# TOKENOMICS ANALYSIS 

**Published by:** [Haruki_Cripto](https://paragraph.com/@haruki-cripto/)
**Published on:** 2024-08-05
**URL:** https://paragraph.com/@haruki-cripto/tokenomics-analysis

## Content

TOKENOMICS ANALYSIS One of the most important aspects to analyze in a crypto project is the token’s economy, as it indicates whether the token is a good investment or not. The first thing to consider in tokenomics is the utility of the token. Is it a governance token or a network token (layer 1 or layer 2)? If it is a governance token, the project should generate revenue beyond just providing incentives. If the project has no revenue and relies solely on investments, it is unlikely to sustain itself long-term. A lack of revenue means that, when investments dry up, the token could plummet or even become worthless. If the token is a network token, look for network activity by checking indicators such as “active addresses” or “daily active users.” Another key point to examine is the project’s “market cap.” Market cap is calculated by multiplying the token’s unit price by the total number of coins in circulation. This indicator helps assess the project’s risk. Projects with a higher market cap tend to be more established and safer, with lower volatility, since significant money is required to cause large price movements. However, projects with a larger market cap may also have lower potential returns. Smaller market cap projects generally exhibit higher volatility and potentially greater appreciation. Additionally, consider the FDV (Fully Diluted Valuation), which is the unit price multiplied by the total number of coins. This metric estimates the market value of a crypto if all coins were in circulation. Pay attention to the percentage of coins still to be released. If a project has few coins in circulation, the introduction of new coins could impact the price, particularly if the difference is substantial. Ideally, at least 70% of the coins should be in circulation. If the project has significant future inflation, check metrics on “token unlocking” and contact me for a list of tokenomics websites if needed. It is also crucial to analyze the token’s ICO distribution. Look at the percentage allocated to the team, the treasury, private investors, and public sales. The more the token is distributed to the community and retail investors, the more decentralized and better it is. If the distribution is concentrated among the team and private investors, caution is advised. Another important factor is whether the token has a vesting contract, a smart contract that locks part of the tokens to prevent manipulation and large investors from selling at any moment, which could cause significant price fluctuations. Ensure that a vesting contract is indeed in place on the blockchain. Check the percentage of tokens held by whales, which you can verify on the project’s blockchain. Ideally, no single major holder should control more than 3% of the total supply. If they do, monitor their transactions and watch if tokens are being transferred to exchanges, as this could indicate potential sales and a risk of price drops. For more content like this, subscribe and follow my updates on X. And don’t forget to make a small donation; it may not be much for you, but it is a great incentive for me to continue producing more detailed and comprehensive content. Thank you for your attention. Remember to focus on fundamentals, market narratives, and long-term strategies. Avoid FOMO and fear, and maintain a strategic approach. Link: https://x.com/Haruki_Cripto?t=wozXyk_PFHyI_6OyE9-MDg&s=09)

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