You can precisely engineer an ICO and that will get you to launch it properly, but then you still need to deliver a viable business model for the long term.
The way you ensure this viable business model, is partly through applying tokenomics. We say partly, because your business model does not only rely on its token. You’ll need customers, suppliers, partners, distributors and all aspects of the business model canvas to sustain your business or organization.
But still, as a tokenized business, your token is an essential part of what you do. And to ensure that your token is used properly, you need to apply tokenomic principles.
Tokenomic Questions to Ask
Since we work a lot on tokenomics here at Infloat, we wrote down some of the questions we try often answer for our clients. You can use these as a starting point when designing your own tokenomics. If you have clear answers for all of them, you’re on the right path to making sure your business, stakeholders and token are properly aligned.
- Why did you create a (crypto)token?
- What is the token supposed to do?
- What behavior are you trying to incentivize or elicit from your users, partners, or other stakeholders with your token?
- What behavior would you like to elicit from these groups that you are unable to do now?
- Has this kind of behavior been elicited before in other projects using tokens or other incentive mechanisms?
- Is your token price solely determined by the open market?
- What effects will a lower token price have on your business?
- What effects will a higher token price have on your business?
- When is your token undervalued?
- When is it overvalued?
- What actions could a bad actor take to manipulate the price of your token?
- What effects would such actions have on your token and your community?
- Do you expect people to hold your token for a longer period of time?
- In an ideal scenario, what is your token’s velocity?
- Is your token a payment token? If so, what currency are your services or the services on your platform denominated in?
- Would your token work without it being traded on a cryptocurrency exchange?
- Would your platform still work when your token is replaced by Ether or another crypto- or non-cryptocurrency?
- How do your users interact with your token?
- How user friendly is this interaction with your token?
- How can you get people to interact with your token, even those who know little about cryptocurrency?
- When is your token — and your tokenized business — a success?
Clearly, this list is non-exhaustive. There are many more questions you could ask yourself to apply tokenomic principles, considering topics such as token utility, functionality, supply, and many more. In addition, the questions you ask yourself and your team also depend on the type of cryptocurrency you are issuing.
However, these questions do give you a place to start from. Should there be certain questions that you do not have the answer to, or questions that you do not feel particularly confident in answering, not to worry. There are plenty of token projects to learn from, and feel free to send us a message if you want help with yours.