Pixels Lite Paper
  • Pixels.xyz Lite Paper
    • NFT Integrations
    • Getting Started
  • Our Approach
    • The Economics of Balance
  • Gameplay
    • Farming
      • Planting and Harvesting
        • How to Farm
      • Energy
    • Land Ownership
      • World Building
      • Reward Sharing
      • Upgrades
      • Community Features
    • Quests
      • Quest Guide
  • Farm Land NFT
    • Traits
    • OpenSea
  • Token
    • Tokenomics 101
    • Our Thesis
    • Allocation
    • Token Roadmap
  • Product Roadmap
    • Long Term Roadmap
  • About Us
    • Team
    • Investors
  • How to Play
    • Getting Started
    • Tips & Tricks
    • Community
    • Encyclopedia
Powered by GitBook
On this page
  1. Token

Tokenomics 101

PreviousTokenNextOur Thesis

Last updated 3 years ago

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.

The Quantity Theory of Money

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.

LogoQuantity Theory Of Money | Encyclopedia.com