An airdrop is a distribution of free tokens to a large base of users to promote the project.
Tokenomics lexicon
A
Token allocation refers to the initial distribution of tokens among the different stakeholders of the project (team, investors, community, etc.).
An Automated Market Maker (AMM) is a decentralized protocol. It uses mathematical formulas to trade digital assets automatically. It maintains liquidity without the need for a traditional order book, as seen on centralized exchange platforms.
B
Blockchain is a distributed ledger technology where transactions are recorded in a decentralized and secure manner across a network of nodes. It is used for the registration of tokens and smart contracts.
Token burning involves permanently removing tokens from circulation to reduce the available supply. This process is typically done by sending the tokens to a smart contract address whose private key is unknown, making them irretrievable.
A buy-back is a process by which a company or organization repurchases its own tokens on the market, often to reduce the circulating supply and potentially increase the value of the remaining tokens.
C
The circulating supply is the number of tokens currently available on the market.
A cliff is a period during which no allocated tokens are distributed. Tokens are distributed after this period ends.
A coin is a digital asset native to its respective blockchain, such as Bitcoin or Ethereum.
A cryptocurrency is a digital asset that relies on blockchain technology to secure transactions and control the creation of new units.
D
A DAO, or decentralized autonomous organization, is an organization managed by smart contracts, where decisions are made collectively by the members, without a central authority.
Decentralized finance is a financial ecosystem built on blockchains, using smart contracts to offer services such as lending, borrowing, and cryptocurrency exchange without centralized intermediaries.
A deflationary system or mechanism in tokenomics reduces the supply of tokens over time, thereby increasing their scarcity and potentially their value.
A digital asset is an intangible resource that has no physical existence in the real world. It is created and stored electronically, and it holds or provides value, such as photos, videos, eBooks, or cryptocurrencies.
The distribution of tokens is the process of allocating tokens among the different stakeholders of the project, including investors, users, or other key participants.
F
The fully diluted market cap represents the market capitalization if the all maximum supply were in circulation.
G
Gamification is the process of incorporating game-like elements, such as rewards and competitions, into non-game contexts, such as tokenomics models, to enhance engagement and incentivize participation.
H
Halving is a preprogrammed event that occurs at regular intervals, where the reward for mining new blocks is cut in half. This reduces the rate of new coin creation and influences the dynamics of supply and demand.
A hard cap is the maximum amount of funds a project aims to raise during a token sale. Once the hard cap is reached, no further funds will be accepted.
I
An ICO is a method of crowdfunding where new tokens are created and sold to early investors in exchange for established cryptocurrencies like Bitcoin or Ethereum.
An IDO is a fundraising method where tokens are sold directly on a decentralized exchange (DEX), without an intermediary.
An IEO is a fundraising method where tokens are sold on an exchange platform, which acts as an intermediary. The platform organizes the token sale, conducts due diligence, and lists the new token immediately after the sale.
Inflation refers to the increase in the supply of tokens over time, which can dilute the value of existing tokens if not managed properly.
Initial circulating supply is the number of tokens that are available and circulating in the market at the time of a token’s launch.
The initial market cap refers to the total value of tokens in circulation at the time of its launch. It is calculated by multiplying the initial price of a token by the total number of tokens in circulation at launch.
J
K
L
A liquidity pool is a collection of funds locked in a smart contract on a decentralized exchange, used to facilitate trading by providing liquidity for token pairs.
A liquidity provider is an individual or entity that supplies assets to a liquidity pool on a decentralized exchange to facilitate trading and earn fees or rewards.
M
The market cap represents the total value of all tokens in circulation. It is calculated by multiplying the current price of a token by the total number of tokens in circulation.
Max supply is the total number of tokens that will ever be created for a cryptocurrency, setting a cap on the supply.
Mining is the process by which new coins or tokens are created and transactions are verified on a blockchain, typically involving complex computational work.
Minting is the process of creating new tokens or coins, either through mining, staking, or directly via a smart contract.
N
An NFT is a unique digital asset that represents ownership or proof of authenticity of a specific item or piece of content on a blockchain.
O
P
Q
R
S
A smart contract is a self-executing contract with the terms of the agreement directly written into code. It automatically enforces and executes actions when predefined conditions are met, often on a blockchain.
A soft cap is the minimum amount of funds required for a project to proceed. If this amount is not reached during a token sale, the project may be canceled, and funds may be returned to investors.
A stablecoin is a type of token designed to maintain a stable value by being pegged to a reserve asset, such as a fiat currency like the US dollar, or a basket of assets.
Staking is the process of actively participating in the validation of transactions on a proof-of-stake (PoS) blockchain by locking up tokens to support network operations and earn rewards.
T
A TGE is the event at which a new token is officially created and launched on the market, marking its official introduction and initial distribution.
A token is a digital asset created on a blockchain, representing value, utility, or governance rights within a particular ecosystem.
Token velocity is the rate at which a token changes hands within an ecosystem. It is a measure of how frequently tokens are used for transactions and can indicate the level of activity within a network.
A tokenized ecosystem is an economic environment based on blockchain technology, where assets are represented by tokens. These tokens serve as units of value or means of governance within the system, enabling decentralized and transparent management.
Tokenomics is the study and design of the economic and financial systems within a blockchain ecosystem, focusing on the creation, distribution, and management of tokens.
Total supply is the total number of tokens that exist currently, including both those in circulation and those that are locked or reserved.
U
V
Vesting is a process in which initially allocated tokens are gradually released to team members, investors, or other stakeholders over a set period, often used to ensure long-term commitment to a project.
W
Web3 refers to the next generation of the internet, where decentralized technologies like blockchain and smart contracts enable peer-to-peer interactions, giving users more control over their data and digital assets.