Theme 10: Tokenomics in 2022

2022 Snapshots Theme 10: Tokenomics in 2022

▪ Cryptocurrencies and the tokenized economy will increasingly serve as the pillar for Web3 development, elevating the importance of tokenomics.

▪ Decentralized projects with real communities and robust tokenomics will prevail in the event of broad-based sector weakness.

▪ It is imperative that projects structure tokenomics to align stakeholders’ incentives around long-term sustainable growth.

Core thesis

Token economics (“tokenomics”) “refers to any factor that might influence the value of the token. Tokenomics is among the most critical designs to the functioning of a blockchain project, or more broadly, the tokenized economy. Tokenomics cuts through multiple layers by aligning the incentives of all stakeholders in a way that is beneficial to the protocol and alters how the utility is measured.

Significance and Disruptive Impacts

Tokenomics needs to be carefully designed as it determines the long-term sustainability and success of decentralized projects. Tokenomics help predict the intrinsic value of the underlying token.

Expectation for 2022

1. The important role of tokenomics in the web3 economy Cryptocurrencies and the tokenized economy will increasingly serve as the pillar for Web3 development. (See Interview with Kevin Loo, New Vision)

2. Digital assets undergo ‘natural selection’ Survival of the fittest, considered a natural progression of cycles, will play out in the digital assets space. With the hype in the digital asset space, an eventual pullback may be inevitable. Projects with real communities and services will prevail. (See Interview with Alex Kent, TPS Capital)

3. Projects with tokenomics that focus on long-term sustainability and community alignment will outperform. It is imperative that projects structure tokenomics to align stakeholders’ incentives around long-term sustainable growth. (See Interview with Alex Kent, TPS Capitaland Interview with Zaf Chow, Animoca Brands)