# Tokenomics 101 This is a high-level, extremely simplified look into how we're approaching our tokenomics. #### Supply and Demand Curves To start with the basics: currencies can be modeled on a graph with two curves: supply and demand. Granted there's a lot of nuance behind these curves in how they look, and how they shift. Where these curves meet is where the token's value is determined (in a closed system). The supply of a currency is typically shifted by the largest holder of that currency or a governing entity by either introducing more currency into a system or removing/burning currency from a system. Reducing the supply of a currency can shift the supply curve to the left, increasing the supply of a currency can shift it right. ![](/files/lBf19qJAIXUeQgxlVAoS) #### The Quantity Theory of Money {% embed url="" %} > PV = MY You can also model the price of a currency (in a closed system) via the Quantity Theory of Money. * P = **Price Levels** - How items in an economy are priced relative to their value * V = **Money Velocity** - How often a currency is exchanging hands * M = **Money Supply** - The amount of currency existing in a system * Y = **Output** - The number of goods being produced by an economy All of these variables have a play in how a currency is priced and its value. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.pixels.online/token/tokenomics-101.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.