Hypermode Methodology – Framework for Tokenomics Design

At Hypermode, we have developed a framework for creative and practical use cases for crypto tokens.

Steps to design Tokenomics for a blockchain or Web3 project:

Token-to-Market-Fit Analysis

The most important factor to consider when launching the crypto token is to identify the token-to-market fit. Actual need for a token in the market! Need that drives the demand and supply factors.

“token-to-market fit is the new product-to-market fit for businesses in Web3, William Mougayar”

Sooner or later, all businesses in blockchain need to launch their crypto tokens. Following are the important questions which need to be asked when analyzing the need for launching crypto tokens:

If the above list of questions seems too technical to answer, we can simplify it and help you in identifying the token-to-market fit for your blockchain business.

Analysis of Market, Mechanism and Token Design

After a token-to-market-fit analysis has been performed, the next step is to use a framework that would focus on a detailed analysis of three important pillars as identified by Lisa JY Tan, founder of Economics Design. The following table shows the three pillars along with different variables:

Market Design

Mechanism Design

Token Design

Market Size

Governance

Token Policy

Network
Efficiency

Non-financial
Incentives

Financial
Incentives

Safety

Structure

Architecture

Once a detailed analysis has been performed for each of the above variables, a business is in a better position to launch crypto token for its blockchain project. There are several specific factors that fall within either of the above variables.

Market Design

pillar focuses on the analysis of market such as its size, the existing solutions, safety and network efficiency benchmarks.  

Mechanism Design pillar

focuses on the rules and structure related to the business.  

The third pillar Token Design is the most relevant to Tokenomics and focuses on the following key areas of a token design strategy: 

The above four factors within the token design pillar are particularly important for a business that is designing the Tokenomics for its project.  

We have studied the following ten successful blockchain projects and found out the average allocations to different groups: 

Ape Coin (BAYC)

Axie Infinity

Avalanche

Sandbox

Flow

Decentraland

Solana

Fantom

Perpetual Finance

Genopets

Typically, Web3 projects distribute/allocate their token supply into following categories: 

We analyzed 10 successful Web3 projects – below is the average distribution:  

Of the 10, lets look at 3:  

Moreover, a research conducted by Pantera Capital shows that the typical distribution of tokens by blockchain projects in 2021 looked like below:  

From this study it is clearly evident that there is no one-size-fits-all framework for Tokenomics design and every project comes up with its distribution strategy as per the respective objectives.

Get in touch with us to understand these variables and come up with a useful Tokenomics design for your blockchain project.