Tokenomics, or token economics, are the core innovation of web3. They are the bed rock of “adding ‘money’ to the internet”. Which is what makes them so important. They are not only a breakthrough innovation. They are also a completely new element to add into a product or protocol. In many ways Tokenomics is a double edged sword. Executed well, they can super charge what you’re building. But poorly designed tokenomics will surely kill it.

So what do you need to know to design tokenomics properly? Here’s the complete syllabus for my tokenomics course.

Tokenomics incorporates many, many, different domains. It’s a domain that tries to bridge technological systems, economic systems, human psychology and politics. Here are the domains you’ll need to know to design tokenomics well:

Here’s the comprehensive curriculum for the tokenomics course:

Why & when to use a token

Tokens are the superpower of web3, but they’re a double edged sword. They shouldn’t be used for every project. Knowing how to evaluate whether to use a token in a project or not is the first step to understanding tokenomics.

Tokenomics 101: Supply & demand

Understanding the overall picture of tokenomics fundamentals is where this tokenomics course starts.

Demand & business analysis fundamentals

What drives demand for a token? We’ll learn how to analyze the utility a token brings and value it drives for the web3 economy. Analyzing demand is a mix of understanding the token economy, business fundamentals, financial prospects for the token and the narrative in the market.

Supply & Token issuance

Supply is as important as demand. It’s made up of the Public and private distribution of tokens, how liquidity is setup. Most importantly it’s a factor of knowing how to look at the token issuance and vesting schedule.

Setting up token liquidity

How to setup a liquidity pool for your token. Determining how much TVL to lock up and incentives to give to liquidity providers. What to take into account and implications to consider.

Regulation

Regulation is becoming ever more present in the web3 sector. Structuring a token so as to avoid violating securities’ laws in different jurisdictions is part of what every tokenomics designer should consider.

Governance approaches

Many tokens serve for protocol governance as well as protocol utility. This gives them a dual purpose that needs to be considered lest they contradict. There are many forms of token governance, such as ‘one token — one vote’, quadratic voting, one person — one vote, governance limiting. This is an area most tokenomics courses neglect to the detriment of their protocols.

Agency problem

Tokens serve as a coordination mechanism amongst different stake holders. The agency problem is a classic problem amongst different stakeholders. It plays its part in designing crypto economics systems as well.

The Designing Tokenomics course covers lots of topics, because to design protocol tokenomics requires lots of different domain expertise. That’s what makes tokenomics such a fascinating design space to explore!