Tokenomics
Tokenomics is a token's issuance and distribution rules: how many exist, who received them, when they unlock and what burns them. These numbers set the future pressure on the price long before any news about the project.
What it consists of
First, total supply and how much of it already circulates. The gap between the two shows how many tokens are still to arrive. If a third circulates, two thirds will eventually appear in sellers' hands.
Second, distribution. The shares held by the team, early investors, the treasury and the public sale. If more than half sits in a few wallets, the price depends on their decisions rather than on demand.
Third, the unlock schedule. The dates on which locked allocations become available. They are known and published in advance, so a large unlock should never surprise you.
How to read an unlock
A token trades at $2. 100m circulate out of 500m total. In a month, 50m unlock.
| Market cap now | $200,000,000 |
| Fully diluted valuation | $1,000,000,000 |
| Circulating increase in a month | +50% |
For the price to hold, demand has to grow by half in a month just to stand still. A fully diluted valuation five times the current cap means the market is paying for a fifth of the eventual supply.
Red flags
- Over half to team and investorsThe project then belongs to them, not to the market. A public share below 20% deserves serious pause.
- Unlocks with no cliffA healthy schedule spreads investor exits over years. Everything at once after six months is an exit plan, not a growth plan.
- Uncapped issuanceIf new tokens are printed to pay yield, that yield is itself the source of the price decline.
- Burning instead of utilityBurning cuts supply without creating demand. The question is always the same: what is the token for, besides going up.