@d12321 9 February 2023 more from that month

🧪 How to analyze tokenomics and earn even more? Why do investors expect growth during a token burn? How to understand when to buy or sell an asset based on its tokenomics? Let's figure it out once and for all 👇 Tokenomics is the economy of tokens and their application in the project. By understanding tokenomics, you can predict where the best entry and exit points will be. There are 2 types of tokenomics: inflationary and deflationary: ✅ Deflationary - the number of tokens in the offer decreases over time. This usually happens by burning (destroying) a share of the tokens. Or a buyback (buyback) of tokens from the market and sending them to a non-existent address. Example: BNB is a deflationary token with a limited supply. A total of 200 million BNB has been issued. Once a quarter, a part of the tokens is burned. So the emission of BNB decreases and the value of one coin becomes higher. 🔼 Pros: + Increase the value of the token. If demand rises and supply falls, the price rises. + Motivation to hold the token. The decrease in supply encourages holders to continue holding the token, as the price will rise in the future. + Stable economy. No one will print an infinite number of tokens by devaluing them. 🔽 Cons: - Reduced turnover. The higher the deflation, the more people tend to save rather than spend. This harms the economics of the project. - There is no incentive for development. The destroyed tokens could be distributed among the most active part of the community and stimulate various activities in the project. ✅ Inflationary - the total number of tokens increases over time. The release of new tokens occurs through mining (BTC), staking (ETH), farming (OSMO) and other activities. Example: Dogecoin has an inflationary model. New coins are endlessly printed. 🔼 Pros: + Stimulation of activity in the project. For example, for activity in projects on Optimism, you can earn OP tokens. + Reward early adopters. + Lure liquidity. Projects can offer high % staking through rewards in their tokens. 🔽 Cons: - Desire to sell the token. High inflation can lead to the fact that the token will be constantly sold. - Depreciation of the asset. An increase in supply leads to a decrease in the value of one coin. ✅ Conclusion As you can see, both models have their advantages and disadvantages. In the long run, deflationary tokens will have more value. In the short term, during the hype of the project - inflationary. Ultimately, the success of the project will depend on a combination of factors: tokenomics, team, marketing, and market conditions. Based on the Temmy thread. 📌 Save so you don't lose!