STEEMIT ENGAGEMENT CHALLENGE S6W3 - TOKENOMICS IN THE CRYPTO ECOSYSTEM

Image edited on Canva

Hello to everyone in this community. I believe we all are doing so well today. I welcome you all to yet another week of the season 6 engagement contest that has been organized by the steemit team so as to enhance interaction among users in this platform.

I will be participating in the engagement contest that has been brought forward by this community team tagged tokenomics in the crypto ecosystem. This is a wonderful topic to engage in and as such, I beckon on you all to come read from me today as I drop my entry to this contest.

I will be answering some questions below so as such, I wish you all a happy reading.

---

---

What's your understanding of tokenomics in the crypto ecosystem?

The word Tokenomic in the crypto ecosystem is a combination of two words which are Token and Economics. And these two words are the most vital keys words that makes the cryptocurrency more valuable and eye-catching.

Image source

Tokenomic in the crypto ecosystem is talking about the all that entails about a particular cryptocurrency such as, it projects, profits, usefulness and so on which would most likely interest the investors to invest in that particular cryptocurrency.

Tokenomic is all the features which a cryptocurrency possesses that attracts certain investors to want to put their funds in it in other to gain and yield profits. So the ability for investors to be able to invest in cryptocurrency is based on the tokenomic of such cryptocurrency.

It relate the full information of the cryptocurrency to the investors which ascertain it features of providing economy value and profits. So before an investor actually invest in a cryptocurrency, he or she will first of all look into the tokenomic of the said cryptocurrency before investing in it.

So the tokenomic provides the details and economic benefits of a cryptocurrency and if these benefits and characteristics are able to capture the investor's mind, then the investor will decide whether to invest or not.

---

Highlight the main importance.?

• To me, the main importance of the tokenomic is so as to give a clear information and details of the cryptocurrency which ascertain the cryptocurrency features and ability to provide profitable gains which makes it precious to investors.

• So the main importance is that it is used to give out the significance of a token's worth and usefulness. It also tells the investors about how the token was created, how the token is being managed. It also gives the correct analysis of a token in the case of comparison between other tokens.

• It is also used to ascertain the demand level and also the supply level of a particular cryptocurrency. Giving a correct statistic of the amount of a cryptocurrency that has been distributed.

All the above said will certainly help the investor to come out with a better verdict concerning the investment whether to invest in that token or not.

---

What are the components of tokenomics? Explain each in detail.

We all know that there are three (3) solid components of tokenomics. And I will be highlighting them as well as explaining them one after another.

• BEHAVIORS - Now the behavior is talking about the attitude someone is expected to showcase. For instance as a student, you are expected to go to school and read so hard if you want to come out with flying colors. And when you do the needful, you will definitely excel.

That is what the behavior component is talking about. The behavior of a tokenomic works in that manner. One is being rewarded after the work is accurately done, so the behavior which one showcases in performing a duty will earn him reward at the end of the day.

• TOKENS - Now the tokens are gotten from the engagement of the said behavior we just mentioned earlier. You see how the connection works. This tokens are said to be achieved based on the behavior that was exhibited previously. So in essence, this tokens or points are reward earned on the account of exhibiting a good behavior. So the money or funds gotten is known as the reward (token) gotten by engaging in work (behavior)

• CHOICE - The choice is another component of the tokenomics and it is the exchange of the rewards which is known as the tokens for a reinforcing distinctive object that are many in numbers based on your choice of preference.

So all these three are related to each other. When giving a presentation regarding the tokenomic. We individuals are quite different in selection and as such, one need to explain the behavior that is needed to be exhibited, alongside the reward (token) gotten based on the behavior which was exhibited, and lastly is using the reward (token) to reinforce several limitless item that are based on one's choice of preference.

Other components of tokenomics are as follows.

• THE TOKEN SUPPLY AND DISTRIBUTION- This is the total amount of production and supply regarding a token to all investors of the said token when the token is being launched. We all can see how the cryptocurrency came into existence such as the bitcoin. It first of all came as an air drop and the air drop is considered as a supply of token that has no value yet.

Also it can also be supplied in a presale form. This means that, the token after gaining some influence, private body can now come to bargain on the price and then purchase it before letting it out to the public to sell.

So the token supply is talking about the total number of supply regarding a token irrespective of the medium that was used to supply this tokens.

• TOKEN VESTING - The token vesting refers to the action in which tokens are reserved for certain people known as the developers or the capitalist. The main purpose of the token vesting is so that they can sell off those tokens after a particular timeframe.

• FUNDING OF TOKEN - Now the funding of token is a way of raising money for the project which will in turn benefits investors and this is done through a process called ICO ( INITIAL COIN OFFERING) . Here, the early investors are being given lower rate of the cryptocurrency and upon investing, they gain more profit when the token is listed and also they become shareholders too.

• TOKEN UTILITY - This is another vital component of the tokenomics of a token. The token utility is talking about a medium in which the said token can be used in exchange for either a product or service depending on your choice. So it is a wonderful component og a token provided that the token is acceptable, then it can be used in exchange for other items.

• TOKEN SECURITIES - Now this is another great component. Provided that the said token has a share of equity among investors, then all investors have the power and right to cast their vote regarding the governance of the said company and what thr company is about to do. So if an investor is not okay with the governance of the company, the investor can then vote for his or her choice of governance.

• DECENTRALIZATION - This is another great component of a token. Here it means that power is not allocated to a particular individual or investor regarding an asset. There are representatives who are always on standpoint to maintain the decentralized proof of stake consensus mechanism.

And these representatives are randomly changed in in hours depending on the token as thoug there many delegates who are on standby to do the job. For with this method, we are rest assured of a decentralized system mechanism.

• TOKEN BURN MECHANISM - This is another good component. The burn mechanism of a token helps to burn a certain number of tokens in other to reduce the circulatory supply of the token. This will help to a great extent in increasing the price of the token.

We all know that when a certain number of a cryptocurrency token is burnt, the number of supply of the token is drastically reduced and when this is done, the demand for this token will rise up and then the price of the token will also increased too. That is why we equally set a percentage to #null in other to burn a particular percentage of the Steem cryptocurrency to reduce the circulatory supply and increase the price of the currency.

---

Choose a token and discuss its tokenomics. From the information deduced about the tokenomics of the asset?

I will like to talk about the Tron tokenomics. We all know that initially, the tron token was using the ethereum blockchain before it has now gotten it on blockchain, and as such, tron still uses the ethereum tokenomics to operate.

Screenshot from coinmarketcap

Tron and other related cryptocurrency project make use of the deflationary system of tokenomics models. In the deflationary tokenomics model of the tron token, it is related to a static supply of the tron token with little money given.

Screenshot from coinmarketcap

Tron- also has a total supply of around 92,110,841,537 with no maximum supply.
When we talk about the distribution of tron both via ICO and Pre-sales orders. Although talking about the tron vesting, it certain do not have a freezing restrictions and also, it has been recorded that they undergo the token burn mechanism of over a billion tron that were burnt in the year 2020. So you can see that tron also support the token burn initiative and this is done purposely to decrease the circulatory supply and increase the price of tron.

tron also have a total number of 27 super representativs that are always present to validate blocks on the blockchain and that is why we can say that tron operates on a decentralized consensus mechanism. And to further prove the points, this representatives are randomly interchanged in every 6 hours as though there are many delegates waiting for this job.

it has a proof of stake system in which users can use their tron and then stake it to gain more reward. It is done by the process of staking tron to validate new blocks and the user with the highest staking amount gets to validate new blocks and earn rewards.

tron utility - there's provision for performing exchange of the tron token to other items of your choice. I can as well use credit card to pay items via tron payment and also, there are certain exchanges that are made available in which one can withdraw with less charges such the poloniex exchange platform.

There are a lot of tron tokenomics to talk about but time will fail me to do that. For now, these are a few about the tron tokenomics that I can talk about.

---

---

Do you consider the asset worthy of investing in? Why?

With all that have been said I do consider it worthy to invest in. I vividly like the Burn mechanism of tron. Because this will help to reduce the number of tron circulation and then increase it value in other to benefits investors. **I rather have 10 tron in my wallet with high price value than to have 100 tron in my wallet with low price value.

Investors are after the future of a token and not the numbers of that token. Also a token that reward users when they stake their tron is also a plus for me as though it is an extra profit for investors. For with this, we are assured of a promising future of the tron token.

Also for the fact that it operates on a decentralized mode of operation whereby the validation of new blocks is done by different super representatives and these representatives are interchange randomly in every 6 hours gives me a solid affirmation that power is being shared evenly and their is equity.

---

Give a few points on why you think tokenomics is important to investors or traders.?

There are certain point in which tokenomics are important to investors or traders and they are as follows.

• As an investor, the tokenomics will give you an insight of what the token is all about. Information like the economic importance, the circulatory supply, how it is been distributed, how valuable it is and how profitable it can be.

• Tokenomics also gives traders a clear information on the payment acceptable methods, how one can be able to withdraw, the exchange platform with a cheaper withdrawal rate and also the utility of the token.

• Also from the readings given by thetokenomics a good investor can decide whether to invest on the token or not after careful looking at the information provided about the said token by it tokenomics.

---

If you are to be a creator of a token, what aspect of tokenomics would you consider most important to drive investors to the project? Give reasons.

If I were to be a creator of a token, I will consider the circulatory supply of the token. This is very important to checkmate as a developer. There would be a less release of the token. My aim is to focus on the price value of the token and not the numbers of the token persay.

We have seen a lot of token supplies with less price value, then what is the essence of supplying more amount of tokens with less price value. The reason why many tokens are seen in lower demands is because it is seen everywhere. And when a token has a large circulatory amount, the demands will be less and when there's is no demand of a token, the price will go down drastically.

So my aim will be to supply fewer amount of the token and then work on the price because whenever there are demands of a token, the price value of that token increases and this will boost the economy to a certain level. With this approach, there will be no need to burn a token in other to reduce the circulatory supply.

---

---

CONCLUSION

Tokenomics are the key factors that determines the adoption of a cryptocurrency. It gives a solid information about what the cryptocurrency entails from the distribution level down to the supply level and economy factors.

It is always advisable that before you invest in a token, always checkmate the tokenomics of that token first. This will help you get a concise information about the token you are about to invest in, and if it is one that suit you so well then you can go for it, but we ought to be careful.

Thank you all for reading from me today, I will like to invite certain users to also participate in this contest and they are @v-brainer, @jenny281, and @skilocy.