Why tokenomics is important:
Fuelling adoption and creating a valuable network.
Having sound tokenomics ensures those who participate in your network operate effectively and in a coordinated manner. To achieve this, it’s crucial to
focus on the following:
Having sound tokenomics ensures those who participate in your network operate effectively and in a coordinated manner. To achieve this, it’s crucial to
focus on the following:
Incentivisation
A token’s incentive mechanism is central to its long-term sustainability.
Bitcoin, for example, incentivizes its miners to mine new blocks by delivering them a monetary reward (paid in bitcoins) every time they do so.
Economic incentives are a powerful tool because they can be used to motivate stakeholders to act in a way that benefits and strengthens
your network.
However, if you get your incentivisation structure wrong, it can lead to unbalanced distribution of your tokens and be detrimental to your project’s chance of success.
Governance
Decision making can be hard for any organisation, especially when a large number of people are involved in the process.
But with the right tokenomics, you can create an efficient governance structure where network participants can vote on any changes to a project and how it will evolve into the future.
Designing such a system can be complex and will depend on what level of decentralization the business wishes to achieve.
Healthy and transparent governance can offer a high level of utility and drive token demand.
Compliance
Whilst blockchain may be a relatively new technology, it is still important that your blockchain business complies with long-established regulations.
By having the right tokenomics, your project can be set-up to comply with state and federal laws in a way that is efficient, streamlined and
even automated.
The importance of token structure
There is a lot to consider when setting up the structure of your token offering. This includes:
There is a lot to consider when setting up the structure of your token offering. This includes:
Token sale parameters (including the holding period)
Bonus system (behavioral incentivisation) in compliance with regulations
Token supply calculation
Token economics and network effect
Token mathematical and market dynamics analysis
Creation and support of secondary market for the token
Economic stability of transactions
The effects of market volatility
Factors that are likely to increase the price of the token
The mathematical effect of token price independence
Token and service usage basis
Purchaser eligibility and ‘Know Your Customer’ (KYC) compliance
Limited token issuance
The design and attributes of the token structure have significant importance, not just to investors and users but to government regulators.
If a token gains its value from an external, tradable asset, it is a security token.
Security tokens have evolved to empower traditional initial public offerings (IPOs) on top of blockchain technology.
The main reason to buy a security token is to, at some point, earn a profit whether that is in the form of profits, revenue share or price appreciation.
Security tokens are heavily regulated, which can be challenging for organisations and their legal teams to navigate. At rewired.one, we develop end-to-end regulatory road maps that scale in alignment with the development and growth of client projects, helping mitigate the risk of getting caught up in red tape.
If a token gains its value from an external, tradable asset, it is a security token.
If a token gains its value from an external, tradable asset, it is a
security token.
Rewired.one provides an end to end service
to bring your token ecosystem to life.
By partnering with rewired.one, you will be guided through the tokenomics creation process, from discovery through to
launch and beyond.
Our process can be divided into three phases.
Discovery
During this stage, it is important to determine the characteristics of the business model or ecosystem and why a token is needed in the first place.
Any existing research or data relating to user patterns, consumer behaviors, market data and other relevant business information will be of great use.
A critical component of constructing any new ecosystem is understanding the key stakeholders involved and how value flows between them.
This step is critical in token design and it is used to justify and evaluate design parameters as well as to determine ways to test and validate underlying assumptions on user behavior.
Design
In the design phase high-level design choices, such as governance structures, the mathematical token model and its parameters, need to be optimized for stakeholders’ incentives and the long-term sustainability of the ecosystem.
Armed with key outputs from the discovery phase, we then dig even deeper to not only just identify those who will participate in the network, but also their specific roles.
Having defined a full picture of network participants and their roles, we can define the metrics that would determine network success such as user engagement or other payoffs.
Governance structure and token supply needs to be determined at this point, along with decisions regarding monetary policy of the token.
Deployment
In this phase, live network data is collected and analyzed to make dynamic adjustments.
In this testing process, a feedback loop is created, helping to optimise the new data to maximise the network’s
objective function.
The goal is not just to create the optimal design, but rather the optimal feedback loop that helps govern and monitor
the system.
The key outputs of the deployment phase are probabilistic and graphical results, as well as scenario analysis, allowing for the frequency and severity of ‘what if’ scenarios, from best to worse, to be understood.
Deployment
In this phase, live network data is collected and analyzed to make dynamic adjustments.
In this testing process, a feedback loop is created, helping to optimise the new data to maximise the network’s objective function.
The goal is not just to create the optimal design, but rather the optimal feedback loop that helps govern and monitor the system.
The key outputs of the deployment phase are probabilistic and graphical results, as well as scenario analysis, allowing for the frequency and severity of ‘what if’ scenarios, from best to worse, to be understood.
What our clients say about us
For more than a year we have partnered with Rewired.one. They have consistently delivered great people that have given us great outcomes. We highly recommend them to augment your engineers and provide sound project management.
I’m grateful that we get to partner with Rewired.one early. It saved us from a lot of what could have been disaster by just following the flow. They provided foresight to not just do what’s trending now, but to see the implications of a decision. They answered the question, what’s the implications of this plan? And, what’s it going to mean five years down the road? Companies that work with rewired.one, will be set up, not just for short-term success, but to be sustainable and protected in the future.
Rewired.one helped us to retain knowledge internally with our engineering teams and get stakeholders buy-in for enterprise blockchain solutions by providing expert blockchain engineers and consultants to train us. Rewired.one really understand the benefits of blockchain in the enterprise and successfully delivered our proof of concept.