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<a href="https://defi-planet.com/2022/09/why-tokenomics-are-important-in-crypto-projects/" rel="noopener noreferrer nofollow">Tokenomics</a>, a portmanteau of &#34;token&#34; and &#34;economics,&#34; forms the backbone of the Web3 ecosystem, underpinning a variety of decentralized applications and blockchain networks. Understanding tokenomics is vital to grasp the economic principles behind these technologies.<img src="https://academy-public.coinmarketcap.com/optimized-uploads/3b2744e4cbd1450e8977b059008e9665.png" />In the Web3 world, tokens are digital assets with intrinsic value and utility. They serve multiple purposes, such as facilitating transactions, granting access to network features, and aligning incentives within decentralized communities. Tokenomics dictates how these tokens are created, distributed, and used, ultimately shaping the behaviour of participants in the ecosystem.Key Elements of Tokenomics:<ol><li>Supply and Distribution: Most tokenomics models define the total supply of tokens and how they are distributed. Some employ mechanisms like initial coin offerings (ICOs), token sales, or yield farming to allocate tokens to users and stakeholders.</li><li>Utility: Tokens often have specific use cases within a given ecosystem. They might grant voting rights in a DAO, provide access to a decentralized application, or serve as a means of payment for goods and services.</li><li>Scarcity: Scarcity is a fundamental concept in economics, and tokenomics leverages this by creating a limited supply of tokens. This scarcity can drive demand and value.</li><li>Incentives: Tokenomics designs incentives to encourage desired behaviours within a network. For instance, users may earn tokens for contributing to a project&#39;s growth or participating in network security.</li><li>Governance: Some tokens grant voting rights for protocol upgrades and decision-making within decentralized communities. Token holders can collectively influence the future of the project.</li></ol>Examples of Tokenomics in Action:<ol><li>Bitcoin: Bitcoin&#39;s tokenomics is based on a capped supply of 21 million coins. Miners are rewarded with new Bitcoin for securing the network through the Proof-of-Work consensus mechanism. This scarcity and mining reward system have contributed to Bitcoin&#39;s value proposition.</li><li>Ethereum: Ethereum&#39;s Ether (ETH) has a dual role as both a transactional currency and a fuel for executing smart contracts. The gas fees, paid in ETH, ensure the network operates smoothly.</li><li>DeFi Yield Farming: Decentralized Finance (DeFi) projects often employ complex tokenomics to incentivize liquidity providers and users. Yield farming involves staking assets to earn high yields or additional tokens.</li></ol>Challenges in Tokenomics:While tokenomics is a powerful concept, it&#39;s not without its challenges. Managing inflation, avoiding token manipulation, and ensuring fair distribution are constant concerns. Regulatory scrutiny is also increasing, leading to a push for compliant and sustainable tokenomic models.In conclusion, tokenomics is a pivotal aspect of the Web3 era, where digital tokens play a central role in reshaping how we transact, interact, and govern. By understanding tokenomics, individuals can make informed decisions about participating in Web3 projects, and developers can create more effective and equitable ecosystems.Catch up on our published articles for the week!NEWS●  Bitcoin’s 5th Bull Run Underway, May Hit $125,000 by 2024; Matrixport’s New Report Claims &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/bitcoins-5th-bull-run-underway-may-hit-125000-by-2024-matrixports-new-report-claims/" rel="noopener noreferrer nofollow"> Read more</a>.● Zhao’s Net Worth Drops Sharply to $17.3 Billion Amid Binance’s Struggles &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/zhaos-net-worth-drops-sharply-to-17-3-billion-amid-binances-struggles/" rel="noopener noreferrer nofollow"> Read more</a>.●  FTX’s $6.5 Million Donation to Nonprofit CAIS Under Scrutiny in Bankruptcy Proceedings &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/ftxs-6-5-million-donation-to-nonprofit-cais-under-scrutiny-in-bankruptcy-proceedings/" rel="noopener noreferrer nofollow"> Read more</a>.●  Mastercard Joins Forces with Moonpay to Explore Web3 for Innovative &amp; Experiential Marketing &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/mastercard-joins-forces-with-moonpay-to-explore-web3-for-innovative-experiential-marketing/" rel="noopener noreferrer nofollow"> Read more</a>.●  SkyBridge Capital Founder Expresses Doubt About Bankman-Fried’s Chances in Ongoing Trial &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/skybridge-capital-founder-expresses-doubt-about-bankman-frieds-chances-in-ongoing-trial/" rel="noopener noreferrer nofollow"> Read more</a>.● Ethereum’s Supply on Centralized Exchanges Falls to 8.41% – Lowest Since 2015 &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/ethereums-supply-on-centralized-exchanges-falls-to-8-41-lowest-since-2015/" rel="noopener noreferrer nofollow"> Read more</a>.●  Maestrobots Reimburses Users Over $1 Million After Ethereum Router Exploit &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/maestrobots-reimburses-users-over-1-million-after-ethereum-router-exploit/" rel="noopener noreferrer nofollow"> Read more</a>.●  SEC Fines BlackRock $2.5M for Incorrect Investment Disclosure &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/sec-fines-blackrock-2-5m-for-incorrect-investment-disclosure/" rel="noopener noreferrer nofollow"> Read more</a>.● Coinbase Debunks Rumors About Imposing Weekly Bitcoin Withdrawal Limits &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/coinbase-debunks-rumors-about-imposing-weekly-bitcoin-withdrawal-limits/" rel="noopener noreferrer nofollow"> Read more</a>.●  New Chainalysis Report: U.S. Is Losing Regulatory Grip on the Stablecoins Market &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/new-chainalysis-report-u-s-is-losing-regulatory-grip-on-the-stablecoins-market/" rel="noopener noreferrer nofollow"> Read more</a>.●  Bitmain Unveil New Mining Machine to Power Aleo’s Blockchain Development &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/bitmain-unveil-new-mining-machine-to-power-aleos-blockchain-development/" rel="noopener noreferrer nofollow"> Read more</a>.●  Attorney Forecasts 3% Chance of Success for SEC’s Appeal in Ongoing Ripple Lawsuit &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/attorney-forecasts-3-chance-of-success-for-secs-appeal-in-ongoing-ripple-lawsuit/" rel="noopener noreferrer nofollow"> Read more</a>.●  Worldcoin to Change Orb Operator Payments From USDC to WLD in November &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/worldcoin-to-change-orb-operator-payments-from-usdc-to-wld-in-november/" rel="noopener noreferrer nofollow"> Read more</a>.ARTICLES●  Top 10 Crypto OffRamps in the USA &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/top-10-crypto-offramps-in-the-usa/" rel="noopener noreferrer nofollow"> Learn more.</a>●  What are Crypto Wallet Trackers, and How Do They Work? &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/what-are-crypto-wallet-trackers-and-how-do-they-work/" rel="noopener noreferrer nofollow"> Learn more.</a>●  DeFi for Beginners: Your Quick Reference Glossary &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/defi-for-beginners-your-quick-reference-glossary/" rel="noopener noreferrer nofollow"> Learn more.</a>●  What Is a Dusting Attack and How Does It Work? &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/what-is-a-dusting-attack-and-how-does-it-work/" rel="noopener noreferrer nofollow"> Learn more.</a>●  A Comprehensive Guide to the Vechain NFT Universe &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/a-comprehensive-guide-to-the-vechain-nft-universe/" rel="noopener noreferrer nofollow"> Learn more.</a>●  What is a Bitcoin Improvement Proposal (BIP)? And How Does It Work? &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/crypto-asset-recovery-in-2023-best-practices-and-tools/" rel="noopener noreferrer nofollow"> Learn more.</a>MARKETS●  Lido Finance Discontinues Solana Staking After DAO Vote &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/lido-finance-discontinues-solana-staking-after-dao-vote/" rel="noopener noreferrer nofollow"> Learn more.</a>●  Will Shiba Inu Hit $0.01 if Half of Its Supply Is Burned? &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/will-shiba-inu-hit-0-01-if-half-of-its-supply-is-burned/" rel="noopener noreferrer nofollow"> Learn more.</a>●  FTT Was In The Middle Of The FTX Collapse, Let’s Spotlight The Exchange Tokens Market? &gt;&gt;&gt;<a href="https://defi-planet.com/2023/10/ftt-was-in-the-middle-of-the-ftx-collapse-lets-spotlight-the-exchange-tokens-market/" rel="noopener noreferrer nofollow"> Learn more.</a>Spotlight on interesting projectsTezoro<a href="https://tezoro.io/" rel="noopener noreferrer nofollow">Tezoro</a> is a non-custodial service that allows you to reduce the risk of losing your crypto by ~100 times by creating a backup: a smart contract that can withdraw crypto from your wallet and transfer it to a backup address even if you&#39;ve already lost access to your wallet or died.Tezoro is a non-custodial service. It helps you to prepare your backup, and you confirm it via your MetaMask and deploy it directly to the blockchain.Nobody, including Tezoro, can change the amount or replace the backup address. The only thing you allow it to do is initiate the transfer at the moment you need it.For more information, visit <a href="https://tezoro.io/" rel="noopener noreferrer nofollow">https://tezoro.io/</a><img src="https://academy-public.coinmarketcap.com/optimized-uploads/2af3317fe45f4e0bbcf309612efcfd4b.jpeg" />If you want more content like this, visit <a href="https://defi-planet.com/" rel="noopener noreferrer nofollow">DeFi Planet</a> and follow us on <a href="https://twitter.com/PlanetDefi" rel="noopener noreferrer nofollow">Twitter</a>, <a href="https://www.linkedin.com/company/defi-planet/" rel="noopener noreferrer nofollow">LinkedIn</a>, <a href="https://www.facebook.com/DeFi-Planet-129907662611402" rel="noopener noreferrer nofollow">Facebook</a>, <a href="https://www.instagram.com/defi.planet/" rel="noopener noreferrer nofollow">Instagram</a>, <a href="https://medium.com/&#64;defi-planet" rel="noopener noreferrer nofollow">Medium</a>. and <a href="https://coinmarketcap.com/community/profile/DeFiPlanet/" rel="noopener noreferrer nofollow">CoinMarketCap Community</a>.

Weekly Round-Up #73 | Tokenomics: The Economics of the Web3 Era 💸

DeFi Planet

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