Tokenomics
The economic model and properties of a cryptocurrency token, including supply mechanics, distribution, incentives, and utility within its ecosystem.
Why It Matters
Tokenomics, or token economics, is crucial for understanding how a token functions within its ecosystem, including supply, demand, and incentives. This can impact investment decisions and long-term viability.
Example
For example, a token with a capped supply might increase in value over time, while one with unlimited issuance could lead to inflation, affecting your investment's worth.
Beginner Context
For beginners, grasping tokenomics helps in evaluating cryptocurrency projects, enabling informed decisions when investing or participating in various blockchain initiatives.
Mike Starr
Founder, CryptoWizardTools · M.S. Organizational Management
Last reviewed: August 2026
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Max Supply
The maximum number of coins or tokens that will ever exist for a given cryptocurrency. Bitcoin has a max supply of 21 million BTC. Once the max supply is reached, no new coins can be created, making the asset deflationary by design.
Circulating Supply
The number of coins or tokens of a cryptocurrency that are currently available and circulating in the market.
FDV
Fully Diluted Valuation. The theoretical market capitalization of a cryptocurrency if all tokens in its maximum supply were in circulation at the current price.
Vesting
A schedule that restricts the sale of tokens for a period of time, often applied to team allocations or investor tokens to prevent large sell-offs.
Token Burn
The deliberate destruction of a quantity of tokens by sending them to an unspendable wallet address. Token burns reduce the circulating supply, which can increase scarcity. Some protocols conduct regular token burns as part of their tokenomics model.