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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
Quantity Theory Of Money | Encyclopedia.com
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.
Last modified 3mo ago
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