If we are working on a crypto project or if we would like to get started with a crypto project, we might need to create a token and an economy around the token. For any project to become successful tokenomics is very important. During the initial days maybe the token value might be sustained but in the long run, the token shouldn't lose its value, and in most of the projects that's what is happening. The project would then mint some more extra tokens to compensate but that's not a long-lasting solution.
When we plan to create a token, it is important to define the faucet or the minting and at the same time it is also important to define the sink of the token. If we look at how water flows, it starts from somewhere flows through something, and then finally reaches somewhere. The rain cycle also represents the same thing where the rain starts from the ocean in the form of evaporated water and from there, it is transported as rain to the plain surface or mountains and after the rain is over, the water is again flown back to the ocean itself and this cycle continues.
The stability of the token becomes good if the mining and sink work very well. The token should be created somewhere and based on the use cases, it should also be taken out of supply in the form of burning. The value of the token would also stay still only then otherwise when it is starting, the value would be very good but gradually when more tokens are circulating the value of the token would keep going down.
token's price for a token to sustain in the market for a longer period, it is important to have good tokenomics. When the token is created and it is circulating, there should be more utility for the token inside the project. Some of the perks or extra things in the project should be available for purchase using the token itself. This way a use case is created for circulating the token from one place to another. Having more use cases for the token is important because even if there is not enough sink for a token, the price of the token will not be affected if the token is circulating properly from one wallet to another in the form of some concrete use ceases.
When many people hold the token, governance is created for the token holders or stalkers. People are allowed to vote on a project decision. There is a facility for this. If a particular user is holding a huge amount of tokens, they would get more opportunities to participate in the decision-making. Sometimes it is based on the amount of stake or just based on the number of tokens held. For people who are interested in more power or for people who would like to be a part of some of the decisions, they purchase a lot of tokens and stake them just to influence. This is another way to lock up the token from circulation and keep the price of the tokens stable.
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