Token Economics

Tokenomics — the study of token supply dynamics, distribution, and value accrual — is one of the most important factors in crypto asset analysis. Supply changes directly affect price: new tokens entering circulation create selling pressure, while burns and locks reduce it. Understanding these dynamics lets you estimate dilution risk, identify overvalued or undervalued tokens, and anticipate price-moving unlock events.

Why Tokenomics Matters

Price is a function of demand and supply. In crypto, supply is programmable and constantly changing:

• A token inflating at 50%/year needs 50% demand growth just to maintain price
• A large unlock releasing 10% of circulating supply in one day often causes 5-20% drawdowns
• Tokens with >80% of supply locked have extreme dilution risk ahead
• Protocols that burn fees can become net deflationary, creating structural price support

Key Supply Concepts

Total Supply vs Circulating Supply