Their Own Research before committing themself to any project. Nagaya is the world’s first hybrid digital asset that is proud to be amongst the pioneers in the Tokenization of Real World Assets to provide sustainability over the long run. To learn more on the latest information on Nagaya and our whitepaper, you can always visit us at www.nagaya.co

Or you can follow us at t.me/nagayaofficial for all the latest updates!

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Nagaya Technologies

NAGAYA (NGY) is a Gold-Backed Cryptocurrency with Subsidiary Projects. We aim to build Trust and Value through LEGALITY and TRANSPARENCY. https://nagaya.co/