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Tokenomics: Why and How Tokens Fuel the Decentralised Economy

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The decentralised economy is booming, despite heavy losses on the crypto market in the past months. In the first quarter of 2018, venture fundraising in blockchain startups has been more than 40% of the total VC funding in 2017, promising a good year for crypto startups concerning VC investments. On the other hand, nearly 50% of the companies that did an ICO in 2017, have already failed, despite having raised over $104 million.

Despite the differences in industry, location, product and service on offer, they all have one thing in common: they use some sort of token as the key enabler to the platform. Startups have multiple options when selecting the type of crypto token and the token economics they opt for influences the likelihood of success for the crypto startup. Therefore, let’s dive into token economics to understand how this new component of the economy works.

Four Types of Tokens

Tokens are the fuel of the decentralised economy and a token has been described as:

“A unit of value that an organisation creates to self-govern its business model, and empower its users to interact with its products while facilitating the distribution and sharing of rewards and benefits to all of its stakeholders.” – …

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