Tokenomics

Tokenomics is short for token economics. It covers how many units of an asset exist now, how many will ever exist, how new units are created or destroyed, who received the initial supply, and when locked tokens become sellable. These rules are written into code or published in a project's documentation, and they strongly influence how an asset behaves over time.

A simple example: two tokens each trade at 1 dollar. Token A has 10 million tokens in circulation and 10 million total, so its market cap and fully diluted valuation are both 10 million dollars. Token B has 10 million circulating but 1 billion total, with the remaining 990 million unlocking to insiders over three years. Token B faces far more future selling pressure even though the price today is identical.

Good tokenomics analysis asks who holds the supply, what the token is actually needed for, whether there is a credible reason for demand, and whether inflation from staking rewards or emissions is sustainable. Projects with vague answers to these questions have often lost most of their value once early holders started selling.