🤘Design

Encourage those who contribute

• Rewarding those who contribute benefits the network's growth and aligns incentives with users.

• It's crucial to note that rewarding contributors is a vital aspect of successful tokenomics, as it links the contributors' success with that of the users and the protocol.

Enhance the product

• A crucial difference between good and bad tokenomics lies in how the token enhances the product. If the token doesn't significantly improve the product beyond fundraising, it's a sign of poor design.

• Ethereum's tokenomics improve its core distributed computing capability, enabling secure processing of economic contracts that wouldn't be feasible otherwise.

• Maker DAO and Curve benefit from their tokens by fostering community engagement and aligning incentives, thereby enhancing their respective products.

• In each case, the presence of tokens enhances the product. While the product could exist without the token, it becomes stronger because of its inclusion.

Advantage for holders

• Tokens should benefit holders instead of solely extracting value from them, avoiding a "ponzinomics" approach. These benefits can include utility or social advantages, not just monetary gains.

• Various protocols utilize strategies such as staking, locking, slashing, and escrowing to reduce the velocity of money, although a slower velocity might not always be advantageous.

• Explicitly incorporating a mechanism that directly benefits token holders should be an integral part of the design process.