[Glossary] Tokenomics & Economic Models Terms

CryptoKas

Below is a concise glossary of key terms you’ll encounter in Tokenomics & Economic Models discussions. Definitions are clear and practical—ideal for anyone designing or evaluating a project’s economic design.

️ Supply & Emission

Total Supply: The total number of tokens that have been created, including those locked or reserved.
Circulating Supply: Tokens currently available on the market and in user wallets.
Max Supply: The hard cap on how many tokens will ever exist (if one is defined).
Inflationary Model: New tokens are continuously minted over time; inflation rate often decreases annually.
Deflationary Model: Protocol regularly destroys (burns) tokens, reducing supply and potentially increasing value.
Emission Schedule: A defined timeline or formula dictating when and how many new tokens enter circulation.

Distribution & Vesting

Genesis Allocation: Initial token distribution at launch (e.g., to founders, investors, community).
Vesting Schedule: Timeline that unlocks tokens for team, advisors, or investors over months/years to prevent dumps.
Liquidity Mining: Rewarding users in new tokens for providing liquidity to DeFi pools.
Airdrop: Free token distribution to existing holders or participants as an incentive or reward.
Fair Launch: No pre-mine or private sale—tokens are made available to all participants equally (e.g., via mining or public mint).

Incentives & Mechanisms

Staking Rewards: Tokens distributed to holders who lock up (stake) their tokens to secure a network or protocol.
Burn Mechanism: Tokens sent to an irrecoverable address (“burned”) to reduce supply (e.g., transaction fees burned).
Buy-Back & Burn: Protocol uses revenue or fees to repurchase tokens from the market and burn them.
Bonding Curve: A mathematical formula where token price increases with each purchase, often used in automated launches.
Utility Token: Grants access to services within the ecosystem (e.g., gas, fees, feature unlocks).
Governance Token: Grants voting rights on protocol changes, treasury spends, or parameter updates.

️ Economic Metrics

Market Cap: Current price × circulating supply—used to gauge project size.
Fully Diluted Valuation (FDV): Current price × max supply—hypothetical total value if all tokens were in circulation.
Token Velocity: Rate at which tokens change hands; high velocity can dilute value, low velocity indicates hodling.
Network Value to Transactions (NVT Ratio): Market cap divided by on-chain transaction volume; high NVT may imply overvaluation.
Realized Cap: Sum of each token’s price at last movement; reflects aggregate cost basis of holders.

Dynamic Models

Elastic Supply: Supply automatically expands or contracts to target a price peg (e.g., algorithmic stablecoins).
Dual-Token Model: Two-token systems separating utility and governance roles (e.g., one token for staking, one for voting).
Seigniorage Shares: Mechanism where holders earn newly minted tokens when price > target, and redeem shares when price < target.
Rebasing: Token balances across all wallets adjust proportionally at intervals to maintain price stability.

Pin this thread as your go-to reference for tokenomics and economic design. If you spot a missing term or want deeper examples, drop a comment below!