After understanding where and how the protocol adds value, it is essential to start diving into the token economics, possible value capture mechanisms and how to incentivize protocol usage in a sustainable way.
Introduction
The token mechanism design is at the heart of your project’s economic model. Within the scope of the mechanism design, we aim to help you answer the following 4 questions:
- Which different token types are there and what are their implications for the protocol from a legal perspective?
- How do you convert your business model into an economic model & what role does a token play in it?
- What are the ecosystem incentive mechanisms & how can you drive demand and usage for your protocol’s token?
- What makes the protocol/dapp sustainable & what will the economic model likely look like 10-20 years from now?
In this chapter, we’ll help you define how these mechanisms drive the economic model in order to allow the protocol to become sustainable in the long run.