Context

The industry is currently grappling with the consequences of flawed tokenomic models that have led to disappointing outcomes for projects and their communities. Token distribution strategies that limit initial circulation while harboring large future supply increases are proving problematic.

As token unlocks occur and circulating supply expands, projects often struggle to maintain user engagement and ecosystem balance. This pattern has led to diminishing enthusiasm and participation in many blockchain communities over time.

Similarly, airdrops and points systems, designed to reward early adopters and active community members, are failing to create lasting value, often leading to immediate dumping and sustained downward price pressure. This pattern of short-term excitement followed by long-term decline has left many communities disillusioned.

These persistent issues across various tokenomic models highlight a critical truth: the current token models are falling short of their promise, replacing the ‘cold start’ problem of Web 2.0 with a new ‘hot-start’ problem.

To deliver on the original promise of decentralized systems, new innovation and experimentation in token economics is desperately needed in order to deliver market impact that can create sustainable value, align incentives over the long term, and foster genuine, lasting community engagement.