Tokenomics 101: The Basics of Evaluating Cryptocurrencies

Supply, Demand, and Memes. Lots of Memes.

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@Learner over 3 years ago

Good article, thanks! How did you calculate the max 33% inflation?

“According to Coingecko, 78.5m of those 100m have already been created, meaning the current supply will inflate by another ~33%.”

@yovela_luo over 3 years ago

@Learner would it be a typo? Would it be 100-78.5=21.5% max inflation?

@Learner over 3 years ago

@yovela_luo Thanks! The article also mentions a "max 33% dilution", which I assume is related to the 33% inflation.

My understanding of dilution using an example:
Company issues initial 1000 shares at $1 which equals $1000 total market cap (owns 100%).
Company issues new additional 100 shares at $1 to Investor.
Total shares equals 1100 and total market cap equals $1100.
Now, the Company owns 1000 / 1100 shares, which equals 91% ownership (down from 100%).
The Company was diluted 9%.

Using the same approach, the Current Token Holders own existing tokens that equals 78.5m (owns 100%).
New additional tokens of 21.5m are issued, which equals 100m total tokens.
Now, Current Token Holders own 78.5m / 100m total tokens, which equals 78.5% ownership (down from 100%).
Current Token Holders were diluted 21.5%.

The 21.5% matches your calculation result. However, I am unsure if I am missing something.