Token Distribution Versus Token Burn
We see a lot of projets promoting the idea of token burns. This is a lot like the idea of stock buybacks. The idea is to have less units out there, thus making the value of each higher.
In this video I discuss this approach as compared to business building and why token distribution along with growth rates is more important.
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BEERKING.Agreed totally removing supply without adding demand does nothing positive, it can however lead to stagnation and lack of interest in a project. Supply is important, but always focus on demand and tokens can be a great way to motivate people to work on and care about a project. Especially if it is done strategically.
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Basic business building strategies tend to work. There needs to be a reason for people to come to the platform or application. Simply because we have a token that is burned is not enough.
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Upgrading distribution will always beat burning. The best example is ApeCoin, which got Airdropped to the right people and skyrocketed instead of getting dumped. Sure that's a far fetch, but then again it's not.
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No doubt you catch the right wave and get interest, token price can skyrocket regardless of what the distribution is. Ultimately, for most projects, it comes back to utility.
This is something that many do not focus upon. Instead they just try to alter the tokenomics (not a bad move if things are not working) but often to the peril of not building.
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Interesting interesting 🤔
My sentiments exactly: I say don't burn crypto (or bridges or witches, maybe ducks are okay).
A few statements I've made about this topic in the past (see above link):
Probably I have not tried ducks so far, but I like roasted chicken. Haha.
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Hard to be that.
Or chicken cooked on a nice BBQ.
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And what is the value of that 1 token if there is no use case or utility associated with it? What happens when the last person loses interest?
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Yep, the value goes to zero. The fewer transactions a currency can facilitate, the lower its market cap is going to be. Zero transactions = zero value.
I definitely agree that the burns don't really make sense to me. Platforms need to prove that they can make enough growth to satisfy their inflation. Then again, I wonder if SPORTS token should be burning tokens. I know there is a lot of talk about it and I know that the initial situation didn't work out well for them. They have a huge supply of SPORTS and the inflation is just as high but it's deployed in different ways now.
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There certainly are times when token re-evaluation is vital. Some projects are designed poorly.
Of course, even with SPORTS present tokenomics, if there were 100K users of that tribe, the token distribution wouldnt be a problem.
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It doesn't make sense when we have shortage of currency and also when want to burn some currency also
True although most are not looking at it as currency. Instead, they believe it to be stock. Less float equates to higher value.
Currency operates on elasticity. There are times less is needed, other times more.
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I just watched The CryptoManiacs Podcast - Episode 117 and your response there and Jon's response are very clear. This podcast reinforces the case for the advantages of increasing the token supply based on an expanding project. Thanks!
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The inflation of a project is meant to help the growth of it. Tokens are incentive for certain behavior. Thus, when there is inflation, the distribution is meant to grow the platform, making the project inclusive.
Many are designed as disinflationary, goes down over time, since the growth rate is harder as projects get bigger. So there is some sensibility to that.
However, outright burns means that we are destroying valuable resources while often overlooking the expansion part.
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As you pointed out, perhaps the mind behind token burning is influenced by the idea of increasing the price of the token just like the typical practice in the stock market of buying back shares to increase the market price of the stock. It's really something new to me this idea of the usefulness of inflation as long as the growth of the project is bigger and faster.
To accomplish this I think we need to be training an army of devs that can build here in the first place. We also need to be lowering the dev learning curve into side jobs (creating skins or puzzles or graphics or balancing or whatever else).
I believe we can gamify the process of learning and pay users to learn so that they can interact with this emergent job market. The key to crypto is definitely getting paid a salary for services rendered. Just like a corporation the value provided to the network needs to be slightly more than what users are being paid. This feeds value into the entire network's pockets instead of a centralized owner.
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Summary:
In this video, Task delves into the concepts of token distribution and token burn in the cryptocurrency space. He emphasizes the importance of focusing on growth and ecosystem development over tokenomics, highlighting that projects should be centered around attracting users, engaging them, and expanding utility. Task argues that simply burning tokens to increase value without actual growth is counterproductive. He uses examples from projects like Leo and Hive to illustrate how stagnation or decline in growth can lead to a decrease in value despite token burns. Task stresses the need for understanding inflation as a tool for growth and warns against token burns as a solution for struggling projects lacking expansion.
Detailed Article:
Task opens the video by discussing a question from Cryptomaniacs regarding token distribution versus token burn in cryptocurrency projects. He criticizes the common focus on tokenomics for new projects, asserting that the primary concern should be on building the project itself rather than artificially manipulating token values. Task urges developers to concentrate on traditional business and internet building principles to grow their projects, attract users, and enhance the overall user experience.
He uses the examples of Leo and Hive to illustrate his points. Task mentions a conversation with Khal regarding Leo's inflation rate, highlighting the importance of growth for sustaining token value. He discusses how token burns, without addressing underlying growth issues, can lead to a temporary spike in token value but ultimately result in long-term problems due to a lack of user retention and engagement.
Task emphasizes that sustained growth is the key to a project's success, noting that token appreciation is a byproduct of consistent and substantial growth over time. He stresses the importance of increasing users, transactions, engagement, and overall activity within the ecosystem to drive value rather than relying on token burns as a quick fix.
Furthermore, Task criticizes the misconception around inflation, explaining that it is a tool for fostering growth rather than just leading to price increases. He warns against token burns as a solution for declining projects, pointing out that real growth is needed to sustain the ecosystem. By drawing parallels with traditional financial systems, Task emphasizes the need for projects to understand and prioritize growth over short-term token value manipulation.
In conclusion, Task reiterates the importance of actual growth and ecosystem development as the foundation for project success in the cryptocurrency space. He cautions against relying on token burns or inflation manipulation to prop up value without addressing fundamental growth issues.
Notice: This is an AI-generated summary based on a transcript of the video. The summarization of the videos in this channel was requested/approved by the channel owner.