Focused on education.

  • This page will be dedicated to teaching tokenomics.

  • Two sections - one for new ICO investors, one for entrepreneurs considering launching their own ICO

I am not a financial advisor. This is my opinion, based on my first 5 months of crypto trading.

Many cryptos of various market caps have wildly speculative valuations. Until their utility platform is realized, most ICOs and tokens have a very pyramid/ponzi-esque structure, especially ones with pre/private sales.

Most ICOs utilize preferentially priced private pre-sales, pre-ICOs, and bounty programs, misleading the general public into believing they should buy at ICO price, only to have the price deteriorate to under 50% below ICO price before listing on a major exchange.

Any crypto intending to act primarily as a currency can accurately be valued by transaction volume.

These coins/tokens often utilize a utility function to stimulate trade volume.

However, in my opinion, any coin/token that uses a PoW consensus algo and is not the drastic leader in hashrate is worthless. Any PoW coin/token's hashpower standing could change at any time.

Any large miner could redirect their hashpower to attack a smaller coin, and they have done so in the past.

A crypto intending to act primarily as a utility token could theoretically be accurately valued by industry size and market capture. However, many of the industries these utility tokens are designed to capture are brand new. The crypto industry itself is nascent and highly speculative, hence the price coupling to BTC and frequent attention to BTC dominance.

Most ICOs entice early investors with a deflationary tokenomic system. If there is a fixed supply and demand goes up, price goes up. Investors can take profit. The token issuer often promises a utility platform that will guarantee token trade volume by utility customers. Typically, utility redemption is based on a USD price so utility customers do not care about token price, they simply buy and immediately redeem, for example, $50 worth of tokens for services. The more utility demand, and the lower the supply, the more profit token HODLers can eventually reap. This causes significant speculative hoarding.

I personally cannot see any advantage to offering a utility function with a price based on an amount of tokens, unless it is a stablecoin. If your utility price is an amount of tokens then the price of your services go up with token adoption. There may be a few rare cases where this is desirable but it sounds too pyramid/ponzi scam-like to me.

Recommended Continued Reading:

Technical Papers

HODL Wallet

Learn SSCs

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This is an educational resource. I am not a financial advisor and this is not financial advice.

Investing in cryptocurrency is extremely risky. Do not invest more than you can afford to lose.