Our Clients - Nomis Protocol (web3 reputation) reached an impressive milestone: Top 2 NFT Smart Contract on Linea (out of 30,7k contracts) with more than 40k transfers daily🔥
We helped Nomis to build supply-side tokenomics: define stakeholders allocations, balanced unlocks schedule, vesting & cliffs, TGE and main metrics (FDMC, IMC). We also developed strategic token sales structure to be the most appealing to tier-1 VCs!
Connect with us to define tokenomics strategy for your web3 project!⚡️
@CoinstructLabs | Tokenomics
We helped Nomis to build supply-side tokenomics: define stakeholders allocations, balanced unlocks schedule, vesting & cliffs, TGE and main metrics (FDMC, IMC). We also developed strategic token sales structure to be the most appealing to tier-1 VCs!
Connect with us to define tokenomics strategy for your web3 project!⚡️
@CoinstructLabs | Tokenomics
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What Tokenomics Lessons should Web3 founders learn from the success of the Ethena (ENA) launch?👨🚀
USDe supply grew to over $2.1bn. This represents the fastest USD-denominated asset to reach >$1bn supply ever in crypto. Ethena also became the highest earning protocol in the industry in just 3 weeks, setting a new benchmark for DeFi interest rates.
🔥 The first season of Ethena’s Shard Campaign campaign was very successful - at Coinstruct, we have outlined some of the tokenomics insights you can take from it:
1. Pro-rata vesting for airdropped tokens: A user's wallet can be monitored with a basic on-chain check to calculate whether the token’s balance has fallen below the balance on the date of a snapshot. So long as the balance of a token is greater than or equal to this amount, users will receive their full unvested amount. If not - example: If a user sells some tokens received from an airdrop, resulting in the initial wallet balance being 10% lower than the snapshot, the user will lose just 10% of their unvested tokens rather than the full amount.
2. Conduct continuous rewards campaign and, most importantly, right after the token launch: For ENA - the second season of incentives began immediately on 2nd April after the listings on CEXes and token claim.
3. Largest wallets should be a subject to a prolonged pro-rata vesting over 3-6 months.
4. Users who participated in the first season of your reward programme and who continue participating in the ecosystem should receive boosted loyalty rewards in the second season of incentives.
5. Airdrops to be set at 4-5% of Total Supply and distributed proportional through seasonal campaigns - one after another.
6. Unclaimed tokens should be redistributed to the benefit of active users and not be retained by the core contributors or the Foundation.
7. A prolonged vesting should be applied to the largest recipients of the airdrop in order to align long term incentives with the protocol.
8. ENA chose to distribute airdrop in the following manner: 50% unlocked, 50% to be subject to 6 month linear vesting.
9. Smaller wallets can receive no vesting conditions - as it is important to acknowledge the higher gas fees required to participate in the campaign.
@CoinstructLabs
USDe supply grew to over $2.1bn. This represents the fastest USD-denominated asset to reach >$1bn supply ever in crypto. Ethena also became the highest earning protocol in the industry in just 3 weeks, setting a new benchmark for DeFi interest rates.
1. Pro-rata vesting for airdropped tokens: A user's wallet can be monitored with a basic on-chain check to calculate whether the token’s balance has fallen below the balance on the date of a snapshot. So long as the balance of a token is greater than or equal to this amount, users will receive their full unvested amount. If not - example: If a user sells some tokens received from an airdrop, resulting in the initial wallet balance being 10% lower than the snapshot, the user will lose just 10% of their unvested tokens rather than the full amount.
2. Conduct continuous rewards campaign and, most importantly, right after the token launch: For ENA - the second season of incentives began immediately on 2nd April after the listings on CEXes and token claim.
3. Largest wallets should be a subject to a prolonged pro-rata vesting over 3-6 months.
4. Users who participated in the first season of your reward programme and who continue participating in the ecosystem should receive boosted loyalty rewards in the second season of incentives.
5. Airdrops to be set at 4-5% of Total Supply and distributed proportional through seasonal campaigns - one after another.
6. Unclaimed tokens should be redistributed to the benefit of active users and not be retained by the core contributors or the Foundation.
7. A prolonged vesting should be applied to the largest recipients of the airdrop in order to align long term incentives with the protocol.
8. ENA chose to distribute airdrop in the following manner: 50% unlocked, 50% to be subject to 6 month linear vesting.
9. Smaller wallets can receive no vesting conditions - as it is important to acknowledge the higher gas fees required to participate in the campaign.
@CoinstructLabs
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About Value Accrual💫
Value accrual --> only possible when protocol creates value in the first place. No value created --> No value captured. However, this case can also be the following: a lot of Value created, however, none of it captured.
In the world of crypto, there are factors collectively called «Value Accrual». This name encompasses the ways in which the value of an asset accumulates.
Here is a partial list of these factors that do affect the value of a token:
==> Network Effect
The value of a currency usually depends on the number users in the ecosystem. It's especially relevant in the case on marketplaces. Each new member increases the value for everyone else.
==> Deflationary decisions
The value is also affected by the deflationary policies of the asset. In theory, If a token has a limited supply, over time this can cause its value to rise -> however, things are way more complicated in reality.
==> Project Development
Of course, project development (often tokens come from them) also stimulates the growth of the asset's value. After all, innovations and major innovative improvements always attract new users and investors.
There are other factors that affect the price of an asset. But we have told you about the main and most important ones. At the same time, they allow you to assess the potential price of an asset in the future and make the right decision whether it is worth investing in a particular asset or not. Thanks for reading!
@CoinstructLabs | Tokenomics
Value accrual --> only possible when protocol creates value in the first place. No value created --> No value captured. However, this case can also be the following: a lot of Value created, however, none of it captured.
In the world of crypto, there are factors collectively called «Value Accrual». This name encompasses the ways in which the value of an asset accumulates.
Here is a partial list of these factors that do affect the value of a token:
==> Network Effect
The value of a currency usually depends on the number users in the ecosystem. It's especially relevant in the case on marketplaces. Each new member increases the value for everyone else.
==> Deflationary decisions
The value is also affected by the deflationary policies of the asset. In theory, If a token has a limited supply, over time this can cause its value to rise -> however, things are way more complicated in reality.
==> Project Development
Of course, project development (often tokens come from them) also stimulates the growth of the asset's value. After all, innovations and major innovative improvements always attract new users and investors.
There are other factors that affect the price of an asset. But we have told you about the main and most important ones. At the same time, they allow you to assess the potential price of an asset in the future and make the right decision whether it is worth investing in a particular asset or not. Thanks for reading!
@CoinstructLabs | Tokenomics
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Liquidity management in DeFi🧊
Liquidity management plays a very important role in DeFi technology, making cryptocurrency assets available for free trading and other transactions.
Today, we will look at the main aspects of liquidity management in DeFi.
==> Liquidity Supply
There are a number of solutions to ensure liquidity supply and asset availability: AMMs that supply liquidity from exchange funds; curated liquidity pools - DeFi platforms that optimize liquidity; liquidity aggregators that combine liquidity from different sources
==> Security
Security should be one of the priority areas of liquidity attraction. DeFi projects should pay attention to regular auditing of smart contracts, use multi-signature wallets.
==> Attracting participants
In order to successfully attract liquidity from users, you need something to interest them. Therefore, many projects already have liquidity mining technology, usually in Liquidity Provider tokens. There are other rewards as well
New liquidity inflows keep the market available and stable. The more liquidity, the more difficult it is to conduct market manipulation. Now you understand some of the liquidity management mechanisms in DeFi. Thanks for reading!
@CoinstructLabs | Tokenomics
Liquidity management plays a very important role in DeFi technology, making cryptocurrency assets available for free trading and other transactions.
Today, we will look at the main aspects of liquidity management in DeFi.
==> Liquidity Supply
There are a number of solutions to ensure liquidity supply and asset availability: AMMs that supply liquidity from exchange funds; curated liquidity pools - DeFi platforms that optimize liquidity; liquidity aggregators that combine liquidity from different sources
==> Security
Security should be one of the priority areas of liquidity attraction. DeFi projects should pay attention to regular auditing of smart contracts, use multi-signature wallets.
==> Attracting participants
In order to successfully attract liquidity from users, you need something to interest them. Therefore, many projects already have liquidity mining technology, usually in Liquidity Provider tokens. There are other rewards as well
New liquidity inflows keep the market available and stable. The more liquidity, the more difficult it is to conduct market manipulation. Now you understand some of the liquidity management mechanisms in DeFi. Thanks for reading!
@CoinstructLabs | Tokenomics
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Crypto buybacks
Today we will discuss such an important aspect of the supply side tokenomics as buyback.
What is a buyback and why is it needed? As it is easy to understand from the name, it is a buying of assets by the token issuing company from the circulation. Here are three reasons why it is being implemented:
==> Reducing float to a desired level
==> Artificial price level support
==> Attracting new investors
Buyback in crypto most often occurs as part of the token burn procces.
To recap, it usually involves the PoB (Proof-of-Burn) algorithm, when holders send an asset to a special address from which tokens cannot be withdrawn
@CoinstructLabs | Tokenomics
Today we will discuss such an important aspect of the supply side tokenomics as buyback.
What is a buyback and why is it needed? As it is easy to understand from the name, it is a buying of assets by the token issuing company from the circulation. Here are three reasons why it is being implemented:
==> Reducing float to a desired level
==> Artificial price level support
==> Attracting new investors
Buyback in crypto most often occurs as part of the token burn procces.
To recap, it usually involves the PoB (Proof-of-Burn) algorithm, when holders send an asset to a special address from which tokens cannot be withdrawn
@CoinstructLabs | Tokenomics
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Airdrop Design Insights
If we look at airdrops from a project's perspective, many questions arise regarding the design of the reward system🫢
How much should be distributed? To whom? Based on what criteria? And how can you prevent users from leaving right after the drop?
Even Tier-1 projects sometimes (often) get it wrong, and these mistakes can be fatal😵
The number of airdrops has increased by more than 300% from 2019 to 2023, highlighting the popularity of this method for attracting audiences to Web3 projects. However, more than 60% of airdrops attracted fewer than 500 participants, indicating difficulties in achieving mass reach and differentiation. Most airdrops fall flat. Why?
A study covering over 2 million airdrops shows that 95% of profits are concentrated in just 5% of the drops. On average, a successful airdrop brings participants around $2,000, but less than 1% of all airdrops reach this level.
At Coinstruct🚀 , we believe that part of the problem with failed airdrops lies in their poor design. Here are some insights we can recommend to crypto project founders who are planning and executing airdrops, based on excellent research by 6MV.
Several key insights were identified regarding the effectiveness of airdrops:
1. Distribution to target groups (Core Users) showed the highest efficiency compared to widespread distribution (Widespread) and resulted in higher token prices two months after the airdrop event (See the trend on the graph adove).
2. The size of the airdrop did not significantly affect price dynamics or volatility. This suggests that the "low float" theory is less relevant for price surges than other factors.
3. Widespread cohorts had twice as many sellers as core cohorts.
4. Small airdrops (less than 5% of the total token supply) for core users led to a 4-8x increase in the number of buyers.
@Coinstruct | Tokenomics
If we look at airdrops from a project's perspective, many questions arise regarding the design of the reward system
How much should be distributed? To whom? Based on what criteria? And how can you prevent users from leaving right after the drop?
Even Tier-1 projects sometimes (often) get it wrong, and these mistakes can be fatal
The number of airdrops has increased by more than 300% from 2019 to 2023, highlighting the popularity of this method for attracting audiences to Web3 projects. However, more than 60% of airdrops attracted fewer than 500 participants, indicating difficulties in achieving mass reach and differentiation. Most airdrops fall flat. Why?
A study covering over 2 million airdrops shows that 95% of profits are concentrated in just 5% of the drops. On average, a successful airdrop brings participants around $2,000, but less than 1% of all airdrops reach this level.
At Coinstruct
Several key insights were identified regarding the effectiveness of airdrops:
1. Distribution to target groups (Core Users) showed the highest efficiency compared to widespread distribution (Widespread) and resulted in higher token prices two months after the airdrop event (See the trend on the graph adove).
2. The size of the airdrop did not significantly affect price dynamics or volatility. This suggests that the "low float" theory is less relevant for price surges than other factors.
3. Widespread cohorts had twice as many sellers as core cohorts.
4. Small airdrops (less than 5% of the total token supply) for core users led to a 4-8x increase in the number of buyers.
@Coinstruct | Tokenomics
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Where is the Ideal in Tokenomics?😆
Our team is constantly searching for great DeFi and purely tokenomics-based mechanisms in major protocols that are successfully applied in practice and bring significant benefits to the product.
One such mechanism is the Safety Module in AAVE.
The Safety Module (SM) is a key security element in the AAVE ecosystem, designed to protect the protocol from risks. Users stake their AAVE tokens in the module and receive rewards in the form of AAVE and stkAAVE tokens. The primary goal of SM is to provide the protocol with liquidity in the event of unforeseen losses, such as liquidity shortfalls or major defaults.
How does it work?🤩
Users deposit their AAVE into the Safety Module and receive rewards in return. The reward consists of two components: AAVE tokens and swap fees. The latter are tokens that can be exchanged for AAVE after a certain period (usually 10 days) without loss.
Covering losses:
In case of a liquidity shortfall, the protocol can initiate a "slashing" process – cutting up to 30% of the staked assets in SM to cover losses. This is a self-insurance mechanism that protects users from losses.
How does the protocol benefit?🫡
1. Rewards for risk: Stakers are compensated for taking on the risk of losing their tokens in extraordinary situations. This encourages long-term user participation in the ecosystem.
2. Safety Incentives: AAVE incentivizes token holders to participate in the Safety Module by offering rewards in the form of AAVE tokens and a share of the protocol's fees. These incentives create a positive feedback loop where participation in SM strengthens the system, and the earned rewards motivate users to continue staking their tokens.
3. Liquidity attraction: The module attracts long-term participants who are willing not only to invest but also to support the protocol. This enhances the ecosystem's resilience.
Thus, the Safety Module not only protects the protocol but also fosters a sustainable community of participants committed to its long-term success.
@Coinstruct | Tokenomics
Our team is constantly searching for great DeFi and purely tokenomics-based mechanisms in major protocols that are successfully applied in practice and bring significant benefits to the product.
One such mechanism is the Safety Module in AAVE.
The Safety Module (SM) is a key security element in the AAVE ecosystem, designed to protect the protocol from risks. Users stake their AAVE tokens in the module and receive rewards in the form of AAVE and stkAAVE tokens. The primary goal of SM is to provide the protocol with liquidity in the event of unforeseen losses, such as liquidity shortfalls or major defaults.
How does it work?
Users deposit their AAVE into the Safety Module and receive rewards in return. The reward consists of two components: AAVE tokens and swap fees. The latter are tokens that can be exchanged for AAVE after a certain period (usually 10 days) without loss.
Covering losses:
In case of a liquidity shortfall, the protocol can initiate a "slashing" process – cutting up to 30% of the staked assets in SM to cover losses. This is a self-insurance mechanism that protects users from losses.
How does the protocol benefit?
1. Rewards for risk: Stakers are compensated for taking on the risk of losing their tokens in extraordinary situations. This encourages long-term user participation in the ecosystem.
2. Safety Incentives: AAVE incentivizes token holders to participate in the Safety Module by offering rewards in the form of AAVE tokens and a share of the protocol's fees. These incentives create a positive feedback loop where participation in SM strengthens the system, and the earned rewards motivate users to continue staking their tokens.
3. Liquidity attraction: The module attracts long-term participants who are willing not only to invest but also to support the protocol. This enhances the ecosystem's resilience.
Thus, the Safety Module not only protects the protocol but also fosters a sustainable community of participants committed to its long-term success.
@Coinstruct | Tokenomics
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Liquidity in Tokenomics and How to Set Up an LP
Liquidity is one of the key aspects of a successful token. It ensures the ability to exchange tokens quickly without significant price fluctuations on the open market😉
Insufficient liquidity can lead to high volatility and deter market participants.
Setting up a liquidity pool (LP) is an important step in building effective tokenomics. A liquid token allows more users to engage with your project’s ecosystem and enhances its credibility.
At Coinstruct, we outline the main steps for setting up a liquidity pool in simple terms:
1. Choosing a Blockchain. Select the blockchain and AMM (automated market maker). Popular platforms include Ethereum (Uniswap) and BNB Chain (PancakeSwap). The choice of blockchain depends on your product, how often users make transactions, how much they are willing to pay for them, and where your target audience is located. For example, blockchain games are better suited for Polygon and ImmutableX, while BSC is ideal for projects targeting Eastern audiences.
2. Setting a Token Price. Initially, you determine the price, but later, the market takes over. The price in an LP is determined by the ratio of tokens in the pool (your token and the paired token). For example, if you add 100 USDC (the pair) and 10 of your tokens "TOKEN", the starting price will be 10 USDC per 1 "TOKEN". This ratio remains a key factor in determining the market price at launch.
😆 Token pricing can be simplified into three main categories:
-Evaluating the supply and demand flows. Here, it’s important to consider how the token will be used (utility), the emission mechanisms, and how they affect token availability. Tokens with broad utility and limited emission generally enjoy higher demand and price growth.
-Evaluating future financial benefits. Modeling the discounted cash flows (DCF) of the token and the project helps determine its long-term value. This approach involves forecasting future earnings that token holders can expect, which is especially important for projects that offer rewards or profit-sharing tokens.
-"Market Milestones". What does the rest of the market think your token is worth? It’s crucial to understand not only the token’s actual utility but also how investors perceive it and what future demand for it will look like.
3. Assessing the Required Liquidity. The more liquidity you provide, the smoother trading will be, reducing slippage and boosting investor confidence. Insufficient liquidity can lead to volatility and deter traders, but at the same time, excessive liquidity might prevent the token from growing. To determine the optimal liquidity volume, we conduct simulations based on forecasted average trading volume. If you expect an average trading volume of $1,000, liquidity should be at least 200 times larger.
4. Incentivizing Liquidity Providers. To attract liquidity providers (LPs), you can offer rewards in the form of your project's tokens. This mechanism, known as "Liquidity Mining," helps increase liquidity in the pool and boost ecosystem activity.
There are many nuances to liquidity management. If you’re planning to launch a token or have any questions about liquidity, feel free to ask in the comments.
@Coinstruct | Tokenomics
Liquidity is one of the key aspects of a successful token. It ensures the ability to exchange tokens quickly without significant price fluctuations on the open market
Insufficient liquidity can lead to high volatility and deter market participants.
Setting up a liquidity pool (LP) is an important step in building effective tokenomics. A liquid token allows more users to engage with your project’s ecosystem and enhances its credibility.
At Coinstruct, we outline the main steps for setting up a liquidity pool in simple terms:
1. Choosing a Blockchain. Select the blockchain and AMM (automated market maker). Popular platforms include Ethereum (Uniswap) and BNB Chain (PancakeSwap). The choice of blockchain depends on your product, how often users make transactions, how much they are willing to pay for them, and where your target audience is located. For example, blockchain games are better suited for Polygon and ImmutableX, while BSC is ideal for projects targeting Eastern audiences.
2. Setting a Token Price. Initially, you determine the price, but later, the market takes over. The price in an LP is determined by the ratio of tokens in the pool (your token and the paired token). For example, if you add 100 USDC (the pair) and 10 of your tokens "TOKEN", the starting price will be 10 USDC per 1 "TOKEN". This ratio remains a key factor in determining the market price at launch.
-Evaluating the supply and demand flows. Here, it’s important to consider how the token will be used (utility), the emission mechanisms, and how they affect token availability. Tokens with broad utility and limited emission generally enjoy higher demand and price growth.
-Evaluating future financial benefits. Modeling the discounted cash flows (DCF) of the token and the project helps determine its long-term value. This approach involves forecasting future earnings that token holders can expect, which is especially important for projects that offer rewards or profit-sharing tokens.
-"Market Milestones". What does the rest of the market think your token is worth? It’s crucial to understand not only the token’s actual utility but also how investors perceive it and what future demand for it will look like.
3. Assessing the Required Liquidity. The more liquidity you provide, the smoother trading will be, reducing slippage and boosting investor confidence. Insufficient liquidity can lead to volatility and deter traders, but at the same time, excessive liquidity might prevent the token from growing. To determine the optimal liquidity volume, we conduct simulations based on forecasted average trading volume. If you expect an average trading volume of $1,000, liquidity should be at least 200 times larger.
4. Incentivizing Liquidity Providers. To attract liquidity providers (LPs), you can offer rewards in the form of your project's tokens. This mechanism, known as "Liquidity Mining," helps increase liquidity in the pool and boost ecosystem activity.
There are many nuances to liquidity management. If you’re planning to launch a token or have any questions about liquidity, feel free to ask in the comments.
@Coinstruct | Tokenomics
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Tokenomics Analysis is hard..
And we know that!
So, in order to bring you some insights - in this in-depth interview, AlphaMind co-founder Kate Naimushina sits down with Max Krasnov, a Web3 economist & CEO of Coinstruct, to explore how retail investors can effectively analyze tokenomics in IDO projects.
Video is here
This one covers mostly the fundamental part & layers & essence of Tokenomics, which can be used right away by analyzing newly launching projects.
🔥Topics Covered:
1. What is Tokenomics?
Why retail investors should care about tokenomics and how it directly impacts their investment decisions.
2. Key Components to Analyze
What to focus on: token distribution, demand, utility, and other factors that drive a token's success.
3. Supply & Demand
How to assess the fairness of allocations between teams, early investors, and the community. Avoid projects where founders hold too much or the community has limited access.
4. Solid Token Utility & Value accrual
Why utility matters: Evaluating a token’s role within the project’s ecosystem and its long-term potential for adoption.
Red Flags to Watch
5. Common tokenomics issues:
Overly high inflation, unclear use cases, and misaligned incentives that should be avoided before joining an IDO.
Tell us your feedback🤝
@Coinstruct | Tokenomics
And we know that!
So, in order to bring you some insights - in this in-depth interview, AlphaMind co-founder Kate Naimushina sits down with Max Krasnov, a Web3 economist & CEO of Coinstruct, to explore how retail investors can effectively analyze tokenomics in IDO projects.
Video is here
This one covers mostly the fundamental part & layers & essence of Tokenomics, which can be used right away by analyzing newly launching projects.
🔥Topics Covered:
1. What is Tokenomics?
Why retail investors should care about tokenomics and how it directly impacts their investment decisions.
2. Key Components to Analyze
What to focus on: token distribution, demand, utility, and other factors that drive a token's success.
3. Supply & Demand
How to assess the fairness of allocations between teams, early investors, and the community. Avoid projects where founders hold too much or the community has limited access.
4. Solid Token Utility & Value accrual
Why utility matters: Evaluating a token’s role within the project’s ecosystem and its long-term potential for adoption.
Red Flags to Watch
5. Common tokenomics issues:
Overly high inflation, unclear use cases, and misaligned incentives that should be avoided before joining an IDO.
Tell us your feedback🤝
@Coinstruct | Tokenomics
YouTube
Essential Tokenomics Analysis for IDO Investors | Insights with Max Krasnov
Unlock the Secrets of Tokenomics for IDO Success! 🎯
In this in-depth 30-minute interview, AlphaMind co-founder Kate Naimushina sits down with Max Krasnov, Web3 economist & CEO of Coinstruct.tech, to break down how retail investors can effectively analyze…
In this in-depth 30-minute interview, AlphaMind co-founder Kate Naimushina sits down with Max Krasnov, Web3 economist & CEO of Coinstruct.tech, to break down how retail investors can effectively analyze…
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🧩 Token Utility in Web3 Projects: What's the Real Economic Impact?
We often see various token use cases in Web3 tokenomics, but what’s their actual effect on the project’s economy?
The core question is: does the token utility successfully remove tokens from circulation and keep them out of the market for a long time, or even permanently?
In most cases - token utilities created just for the permanent locking of liquidity with a shifted accrual - which actually acts as a postponed sell-off.
1️⃣ Burning Mechanism 🔥
The simplest approach. When tokens are burned, they’re permanently removed from circulation. With a fixed or increasing demand, reducing the supply pushes the price upward.
2️⃣ Treasury Allocation:
Some protocols allocate a portion of revenue to the Treasury. The key factor here is how much of this pool is being sold on the open market (creating sell pressure) versus locked for future use. The more tokens locked and reserved, the better for market balance.
3️⃣ Staking:
Staking is popular (used by 95% of projects), but its effectiveness depends on the protocol’s revenue. If staking rewards come from protocol revenue, growth in revenue amplifies staking's positive effect. But when revenue plateaus or declines, staking can turn negative, as early stakers begin selling their rewards and new stakers aren’t entering.
Understanding these mechanisms is crucial for evaluating long-term tokenomics impact!
@CoinstructLabs | Tokenomics
We often see various token use cases in Web3 tokenomics, but what’s their actual effect on the project’s economy?
The core question is: does the token utility successfully remove tokens from circulation and keep them out of the market for a long time, or even permanently?
In most cases - token utilities created just for the permanent locking of liquidity with a shifted accrual - which actually acts as a postponed sell-off.
1️⃣ Burning Mechanism 🔥
The simplest approach. When tokens are burned, they’re permanently removed from circulation. With a fixed or increasing demand, reducing the supply pushes the price upward.
2️⃣ Treasury Allocation:
Some protocols allocate a portion of revenue to the Treasury. The key factor here is how much of this pool is being sold on the open market (creating sell pressure) versus locked for future use. The more tokens locked and reserved, the better for market balance.
3️⃣ Staking:
Staking is popular (used by 95% of projects), but its effectiveness depends on the protocol’s revenue. If staking rewards come from protocol revenue, growth in revenue amplifies staking's positive effect. But when revenue plateaus or declines, staking can turn negative, as early stakers begin selling their rewards and new stakers aren’t entering.
Understanding these mechanisms is crucial for evaluating long-term tokenomics impact!
@CoinstructLabs | Tokenomics
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📉 The Problem with Time-Based Vesting Schedules in Web3 Projects
In the picture above you can see a common price action of young crypto tokens with much selling pressure from vesting parties and too less adoption / demand for the token.
That's because - most Web3 projects use time-based vesting schedules, which is a system where tokens are distributed to team members, investors, or other stakeholders over a set period of time, regardless of market conditions🥲
This means that no matter how well or poorly the project performs, tokens are being released at a fixed rate (already shedualed).
However, the problem with this approach is that it’s too rigid. It doesn’t account for changing market conditions or project performance.
Predicting future demand and buying pressure is nearly impossible, which makes a fixed token release schedule problematic. If demand suddenly drops or increases, the fixed emission schedule can flood the market with tokens at the wrong time, leading to oversupply or missed opportunities.
💡 A Smarter Approach: Performance-Based Vesting
To address this, more adaptable alternatives should be considered, such as:
1️⃣ TVL-Adjusted Vesting: Vesting linked to the Total Value Locked (TVL) in the protocol. The higher the protocol’s TVL, the more tokens are unlocked, aligning incentives with growth and ensuring that token release reflects actual usage and value creation.
Example: Clip Finance
2️⃣ Adoption-Adjusted Vesting (AAV): AAV ties the release of tokens to actual user adoption and traction. Tokens are released when the project hits certain user or usage milestones. This method allows for flexibility in token release based on real-world performance. According to Outlier Ventures, AAV helps maintain long-term alignment between the protocol’s success and token emission, making sure tokens are only released when the protocol is gaining actual traction.
By moving away from rigid time-based vesting schedules and adopting more flexible, performance-based alternatives, projects can better adapt to changing market conditions and ensure that token supply aligns with actual demand.
@CoinstructLabs | Tokenomics
In the picture above you can see a common price action of young crypto tokens with much selling pressure from vesting parties and too less adoption / demand for the token.
That's because - most Web3 projects use time-based vesting schedules, which is a system where tokens are distributed to team members, investors, or other stakeholders over a set period of time, regardless of market conditions🥲
This means that no matter how well or poorly the project performs, tokens are being released at a fixed rate (already shedualed).
However, the problem with this approach is that it’s too rigid. It doesn’t account for changing market conditions or project performance.
Predicting future demand and buying pressure is nearly impossible, which makes a fixed token release schedule problematic. If demand suddenly drops or increases, the fixed emission schedule can flood the market with tokens at the wrong time, leading to oversupply or missed opportunities.
💡 A Smarter Approach: Performance-Based Vesting
To address this, more adaptable alternatives should be considered, such as:
1️⃣ TVL-Adjusted Vesting: Vesting linked to the Total Value Locked (TVL) in the protocol. The higher the protocol’s TVL, the more tokens are unlocked, aligning incentives with growth and ensuring that token release reflects actual usage and value creation.
Example: Clip Finance
2️⃣ Adoption-Adjusted Vesting (AAV): AAV ties the release of tokens to actual user adoption and traction. Tokens are released when the project hits certain user or usage milestones. This method allows for flexibility in token release based on real-world performance. According to Outlier Ventures, AAV helps maintain long-term alignment between the protocol’s success and token emission, making sure tokens are only released when the protocol is gaining actual traction.
By moving away from rigid time-based vesting schedules and adopting more flexible, performance-based alternatives, projects can better adapt to changing market conditions and ensure that token supply aligns with actual demand.
@CoinstructLabs | Tokenomics
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Bonding Curve for Web3 Community Creation
Bonding curves are mechanisms that enable continuous liquidity for a token, with its price dynamically changing based on the amount of activity within the network. One of the best use cases for bonding curves is community tokens.
However, Web3 community creation comes with challenges, such as:
1️⃣ How to incentivize participation in a community that doesn’t yet exist?
2️⃣ How to prevent free-riders from extracting value without contributing to the community?
Let's explore how bonding curves can solve these issues by examining three types of community members:
🧑💼 Person A buys a large portion of tokens early on, which initially gives them significant ownership of the supply. However, as more members join and new tokens are minted, their share of the total supply decreases. This results in a high initial price for Person A, but over time, as others join, the token becomes cheaper for new members.
🧑💻 Person B buys tokens consistently, increasing their share of the total supply over time. Because they purchase tokens steadily, their costs increase as the total supply grows and the token’s price rises. They are buying more tokens than others, causing each new purchase to be more expensive for them.
🧑💼 Person C buys varying amounts of tokens at different times. Their share of the total supply and the price they pay fluctuates, depending on the overall supply and demand dynamics at the time of each purchase.
Effects of Dynamic Bonding Curves:
💰 If you hold a large portion of the total token supply, buying more tokens becomes expensive. However, if you decide to sell, you'll receive a higher price due to your dominant position in the community.
💸 On the other hand, if you hold a small portion, buying tokens is cheaper. But if you sell, you'll get a lower price because of your smaller influence on the total supply.
Benefits:
1. Incentivizes early participation by rewarding those who contribute from the beginning with greater value.
2. Discourages free-riders, as buying tokens becomes more expensive the more dominant your position is, encouraging participants to continuously add value to maintain their standing.
With bonding curves, community-driven tokens become a self-regulating mechanism that balances entry and exit prices, aligns incentives, and ensures that value is created as more people participate.
@CoinstructLabs | Tokenomics
Bonding curves are mechanisms that enable continuous liquidity for a token, with its price dynamically changing based on the amount of activity within the network. One of the best use cases for bonding curves is community tokens.
However, Web3 community creation comes with challenges, such as:
1️⃣ How to incentivize participation in a community that doesn’t yet exist?
2️⃣ How to prevent free-riders from extracting value without contributing to the community?
Let's explore how bonding curves can solve these issues by examining three types of community members:
🧑💼 Person A buys a large portion of tokens early on, which initially gives them significant ownership of the supply. However, as more members join and new tokens are minted, their share of the total supply decreases. This results in a high initial price for Person A, but over time, as others join, the token becomes cheaper for new members.
🧑💻 Person B buys tokens consistently, increasing their share of the total supply over time. Because they purchase tokens steadily, their costs increase as the total supply grows and the token’s price rises. They are buying more tokens than others, causing each new purchase to be more expensive for them.
🧑💼 Person C buys varying amounts of tokens at different times. Their share of the total supply and the price they pay fluctuates, depending on the overall supply and demand dynamics at the time of each purchase.
Effects of Dynamic Bonding Curves:
💰 If you hold a large portion of the total token supply, buying more tokens becomes expensive. However, if you decide to sell, you'll receive a higher price due to your dominant position in the community.
💸 On the other hand, if you hold a small portion, buying tokens is cheaper. But if you sell, you'll get a lower price because of your smaller influence on the total supply.
Benefits:
1. Incentivizes early participation by rewarding those who contribute from the beginning with greater value.
2. Discourages free-riders, as buying tokens becomes more expensive the more dominant your position is, encouraging participants to continuously add value to maintain their standing.
With bonding curves, community-driven tokens become a self-regulating mechanism that balances entry and exit prices, aligns incentives, and ensures that value is created as more people participate.
@CoinstructLabs | Tokenomics
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Token Velocity: $100M Product, $0 Token Value?
In the traditional economy, velocity of money refers to how frequently a unit of currency is exchanged in an economy over a specific time frame. Similarly, in tokenomics, token velocity impacts the price of a token by breaking the link between the value generated by a product and the value transferred to the token economy.
Here’s an example: Imagine a ticketing platform called “XYZ.”
🎫 Consumers prefer paying for tickets in dollars. While they may purchase XYZ tokens to buy tickets, they won’t hold onto them for long. There’s no incentive to hold the tokens since they could lose value compared to dollars.
🏟 Venues are in the same situation. Once they receive XYZ tokens from consumers for concert tickets, they will quickly trade those tokens for their preferred currency to avoid price risk.
This creates a high velocity of the token, meaning that the tokens move quickly between users but aren’t held long enough to create demand or value.
The formula for velocity is:
Velocity = Total Transaction Volume / Average Network Value
Which means:
Average Network Value = Total Transaction Volume / Velocity
⚡️ If no one wants to hold the token, velocity will increase linearly with transaction volume. This means even if transaction volume explodes, the network value could remain constant or even decline.
As a result, utility tokens, like XYZ, struggle to capture value, no matter how successful the product is.
Without a mechanism to reduce velocity (e.g., staking or utility incentives), the token's value fails to grow, despite high product usage.
@CoinstructLabs | Tokenomics
In the traditional economy, velocity of money refers to how frequently a unit of currency is exchanged in an economy over a specific time frame. Similarly, in tokenomics, token velocity impacts the price of a token by breaking the link between the value generated by a product and the value transferred to the token economy.
Here’s an example: Imagine a ticketing platform called “XYZ.”
🎫 Consumers prefer paying for tickets in dollars. While they may purchase XYZ tokens to buy tickets, they won’t hold onto them for long. There’s no incentive to hold the tokens since they could lose value compared to dollars.
🏟 Venues are in the same situation. Once they receive XYZ tokens from consumers for concert tickets, they will quickly trade those tokens for their preferred currency to avoid price risk.
This creates a high velocity of the token, meaning that the tokens move quickly between users but aren’t held long enough to create demand or value.
The formula for velocity is:
Velocity = Total Transaction Volume / Average Network Value
Which means:
Average Network Value = Total Transaction Volume / Velocity
⚡️ If no one wants to hold the token, velocity will increase linearly with transaction volume. This means even if transaction volume explodes, the network value could remain constant or even decline.
As a result, utility tokens, like XYZ, struggle to capture value, no matter how successful the product is.
Without a mechanism to reduce velocity (e.g., staking or utility incentives), the token's value fails to grow, despite high product usage.
@CoinstructLabs | Tokenomics
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Coinstruct × BlastUp
We're excited to announce a strategic partnership between Coinstruct and BlastUp.
We have joined forces with BlastUp, the leading community-backed launchpad with native yield. Together, we aim to accelerate growth for top-tier Web3 projects through cutting-edge token models, sustainable economic solutions, and our combined expertise in Web3, marketing, and investments.
We're excited to announce a strategic partnership between Coinstruct and BlastUp.
We have joined forces with BlastUp, the leading community-backed launchpad with native yield. Together, we aim to accelerate growth for top-tier Web3 projects through cutting-edge token models, sustainable economic solutions, and our combined expertise in Web3, marketing, and investments.
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Staking in 2024
A key metric for PoS blockchains is the staking ratio—the share of tokens actively participating in staking. Solana and Polkadot consistently outperform Ethereum in this area. However, Ethereum’s staking ratio has been steadily rising, reaching around 28% as of September 2024.
Staking is critical to the security of Proof-of-Stake (PoS) blockchains. Ethereum, Solana, and Polkadot are among the largest PoS chains by the value of tokens staked. Ethereum leads this metric, with over $88 billion staked as of September 2024. Solana, however, has seen a surge, with its staked value soaring from $7.5 billion in September 2023 to over $58 billion by September 2024.
@CoinstructLabs | Tokenomics
A key metric for PoS blockchains is the staking ratio—the share of tokens actively participating in staking. Solana and Polkadot consistently outperform Ethereum in this area. However, Ethereum’s staking ratio has been steadily rising, reaching around 28% as of September 2024.
Staking is critical to the security of Proof-of-Stake (PoS) blockchains. Ethereum, Solana, and Polkadot are among the largest PoS chains by the value of tokens staked. Ethereum leads this metric, with over $88 billion staked as of September 2024. Solana, however, has seen a surge, with its staked value soaring from $7.5 billion in September 2023 to over $58 billion by September 2024.
@CoinstructLabs | Tokenomics
It has become increasingly common for projects to launch with low floats and high FDVs.
These tokens usually experience rapid price appreciation due to limited liquidity available for trading at launch. Retail enters, only to get diluted by the constant unlocks.
We would recommend getting launched with a low FDV backed by the revenue flows of the Protocol. We would approach defining the optimal FDV by running a cash flows analysis first and defining the crypto-DCF (Discounted Cash Flow) model of the protocol first, and then reverse-engineer the FDV.
The best way to launch a token and grow a community alongside - is starting with a relatively low FDV now, growing organic volumes, building the product with a clear PMF and organic traction and by having a low FDV at the start - let the community be a part of the journey and generate returns.
@CoinstructLabs | Tokenomics
These tokens usually experience rapid price appreciation due to limited liquidity available for trading at launch. Retail enters, only to get diluted by the constant unlocks.
We would recommend getting launched with a low FDV backed by the revenue flows of the Protocol. We would approach defining the optimal FDV by running a cash flows analysis first and defining the crypto-DCF (Discounted Cash Flow) model of the protocol first, and then reverse-engineer the FDV.
The best way to launch a token and grow a community alongside - is starting with a relatively low FDV now, growing organic volumes, building the product with a clear PMF and organic traction and by having a low FDV at the start - let the community be a part of the journey and generate returns.
@CoinstructLabs | Tokenomics
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How to approach Staking Rewards distribution?
We would recommend keeping the Staking Incentives vesting for a longer period (24-32 month) in order to ensure the distribution stability, but at the same time decrease the Staking reward rate coming from emissions (that’s crucial) logarithmically every month. The best way is to think of it the same way as overcoming the “Network Effect” with increased rewards rate at the beginning to incentivize new comers, but decreasing inflation (as rewarding stakers of XYZ with XYZ is nothing else then inflation with postponed sell-pressure).
But how will the stakers will be incentivized, if the Staking Rewards emission rate will be decreasing over time? We would introduce Staking Pool Replenishing - when “inflationary” rewards in XYZ to stakers will be decreased, the APY should be substituted and increased (in the future) bu flows coming from Protocol Revenue.
Staking is indeed popular, but its effectiveness depends on the protocol’s revenue. If staking rewards come from protocol revenue, growth in revenue amplifies staking's positive effect. But when revenue plateaus or declines, staking can turn negative, as early stakers begin selling their rewards and new stakers aren’t entering.
@CoinstructLabs | Tokenomics
We would recommend keeping the Staking Incentives vesting for a longer period (24-32 month) in order to ensure the distribution stability, but at the same time decrease the Staking reward rate coming from emissions (that’s crucial) logarithmically every month. The best way is to think of it the same way as overcoming the “Network Effect” with increased rewards rate at the beginning to incentivize new comers, but decreasing inflation (as rewarding stakers of XYZ with XYZ is nothing else then inflation with postponed sell-pressure).
But how will the stakers will be incentivized, if the Staking Rewards emission rate will be decreasing over time? We would introduce Staking Pool Replenishing - when “inflationary” rewards in XYZ to stakers will be decreased, the APY should be substituted and increased (in the future) bu flows coming from Protocol Revenue.
Staking is indeed popular, but its effectiveness depends on the protocol’s revenue. If staking rewards come from protocol revenue, growth in revenue amplifies staking's positive effect. But when revenue plateaus or declines, staking can turn negative, as early stakers begin selling their rewards and new stakers aren’t entering.
@CoinstructLabs | Tokenomics
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Innovational Tokenomics Model & TVL-based emissions
Max from Coinstruct sat down with Arthur Schaback, Founder of Clip Finance, formerly Founder Paxful - to discuss how Tokenomics can be connected to the core product.
What will be in the video:
-The negative impact of pre-determined Tokenomics and how to overcome it
-How Clip Finanace manages liquidity to maximize yields
-TVL-based emissions in Tokenomics
-Challenges of building innovational Tokenomics
and more..
Coming this Friday, October 25th. Stay Tuned!
@CoinstructLabs
Max from Coinstruct sat down with Arthur Schaback, Founder of Clip Finance, formerly Founder Paxful - to discuss how Tokenomics can be connected to the core product.
What will be in the video:
-The negative impact of pre-determined Tokenomics and how to overcome it
-How Clip Finanace manages liquidity to maximize yields
-TVL-based emissions in Tokenomics
-Challenges of building innovational Tokenomics
and more..
Coming this Friday, October 25th. Stay Tuned!
@CoinstructLabs
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Seeing a lot of bad takes on socials regarding Ethereum vs Solana right now.
It's about time we cut through the noise with a data-driven approach.
Let's compare the economics of the two networks across:
1. Value Accrual
2. Total Economic Value
3. Cost to Produce $1 Fee Revenue
4. Network Fundamentals
5. Performance & Valuation
It's both quantitative and qualitative.
1. Ethereum has done nearly $20b in all-time fees. Solana has done $495m, with 87% coming this year alone.
That said, Solana is catching up. It's done 41% of Ethereum's network fees (not including MEV) over the last 90-days.
If we include MEV, Solana has done 58% of Ethereum over the last 90 days and 77% over the last month.
2. In terms of Total Economic Value (Fees + MEV + Token Incentives), Solana ($1.19) has outpaced Ethereum YTD ($1.01b) over the last 90 days.
With that said, 79% of this is from Token Incentives (paid to stakers, dilutive as inflation to non-stakers).
If we only look at Real Economic Value (Fees + MEV), Ethereum ($2.6b) is still significantly outpacing Solana ($753m) YTD.
3. In terms of compensation to the supply side of each network, Ethereum has paid out $7b all-time to its validators (36%). $400m YTD.
4.Solana has paid out $247m all time. $212 YTD.
5. Cost to Produce $1 of Fees. Ethereum YTD = $1.28. Solana = $7.62.
@CoinstructLabs
It's about time we cut through the noise with a data-driven approach.
Let's compare the economics of the two networks across:
1. Value Accrual
2. Total Economic Value
3. Cost to Produce $1 Fee Revenue
4. Network Fundamentals
5. Performance & Valuation
It's both quantitative and qualitative.
1. Ethereum has done nearly $20b in all-time fees. Solana has done $495m, with 87% coming this year alone.
That said, Solana is catching up. It's done 41% of Ethereum's network fees (not including MEV) over the last 90-days.
If we include MEV, Solana has done 58% of Ethereum over the last 90 days and 77% over the last month.
2. In terms of Total Economic Value (Fees + MEV + Token Incentives), Solana ($1.19) has outpaced Ethereum YTD ($1.01b) over the last 90 days.
With that said, 79% of this is from Token Incentives (paid to stakers, dilutive as inflation to non-stakers).
If we only look at Real Economic Value (Fees + MEV), Ethereum ($2.6b) is still significantly outpacing Solana ($753m) YTD.
3. In terms of compensation to the supply side of each network, Ethereum has paid out $7b all-time to its validators (36%). $400m YTD.
4.Solana has paid out $247m all time. $212 YTD.
5. Cost to Produce $1 of Fees. Ethereum YTD = $1.28. Solana = $7.62.
@CoinstructLabs
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CEX Insights for October
Spot trading volume on major exchanges rose by 17% MOM. The top three exchanges by growth rate were Coinbase (61%), Gate (36%), and Binance (24%). Derivatives trading volume rose by 25%. The top three exchanges by growth rate were Bybit (61%), Bitget (30%), and Mexc (25%).
Source — link
@CoinstructLabs
Spot trading volume on major exchanges rose by 17% MOM. The top three exchanges by growth rate were Coinbase (61%), Gate (36%), and Binance (24%). Derivatives trading volume rose by 25%. The top three exchanges by growth rate were Bybit (61%), Bitget (30%), and Mexc (25%).
Source — link
@CoinstructLabs
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Coinstruct is proud to be Top-1 Tokenomics Provider on the market according to the rating by InnMind.
Read the article here: https://blog.innmind.com/top-web3-tokenomics-service-providers-to-watch-in-2025/
We've worked with more than 35 Web3 Protocols across various crypto verticals. Coinstruct is trusted by $5B chains and has 15+ professionals in the core team.
Join us on the journey to become global crypto corporation in the next 2-3 years⚡️
Read the article here: https://blog.innmind.com/top-web3-tokenomics-service-providers-to-watch-in-2025/
We've worked with more than 35 Web3 Protocols across various crypto verticals. Coinstruct is trusted by $5B chains and has 15+ professionals in the core team.
Join us on the journey to become global crypto corporation in the next 2-3 years⚡️
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