Ideas and Examples of NFT Tokenomics

Ideas and Examples of NFT Tokenomics
January 8, 2023

The term "tokenomics" describes economies based on tokens. It is a crucial component of every blockchain project. Teams can create sustainable economies and add value for token holders by properly implementing token economics.

Effective NFT tokenomics creation is a difficult process that depends on interrelated elements like supply and demand equilibrium, launch tactics for token distributions, use cases for NFTs, incentive mechanisms, and the inclusion of anti-inflationary measures.

The balance between supply and demand is crucial.

All successful token economics is based on a healthy supply and demand equilibrium. It influences the appeal and hence the sales of NFTs. The scarcity principle states that if an asset is in high demand and limited supply, its value will increase. Teams working on the NFT project should take steps to secure a limited supply while also raising demand for the tokens.

IDEAS AND ILLUSTRATIONS FOR NFT TOKENOMICS TO LIMIT SUPPLY

Teams think about the overall number of tokens that will be initially distributed, whether new NFTs will be produced over time, and what kinds of deflationary techniques will be used to prevent inflation when deciding on the supply side.

Most NFT initiatives produce a set quantity of NFTs. Think about PFP NFTs, like Meebits. These initiatives simultaneously release thousands of NFTs. As an illustration, Meebits released 20,000 NFTs on the day of release. The supply from the genesis collection will not change, despite the possibility of further NFT collections being launched by the same team.

This path is also taken by the metaverse. The team can present various regions of the metaverse as digital real estate during the project's execution in a number of sales events. The overall amount of land parcels to be issued, however, never changes. In the SandBox metaverse, there will be, for instance, 166,464 land NFTs.

Conversely, play2earn NFT projects use several supply strategies. As they advance in these initiatives, users receive in-game NFT assets, which eventually raises the overall token supply in circulation. Therefore, to reduce the supply of NFT, these projects employ deflationary techniques like burning, breeding, or fusing. Tokens are permanently removed from circulation via the burning mechanism. In NFT games, breeding and fusing are used to combine two more widespread NFTs to produce a new enhanced item.

Distribution and allocation of tokens

The effectiveness of a project is also influenced by how teams distribute and allocate NFT tokens.

While some projects choose to begin fairly by distributing the tokens to everyone at once, others choose to distribute a portion of the total supply to chosen investors or reserve slots on the whitelist for early adopters.

Additionally, some teams release a thorough NFT allocation plan, which is uncommon for NFTs but necessary for fungible crypto tokens. The NFT Starts project, for instance, distributed the 20,000,000 total NFT supply as follows: market mining (45%), core contributors (16%), airdrops (6%), reserve fund (2.5%), community offer (1.5%), DEX liquidity (1.5%), marketing efforts (12%), and team (15.5%).

NFT TOKENOMIC IDEAS AND EXAMPLES TO INCREASE DEMAND

considering that B.F. It is widely acknowledged that token economics must provide value in order to encourage positive conduct, according to Skinner's studies from the 1970s. NFT teams use techniques to provide value on the demand side by tying membership benefits and other rewards to NFTs.

On the one hand, these initiatives motivate NFT holders to keep their tokens for the long term. The supply that is in circulation is reduced as a result. Teams may provide NFT staking options for this reason, allowing holders to lock their assets in a liquidity pool for a specified period of time.

On the other hand, these techniques support and propel long-term demand for the tokens. In order to achieve this, teams might offer valuable membership perks like entry to special IRL events, upcoming drops, giveaways, or airdrops. Teams constantly develop new NFT utilities as the market becomes more complex.

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