Economic Fundamentals Behind Defi Tokens

Greetings and welcome dear readers, as humanity we have learned a process of adaptation and constant changes, at a social, economic and even environmental level, which has allowed us to evolve and demonstrate the best and worst of the human species.

In this sense, less than two years ago we suffered a tough battle against covid-19 that allowed us to observe the solidarity between us and a few months after having made some positive progress at the health level, since We are witnessing an armed conflict that demonstrates the folly of the human species, a conflict that in a certain way puts the world's financial systems in jeopardy, where many countries and users have decided to emigrate to new financial mechanisms that allow shoveling the harsh situation.

Among the new economic models that stand out we find cryptocurrencies and the decentralized format that this system offers us through its DEFI systems, where decentralization, speed and percentage yield of capital, without a doubt It is attractive for small, medium and large investors, therefore through these lines of writing we will focus on studying what refers to the economic operation of the token offered in DEFI systems so that we can evaluate their profitability.

Therefore, it is necessary to determine that the token economy, also called Tokenomics, aims to build a new sustainable economic system based on decentralized finance in the blockchain world. This economic design proposal is possible thanks to different types of interactions between the digital world and the real world, so that anything is assumed as a token, be it a work of art, a book, a scientific article, a song, among others.

So the true strength of this economic design is based on making the intangible tangible or, in other words, bringing to reality the value of the tokens created under the digital premise, through a process between users. and in a decentralized way.

Consequently, the token economy moves based on different indicators or variables that we will describe below:

1. A community that supports the token: this is one of the crucial variables within any financial economy, so having a conglomerate that supports the decisions, objectives and goals of the project will make that its economy is stronger and more sustainable over time.

Taking into account that the users themselves will be in charge of disclosing the potentialities of the token of the project that we want to promote and this translates into greater exposure and interest in potential investors.

2. Token distribution: once we are clear about the community that we have been able to support or develop, it is necessary to present a distribution of the tokens generated among the members of the community, this with the purpose of boosting the economy of the project, so that a network can be built that allows the different economic exchanges between users.

This process is usually dynamic and can be carried out through airdrops or initial launches, or in the form of initial offer and demand that allows investors to obtain the project token, therefore not supply and demand is enough, in such a way that in order to grow the economy, mining must be promoted that allows them to obtain attractive returns for the investors who participate in it.

3. Provide price stability: this is one of the argued points of the economic process of a token or project, since price fluctuations become a real problem for investors and developers, because decentralized finance is based on accumulating in the short term and selling what has been accumulated, which implies that the selling pressure causes the price of the asset to drop drastically and, consequently, the project is no longer sustainable over time.

Therefore, it is necessary to achieve stability of the token by applying timely burning methods that allow a part of the surplus of the asset to be taken out of circulation and consequently generate a certain stability in the price.

Based on the above, I would like to extrapolate what was studied to what the @xpilar community was doing well with the WOX project, without a doubt once the frozen assets were released in the project, a massive sale that took the price of $0.17 to a worrying minimum for investors who decided not to sell $0.04, now what is happening with the price of the WOX token that as of the date of this publication its value is $0.075.

From my point of view, the project is in the phase of providing price stability and for this the team of developers has decided to implement a burning process, carrying out the first operation with more than 30,000 WOX burned, which undoubtedly improved the value considerably. token.

Now, the implemented measures will be enough, being objective, it is the first approximation that is made in this regard, personally, a true economic dynamic begins with a method to retain community users since if we all bet on obtaining income in the short term, it will be difficult to stabilize the economy of the project.