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.

The Quantity Theory of Money


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.

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