Tokenomics – How to Know a New Project is Profitable?

• Avinandan Banerjee
• December 21, 2021

Are you new to the concept of cryptocurrency and tokenomics? Well, you are missing out on a huge potentiality. 2020 was the year when we saw a global crash in the financial markets all over the world. However, it was also the year when the crypto world evolved by leaps and bounds. Interestingly, a massive number of new investors considered cryptocurrency as an alternative and profitable investment during the pandemic months. 

Now, as 2021 is ending, the climbing value of the crypto market is still the talk of the town. Brand-new DeFi projects keep popping up in the sector every day. In such a competitive market, it might be hard for a new investor like you to decide your crypto to invest in. So, how can you recognize a particular crypto’s value? A crypto’s tokenomics can help you get a better idea of the blockchain platform. 

Tokenomics – a first-timer’s lead! 

You recently discovered a promising project that is doing pretty well. But what should you learn before diving in? How can you make sure that the project is not a scam? The best way to identify a project’s growth potential is by studying its tokenomics. An in-depth knowledge will help you to skip projects with no promising future. 

As of the current time of writing the blog, the total crypto cap stands at 102.67 million USD. Are you trying to get your slice of the cake?  Well, educate yourself before entering into the new world. 

There is a large variety of tokens with various tokenomics (token models). By knowing what to search for, you increase your chances of picking a good project. So, let’s dig deeper.

Tokenomics is the fusion of two words- ‘economics’ and ‘token. Basically, this term refers to the detailed analysis of how digital currencies work in blockchain development. The study evaluates the influencing factors behind the demand and supply of crypto tokens. To understand your crypto tokens properly, you have to consider everything including the creation, quality, and distribution of the cryptocurrencies.  

How Does a Token Work? 

A few examples of a tangible token are- 

• Your driving license represents that you are a trained and verified driver 
• Your gym membership that speaks for your subscription
• Your hotel key card shows that you paid for the rooms and other services 

Similarly, in the blockchain platform,  a token represents a specific stake, valNo.ue, voting right, or anything. It is never limited to one particular thing. And, tokenomics is the quality of a token that interests the investors. So, you might ask what is the quality of a token? Simply put, anything that impacts a crypto token’s value is tokenomic’s part.   

Tokenomics is very important when you are analyzing the fundamentals of cryptocurrencies. At this point in time, there are lots of tokens available on the network. The best part is that in the upcoming future you will get to see even more of them. That is why It is not humanly possible to find a single way to evaluate such assets.

Tokenomics appeared as a solution to this Issue. Primarily It aims to help you understand a digital coin’s value. Once you understand the principle and essence of a digital asset, you will seamlessly figure out its prospects before investing.

So How Can You Study Tokenomics?

Studying tokenomics is an integral part of your analysis when you are trying to learn blockchain. A detailed and robust tokenomics can break or make your new project’s future. So you would never want to risk investing in a project that has poor tokenomics. First of all, your new project needs to have a tokenomics section. So how can you look for the brownie points in a new project.? Let’s discuss the essential factors below: 

Check the Funding Goal Behind the Project

Remember, every project does not need $10 million at the initial stage. If you are planning to Invest in a big tech company. Take a look at their project goals first. They might not be looking for a massive investor interest, still, you need to be cautious. 

Learn About the Token Allocation

Every project must have a specific token allocation chart. Check out whether  the project team holds some of the tokens or not. But keep in mind that the allocation shouldn’t be something like 60%. Be aware of a team that holds most of the tokens as it is a red flag. Also Ensure that the public investors have access to most of the tokens of the project. For instance, Crypto Crops’ public Investors can access almost 39% of the tokens via mining. 

Check Out the Vesting Schedule of a Project

Make sure that your new project has four vesting rounds – a) starter, b) strategic, c) private, and d) public. While going through each round, the token value should increase for the investor, as in you!  

Evaluate the Purpose of the Token

So, how can you utilize the token? Nowadays you cannot produce a token just to store your value. It must have some more usage. Once again, let’s take the example of the Crypto Crops token, which is an in- game money system. Another good example of an excellent project would be Helium HNT, an IoT network with broad users around the world. 

What Are the Project goals?

Is your new project well-defined with set goals? A well-planned crypto project must have a detailed set of objectives and a roadmap with proper deadlines. If it is not scheduled, that’s your red flag. A promising project always solves some real purposes with crucial goals and consistency. Even if it’s an in-game money system, it’s a form of entertainment that is in high demand. Thus, longevity always ensures your earning’s growth and proves that it’s not a case of pump and dump. 

Don’t Miss Out to Check the Team Leaders

Look for the fund managers and check out their LinkedIn pages. Yes, you have to invest your heart and soul into evaluating the project before trading and that takes a lot of work. Try to gauge if the team has sufficient experience to add value to your new project. Do the team leaders have relevant expertise in business development or management according to the objectives of the project? If no, it’s not your game! 

So you see, checking out the prospects of a new project is all about evaluating and understanding the basic parameters of how the crypto world runs. Studying tokenomics means you’re actually invested in the growth of your new project. Interestingly, it gives you the satisfaction that you are actually digging deep to see the effectiveness of your cryptoGame.  Nothing is more satisfying than being the brain behind your success. So stop following others and create your own crypto strategy with the right tools available on blockchain platforms.

Does Understanding Tokenomics Really Help to Make More Money?

A good team, a detailed plan, the longevity of the project, a clear business objective, and a specified road map mean steady and robust growth. So looking forward to growing your tokens with the sustainability of the project is a healthy sign. Lucrative long term projects are always better than sudden short term gains. So always look for healthy market activity and plan of action when investing in the crypto Word.

Lots of investors are there who look for a pump and dump scenario as becoming a millionaire overnight is always a temptation. Plus it is not unreal too. But, it should not be the healthy norm of investing. Your investments should always have long term growth and viability.

The Final Thoughts 

Now it’s not easy to understand tokenomics in just one day. You might need proper blockchain course online in order to become a pro at analyzing your own trades. The crypto world is filled with scams. So, you must take care while navigating new projects. If you don’t have the right knowledge, it is nothing less riskier than playing with fire!

So, when you are a beginner, you must take the guidance of a pro. Yes, we are talking about investing in a blockchain certification from a renowned blockchain experts. Choose wisely and grow for a better and brighter future. For more useful information and daily inspiration Keep an eye on our blog page. 

If you want to enter the blockchain world, we have everything that you need – click here. Obtain certification in a variety of blockchain domains to gain entry to a prosperous world that will ensure your job chances. Don’t forget to check out our special offers page for the best certification deals.