Admittedly, I have missed this in many of my previous tokenomics reviews, but I will endeavor to include it in my future reviews.
❗️ Many crypto investors misconstrue crypto as akin to stocks, believing that buying the token equates to investing in the company or project.
Unlike stocks, in most cases, when you purchase crypto, you are NOT buying a share of the company.
This implies that the company can prosper financially while the token never takes off. In fact, there are numerous instances where tokens are exploited via a bridge or staking contract. As a result, the tokens devalue to zero, and the company merely issues a new token and moves on, leaving previous investors high and dry.
❗️ Not all projects necessitate a token.
There should be a specific rationale for a token, which should perform VALUE CAPTURE.
Therefore, I believe it's important to view tokenomics from two significant angles:
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The Value Capture perspective (if one is present).
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The Supply and Vesting perspective (the traditional approach).
So, what is Value Capture?
To demonstrate this, let's take GenomesDAO as an example. They've devised a system where you can get your DNA sequenced, and the results are stored anonymously in an encrypted vault (wallet) on the blockchain. Then, they collaborate with researchers, universities, pharmaceutical companies, and third parties, allowing them access to your DNA data. You get compensated if you opt to participate in the research.
Many people don't realize that sites like 23andMe or Ancestry.com sell your valuable data without you receiving any monetary benefit.
Now, let's return to GenomesDAO. How would it benefit the token if they were to do the same thing? It wouldn't. GenomesDAO could generate hundreds of millions of dollars, but the token value would likely remain stagnant.
However, GenomesDAO uses "Value Capture" by ONLY allowing access to the precious DNA vault through the purchase and expenditure of GENE tokens. If GenomesDAO becomes a multi-billion-dollar company, the Value Captured by the tokenomics model will also benefit all the token holders.
So, while focusing on a project's token distribution and vesting is important, it is equally, if not more, crucial to consider the Value Capture aspect and whether that project requires a token at all.
**Special thanks to @CryptoGirlNova for helping me broaden my understanding of Value Capture. Show Less
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