TOKENOMICS
Project cases from the Insider Club portfolio with the most favorable vesting conditions
Became a millionaire thanks to Elon Musk's tweets [or risky investments]
WHAT IS TOKENOMICS
Tokenomics (token + economics) โ encompasses all aspects related to a project's token, serving as a sort of business plan for the token (details of its issuance, distribution, usage, and governance):
โพ๏ธ Defines the project's economic model
โพ๏ธ Influences its success and attractiveness to investors.
Key components of tokenomics
- Token Ticker โ a unique short designation for the token, used for identification on exchanges and platforms (e.g., $BTC, $ETH). The dollar symbol ($) before the ticker is a conventional notation used before the letter combination.
- Total Supply (Emission) โ the total number of tokens that will be issued by the project.
- Network โ the blockchain platform on which the token is issued, such as Ethereum (ETH), Binance Smart Chain (BSC), or Solana (SOL).
- Round โ a stage of fundraising for the project, such as Pre-seed, Seed, Private, or Public round. Each round has its own conditions.
- Round Valuation (FDV) โ the estimated value of the project at the time of fundraising in a specific round. This value helps investors assess the project's growth potential and risks.
- Token Price โ the cost of one token in a specific fundraising round. For example, the token price might be $0.10 in the Seed round and $0.20 in the Private round.
- Vesting โ the schedule of gradual distribution and release of tokens after a certain lock-up period (cliff). For instance, tokens may be "locked" for 6 months and then released in equal parts over the next 12 months.
HOW VESTING WORKS
A new project is launched, and tokens are distributed among developers, the founder, angels, and investors. Some are interested in the long-term growth of the project, while others simply want to profit immediately and then exit the project. To balance the interests of all investors and developers, a vesting mechanism is implemented.
Components of vesting
- TGE (Token Generation Event) โ the moment when tokens are created and appear on the contract, often followed by Listing. TGE sets the starting point for the cliff and unlock, determining the beginning of their action.
- Listing โ the moment when the token begins trading on an exchange.
- Cliff โ a period during which tokens are locked. Investors cannot transact or trade these specific tokens during this time. The cliff helps reduce market manipulation, such as avoiding a mass sell-off at the time of Listing.
- Unlock โ the process of gradual token release after the cliff period ends. Each unlock is also called a Batch.
For example: At TGE, 10% of all tokens are distributed (first batch), after the cliff another 10% is released (second batch), and so on. The unlock ensures a smooth token flow into the market, helping to avoid sharp price fluctuations.
โพ๏ธ Makes the token price more stable.
โพ๏ธ Encourages the project team and investors to work towards long-term goals.
Project Cases from the Insider Club Portfolio with the Most Favorable Vesting Conditions
In this case, we receive 25% of the tokens immediately after TGE. The remaining 75% of the tokens will be gradually released over the year. This allows us, as investors, to start using the tokens right away, but prevents the price from being dumped.
After TGE, 15% of the tokens become immediately available to us. The remaining tokens are locked for 6 months and then released in equal parts over the next 6 months. This is also very favorable โ we receive 15% right away and can sell or hold, and then begin receiving 14% monthly after just half a year.
After TGE, we receive 15% of the tokens immediately. The remaining tokens are locked for 6 months and then released in equal parts over the following year. Similar to the previous project, but after the cliff, the tokens will be released at a rate of 7%.
WHAT IS EMISSION
Emission (Total supply) โ the total number of tokens that will be issued by a project. It is one of the key components of tokenomics that we always consider in project analysis.
For example, the emission of BTC โ 21 million, which contributes to its value.
In contrast, the emission of Dogecoin ~ y 145 billion tokens.
BECAME A MILLIONAIRE THANKS TO ELON MUSK'S TWEETS [or risky investments]
- Glauber Contessoto, a professional hip-hop artist from Los Angeles, invested his money in Tesla and Uber stocks, always dreaming of getting rich.
- In search of a promising token for successful investments, Glauber turned his attention to the meme coin Dogecoin.
The reason I invested all my savings in Dogecoin was Elon Musk.
- Inspired, Contessoto sold all his stocks, borrowed money, and in February 2021, invested $180,000 in Dogecoin at $0.045 per token.
- Two months later, the coin's value increased tenfold, and his balance reached $1.8 million.
- Glauber planned to accumulate $10 million and then withdraw 10%.
However, in May 2021, Dogecoin's price soared to $0.7 and then started to fall, causing Contessoto to lose $167k in one day. - Currently, Dogecoin's price is $0.12.
- Emission is a very important element of tokenomics: the fewer tokens in circulation, the more valuable the project.
- Public support for a project by influencers or famous personalities is a "roulette."
- Remember the golden rule:
โพ๏ธ Sell when everyone is buying.
โพ๏ธ Buy when everyone is selling.
- Allocation โ the process of distributing tokens among participants of a pool with a designated amount during a round.
- Batch โ each instance of token unlocking.
- Vesting โ the schedule of gradual distribution and release of tokens.
- Cliff โ a period during which tokens are locked.
- TGE (Token Generation Event) โ the moment when tokens are created and appear on the contract, often followed by listing.
- Listing โ the moment when the token begins trading on an exchange.
- Hard Cap โ the maximum fundraising goal.
- Soft Cap โ the minimum fundraising goal.