Tokenomics typically refers to the understanding of the economics of the underlying cryptocurrency and the supply and demand characteristics that influence it.
Understanding the relationship between supply and demand for a token is important as it may help you predict market pricing in the present and the future.
The main question you should ask yourself when examining a token's supply is: Should I anticipate that this token's value would drop, maintain steady, or rise over time based only on its supply?
A token's value will rise on the supply side if there are fewer of those tokens available; this is known as deflation. If there are more tokens, their value will decline; this is inflation.
To answer this question you should consider:
- How many tokens are in circulating supply;
- What is the max supply;
- How quickly are new tokens being minted;
- What is their allocation.
Besides the token distribution breakdown and the emissions schedule you should as well pay close attention to the mechanisms we have developed (locking, buy back, burn) and that influence both the supply and demand of FISH.
The most crucial factors to consider when determining whether a token will have demand-side value in the future are the utilities it provides to its owners.
A common utility for tokens in the DeFi space is that they give governance rights to its holders. This means investors are incentivized to buy a token because this allows them to have a say in how the protocol works and can shape it according to their desires.
Another major thing that gives a token utility is its return on investment (ROI). ROI here does not refer to how much you anticipate the token price to increase. It's the amount of income or cash flow the token may bring in for you just by holding it, for example through staking rewards or by receiving a cut of the protocol's earnings (dividends).
Other use cases for a token include for example the ability to buy NFTs, take part in prediction markets, lotteries, and casinos, buying stuff in video games and many more.