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The Big Question of Token Economics | Before buying any cryptocurrency, ask yourself these 100 questions first!

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The Big Question of Token Economics | Before buying any cryptocurrency, ask yourself these 100 questions first!

How to avoid blind investment in the cryptocurrency market? How to curb your FOMO mentality when prices are rising? Galaxy Digital researcher Kirill Naumov listed 100 questions to ask yourself when analyzing token economics on Twitter. By carefully examining each question, you can choose better long-term investment goals.

Before Investing, Ask Yourself These 100 Questions!

Outline of Questions:

  • Overall Questions
  • Token Issuance
  • Supply Side
  • Demand Side
  • Token Functionality
  • Past Performance
  • Current Relevant Issues

Overall Questions

1. Which tokens does this protocol use?

2. If there are multiple tokens, why are they needed?

3. What is the market value of the token?

4. What is the circulating supply of the token?

5. What is the maximum possible supply?

6. What is the fully diluted valuation (FDV) of the token?

7. Is the token's supply inflationary, stable, or deflationary?

8. Where can this token be purchased?

9. Why is this token listed on specific centralized or decentralized exchanges?

10. How deep is the liquidity of the token on these exchanges?

11. What is the trading volume of the token on these exchanges?

12. Who are the primary liquidity providers/market makers?

13. Are they long-term holders or just incentivized by unsustainable token issuance rewards?

14. When holding the token, what aspects do you have confidence in? Chain, cross-chain bridges, team, etc.

15. Does the team benefit from the token appreciation?

16. Do non-token holders benefit from the token appreciation?

17. Can the protocol function without the token?

Token Issuance

18. Why choose this blockchain for token issuance?

19. Is the chosen chain optimal in terms of security, speed, and interoperability?

20. How long has the project been developed before issuing the token?

21. What token issuance method was used?

22. How much funding did the protocol raise through token issuance?

23. What is the FDV of the token post-issuance?

24. Since launch, how has the market cap/FDV changed?

25. How will the chosen initial supply ratio affect future token issuance and token holder value dilution?

Supply Side

26. What factors will affect the selling pressure of the token?

27. How much will the future token supply increase?

28. Who holds the tokens?

29. What proportion of the supply does the top 10 addresses control?

30. And the top 100 addresses?

31. When will the tokens held by VCs and the team unlock?

32. Are there a significant number of tokens lost or destroyed?

33. What proportion of the tokens is held by the community?

34. How fair is the token distribution?

35. Do you understand the overall token distribution schedule?

36. To whom are the tokens distributed?

37. How do they typically dispose of the tokens they receive? Hold or sell immediately?

38. Can you benefit from token distribution through liquidity provision or staking?

39. Does token distribution bring you profits, or is it just to protect you from token dilution?

40. Why are some issued tokens not circulating in the market?

41. What happens when locked or staked tokens are unlocked?

42. Does the community lockup mechanism include batch unlocks?

Demand Side

43. What are the main driving factors for token demand?

44. Can users easily substitute this protocol with others?

45. How did you learn about this protocol?

46. Will others want to acquire this token in the future?

47. What is your expected return on holding this coin?

48. Will protocol revenue be distributed to token holders?

49. Does the protocol buy back or burn its own tokens?

50. When tokens are used to purchase goods/services from the protocol, are the tokens burned or transferred?

51. Does this protocol have passionate supporters?

52. How is the atmosphere in the protocol's Discord community?

53. How active is the protocol on Twitter?

54. How active is the protocol's Twitter community?

55. How long have they been active so far?

56. Can they maintain their activity levels a month or a year from now?

57. Are there incentive rewards driven by game theory that make you hold the token?

58. Is there a token lockup mechanism?

59. Is there a hint of Ponzi scheme?

60. Is there a token burning mechanism?

Token Functionality

61. What is the functionality of the token?

62. Should you hold it long-term or use it for trading/services?

63. What percentage of the protocol's cash flow is distributed to token holders?

64. Will the cash flow dilute the token, or is it distributive?

65. Do you plan to sell immediately or hold for unrealized gains?

66. Is the token used for governance?

67. If so, how centralized is the governance voting?

68. Does your vote affect the voting outcome?

69. What is the minimum token requirement for submitting and upgrading governance proposals?

70. Can governance influence profit distribution?

71. Is there a bribery mechanism in governance voting that allows you to profit from it?

72. Can the token protect the protocol?

73. Can the token be used as collateral to borrow liquidity?

Past Performance

74. Is the token related to the broader crypto market, ETH, BTC?

75. Why hold this token instead of ETH or BTC?

76. How volatile is the token price?

77. How has the token's exchange rate to USD/ETH trended since issuance?

78. Does token distribution/staking rewards offset any losses?

79. What is the token's circulation speed? Circulation speed = Trading volume / Market value

80. How big is the difference between the current token price and its all-time high (ATH)?

81. Does the token price react to positive/negative news?

Current Relevant Issues

82. Does the token's tokenomics still make sense in a bear market?

83. How does the token fare in market crashes?

84. Is the tokenomics effective in high volatility and other extreme conditions?

85. How likely is it that the token will attract scrutiny from regulators like the SEC?

86. Is there enough liquidity for you to exit quickly?

87. What if everyone exits simultaneously?

88. Will user entry/exit affect the tokenomics?

89. Are there funds set aside to compensate for losses in black swan events?

90. Has the team adjusted the tokenomics in the past?

91. Are there other protocols with similar tokenomics, and how do their tokens perform?

92. Are there any prominent holders?

93. Are they selling or hoarding tokens?

94. Will this protocol still be relevant in the next bull market?

95. Is the tokenomics of this protocol superior to its direct competitors?

96. Have you thoroughly researched the tokenomics of this token?

97. Is the protocol behind the token well-executed?

98. Is the tokenomics of the protocol overly complex, leading to more potential failures?

99. How reliable is the data used to answer these questions?

100. Do you still want to "ape in" this token?