How do you get started in tokenomics?

How do you get started in tokenomics?

How to get started in tokenomics is a question I’m often asked these days by participants in my Designing Tokenomics course. Tokens and tokenization, is the big unlock of the crypto and web3 industry. In this article I’ll layout how you can start your tokenomics path. It comes down to a few steps:

1. Understanding what tokenomics is and what fields it touches on
2. Are you the right fit to dive into tokenomics?
3. Getting a good grasp on the core principles of good token economic design

By the end of this, you’ll have a good idea on how to get started with tokenomics!

What is tokenomics anyway? (Briefly)

Tokenization in web3 is the ability to connect digital data to incentives and align incentives between different participants in a way that web2 hasn’t been able to achieve.

That's the innovation that’s gotten so many excited about this space. To do this properly requires designing your token economics, your tokenomics, properly. If you do it well, you can supercharge your project, whether it's a distributed ledger like Bitcoin or an art project or a game. Tokenomics is the system of human incentives and economic design around your tokens.

How can you get started in Tokenomics?

Getting started in tokenomics comes down to a few steps:

Understanding what tokenomics is and what fields it touches on

Tokenomics touches on both human behavior, technology as well as economic design. It’s an incredibly multidisciplinary field of expertise. These topics include:

• Behavioral psychology
• System design & architecture
• Finance
• Economics
• Blockchain technology
• Financial history
• Political science

And more (you can find a full list of the topics that that go into a tokenomics course syllabus here)! Figuring out if these topics fascinate you, you’re on your way to step number 2.

Are you the right fit to dive into tokenomics?

Who makes a good tokenomics expert? Are you the right fit? Do you have the skills? This is an excellent question, especially in a new and emerging field such as designing tokenomics and token economies. It’s only really been around for 7 years, and is still in its baby steps.

You’ll know if you’re a good person to head up the token design of a web3 project if you’re fascinated in all of the topics that go into designing tokenomics. And I mean fascinated. You need to really love this stuff. Otherwise, you’ll never be able to get into the depth and breadth that are necessary.

What else goes into who can be a good tokenomics expert?

1. First principle based thinking: The market is full of assumptions, you need to be able to think critically to evaluate things on your own to see if they make sense or not.
2. Non conformist: Web3 and crypto are full of manias and depressions. You often need to be counter consensus to be able to sift through the hype cycles.
3. Love to learn: There are just so many topics to know, a love of learning and knowing how to learn is incredibly beneficial.

Getting a good grasp on the core principles of good token economic design

Your last step in getting started in tokenomics is understanding an overview of what makes good Tokenomics design. This isn’t exhaustive as a list, and is a starting out point for you to go and explore (see the above list of topics to know about!). The core principles of a good tokenomics design are:

1. Understanding why have a token in the first place! What purpose does the token serve? Is your token actually serving your goal?
2. Understanding when the right time to distribute your token is! Too many projects launch their tokens too early (fewer do this too late) and mess up their project (this usually happens from messing up point #1).
3. Understanding the supply and demand dynamics behind your token! Who wants your token? Why is someone using it? Who’s selling your token? How are tokens entering the market? When and how many tokens?
4. Token liquidity! How can people access your tokens? What is the expected volume?

These four factors are the core principles of good token economic design.

So how do you get started in tokenomics?

Here’s how you start your tokenomics path. It comes down to a few steps:

1. Understand what tokenomics is and what fields it touches on
2. Are you the right fit to dive into tokenomics?
3. Getting a good grasp on the core principles of good token economic design

And with that, you’ll have a good idea on how to get started with tokenomics! If you’re looking for further resources, I have a free 14 day email course on tokenomics 101 which you can find here!