Hi, today let's take a look at what the price of crypto assets depends on, and what you need to consider when analyzing a particular token
[!] The main factors are:
-> 1. Utility of the token
Token utility is the usefulness of the token. For example, actual use as a means of payment, participation of the holders in project management, access to steaking, unique merch, or something else
-> 2. Marketmaking (proper liquidity support)
Without proper marketmaking the asset cannot meet market demands, this process maintains a stable price
-> 3. Influencer calls, generally discussability
For obvious reasons, popularization of the token often leads to short-term price increases
-> 4. Support from the community and expectation
The best scenario is a token with a really involved and loyal community. But these are quite rare
All of the above factors should be taken into account if you are planning to buy this or that crypto asset to minimize possible risks. Of course, it is impossible to accurately predict the market, but nevertheless, it is better to do a little analytics than to rely on dry intuition
@Coinstructglobal
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🪙Types of tokens in DeFi
Hello to all the readers! Today you will learn what tokens exist in the world of DeFi. And they exist in very different ways. This knowledge, in our opinion, is very useful and necessary for every enthusiast in the field of cryptocurrencies.
[!] There are three groups of tokens:
-> 1. Tokens involved in governance - these are the so-called «Governance» tokens. The name denotes tokens that allow their holders to participate in the life of the DeFi project and make decisions in its governance. This can be formalized in different ways, but often the right to vote is proportionally distributed among DAO participants depending on the number of assets in their portfolio. Many decentralized projects operate on this very technology.
-> 2. Specialized tokens - operational tokens. They serve as a tool in completely different cases. As an example, I will give only a part of them: derivative tokens (similar to stablecoins, but the possibility of linking is possible not only by price, but also by other factors), deposit tokens (tokens that give projects for a deposit), stablecoins (an asset linked to another asset by a certain ratio).
-> 3. Meme-coins - tokens often without certain technologies and built only on the basis of some meme or short-term event. But it happens in other ways too, as an example you can take the meme token $BONK, which has managed to grow a whole ecosystem, including a bot, a platform for staking and much more.
->work-tokens (like Filecoin and many more)
Now you know what types of tokens exist in DeFi. This knowledge will be useful to you when analyzing a particular token.
@CoinstructLabs | Tokenomics
Hello to all the readers! Today you will learn what tokens exist in the world of DeFi. And they exist in very different ways. This knowledge, in our opinion, is very useful and necessary for every enthusiast in the field of cryptocurrencies.
[!] There are three groups of tokens:
-> 1. Tokens involved in governance - these are the so-called «Governance» tokens. The name denotes tokens that allow their holders to participate in the life of the DeFi project and make decisions in its governance. This can be formalized in different ways, but often the right to vote is proportionally distributed among DAO participants depending on the number of assets in their portfolio. Many decentralized projects operate on this very technology.
-> 2. Specialized tokens - operational tokens. They serve as a tool in completely different cases. As an example, I will give only a part of them: derivative tokens (similar to stablecoins, but the possibility of linking is possible not only by price, but also by other factors), deposit tokens (tokens that give projects for a deposit), stablecoins (an asset linked to another asset by a certain ratio).
-> 3. Meme-coins - tokens often without certain technologies and built only on the basis of some meme or short-term event. But it happens in other ways too, as an example you can take the meme token $BONK, which has managed to grow a whole ecosystem, including a bot, a platform for staking and much more.
->work-tokens (like Filecoin and many more)
Now you know what types of tokens exist in DeFi. This knowledge will be useful to you when analyzing a particular token.
@CoinstructLabs | Tokenomics
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Building sustainable, web3-native tokenomics solutions has always been a passion of our company!
Join us on our way to become #1 Web3 firm in the next 5 years!
@CoinstructLabs
Alongside Gate and BNB...
Building sustainable, web3-native tokenomics solutions has always been a passion of our company!
Join us on our way to become #1 Web3 firm in the next 5 years!
@CoinstructLabs
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How to reduce circulation supply of a token and put tokens to work?
The answer is to implement more sinks🔥
Token sinks is a term for any mechanism, feature, or use case that reduces the velocity of a token - you can them of them as “absorbing” token supply, like a sink filling up with water.
Some popular examples of sinks include:
- Bitcoin: the expectation of store of value against an inflating Fiat money supply serves as a social/psychological sink for BTC, as holders are happy not spending, using, or selling their coins (thus reducing velocity)
- Ethereum: staking to run a validator serves as a sink for ETH
- Chainlink: requiring oracles to post collateral that can be slashed both serves as a means to incentivize honest oracles, and as a sink for LINK tokens
- Filecoin: posting collateral in order to provide storage space and to take on deals, as well as token rewards being locked up for newer providers, creates a sink for FIL
- Curve: staking tokens as ‘veCRV’ form in order to direct rewards to different liquidity pools and earn protocol revenue distributions is a sink for CRV
- GMX: escrowed ‘esGMX’ staking rewards (rewards that must be gradually unlocked by pairing with GMX tokens), creates a sink for GMX tokens
In particular, Curve’s “vote escrow” staking model and GMX’s escrowed rewards are two of the most popular, and often imitated, token sink mechanics in recent years.
@CoinstructLabs | Tokenomics
The answer is to implement more sinks
Token sinks is a term for any mechanism, feature, or use case that reduces the velocity of a token - you can them of them as “absorbing” token supply, like a sink filling up with water.
Some popular examples of sinks include:
- Bitcoin: the expectation of store of value against an inflating Fiat money supply serves as a social/psychological sink for BTC, as holders are happy not spending, using, or selling their coins (thus reducing velocity)
- Ethereum: staking to run a validator serves as a sink for ETH
- Chainlink: requiring oracles to post collateral that can be slashed both serves as a means to incentivize honest oracles, and as a sink for LINK tokens
- Filecoin: posting collateral in order to provide storage space and to take on deals, as well as token rewards being locked up for newer providers, creates a sink for FIL
- Curve: staking tokens as ‘veCRV’ form in order to direct rewards to different liquidity pools and earn protocol revenue distributions is a sink for CRV
- GMX: escrowed ‘esGMX’ staking rewards (rewards that must be gradually unlocked by pairing with GMX tokens), creates a sink for GMX tokens
In particular, Curve’s “vote escrow” staking model and GMX’s escrowed rewards are two of the most popular, and often imitated, token sink mechanics in recent years.
@CoinstructLabs | Tokenomics
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🪙History of tokenomics
Hello! Today we are going to present you some interesting information on tokenomics, itself a very important part of DeFi technologies.
Tokenomics has been around for quite a long time, but it wasn't always what we imagine it to be today. It initially originated as a mean of implementing loyalty programs.
To quantity their efficiency.
But, tokenomics as we know and mean it was born, understandably, in the era of blockchain technology and cryptocurrencies. Through various tools (blockchain, smart contracts), tokens can represent digital assets or provide access to some unique features.
Some other events have made adjustments to the foundation of tokenomics. For example, the emergence of Proof of Work technology (block verification algorithm). Then there were other innovations, such as the PoS algorithm (mechanism used to confirm transactions and create new blocks through randomly selected validators), ICOs (sale of primary offering tokens), GameFi projects.
One of the earliest and most famous examples of tokenization was Ethereum, offering a platform unique at the time for creating decentralized applications and hosting tokens based on smart contracts.
Lately, tokenomics (and token) technology has been gaining popularity and is more often used in many web3 projects, from financial to gaming.
Thanks for reading!
@CoinstructLabs | Tokenomics
Hello! Today we are going to present you some interesting information on tokenomics, itself a very important part of DeFi technologies.
Tokenomics has been around for quite a long time, but it wasn't always what we imagine it to be today. It initially originated as a mean of implementing loyalty programs.
To quantity their efficiency.
But, tokenomics as we know and mean it was born, understandably, in the era of blockchain technology and cryptocurrencies. Through various tools (blockchain, smart contracts), tokens can represent digital assets or provide access to some unique features.
Some other events have made adjustments to the foundation of tokenomics. For example, the emergence of Proof of Work technology (block verification algorithm). Then there were other innovations, such as the PoS algorithm (mechanism used to confirm transactions and create new blocks through randomly selected validators), ICOs (sale of primary offering tokens), GameFi projects.
One of the earliest and most famous examples of tokenization was Ethereum, offering a platform unique at the time for creating decentralized applications and hosting tokens based on smart contracts.
Lately, tokenomics (and token) technology has been gaining popularity and is more often used in many web3 projects, from financial to gaming.
Thanks for reading!
@CoinstructLabs | Tokenomics
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💎 Risks in the world of DeFi
As a rule, we associate the concept of DeFi high yield. But, as we can realize by looking objectively, this approach is not something pretty far from reality.
Here are the shortcomings of DeFi that we think are important to know:
==> Undefined legal status
In many countries around the world, particularly where there is majority jurisdiction, there is no legal regulation of DeFi (sometimes, even cryptocurrencies in general), which creates some risks
==> Lack of warranties
No one is actually responsible for any system errors or even hacks, DeFi is decentralized
==> Technical vulnerabilities
Vulnerabilities are created by the complex component of smart contracts, which may have some «gaps» or other nuances that make it possible for third parties to exploit the system. As you realize, this can also entail loss of funds for ordinary users
Yes, the DeFi concept, just like any other, has many disadvantages (as well as advantages). But we continue to believe in it :). Thanks for reading!
@CoinstructLabs | Tokenomics
As a rule, we associate the concept of DeFi high yield. But, as we can realize by looking objectively, this approach is not something pretty far from reality.
Here are the shortcomings of DeFi that we think are important to know:
==> Undefined legal status
In many countries around the world, particularly where there is majority jurisdiction, there is no legal regulation of DeFi (sometimes, even cryptocurrencies in general), which creates some risks
==> Lack of warranties
No one is actually responsible for any system errors or even hacks, DeFi is decentralized
==> Technical vulnerabilities
Vulnerabilities are created by the complex component of smart contracts, which may have some «gaps» or other nuances that make it possible for third parties to exploit the system. As you realize, this can also entail loss of funds for ordinary users
Yes, the DeFi concept, just like any other, has many disadvantages (as well as advantages). But we continue to believe in it :). Thanks for reading!
@CoinstructLabs | Tokenomics
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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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