Part 1 – Introduction to tokenomics
Part 2 – Token utility
Part 3 – Economic design
Part 4 – Token Design
Part 5 – Testing & Adaptation
Welcome back to the fifth and final part of our tokenomics series. Congratulations on making it this far, and thank you for the ongoing support!
The aim of this article will be to explain how to test and adapt your tokenomics. By now you should have a clearly defined tokenomics structure based on several assumptions. It is time to test those assumptions and see what you can improve upon.
Once all the specifics of your token ecosystem are determined, it is a good idea to map it out. Not only will this provide a visual overview but, more importantly highlight the relationship between different stakeholders. It also allows you to identify any aspects you might have missed or want to correct.
Depending on the complexity of your tokenomics as well as your resources, you can use different tools to map out your token ecosystem. If you are just starting out, in the ideation phase, and don’t have a lot of resources, you can simply use PowerPoint or Miro. However, once you have validated your business model and the necessary resources, we highly recommend mapping your tokenomics using more advanced tools. Tools such as Machinations allows you not only to map the ecosystem but also enable you to conduct detailed simulations.
If you need assistance in mapping out your tokenomics feel free to explore our service here.
Simulating tokenomics will help you visualise the token inflows and outflows between the different stakeholders in your ecosystem. Until now your tokenomics are based on several different assumptions, using simulation tools will test them and expose any deficiencies.
If for example you are designing a play-2-earn game, you will be dealing with several different player personas, each interacting with the ecosystem in a different way. Using simulation, you can identify the impact of different player personas and compare them to the initial assumptions and goals. Furthermore, you can simulate extreme scenarios and visualise how the token ecosystem will behave when distressed.
Once you have simulated different scenarios you can compare the result with the initial assumptions and the key performance indicators you defined. At Block Consult we provide our clients a full simulation report outlining the strengths and drawbacks of the tokenomics and recommended improvements.
Generally speaking, it is very difficult to change the tokenomics design once the token(s) have been launched, this is why proper planning and simulation is more important. However, no tokenomics design will play out as planned as there are a multitude of unforeseen and external factors which will have an impact. Therefore, the performance and health of a token ecosystem must be monitored on a continual basis. if necessary, the tokenomics can be adapted to align stakeholder incentives better. For example, in P2E games it is often the case that the tokenomics are adapted on a continual basis after being approved by all stakeholders via a snapshot vote.
Mapping out your tokenomics will help you visualise the ecosystem. The simulation process will further assist in understanding the relationships between different stakeholders and expose any weak points in the design. Once simulated the results must be compared to the initial goals and key performance indicators. Post-launch, the token ecosystem must be monitored continuously and if necessary, adapted accordingly.