Space Summary
The Twitter Space Master Tokenomics Design: Sustainable Crypto Strategy #Tokenomics hosted by _WEB3M_. In the '? Master Tokenomics Design: Sustainable Crypto Strategies ? #Tokenomics' space, experts delved into the critical realm of token economics within the crypto industry. From the role of DeFi to AI integration and the necessity of community engagement, the discussions emphasized the importance of innovative and sustainable approaches in developing effective token strategies. Key takeaways highlighted the significance of understanding market trends, leveraging technology like AI, and prioritizing security and branding. By exploring diverse aspects of tokenomics, participants gained insights into building resilient and successful crypto projects.
For more spaces, visit the DeFi page.
Questions
Q: Why is tokenomics design crucial in the crypto industry?
A: Tokenomics design forms the foundation for sustainable and effective cryptocurrency projects.
Q: What role does DeFi play in influencing tokenomics strategies?
A: DeFi introduces novel concepts and mechanisms that shape token economics and project sustainability.
Q: How can AI integration benefit tokenomics design?
A: AI technology enhances the efficiency, predictive analysis, and optimization of token economics models.
Q: Why is community engagement critical in successful tokenomics design?
A: Involving communities fosters user adoption, loyalty, and long-term project sustainability.
Q: What considerations are essential for launching a successful token project?
A: Strategic marketing, branding, security measures, and risk management are paramount for project success.
Q: How can tokenomics design adapt to evolving market trends?
A: Continuous adaptation and flexibility in tokenomics design are necessary to align with market dynamics and technological advancements.
Highlights
Time: 05:10:28
DeFi Innovations in Tokenomics Design Exploring how decentralized finance transforms traditional token economics approaches.
Time: 06:25:14
AI Integration for Optimizing Token Strategies Analyzing the impact of artificial intelligence on enhancing tokenomics efficiency and decision-making processes.
Time: 08:45:02
Community Engagement and Token Adoption Discussing the significance of community participation for the success and growth of token projects.
Time: 10:15:40
Security Measures in Token Ecosystems Examining the importance of robust security protocols in safeguarding token assets and networks.
Key Takeaways
- Tokenomics design is crucial for the sustainability and effectiveness of cryptocurrencies.
- Innovative approaches to token creation and management are emerging in the crypto space.
- DeFi plays a significant role in shaping tokenomics and crypto strategies.
- AI integration is enhancing the efficiency and optimization of token economics.
- Exploring unique projects offers insights into the diversity and creativity within tokenomics.
- Understanding community engagement is essential for successful tokenomics design.
- Tokenomics design requires constant adaptation to market trends and technological advancements.
- Inclusivity and accessibility are vital considerations in developing sustainable token strategies.
- Strategic marketing and branding are key components in launching successful token projects.
- Security and risk management are critical aspects of maintaining the integrity of token ecosystems.
Behind the Mic
Introduction and Initial Thoughts
Trying to find a good song, guys. I'm Donald J. Trump, and I approved this message. That's not it. Hey, what's going on, Gabriel? How you doing today, man? Good. Just testing if I'm being heard well, because I'm joining from the computer for the first time, but I guess everything works well. Oh, nice. I have yet to try the computer, the desktop version, but I can hear you. Great, man. That's perfect. Amazing. Hope you're doing well. Doing quite well. How have you been, man? Loving the dream. Nice, nice. Well, everybody, thanks for coming. We'll get this show on the road here shortly, but until then, I'm going to turn up the music as we get people coming in. Thanks, everybody. This is a little awkward.
Getting Started
All right, everybody, let's do this thing. We got a couple more hosts, or, pardon me, a couple more speakers joining us, but let's get into this. I can't wait. We're going to talk about tokenomics design sustainable crypto strategy. Tokenomics, does it really make that much of a difference? I think it does. And so these guys are going to kind of get into that information and. Yes, absolutely. And, Mike, what's up, man? You're down there below. I see you, and I'm going to invite you to speak, see if we can get you up here. My man. Pleasure to have you. And. Yes. So today we have Gabriel. He is from Alpaca Finance. Awesome DeFi protocol application. We have simplicity. We have Samoto, and we have Mike G. From. He'll have to remind everybody where he's from. So. But first, let's. Let's get a little intro from Gabriel.
Gabriel's Introduction
Gabriel, if you could introduce yourself, and alpaca, that'd be awesome. Sure. Pleasure to be here. I'm Gabriel. My background is primarily in trading communication strategies for big retail players. I joined the DeFi sphere in Alpaca finance since I knew that the same use cases that are scaling big businesses in web two are going to probably work with web three. And I created my thesis, and here I am helping out the finance for over two and a half years to build a good defi sustainable defi to help onboard the next billion users into web three, I hope. At Alpaca Finance, we're mainly focused on creating DeFi products that we all want to use and DeFi products that we would like to recommend to our friends and family.
Alpaca Finance Overview
So we started as a leverage yield farming protocol, which allow you to supply some amount of money, borrow some additional money to increase your. The amount of money that you will supply to the decentralized exchange to earn yield. And this is a kind of product that we grew on and over time, we diversified. We launched a perpetual futures exchange where you can trade bitcoin, Ethereum, BNB on perpetual futures contracts with up to 50 x leverage. You can use it to hedge your portfolio. Not necessarily for just speculating, but hedging your portfolio. If you have some spot money in bitcoin, Ethereum or any other token, you can also supply it to our money market. So money market, which allows you to earn yield on your assets that you accumulate and also borrow against these assets if you don't want to sell them.
Creating a Crypto Ecosystem
So we're creating an ecosystem of different products that will help you to manage your portfolio and facilitate your journey in crypto, so you can earn passively on the amount of crypto that you hold. And that's what we are all doing, I hope. Thank you very much. Nice, Gabriel, pleasure to have you once again. And for all those that are new to Alpaca finance, we did a space with them probably like four or five months ago, maybe a little bit longer. I'm not sure how long ago it was, but scroll down on our page, literally, we had some awesome information from Gabriel in that space about what alpaca finance does and what they provide to users. It's like you just can't get those resources in web two, period.
Introduction to Simplicity Group
So thanks, Gabriel. Appreciate it, man. And simplicity. Alex, what's up, man? How you doing today? Pleasure to have you. Hello, hello, pleasure to be here. Thank you very much for inviting me on a quick intro. I'm Alex, co founder of Simplicity Group. We're a consultancy that's been in the space since 2022 and we primarily specialize in designing to economics. We also do research as a service for investors and ecosystems, and we have our own ventures arm where we invest via the syndicate. Average ticket size about 80k. Awesome, man. Pleasure to have you once again, like always, and excited to get into the tokenomics.
Understanding Tokenomics
You know, I need to learn a lot about tokenomics. It's so important for users to understand, you know, what's a viable, you know, tokenomics design for, you know, a long term project. So very important. Thanks, Alex and Mike. What's up, Mike, how you doing? Pleasure to have you. Hey, man, what's up? Great to be here. Great to be here. So, yeah, thank you so much for the invite and really looking forward to having this discussion. So, yeah, my name is Mike G or Mike Graham. I'm based in Dubai, but relocating to Spain and Saturday, which I'm super excited, basically telling everybody about that.
Mike's Background and Role
I'm the head of growth here at Cryptocea, and essentially what we focus on doing was we're a web three marketing studio. We operate as an incubation process for web three projects. So we work with, you know, right down from beginning ideas all the way top 100 market cap coins. And really we see everything from good, bad, great, amazing, terrible, you know, tokenomics from different projects. So, yeah, really looking forward to the conversation. I initially got into the whole crypto web three space back in 2017 where I set up and ran my own small VC fund where we used to invest in crypto projects.
Tokenomics and Investment
I still help projects to invest and, you know, find funding. And going through that tokenomics process is obviously a big, big topic. So great to be here and looking forward to the conversation. Thanks, Mike. Pleasure to have you and nice to meet you for the first time, and I hope to have you on plenty more. So, yes, so let's get into it, everybody. Mastering tokenomics design and what we're doing here today is everyone got here together using the collab hub. The Collabhub is a platform that cultivates collaborations, and so we do.
Collab Hub and Tokenomics Discussion
You can sign up for the clap hub for free, look for a space that fits your niche or your company as a professional or as a company, and we'll reach out to you, to onboard you to the space and vet you, of course, to make sure that all speakers and companies joining are building in the web three space and building something. Awesome. So that's how we got here together today. And so, for the first question for everybody is, whenever it comes to the tokenomics, can you guys kind of give like a baseline explanation of what tokenomics is in the web three space? And Alex, if you want to start, that'd be awesome.
Defining Tokenomics
Yeah, sure. So, tokenomics, long story short, is the rules and policies surrounding the supply side of the token, generally speaking. I mean, obviously everyone has different definitions, but it's things like the emissions, the valuations, the allocations, vesting schedules, etcetera. And also some people within that classify things like the utilities, the behavior of the token within the economy, for example, what people spend it on, who spends it where, how much taxes are collected, or fees, or whatever you want to call it. So all of that, generally speaking, is what people refer to as to economics.
Insights on Tokenomics
Nice. Mike or Gabriel, do you guys have anything to add on that pretty baseline? Sure, I would. Maybe just to simplify the complex nature of it, I would just say that if you're investing into something, you're buying anything, any token. It's even called an investment vehicle. You just have to know what are the specs of this investment vehicle, right. So how fast this vehicle will generate revenue, how big portion of this revenue will be directed towards buying the tokens from the market and returning the economic value to the community of investors that are participating in the venture?
Investment Analysis
Also, like it was just said, what are the other important aspects, like taxes, like fees, how in general the money that you invest is going to return to you in the form of either dividends or buyback and burns. So anything that involves your investment should be carefully analyzed. And the tokenomics is just a reflection of how this vehicle that you're going to drive with your investments is going to work. Is it a long term vehicle, is it a short term race? It all depends on how the specs of this vehicle is going to work for you.
Understanding Complexity in Tokenomics
Sure. Yeah. And the complexity of tokenomics, you know, probably is sometimes a little bit much for new users and really existing users to understand the difference between, you know, a long term vehicle and a short term vehicle. So would you guys be able to give like an example of like a concept that would distinguish a long term vehicle opposed to a short term vehicle or a short term or long term investment? And Mike, do you have any insights on that? Yeah, no, absolutely. Absolutely. Great question.
Understanding Tokenomics
And just a double click on the previous question, which was a good point. Obviously, tokenomics, we're looking at the rule setting. I think one of the big things that's super important when we're looking at it is the distribution mechanism, the incentive, the rewards. Obviously governance, as one of the previous guys mentioned in terms of rule sets. And I think just to double click on your question in terms of short term, long term, I think it's really interesting when you look at tokenomics because there's things like, for example, the cliff and the vesting period that gives you an indication once you get your head around it. And once you understand that process, you can kind of understand whether the project's in it for a short term or whether the project founders and builders are in it for the long term. I tend to find that when I look at tokenomics for right now, like as we speak right now in this space, when we look at tokenomics, for example, for rwas, I tend to see that their tokenomics just the way they've.
Indicators of Long-Term Viability
And we might go into detail today in the space in terms of the different structures and the different percentages and components. When you look at tokenomics, but there's certain things that give you an indicator that it's a long term play. Like, I think studying examples of some strong rwas in the market right now is a great example of, we work with quite a few of those type of businesses, projects. It's quite a good example to see kind of that they're thinking about a longer term play rather than short term gains. Absolutely. Yeah. Alex or Gabriel, do you guys have anything to add to that? I think that it's really important to factor in the idea of real world utility and tokenomics. That's absolutely important and a very good example. But we've seen, you know, there's been a lot of those projects pop up in the past year or so, but we've been in crypto creating projects for I don't know how long, and a lot of them fizzle out, but there's so many that don't have a real world application that are sustainable, which is really interesting how all that works.
Utility in Long-Term Success
So let's go back to. Oh, yes, Gabriel, I just want to say that in the long term utility and the real world application is the only thing that matters. Because short term, you can speculate, you can be lucky once, twice, three times, maybe four times, but eventually, gambling usually leads to losing money. But if you are playing the long game, and you should understand very well if the project you are voting on with your money, is it useful for other people? Does it generate value? And then when it does, and you have a collection of these, this is what makes people rich over the long term. Nice. And just for an example, and I know this is not one of the questions that we discussed before the space. Oh, yes. Mike, did you have something to add, please? Yeah, yeah.
The Importance of Utility and Application
And just a double, because that's a really good point from Gabriel. Right. In terms of utility and in terms of, you know, real world application, I think a huge thing to look at in terms of if it's a long term, you know, long term play is exactly. That is exactly kind of what the utility is going to be. How does that impact in terms of a real world kind of application? Because, and I think the biggest, because the biggest, I think the biggest error sometimes when you look at tokenomics and when you see a project is being able to sustain that kind of buying pressure, right? Like once they go through a certain process, if the tokenomics is not set up for a long term play, then you just see the price of the token crashes and, you know, the project dies before it even kind of has any longevity before longevity even comes to mind. So, yeah, looking at that, I think, is a really crucial point, because if the tokenomics are just purely reliance on holding buying pressure, no project is able to hold that forever.
Maintaining Trust and Investor Confidence
So, yeah, that's a really good point from Gabriel. Absolutely. And during this conversation, please just jump in, any of you, during the conversation, I'm not sure. Whenever you want to add something, of course, but. So with. With this, it sounds like, you know, we've gone through different stages in crypto, and we. We've seen projects thrive, and short term, you know, for some people, is. Is a little bit different than others. Like Gabriel mentioned, short term, he means, you know, I'm not sure what you mean, what you're. What you constitute as short term, but from my experience with you mean maybe a couple years, you know, not 10, 20, 30 years. That's long term kind of. Kind of vehicle. Right, Gabriel? Yeah, I think everyone needs to answer to themselves, what's the longer short horizon for them? But I would say that a long term horizon is not shorter than five years. Actually, it's supposed to be more than eight years, at least if you look at the cyclicality of crypto. But this is where the long term starts.
Sustainable Models in Tokenomics
Anything shorter, I would consider short term. Got it. Got it. Going back to how we're changing in the crypto space and onboarding users is the hype kind of things is kind of fizzling out. The hype is really not cultivating as much as it used to, and we're really moving towards bringing true value to the token. Not launching a token and onboarding a crazy community and doing all these things to hype up the value of the project, but really bringing some true value to it. So, for an example, like Telegram mini apps, right now, there's so many that are launching, and they're just supplying this massive airdrop to people just for doing these simple actions. Do you guys believe that's a sustainable model of tokenomics? And, Alex, if you want to start.
Challenges of Reward Structures
Yeah, I mean, I think the problem is always. It always boils down to supply and demand, right. I think if you're rewarding people for creating simple actions, if those simple actions actually benefit you in some shape, way, or form, then, you know, reward them may as well. But you need to understand how much value those simple actions are bringing you. And to boil it down, very simply, if you're getting 100 people to, you know, like, all of your posts, and then you have a deal with someone where they give you $1,000 for every time you get 100 likes on all of your posts. Well, then the value of each of those likes is about $10. So if you reward people $10 per like in total, if you will, then your supply and demand is fine and you can reward them that amount of money.
Valuing Rewards in the Crypto Ecosystem
The problem with all of these projects, and basically the entire crypto market in general, is that everyone always seems to think that when they're fully diluted, valuation is tens of millions or hundreds of millions of dollars. That that doesn't mean that they need tens or hundreds of millions of dollars of buy pressure. Net buy pressure. Sorry. So not just people buying and then selling eventually, but people buying and never selling again. That is literally impossible, considering this industry has, like, maybe ten users in total who actually buy and, you know, use products, you know, respectfully. So I think whatever your strategy is, whether it's airdrops, whether it's, you know, campaigns, whether it's just standard marketing, and then you're rewarding people with cash back, for example, or maybe discounts or whatever else, it all makes sense. It's all completely fine.
The Reality of Overvaluing Rewards
The problem is when people overvalue the rewards that they give, and as a result, you know, eventually it bites you in the back because of simple, very simple economics. So, yeah. Got it? Oh, yes, please. Gabriel. Yeah. So I would say that it definitely depends if the projects that are onboarding these masses of users will be able to generate revenue and therefore create some value for which people will be willing to pay. Right, with. With money, with crypto, whatever it is. But I just wanted to focus our understanding around that if, as investors, whether by buying into the shares or buying into the tokens of a particular project, or by participating at a very early stage to get a share for free in the form of airdrop, we're essentially becoming a part of a business venture that has a goal of creating some value generating revenue.
Expectations of Revenue from Investments
And as the shareholders, we hope to get a little bit of this revenue to ourselves back. Alternatively, obviously, we speculate just that there will be more willing buyers and people who will want to join the venture. So the prices of our shares or tokens will go up. But primarily, we just want to have a part of the revenue that's going to be generated by this new venture. And I know that this might sound a little bit abstract, because in crypto, we are just used to, you know, everything is just so hyped up, gamified, and there is, like, lots of magic and sprinkles on top that we, like, sometimes might forget what, like why is this done for in the first place? But essentially that boils down to just that, like generating revenue for the shareholders of aventure.
Realizing Potential in New Ventures
And I think that the many apps on ton that are creating, they currently hold immense potential. But to realize this potential, ton will have to find a way to actually extract some value out of the users of the many apps, not necessarily the token holders, because that would be a little bit weird, but rather from users. If you're creating a game, let's make a game that's going to be so good that the people will want to buy anything in this game, contribute to the revenue, and then we can reshare this revenue to the people who are engaged as investors. And I think the potential is there, but whether it's going to be realized and if the people will be actually spending money, we'll see.
Success Stories and Marketing Strategies
Sure, absolutely, Mike. Yeah, I think that's such a good question. Right. In terms of the TG miniapps, I think obviously we all know of the success of hamster being like the third fastest app in history to get to over, what is it, 150 million, 200 million members. Just insane results. And it's funny because I regularly talk to projects where they say to me, listen, do you think using TG mini apps is a good way? And I think when you look at the tokenomics and talking in terms of the project and the roadmap, and it's essentially the business plan. Right. I think there is going to be a layer in the beginning where you've just got to bring in traffic, you've got to get eyes on the project.
Leveraging User Engagement
Telegram has over 900 million users, a lot of them savvy and interested and open to whole web three and crypto. So it's definitely a fantastic farming ground to bring people into your project. I don't think you can deny that, but I think kind of doubling in on them. On the. Is it Alec? No, on. Yeah, on Alex's point. In terms of maintaining that buying pressure. Right. Like if a project doesn't have, like, within the tokenomics, you look at how they generate revenue and how they reward the community in terms of retention, I tend to find that a lot of projects, when you look at the tokenomics plan, there isn't too much thought being given to how we retain people.
Retention Strategies in Tokenomics
Right. What's going to make people stay once they've earned that airdrop, once they've come through, in terms of that TG miniature? Okay, great. They're at your house or in the party, they're enjoying it. They love the narrative that you do, but then what makes them stay? And the reality is, I think a good point that Alex made is that really most people, including us on this call, right? Most of us, the reason we join a project is because we want to see growth in our money, right? The trust. We look at a project, we trust it. So the biggest form of trust is we validate it with our money, so we invest in it. But once our $10 becomes $12, $15, $20, we obviously want to gain, you know, we want to gain our profit.
Investors' Motivations and Tokenomics
So I think when you look at the whole tokenomics, it's not so much, is TG mini apps good or not? I think it's a fantastic way and we're doing some incredible campaigns in terms of onboarding more users into projects, but it's how you have that kind of ecosystem around the tokenomics in terms of retaining people, right? Because if my entire. If your entire play as a retail investor, as a VC investor or as an institutional investor with the tokenomics is I'm going to hold and I'm going to wait until it goes up to, you know, a two x or a three x or a ten x and then I'm out. Well then you're always going to have these constant drops, right, in terms of the price.
Price Dynamics and Trust in Projects
And price is the biggest indicator of trust, right? It's like, funny, I have friends outside of crypto that ask me, you know, what's the price of bitcoin? What's going on with bitcoin, right? And if bitcoin's up, they all trust it. Bitcoin's down, you know, it's a scam, right? And I think that the way we look at tokenomics with projects is very similar in the concept that if the price goes up, there's trust, but if everybody sells at the same time, then obviously that drops your price. And it's not. It's not that the project is bad, it's nothing like that.
Tokenomics and Community Retention
But it's the way the tokenomics are set up and it's the way that retention model for the community is set up as well. And that's. I think that's one of the big things that people miss when it comes tokenomics with projects. And I just wanted to jump in here quick and say that for me, the ultimate way of retaining is to pay out shares of revenue instead of allowing people just to exit. Because if you're paying out regularly revenue, this keeps people hold your token no matter what because they will be still earning money. Yeah, 100% Gabriel, sorry, just to click on this, I hope you guys don't mind. 100%. I see this, for example, really well with gamify projects, and also with rwas specifically. So, like, an RWA project, where part of their tokenomics is you're essentially buying, like, a share within a company, right? Like, if you buy a share within Coca Cola or Google, I mean, yeah, maybe your play is to sell it when it goes up, but actually, your play as an investor, a lot of times is to earn the dividends, is to earn the yields, right? And if, like you, I'm seeing this with so many projects where their retention model is exactly what you've just said, Gabriel, is kind of, how can.
Passive Income and Investment Sustainability
How can this investments become a passive income for the retails or for the VC's? And that's where I think it's the magic, because then you stop these big pump and dump cycles in that. We see a lot in crypto. Absolutely. Yeah. Awesome points, guys. And, you know, no major, you know, venture fund or any. Any large amount of money is going to want to jump into a community based, you know, project, you know, without a sustainable revenue model. You know, just. Just like the other day, we had an RWA space, and it was Arkendez. Arkham, I believe, is the name of them. They just secured a $60 million commercial building that they will be creating a Dow for, where they will be providing shares, tokens in terms of ownership for that specific property, and they'll be giving out revenue from the actual rent that people are paying for. And what an easier way to do that than a smart contract that is, that distributes it in their native token. So I'm not sure, like, all the. All the different legal parts to that and how that works in the US, but it's based out of Houston and they've secured it. It's a real. It's a real thing. It's a real thing.
Effective Tokenomics Examples
And so, for me, that's, like, a great example of a sustainable model that uses great tokenomics and a decentralized, autonomous organization, a dAo. So, could you guys provide some insights on some examples of what a good project looks like in terms of good tokenomics and or a bad project so users kind of understand, you know, what should they stay away from whenever there is a launch coming up, if they are interested in a project, what kind of things should they look for that should give them a good decision to make. And, Alex, it'd be awesome to get your insights on this. Yeah, thank you. Thank you. I'll keep it very nice and short. I think as a retail investor, the most important thing is trying to at least somehow, roughly estimate whether the valuation of the token actually makes sense. So, for example, if you want to participate in Ido, for example, and the valuation is $80 million, and you go on the website and it's because they're AI and deep in and this and that, and it seems very good, and you're like, you know what, maybe 80 million sounds about right.
Analyzing a Project's Value
But then you go on the, let's say, Twitter account, you know, scroll through it, see if they have any institutional partnerships. Maybe they're partnered with Nvidia. Okay, cool, 80 million makes sense. But maybe they're partnered with only launchpads and a couple of VC's. Now, it's like, okay, maybe they're actually not that much. You know, maybe they're not that valuable as a company. Maybe they don't have, you know, a very clear, like a very clear go to market if you're, whatever, doesn't matter, basically, look at stuff like that. Another big thing with that is a lot of companies, they use campaigns. So you go on their Twitter and you see 300,000 followers. You see every post is like 500, 600 likes. And again, you think, wow, this is great. Check out if they have any campaigns going on Zlee or Galaxy or any of the other campaign apps, because more often than not, most of those followers and likes are going to be bots. That is just 100%. And the rest of the likes and followers are very likely to be just people who are wanting to get some, know, airdrops or some money from these campaigns, right?
Identifying Red Flags
And the point I'm making here is, you know, when you see that and, you know, you check out, they do have campaigns, you check out who likes or who retweets. And, you know, you see that it's bots. Realistically, they're not upholding $80 million valuation. They have no users, they have no partners, they have no users, they have no go to market. They have no market, they have nothing, right? So look at stuff like that. And, you know, roughly speaking, if you watch Shark tank for a couple episodes, maybe you watch Dragon's Den or whatever else, you'll be able to identify how much value a company would have. Generally speaking, like, you don't have to be accurate, but a lot of people in crypto from the project side, they assume that retail knows absolutely nothing. And they're very much correct because, you know, that's why they were launching at such high valuations. So even just a little bit of research like that and you'll be able to avoid the vast majority of projects that will, within a couple of months, go to zero.
Due Diligence Before Investment
Absolutely. Yeah. And those are awesome insights to understand and to actually take some time before, you know, quote unquote aping into the project. And Mike, yes, please. Yeah. No, 100%. 100%. I think kind of what, you know, just to double down a little bit on what Alex is saying. I think, you know, sometimes you catch the hype, like exactly what you just said, right? The hype train and you see a project and they come out with these, like, I talk to some projects and it's crazy, right? They're like, yeah, our valuation is 100 mil and some LTV this and the tokenomics that. And I'm like, where did you get this from? They're like, and, you know, the explanation is just really wishy washy and there's no vc backing it, there's no, you know, there's. The team isn't strong. The website looks like, you know, let's not go into that too much. But I think a big thing, a big factor a lot of times is check out the.
Assessing Community Integrity
Just a double click on. I think what Alex mentioned here is have a look at their community. A lot of projects, they use these campaigns and they get a lot of bots. You can very quickly, you can look at a Twitter profile of a project or an x profile and very quickly you can tell whether there's something legit, there's something solid. I think see who is in that community. Join the telegram communities before aping in and seeing what the process is. And I think try to understand as much as you can how they make their revenue. You know, coming back to the utility. Right. Just to give you an example. So again, coming into the whole RWA narrative, but, you know, we're working with some projects. I see some projects where when you think about, again, it's like looking at a business, right? How does this business make money? And, you know, there's some projects that we're working with where they're tokenizing real estate, right?
Revenue Models in Cryptocurrency
And the way they're rewarding the token holders is with essentially a percentage of the revenue that comes through that real estate assets, that real estate asset, it's not going to go anywhere, right? It's an asset. It's a pretty solid asset. It earns revenue, it earns rent. It's not just going to go up in smoke. So the idea there, you've double clicked and I think the question is, how does this project make money? And very quickly, once you've gone through that process, that due diligence of checking who's behind it, how does it make money? Who's in the community? What is the community? I think also another big factor in terms of looking at tokenomics with before, and this is, again, a big thing that we focus on with our projects, with our builders, is what's the profile of the founder? I think for me personally, it's not always a red flag.
Profile of Founders and Team Visibility
I know in web three and crypto, people like to be anonymous, etcetera, but I think more and more what I'm seeing from solid projects, the team, the founder, someone within that project has, what's it called? A public profile. And for me, that's a big indicator of this project has longevity. Just to give you an example of one project we work with, Bricken, I absolutely love these guys. Their CEO is a guy called Edwin. He has a super public profile. So even if you knew nothing about that, just the fact that he's on LinkedIn, he's on Twitter, he speaks at conferences, you know, they have a big community, all that kind of thing. Even if you couldn't really understand the whole tokenomic roadmap, you would see that project has longevity. Right? So, yeah, those are my two cent on that.
Recommendations for Tokenomics Model
Nice. Yes, Gabriel. So from my end, it's probably not going to be a surprise. If I'm going to say that I would recommend everyone to have a look at Alpaca finances, tokenomics. I think we did that pretty good. I'm quite proud of how the things are working and how the tokenomics are designed in order to provide every investor, every holder of the token, to grab a portion of the economic value that the platform is bringing. Right. So basically, the idea is that we are building a DeFi protocol, something which will allow people to compound their crypto holdings, something which will allow you to earn, yield and protect your funds from the downturns of the market. So allowing you to hedgehead either via futures or by shorting, by borrowing. Soon we'll be launching a product which allow you to borrow against bitcoin on very good terms, especially for the larger accounts.
Building a Sustainable Revenue Stream
And these services generate revenue when our users are creating revenue for themselves. So in other words, the more yield you generate, the higher is the revenue that the platform generates. And this revenue is used for upkeeping the team. So when looking at the tokenomics, you should also be aware of how big the team is behind the project, how fast they are burning the revenue that they're receiving from their products. And the other parts are divided between the governance vault stakers. So people who are staking their alpaca tokens in order to get their weekly dividends which are paid out every week, and the other part is being used. And then this mechanism allows to reduce the amount of tokens which are available on the market. And as the number of tokens available to be purchased is going down, the price is going up.
Investing in Tokens and Market Dynamics
Our protocol is a big buyer of the token because we are putting in the revenues, buying the tokens and burning them. And as people see that, I see that this token, this project is fairly priced and I want to get a part of the token, like get a part of the project. By buying the token, they're increasing the buy pressure, right? So we are a big buyer of our own token. And people who see the potential in the products that we are making and growing user base and the new ideas that we have for developing the protocol, they also are creating this buying pressure. So over time the incentives that we have as a team are investors are aligned and everything in the tokenomics are working towards us being having more revenue as a team. And all of our investors are getting proportion share in this, in these revenues.
Long-term Growth and Innovation
At the same time, we're keeping the costs low and we are constantly innovating in order to cater to different parts, different types of investors and different types of users of our products. So I think that these are the quite important points to keep in mind when looking to invest in a new project. Killer insights.
The Beauty of Web Three
Awesome insights, man. And that's the beauty of web three. You know, being able to provide a user base or investors with a resource that, you know, if they benefit the platform, obviously the platform benefits, but it's a really unified success. Basically there's no, you can't have one or the other. And the users, you know, the way that you can benefit from these kind of resources is awesome. And before we get into the last questions, I'm not sure if everybody had a chance to see the tweet on the top that was tagged. If you guys want to go have a chance to win 50 USDT, it's going to be split between two winners and you just have to complete the tasks in the intract quest. And so if you guys just click on that and get it done, you'll have a chance to win 25 USDT and we'll announce the winners after the space. So you guys have probably another maybe ten minutes and then we're gonna get out of here.
Tokenomics Innovations
We got a lot of fun stuff to get done today, but, yeah, I just wanted to make sure and remind everybody that's there. And so for some of the closing questions that I have, whenever you guys are creating a tokenomics model for, you know, a new project or whatever you guys are doing, how is there any new kind of innovations that you guys are implementing to projects? Are there any kind of new ways to structure tokenomics that a basic user or any new user would not know that's out there? What's some new innovations? Tokenomics. And alex, please. So just to throw that back for absolute clarity. So you're asking, what are some new innovations in tokenomics? And then, like, how can people structure the tokenomics? Or are you just asking about the innovations? Yeah, just. Just the innovations. Thanks for clarifying. Yeah, perfect. To be entirely honest, I think.
Current State of Innovations
I think this last year or so, maybe even two years, the innovation has kind of, at least from my experience, been a little bit dialed down, it seems, compared to, let's say, 2017 or 2020, the DeFi summer days and infrastructure innovations and stuff, it seems like there's been a little bit less innovation recently, partially probably because of regulatory scopes coming in Europe and America, partially for other reasons, maybe like a lack of liquidity, but I think people would have heard of things like this. But like bearer chains, proof of liquidity is pretty cool because it aligns incentives a lot better, whereby basically you have to stake their token and then you earn the governance token, which allows you to actually partake in governance, which basically aligns incentives of everyone governing with the infrastructure or the protocol and its crypto economic security and so on and so forth. I think to be entirely honest, other than that, I haven't really heard much like we even tasked one of our analysts to kind of like give us weekly reports on like innovations in tokenomics.
Reflections on Tokenomics
But honestly, there hasn't really been much that I can recall, to be honest. I'm probably not the best to answer this. No, I like the honesty, man. Mike, did you have something to add? I was going to say, I think, yeah, there's not been a huge amount of innovation, but I think if part of the project is in terms of locking in the tokens, that you have part of the tokenomic processes, locking it in, wrapping it in keeping basically if part of the tokenomics, I think what a lot of projects are trying to do, and we're seeing this in the RWA players, they want investors to buy the token, hold the token. I think the way that tokenomics works in terms of either the yield or wrapping that token and earning a return on that, or earning it directly from an asset, like a real world asset that's making revenue. I think that's an innovation and I think that's quite smart. So yeah.
Mature Tokenomics
Oh yeah. Yes, Gabriel. I think that one of the innovation is actually not creating new things, but getting away from the bad things. So I think we see less of the bronze genomics being around, less high taxes, less forcing people to hold the tokenization because they're going to lose anything that they gained from it. I think that as a space we are getting more sane. The fact that we can create any token with any tokenomics resulted in the beginning of testing all the edge scenarios by doing crazy stuff. And right now the space is rather maturing. All the bad stuff has been carved out. And right now we can see after some years of having projects to exist we see which ways were actually the good ones. And we can see that already. If a project is alive for more than few years, like two years or three years, its longevity is strong. And if it still has a decent user base, it means that.
Importance of Longevity in Projects
I mean by user base I mean more token holders. I think that this signifies that their tokenomics have been found. And if, like I said in the, in all of my speeches so far, if the revenues are consistently working towards giving back to the community, I think this is just signifies that this particular road is a good road to take for the new projects. Sure. And the discovery of tokenomics, from the beginning I was subjected to, you know, the meme culture as it first came out. Like say safemoon, you know, one of, was one of the first memes, you know, to offer a tax based system within their tokenomics. And of course that was the craze whenever it first came out. And everybody was more than happy to pay 10% tax for a purchase of the tokens and then a 10% tax to sell their purchase which is 20%. And then you sell in the US and then you pay another 30% in taxes.
Shift Towards Better Practices
So you're literally out 50% before you even are able to get the money to your bank, which is interesting and I was more than happy to do it. But the whole point of it is we're getting away from those kind of tokenomics and we're going towards more sustainable and real world kind of utility where we're offering revenue, which is awesome. So I think that's it for today guys. If you guys have any other points that you guys want to bring up about tokenomics that I left out. Please, by all means, just interrupt me as I kind of close this space down. Thanks so much everybody, for coming. And Alex? Yes, please. Yeah, I think just for any projects or builders building their own tokenomics at the moment, one thing that I'd say that makes it very simple is just working bottom up.
Building Tokenomics from the Ground Up
Everyone in the. Not everyone, but a lot of people in the industry work top down. They see what other projects have done with their tokenomics and they copy it. But it's very easy to work bottom up. What you do is you understand how much value you can bring. Either the token can bring, whether it's monetary. So for example, if I get 10% discount, there's a value to that 10%, whether it's the value of social connection, whatever it is, you can figure out somehow, in a loose way, the value that your token will have, and just build the tokenomics bottom up from that. What I mean by that is if you can only bring in $10 million worth of value, then that should be your fully diluted valuation. At your listing price, at your listing round, whatever price, don't go for 80 million just because you need to raise a lot more money.
Practical Approaches to Tokenomics
If you need to raise a lot more money, then maybe raise equity, maybe raise via a node sale or an NFT sale, if your project allows for that. Maybe get a job and do the project on the side and just invest your savings. But a token is a very key part to the project and to marketing the project to retail. And if your token goes to zero, not to zero, but like falls down by 95%, it's basically over. And it can all be avoided just by being sensible. Figuring out the value of your token first, figuring out how much your economy can accrue, as the guys were talking about buybacks or retention and so on, and then from there, figuring out, okay, well, this is a reasonable valuation, and going like that, it's way better.
Final Thoughts and Community Engagement
Awesome. Yes. And Mike? Yeah, no, listen, I just want to say great space and really interesting, really good. Share the space with Alex and Gabriel and thanks for the invite. And I think just to. Yeah, just to double click on that, you know, concept. You know, before I joined the web three world years ago, I was in web two, and I used to raise money for companies and it was a similar syndrome where, you know, founders would overvaluate their companies, right? Just in web three, instead of it being like one mil, two mil, five mil, it becomes 20 mil, 100 mil. And I think just because you see, I think you see projects that do that I think that doesn't necessarily mean that's your projects.
The Importance of Community
And I almost think that in the tokenomics, it's actually better to. And this might go against the ethos of web three sometimes, but it's almost better to build slowly and build with the community, get your community involved, get people that are really engaged with you, because I've seen projects that, from the way they started in the beginning, they pivoted a few times, but because the community was really strong with them, that managed to grow their tokenomics and they grew a really solid ecosystem. So I think rather than going for that moonshot, which we all talk about in Web three, I mean, you see projects. Yeah, sure. You see projects, you know, sell out a private sale in, I don't know, 24 hours, they raise four mil, five mil, and that's amazing.
Lessons Learned
But that doesn't mean that every project's roadmap should be that. So I think, yeah, really great points. Alex Grabriel. Lovely to meet you guys. Thank you so much for hosting this space as well. And it was a pleasure sharing the knowledge with you guys. Likewise. Second pleasure to be on the space. And, yeah, pleasure to meet you gents, as well. Yeah, thanks, Mike. Appreciate it. And, Gabriel? Yes, please. So, just for the end, I would just like to remind everyone that we are not in a token selling business. We are in a business of creating tools for our users to be happy to use and pay for.
Focus on Value Creation
And I think that's one of the key things I would like to pass on. I think no one should make the tokens as a center of the projects that they do. They should use the tokens as a way to bootstrap money in order to build these products to finance themselves at the beginning. But the rest is all about the products you make, the experiences you deliver, and how you are bringing value to the world. And I think if you're going to be focused on that and you will keep the investor alignment in your mind when creating the tokenomics, everything will go well for you and your projects, and you're going to build something that you're actually proud of.
Conclusion and Well Wishes
And let's just skip all those pump and dumps and other stuff. Like, we don't need that. I think it's only slowing us down. And, yeah, guys, thank you very much for being on this space. Thank you for giving us the time, and I wish you luck in your crypto journey. Awesome. What a fantastic closing remark. So, if anybody in this space, anybody listening, if you guys have an idea and you want to bring value and provide value to the web. Three space. Go out, look for businesses, bring them on chain, bring real world utility, bring real world assets. And if you guys need some help, don't hesitate to reach out to Alex or Mike that are here up on the space. They're awesome people.
Encouragement for Future Endeavors
They love to help. And, yes, that's how you get something started that can really change someone's life or your life. So thanks so much, everybody, for coming. And right after the space, I'll post the winners in the comments, you know, from everybody that completed the tasks. And so thanks again, everybody. We'll talk to you soon. Cheers. Have a good week. Cheers, guys. Thank you. Bye bye. Bye. Bye, guys.
