Tokenomics simply refers to a detailed outline of how your token works within the blockchain ecosystem, its viability and also how you plan on attracting investors.
Due to the lack of proper regulations, scammers are taking advantage of ignorant crypto investors who just invest their money in projects without first scrutinizing them thoroughly. In 2017 alone over 70% of ICOs were frauds mostly because at the time not many investors knew much about ICOs.
However, over a period of 2 years, investors have gained more knowledge making it is hard for scammers to con them. Investors are now more educated about what a trustworthy token entails and you will have to include all that in your whitepaper to convince them that you are not just another scammer.
The whitepaper informs the world about your project
The whitepaper is a very crucial aspect of an ICO/STO. It tells potential investors all about your project. Therefore, you will have to make it as much detailed as possible.
Most specifically, you will have to include everything about the tokenomics. You will have to clearly show that your crypto token is just not a way of raising funds but it goes beyond to become a robust alt coin in the near future. Investors must be able to clearly understand how your crypto token interlinks with the whole project and also understand its economic value.
What is included in the tokenomics?
For your crypto token to be proved to be viable, you should include a number of things, which include:
- The function of the token
You should explain how your token shall be used within the blockchain network and how users will benefit from it. You have to paint a clear picture to the investor of why you are creating the crypto token.
For instance, you could outline a number of services that can be paid for using the token or even give a number of goods that the user shall be able to purchase using the token if there are any.
- Token distribution
The token distribution gives a detailed outlook of how you intend to distribute the total amount of the available tokens. You should give the actual number of tokens that shall be available for the Pre-sale and also for the ICO itself.
You should also breakdown the information and show the potential investors out of the available tokens what number of tokens will be used for what. For instance, you could have a project with 1 billion tokens and decide that 60% will go to the token sale, 20% for marketing, and 20% for the team. This way, the investors will be able to get a clear picture of how you intend to fund your project.
You should also give a detailed outlook of how the funds collected through the token sale shall be used and show what percentage will be used for what.
- The token governance
You will also need to stipulate how the tokens shall be used within the blockchain ecosystem of your project. You need to clearly outline the rules on which the token shall operate. For example, you should include the pricing guidelines for transactions and many more.