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In the bear market, these 10 Token economic designs may have major flaws

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There is a kind of helplessness called "your favorite project, its Token design sucks".

Original title: " Inventory of 10 types of Token designs that may return to zero in the Crypto bear market "

Original author: NoSleepJon

Original compilation: overnight porridge, the way of the original universe

There is a kind of helplessness , called "your favorite project, its Token design sucks".

Most Tokens are launched for the purpose of exiting liquidity and transferring legal responsibilities, not for decentralization. "Decentralization" may not even be a consideration when issuing Tokens. You can say it out loud because these tokens are completely useless. All you can do is check customer service complaints in project forums and stake those tokens, which can then be used to get more useless customer service tokens.

But if the market will buy anything you sell, why not just launch a token? You can blame VCs, you can blame greedy teams, you can blame stupid people, you can blame the Fed, if it relaxes your soul, you can do whatever you want. At the end of the day, it's a broken incentive cycle, and if everyone is driving that cycle, there's really no one group to blame.

Over time, market participants will become more perceptive and realize that most tokens are just Useless governance token. Therefore, the project party must up its game to sell useless (product) tokens. You can no longer just roll out a governance token, you need “token economics” and various air fresheners to cover up how bad your shit token is. In most cases, these tokens will be zeroed, thank goodness. To be fair, many of these projects have great innovative products, but that doesn't mean their tokens are great.

Some Token economics design worthy of reflection:

1. Every shitcoin will have a pledge (staking), and the pledge is just to use shitcoin as a reward to motivate you to hold shitcoin and temporarily reduce the selling pressure of shitcoin. APY doesn't make sense as this is priced in shitcoin, staking makes the asset more illiquid by locking supply, so it also makes the asset more reflexive in both directions. We see this clearly in the cosmos ecosystem projects like Osmosis and Juno. Once demand and price start to collapse, then massive unlocks lead to massive pullbacks. Staking is a double-edged sword.

2. Every shitcoin will have liquidity mining, paying people to use your product is helpful for early traction, but this Traction is fleeting, crypto-natives are gold diggers, and once you run out of money, they don't need you. More than 99% of the protocols pay more rewards than they earn, and due to the continuous selling pressure, these tokens will also continue to fall, which is why the DeFi Token chart looks like it is going to zero.

3. The Solana ecology has many projects with low circulation and high VC allocation. Due to the low circulation, insiders can only lock in profits by hedging crazy FDV , and then sell the tokens to the receiver.

4. Distribute Sushiswap fees to Token holders, which reduces the resources of the team, which has minimal protocol ownership from the beginning, so the team focuses on Insufficient motivation for the project.

5. OHM binding and insane APY created a reflexive monster which led to excessive speculation and subsequent crash due to massive inflation (-3, - 3).

6. Terra stablecoin burning/minting mechanism and Anchor reserve, this topic has been discussed in a lot of articles, so you can read them for more nuances difference. Basically, you can only pay people to use your stablecoin for a limited amount of time, and if it doesn't attract people before the money runs out, it's probably cooked.

7. Axie's SLP model. An infinite supply of breeding coins does not work if there is no new money flowing into the game to support the price.

8. Airdrop. Due to the wide distribution and high degree of attention, the airdrop token will rise quickly at first, but then slowly return to zero, because it is free money, everyone will take it off the table after a certain point, Thus leading to selling pressure and ugly charts.

9. Paraswap anti-Sybil attack. It turns out that pissing off users is not a good marketing strategy. Excessive Sybil filtering has the side effect of alienating users and over-shrinking the distribution. Token distributions are your best marketing tool, you want people to talk about your shitcoin, if you remove everyone's airdrops then no one will talk about it.

10. Solidly ve (3,3) and Toekn distribution. Game theory for SOLID Toekn assignments lead to mercenary projects launching with insane APYs, we haven't been able to see the ve(3,3) mechanism fully functioning because of AC's withdrawal, but it's likely that it will, like OHM, in buying interest There will be a very reflexive parabolic move before exhaustion.

Neither of these Toekn analyzes are nuanced enough that each could use its own sub-stack. Yes, I'm disgusted with most token models in the space, but no solutions were provided, and I must have forgotten some, either way, I hope this is a good overview.

Although some projects use one or more of the above models, they still achieve success, and there are other improved Token models worth exploring Research. But in general, token incentives are broken, and as long as tokens continue to dilute supply without improving profitability, their fate is ultimately zero. If your protocol requires a token to function, it may not escape death. Tokens are designed to enhance the user's incentives and experience, not the entire experience.

We are still in the early stages of token design and experimentation, and the industry will not progress without these examples. There are more tokens to zero, more failed tokens to issue, and more to learn. The crypto industry will continue to evolve, and one last thing:

Not everything needs to issue a token.