- Designing tokenomics that help foster growth in the surrounding ecosystem is likely to be a key tokenomics lesson to be learned from Terra’s collapse.
- “Staking is gaining traction in the tokenomics discussion and is likely to continue that way for the near future.”
- “The fact that Terra failed is not necessarily proof that the design is wrong.”
- “Ecosystems like Terra would do well to spend as much time simplifying and educating the public on what they’re attempting to achieve.”
It seems that tokenomics is in crisis. Where before a superficially deflationary monetary system was enough to draw in investors, the Terra collapse and the ongoing downturn have likely had an irreversible impact on the perceptions of traders, who now may think twice before throwing their money in with a coin that claims ‘strong tokenomics.’
So what are platforms and developers to do now? Abandon tokenomics altogether and focus more on actual utility, or refine their use of tokenomics so as to avoid catastrophic death spirals?
It seems that the approach, perhaps unsurprisingly, is going to reside somewhere in the middle. So while creating demand by offering real utility is going to become more of a focus for serious projects, there will also be a shift to more conservative tokenomics principles, which don’t bake in the possibility of a dramatic rug pull.
From speculative to sustainable tokenomics
Following the…
