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🍿 tokenomics for defi projects

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Tokenomics/README.md → tokenomics/README.md
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## 📊 tokenomics for defi projects ## 🍿 tokenomics for defi projects
<br> <br>
#### Tokenomics studies the factors that drive the demand for tokens. It includes: ### tokenomics factors
<br>
* math * math
* supply vs. demand * supply vs. demand
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<br> <br>
#### Questions to ask ----
### main questions
<br>
* How many tokens are in existence? * How many tokens are in existence?
* How many tokens will there be in total? * How many tokens will there be in total?
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<br> <br>
#### Things to watch out ---
### concerns
<br>
* The tokens were inflationary without enough utility. * The tokens were inflationary without enough utility.
* Concentration of tokens by VCs & whales led to retail getting dumped on. * Concentration of tokens by VCs & whales led to retail getting dumped on.
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<br> <br>
#### Supply Metrics You Should Know ---
### supply metrics
<br>
* Supply: How many tokens exist NOW * Supply: How many tokens exist NOW
* Max supply: The most that can exist * Max supply: The most that can exist
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<br> <br>
For example, it's not a good sign that a circulating supply was only at 40%. That means the supply will increase by 60%.
More coins created will put pressure on the price.
* for example, it's not a good sign that a circulating supply was only at 40%. That means the supply will increase by 60%.
* More coins created will put pressure on the price.
* another example, Dogecoin is an inflationary token: its supply is increasing each year, and there's no CAP on the supply.
* this isn't good for Tokenomics because it's the opposite of Scarcity. Some coins can become deflationary when the supply DECREASES over time.
<br> <br>
Another example, Dogecoin is an inflationary token: its supply is increasing each year, and there's no CAP on the supply. ---
This isn't good for Tokenomics because it's the opposite of Scarcity. Some coins can become deflationary when the supply DECREASES over time.
### allocation & distribution
<br> <br>
#### Why Ethereum is ultrasound money * how are the initial tokens distributed? There are roughly 2 ways:
* The merge to proof of stake lowers the inflation supply of ETH
* EIP-1559 takes a bit of the transaction fees and burns it
<br> <br>
#### Allocation & Distribution ##### pre minted
How are the initial tokens distributed? There are roughly 2 ways:
* Pre Mined:
1. The team distributes tokens to itself. 1. The team distributes tokens to itself.
2. Distribution to insiders such as the team and venture capitalists 2. Distribution to insiders such as the team and venture capitalists
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In this case, VCs and Insiders could dump their tokens and cause a price crash. In this case, VCs and Insiders could dump their tokens and cause a price crash.
Vesting means when they're allowed to sell the tokens. You want to make sure that the early backers are INCENTIVIZED with the protocol long-term. Vesting means when they're allowed to sell the tokens. You want to make sure that the early backers are INCENTIVIZED with the protocol long-term.
* Fair Launch: ##### fair launch
100% fair. Everyone has equal access. * 100% fair. Everyone has equal access.
<br> <br>
<br>
<img width="490" alt="Screen Shot 2022-05-31 at 4 10 16 PM" src="https://user-images.githubusercontent.com/1130416/171298450-9c18c98a-db92-41f7-baad-1e3a180fe924.png"> <img width="490" alt="Screen Shot 2022-05-31 at 4 10 16 PM" src="https://user-images.githubusercontent.com/1130416/171298450-9c18c98a-db92-41f7-baad-1e3a180fe924.png">
<br>
<br> <br>
#### What Drives the Demand for Tokens? ---
### what drives the demand
<br>
* Utility (gas, fun, adoption) * Utility (gas, fun, adoption)
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--- ---
<br> ### resources and tools
## resources and tools
<br> <br>