Nephos Group had the pleasure to sit down with Simplicity Consultancy on the Nephology Podcast. Simplicity Consultancy are a team of economists specialising in tokenomics, who are in the market to revolutionise the token architecture methodology by crafting tokenomics that are grounded in economics.
Token architecture, includes the utilities, economy to economics, emissions and modelling, in the podcast Joe David, dives into a discussion covering the following elements:
- Why most projects fail
- What tokens really are
- Red flags in tokenomics
To note, this article does not cover in detail everything which was discussed, this is merely an outline. To listen to the full episode, make sure to like & subscribe to Nephology.
Why most projects fail.
Now, when it comes down to project failure, like with most things there can lie a plethora of reasons for a project not to work out. When asked, Simplicity Consultancy stated that what they generally see as the most common reason is that the founders don’t deliver on their promises.
However, when it comes to tokenomics, it can come down to supply and demand.
For example, if a project is expecting to get 1000 users, but then you’re inflating the economy with tokens, the value per user per token will be incredibly low — therefore, you’e going to get an inflation of tokens and not enough demand to bring the price back up.
Additionally, crypto companies can utilise a tokenized score, meaning the price of the token is a direct reflection of how well a company is doing.
What tokens really are.
There is a lot of conversation around tokens, coins, currencies and digital assets — and these words ultimately all describe the same thing.
Simplicity Consultancy stated the following:
“In essence tokens are very misunderstood, as there is no actual concrete fee assessed for crypto, so many people perceive things to be different.
Tokens are basically tradable assets. And they can take on the responsibilities or the functions of financial instruments.”
Simplicity Consultancy goes onto explain their analogy when it comes to tokens, you can find this at around the 10 minute mark in the podcast.
Red Flags in tokenomics
When it comes to tokenomics it can be quite complicated as there is no set framework. It’s important to look at web allocations, such as how much is going to private investment vs how much is going to the public. Additionally look into how much is there for rewards and how much is going to the team.
Simplicity Consultancy state that it’s better to look for the Red Flags more than what’s good.
Red Flags can be:
- The team getting a high percentage of allocation
- VC’s getting a high percentage of allocation
- Company Value
- Allocations in general
- Revenue of the company
In conclusion
Simplicity Consultancy and Joe David discuss tokenomics in depth throughout the podcast, simplifying many elements down even for the complete beginner. If you’d like to gain a better understanding, listen to the podcast or reach out to them directly.
Articles referenced in the podcast:
https://vitalik.ca/general/2022/09/20/daos.html
https://cointelegraph.com/news/sec-lawsuit-claims-jurisdiction-as-eth-nodes-are-clustered-in-the-us
To listen to the full episodes, click here.
