Tokenomics is a fundamental concept to understand if you want to explore the cryptocurrency industry. Tokenimics play a vital role in the success of a blockchain project by aligning the interests of all stakeholders and ensuring the long-term growth and sustainability of the blockchain project. The success of a cryptocurrency project is often attributed to the design of its tokenomics.
At EkoLance, we organized a tokenomics workshop, and we invited Maximilian Gutsche, the co-founder of Futurebrains, as our guest speaker. He is an expert in designing and analyzing token ecosystems. He educated the EkoLance community on tokenomics, how to analyze tokens, and the best analytical tools and frameworks. This article summarizes everything that was discussed.
What is Tokenomics?
“Tokenomics is the science of how to coordinate actors in a decentralized ecosystem through incentives (rewards)”— Maxmillian Gutsche, Co-founder of Futurebrains
Max explained that in a decentralized ecosystem, where there is nobody to set strict rules and enforce them, projects find a mechanism to get people to work on something that creates value. These people could have different personas but using an incentive design, they can be brought together to work on a project, and tokenomics makes this possible.
A practical example of how this plays out is the Helium Network. With this decentralized wireless connectivity platform, developers use LoRaWAN (Long Range Wide Area Network) to connect devices to the internet without relying on traditional cellular or Wi-Fi networks.
Helium has four major user groups: hotspot providers, validators, devices, and developers. These different actors and millions of users are rewarded so that they work together in one ecosystem to create a huge network coverage that is cheaper than our traditional network.
How to Analyze a Token
Max presented the Token Ecosystem Evaluation Framework, which is a framework and a tool he developed for token analysis. It uses the following aspects for the analysis:
Team & Investors
It is the first principle approach to analyzing tokens, although it is still in its Lite version. The framework covers essential metrics such as how value is created in an ecosystem, how a token rises in value, its supply, sustainability, etc. The framework covers classical metrics like the business model, revenue, team, investors, etc.
“This framework is valuable for investors, asset managers, hedge funds, and people who want to become a token researcher”- Maxmillian Gutsche, Co-founder of Futurebrains
To get an expected result from using the tool, you ought to fill up all the details required. In the end, you will get a report based on the answers and scores you supplied.
Analytical Tools To use in Finding the Details of Tokens
To get some of the information that might not be available on the whitepaper of a blockchain project, you will need to use some analytical tools. Examples of some of these tools are Token Terminal and Dune analytics.
Token Terminal is the most accessible analytical platform. It has a good UX interface, and you can click through things and analyze tokens with ease.
Dune analytics has amazing views and queries.
“It’s a red flag for a blockchain project not to have enough relevant information because good projects have good tokenomics”— Maxmillian Gutsche, Co-founder of Futurebrains
Max stated that a lack of relevant information about a blockchain project could be considered a red flag. Good blockchain projects typically have well-designed tokenomics, which include a comprehensive understanding of the token's use cases, value proposition, and how it will be distributed and utilized within the ecosystem.
The most important KPIs to look out for when analyzing a token are token price, the number of active developers, token incentives, daily active users, and revenue growth. Although, it is dependent on whether it’s layer 1 or layer 2, a DAO or a DeFi project.
The total value locked, trading volume, and average daily active addresses are essential if it’s a DeFi project.
For a DAO, things to look out for are the governance aspect of the project, how it creates value, what happens in the DAO, and the token's utility.
He concluded this part of the workshop by introducing his DAO, which is still in progress. The name is Token Research Cooperatives, and they focus on educating new token researchers; they also review crypto tokens based on their fundamentals.
What is the Job Market of a Token Researcher
“We used to call them blockchain analysts, but we are moving from that to digital asset analyst or token researcher”— Maxmillian Gutsche, Co-founder of Futurebrains
The financial institutions moving to the cryptocurrency industry will need token researchers, and there are no institutions that educate these people already, and that’s why the Token Research Cooperative was launched.
What Skills Do You Need to Become a Token Researcher?
“Most importantly, you need to be someone who enjoys analytical thinking”— Maxmillian Gutsche, Co-founder of Futurebrains
You don’t necessarily need to be a finance expert, but having a bit of financial market knowledge helps. The bull market will be triggered by the macro economy and inflation being favorable, but that’s not going to end in 2023. This means we need to innovate a lot and build more blockchain projects with good tokenomics.
Token Researcher & DeFi Analyst Training
EkoLance has launched a shared cohort-based course with Max for Web3 professionals who want to become Certified Token Researchers & DeFi Analysts.
The 10-week training program will start on the 18th of April 2023 and it is designed to provide you with the necessary knowledge and skills to excel in the industry.
Throughout the program, you'll gain a comprehensive understanding of tokenomics, including token design, distribution, and governance. This training session is an incredible opportunity to learn from experienced professionals and join a vibrant community of Token Researchers.
After the training, you will be able to work for institutional investors, asset management firms, banks, and blockchain companies. To enroll for this training, click here.
EkoLance is a Web3 skill-training and recruitment company that equips you with the knowledge and skills needed to meet the specific requirements of your preferred career in the blockchain industry. In addition to providing skill training, we partner with global tech companies in finding and hiring qualified candidates from our talent pool.
To read the summary of our just concluded blockchain content creator training for professionals, click here.
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