How to Review Tokenomics of Crypto Presales

Participating in a crypto presale means taking risks. By better examining projects, we can reduce risk and earn more. When reviewing a project, we need to research many topics such as team, product, utility, tokenomics, collaborations. In this article, we cover the topic of tokenomics.

Token Distribution

Examine how the tokens will be distributed during the presale. Look for information on the allocation to the team, advisors, early investors, and public participants. Ensure that the distribution is fair and transparent, with reasonable portions allocated to each category.

E.g.: It is a red flag if a large percentage of the total supply is allocated to the team.

Token Supply and Total Cap

Assess the total supply of tokens and any maximum or hard cap on the token issuance. Consider the implications of a large supply and whether it aligns with the project’s goals and market demand. A capped or limited token supply may indicate scarcity and potential for price appreciation.

Vesting and Lock-up Periods

Look for details on any vesting or lock-up periods for team tokens and early investor tokens. Vesting schedules ensure that these tokens are gradually released over time, promoting long-term commitment to the project. Consider the duration and terms of the vesting periods and how they may affect token price and project stability.

Except for tokens used for liquidity, other tokens should be locked in accordance with their intended use and time. If the team has too many unlocked tokens, this increases the risk.

Token Economics

Analyze the token economics, including the token’s inflation/emission rate, deflationary mechanisms, and token burning mechanisms. Understand how the project plans to maintain the token’s value and manage supply and demand dynamics.

Emission rate: The emission rate of a token is the rate at which new tokens are created. A high emission rate can lead to inflation, which can make the token less valuable over time.

Roadmap and Use of Funds

Evaluate the project’s roadmap and how the funds raised during the presale will be utilized. Look for transparency regarding the allocation of funds for development, marketing, partnerships, and other essential aspects. A clear roadmap and sound allocation strategy instill confidence in the project’s sustainability and growth potential.

It’s crucial to conduct thorough due diligence and review the project’s whitepaper, website, social media channels, and any available audits or third-party reviews. Engage in discussions with the community and seek insights from experienced investors. Tokenomics is a critical aspect of any project, and understanding it will help you make informed investment decisions.

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