Tokenomics 101

In the rapidly evolving world of crypto, new tokens appear every day, yet most are built on shaky foundations, heavily reliant on hype rather than enduring value. These tokens often launch with lofty promises, positioning themselves as revolutionary, but beneath the surface, they lack the core elements needed for sustainable growth. Without solid business principles, genuine value generation, and product-market fit, they’re vulnerable to a risky cycle: initial excitement drives prices up, only for them to crash as sell pressure rises and investor confidence fades.

This pattern is not merely a flaw of individual projects; it represents a systemic issue. It creates a volatile market that deters serious investors and hampers mass adoption. How can we bring stability to this ecosystem? At Tokenise, we believe the solution lies in building smarter, fundamentally sound tokenomics.

The Appeal and Risks of Speculation

The speculative nature of many new tokens can make buying and trading them feel more like gambling than investing. For some, this speculative environment is appealing—memecoins and high-risk plays offer a thrill, and they certainly have their place in the market. Yet this approach isn’t sustainable for projects aiming to build real, lasting value. As we’ve seen, once the initial hype fades, speculative tokens often experience a severe drop in price as early investors cash out. This environment becomes a deterrent for institutional players and large retail investors, who seek less volatile, more predictable assets.

As larger institutional players such as BlackRock and Grayscale begin to take digital assets seriously with products like Bitcoin ETFs, we’re seeing promising signs for broader adoption. These developments point to a future where crypto and digital assets play a role in mainstream portfolios—but they’ll only get there if we address the foundational weaknesses in today’s tokenomics.

Case Studies: Learning from Both Failures and Successes

Let’s examine two prominent examples that illustrate the high risks of unsustainable tokenomics. Illuvium (ILV), for instance, launched at $30 and surged to $1,800, largely due to an enticing staking programme and strong initial demand. However, as the lockup periods ended, Illuvium had not delivered on its promises, leading to a sharp decline in investor confidence and a subsequent price drop.

Similarly, Olympus DAO (OHM) employed a bonds and rebasing model that initially attracted attention, pushing the price to $1,400 per token. But as the initial hype waned, so did its value. Today, the token trades at less than $20. Both projects reached impressive market caps in the tens of billions, yet their tokenomic structures couldn’t sustain these values over the long term.

On the other hand, IX Swap (IXS) provides an example of resilience. Tokenise team members assisted with their launch in 2021, and while IXS initially saw a dip in line with the broader bear market, the team’s dedication to innovation and strategic growth helped the token regain value over time. IXS has recently been trading within a positive range, thanks to its focus on fundamentals and consistent improvements—a model for what tokens can achieve with the right structure and persistence.

Tokenise: Building Smarter, Sustainable Token Models

So, what sets sustainable tokens apart? At Tokenise, we’re committed to designing token models rooted in practical value and longevity. Through our Tokenise Tooling, we offer templates and resources based on proven market tokenomics, guiding founders in creating tokens with the structural integrity needed for resilience. Our tools allow projects to simulate liquidity, forecast prices, and model vesting and distribution—all essential aspects of responsible token design.

Meanwhile, Tokenise Enterprise provides hands-on consulting, where we “own” the execution of our clients’ launches. This goes beyond technical strategy; it includes a comprehensive approach to token design, liquidity management, listing on centralised and decentralised exchanges, and community engagement. We help founders—especially those without a technical background—navigate the complexities of tokenomics and launch with a robust plan for long-term success.

The Core of Sustainable Tokenomics: Creating Lasting Value

At the heart of Tokenise’s approach is a philosophy that tokens should never be created “just because.” Too often, projects launch tokens as an afterthought, without considering the strategic role a token could play within their ecosystem. At Tokenise, we advise founders to think deeply about the why of their token: What purpose will it serve? How will it integrate into the broader project? A token is not a product; it’s a means of value transfer, a building block within an ecosystem.

When done right, tokenomics can support meaningful, value-driven ecosystems. Our goal at Tokenise is to empower founders to think about tokenomics not as a quick revenue stream, but as a critical foundation for their project’s success. With the right guidance, projects can avoid the pitfalls that have plagued so many tokens before them, building assets that not only survive but thrive in the long term.

A Vision for the Future of Digital Assets

Looking ahead, we believe tokens have the potential to evolve into a recognised asset class of their own. In a properly regulated environment, tokenised assets could become as legitimate and trusted as traditional stocks, enabling companies to raise capital through digital means. Imagine billion-pound companies choosing to tokenise equity rather than issue stock, creating digital assets that are safe, regulated, and accessible to a wide audience.

At Tokenise, we’re working towards this vision, positioning ourselves at the forefront of a token ecosystem that is sustainable, secure, and aligned with the principles of good business.

Conclusion

Tokenise exists to turn the tide in tokenomics by providing founders with the tools and expertise they need to create tokens with purpose and resilience. We’re building a future where tokens are more than speculative assets; they’re integral to value-driven ecosystems, fostering innovation and long-term growth. In an industry where too many projects falter, Tokenise offers a path forward—a way to build tokens that last.