Skip to content
Home
  • Locations
    • Delaware
    • Florida
    • Maryland
    • Massachusetts
    • New Jersey
    • North Carolina
    • Pennsylvania
  • Find Crypto ATM
    • All ATMs
    • BTC
    • ETH
    • BCH
    • DASH
    • LTC
  • Buy online
  • Find Transaction
  • Blog
  • Locations
    • Delaware
    • Florida
    • Maryland
    • Massachusetts
    • New Jersey
    • North Carolina
    • Pennsylvania
  • Find Crypto ATM
    • All ATMs
    • BTC
    • ETH
    • BCH
    • DASH
    • LTC
  • Buy online
  • Find Transaction
  • Blog
spinner
What is tokenomics, how to analyze and select projects?

Breadcrumb

  1. Home
  2. Crypto Blog
  3. What is tokenomics, how to analyze and select projects?

What is tokenomics, how to analyze and select projects?

Author:
PAY DEPOT team
2022-11-15
Knowledge

Table of contents

  • What is tokenomics?
  • Why is knowledge of tokenomics necessary?
  • Tokenomics and its components
    1. Purpose of funding
    2. Allocation of tokens
    3. Vesting schedule
    4. The purpose of the token
    5. Project goal(s)
    6. Team Leaders
    7. Native token
    8. How can understanding tokenomics help you make more money?
    9. Conclusion

One way to find out if a crypto startup can be trusted is through its tokenomics. By understanding what you should pay attention to, you can significantly increase your chances of choosing a successful project for investment.

You have invested in several promising assets, and your portfolio is performing well. And like any successful investor, you keep looking for new ideas to reinvest your money and further increase your passive income.

Everyone wants to find X's and enter the project at the "zero" stage. But what does it take? How do you know if a seemingly tempting offer is a scam or a throw-in?

If an investor is smart enough to build a well-performing portfolio, he probably won't invest more money in an untested idea than he can afford to lose. But recognizing a scam is not so easy. Scammers can fool even experts, so you should always stay alert.

What is tokenomics?

Tokenomic

Tokenomics are the components that make up a token's interaction with a project. For example, what the buyer will get from hodling and why it is more profitable for him than dropping the asset at the nearest pumppe.

Reliable and well-designed tokenomics can launch a rocket, but poor quality or no tokenomics will kill the whole thing. Of course, there are exceptions to this rule, but don't take the risk of investing in an idea with blatantly bad tokenomics.

Another indicator of reliability is the utility of the token. What does the asset do for an investor beyond simply preserving its value? What motivates the buyer to hold it? Does he receive remuneration or passive income?

Let's break down the main parts of tokenomics.

Why is knowledge of tokenomics necessary?

If looking at an existing project with strong support, it is not necessary. But when looking for new promising projects, future rockets, and potential X's, you need to review and analyze their tokenomics page. Immediately skip the asset without such a section!

Take CropBytes, for example, which is an NFT game. They have two days left on their funding round. And the first thing I noticed is that the funding goal was a fund of a modest $230,000. New investors might think that the budget is too small for a serious project. However, it is just the right amount. Why?

First, it leaves users with plenty of opportunity to create value.

Second, unless the token is partnered with a large company like Google, for example, a $10 million request could be a sign of "carpetbagging" or inexperienced developers. Both are red flags.

CropBytes openly shows the distribution of its tokens. The team owns 16.09% of the coins with an effective period of 12 months and a monthly unlock period of 36 months. I think 3 years is too long. But the rares are making a serious effort to gain investor confidence, and that's a good thing.

Other details are important to gauge how much credibility the project has, so let's move on.

 

Tokenomics and its components

Tokenomic2

Purpose of funding

It is not necessary to have tens of millions of dollars in your account in order to launch a project. When cooperating with a large technology company, a measure of massive investor interest may be important, but it is more of an exception. So, check the goals of the project, and stay vigilant.

Allocation of tokens

Each project must have a distribution schedule. It is acceptable for developers to hold part of the tokens, but no more than 60%. Exceeding this value is a stopgap for an investor. Of course, everyone knows that Ripple owns most of XRP. But, it's also an exception. Make sure public investors have access to most tokens. For example, at CryptoCrop, it is possible to get 38.4% of coins through mining.

Vesting schedule

A project can have four stages of financing: initial, strategic, private and public. At each stage, the asset must grow in value for the investor, and the period before the start of each subsequent round must be shorter than the previous one. Since a later investor is paying more for their tokens, they simply don't have the patience to wait a long time to issue. Otherwise, you will have unsatisfied customers who will abandon the hodgepodge by selling the token on the first day.

The purpose of the token

What is the utility of a token? These days, you can't see it solely as a cache repository. It should do more than that. A CryptoCrop token is not just a measure of value, but an entire in-game monetary system. Helium (HNT) is also a good example: it is an IoT network with a wide range of uses, and the Wi-Fi hotspot generates HNT, so, the token is very attractive to investors.

Project goal(s)

What are the goals of the project? Are they clearly defined? A well-designed startup should have a clear, detailed set of goals, with a roadmap and deadlines. If there are none, be wary. The project must solve real problems, have vital goals, and be durable. Longevity means revenue growth, not siphoning off money.

Team Leaders

I saw a company page that had a picture of Ryan Gosling instead of a photo of one of the developers. So always pay attention to the data about the team. Find and analyze their LinkedIn pages. Consider whether their experience will benefit the project. For example, have they worked in business management or development? Or are they former doctors, lawyers, marketers, or actors? Check these people out. They should have relevant experience, and the more the better.

Native token

Creating a project based on ERC-20 does not mean it is a scam. Just check with tech support to find out why they chose an existing framework rather than making their own. For example, a project with specific goals, features and a reward system would probably need its own token. The amount of effort you put in can be an indicator of the seriousness of the company, or signal a possible pulling the rug out from under an investor if you get an inarticulate response.

How can understanding tokenomics help you make more money?

Longevity, a good team, detailed plans, a clear roadmap indicate reliability and sustainable future growth, which means profit for you. Therefore, strive to keep tokens in the project in the long run. Not being a cache vault, this system acts almost like a bank. You will make a lot of trades, and that is healthy market activity and price action for the project.

Often investors are looking for a "pump and dump" scenario. I am not one of those who are in favor of getting big money immediately at any cost. Becoming a millionaire overnight sounds tempting, but such offers are rare. I choose reliable, long-term, viable projects with great growth potential.

Now you can see the advantages and disadvantages of a new project and enter it from ground zero. Remember, never invest more than you can afford to lose, and all will be well. Remain vigilant and critical, because even with all this information, you can be cheated. Scammers have scammed many renowned experts, and it's easy for a person with no relevant experience to fall for the tricks of swindlers.

Conclusion

Tokenomics is critical to the viability of a crypto startup. All the data provided by the project team must be studied carefully. And any appearance of "red flags" that cause an intuitive sense of discomfort should serve as a signal that the project is worthy of the trash garbage can and not your investment portfolio.

The crypto space is rife with scammers. With experience, you will learn how to invest in assets that will lead us to financial freedom and perhaps make the world a better place, advancing the technology of the future for the common good. If you wish to start a profitable and reliable crypto project look at Bitcovault - a solid partner specializing in Bitcoin ATMs in the US market and worldwide.

Disclaimer: The information provided contains opinions of the author or editorial staff regarding investment, tax, or financial information. Such articles are provided for general informational purposes only and do not purport to provide specific legal or other professional advice. This information provided is in no way a solicitation to sell or purchase cryptocurrencies in any way. The recipient agrees that the authors, owners, and publishing agents of this article have no liability whatsoever for the material presented here, as we do not offer any brokerage or advisory information.

PAYDEPOT doesn’t give any advice or recommendations. For financial advice, contact a professional consultant.

Top posts

What is a Crypto Airdrop and how Does it Work…
How to Use a Bitcoin ATM
How to Use a Bitcoin ATM
12 Proven Ways to Make Money with Bitcoin
12 Proven Ways to Make Money with Bitcoin

Related posts

  • The collapse of FTX collapsed the entire cryptocurren…
  • Bitcoin price forecast for July 202…
  • What is the best day of the week to trade Bitcoin?…
Office Address
3524 Silverside Road, Suite 35B,
Wilmington, DE 19810-4929, USA
[email protected]
Working Hours
Mon-Fri : 10am to 5pm EST
Saturday & Sunday: Closed
Support
For all Forms of Inquiries
Phone:
Email:
[email protected]
Logo Paydepot
Logo FinCen

PAY DEPOT is a U.S. Department of Treasury Registered FinCEN MSB #31000226597910.

We are fully compliant with all Bank Secrecy Act (BSA), Anti-Money Laundering  (AML), and Know Your Customer (KYC) regulations. We offer buying and selling cryptocurrency online and using BTC ATMs.

Services
Find Crypto ATM Buy Cryptocurrency Online OTC crypto trading Bitcoin Price prediction
Customer Support
Customer Support General FAQ Crypto Glossary
Download Crypto Wallet
Get it on Google Play We are working on it! Coming soon
Get it on App Store We are working on it! Coming soon
Company
About Us Partner With Us Contact Us Reviews Blog
Latest Posts
  • The collapse of FTX collapsed the entire cryptocurrency market - what happened?
    The collapse of FTX collapsed the entire cryptocurren…
  • What is tokenomics, how to analyze and select projects?
    What is tokenomics, how to analyze and select projects?
  • Bitcoin price forecast for July 2022
    Bitcoin price forecast for July 202…
Follow Us
Facebook LinkedIn Instagram Twitter Youtube Medium Pinterest
Host Bitcoin ATM
Host our ATMs BTM Benefits
Knowledge Base

How to Buy Bitcoin with Cash

How to Buy Bitcoin with Pay Depot

Can You Use A Credit Card To Purchase Cryptocurrency?

Bitcoin and Cryptocurrency Drop: Should You Buy the Dip?

Find Crypto ATM Buy Cryptocurrency Online OTC crypto trading Bitcoin Price prediction
Company
About Us Partner With Us Contact Us Reviews Blog
Host our ATMs BTM Benefits
Latest Posts
  • The collapse of FTX collapsed the entire cryptocurrency market - what happened?
    The collapse of FTX collapsed the entire cryptocurren…
  • What is tokenomics, how to analyze and select projects?
    What is tokenomics, how to analyze and select projects?
  • Bitcoin price forecast for July 2022
    Bitcoin price forecast for July 202…
Follow Us
Facebook LinkedIn Instagram Twitter Youtube Medium Pinterest
Customer Support
Customer Support General FAQ Crypto Glossary
Download Crypto Wallet
Get it on Google Play
Get it on App Store
Logo FinCen

PAY DEPOT is a U.S. Department of Treasury Registered FinCEN MSB #31000226597910.

We are fully compliant with all Bank Secrecy Act (BSA), Anti-Money Laundering  (AML), and Know Your Customer (KYC) regulations. We offer buying and selling cryptocurrency online and using BTC ATMs.

Copyright © 2022 PAY DEPOT
Trustpilot
Cookies Risk Disclosure Privacy Policy Terms & Conditions