Tokenomics 103: Evaluating Token Utility

1. UtilityThe utility is probably the most important factor in a crypto project’s tokenomics.Even if a token is deflationary, has the best price stability mechanisms, distribution, as well as a decentralized and highly efficient on-chain governance process, it won’t be worth too much if it is not used for anything.

Supply is obviously just one piece of the puzzle though. So in future pieces of this series we’ll also dig deeper on demand, game theory, ROI, and other aspects to good tokenomics worth knowing before investing or launching a project of your own. 

So far, this post has focused almost exclusively on tokens’ ability to capture value by generating income streams for their holders. They are productive capital assets. This may very well be sufficient to value most tokens in the long-run. Equity-like analysis will do the trick here. Think DCF and DDM.

However, valuing tokens based on cash flows rem... See more