A successful crypto project must have a well detail supply of their token economics.
Not understanding this as an investor or trader will affect your trading success.
Here is a fully understanding towards Tokenomics and why you should pay critical attention to it.
Lets discuss these critical things to note about tokenomics.
1. What is a Token?
2. What is Token Supply?
3. Understanding utility in token.
Tokens are transferable units of value on the Internet which runs on blockchains.
There are two major kinds of tokens
1. Utility tokens
2. Security tokens
Utility Tokens: These tokens act as a medium through which traders and investors can make use of it as a means of exchange within the ecosystem.
Examples of Utility Tokens.
$SOL
$ARB
$MATIC
$BNB
etc.
Security Tokens: These tokens represent financial assets.
Investors or traders use this tokens to have ownership rights in the said projects.
Token Supply
You must understand, as a trader, token supply will determine your profit ratio in trading and investing. Successful traders or investors use this idea in investing in a crypto project.
The law of demand and Supply is crucial and most be applied to every successful project. Devs know these, that is why many projects have limited supply tokens for their investors.
Two major things to note when investing in a crypto project regarding tokenomics are as follows:
1. Circulating Token Supply.
2. Maximun Token Supply.
3. Total Token Supply.
Looking at this three, will shape the way you should invest in crypto projects with large or limited supply chain.
Understanding Utility in a Token
Utility is what makes are product tradable and in high demand zone.
Token utility is all about the use cases of a token in a project.
What should investors/traders earn
or use this token for.
There are millions or tokens out there with less or no use cases in real life or within the ecosystem.
$BNB $SOL $ETH $ARB $SUI
These are few out of many others with huge utility for investors and traders.
One good thing about these tokens is that, you get to earn more of them by transacting, staking, farming, this way users can earn more money through their various investment in the ecosystem.
Token utility also doesn't stop at earning more income but allows for governance, voting mechanism, etc.
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