🌟 In Eastern philosophy, there is a saying that extreme things are bound to oppose. This concept also applies to tokenomics, which is how tokens are designed and managed 🌀
When it comes to tokenomics, having too little circulating supply from the beginning is not good, just as having too much is also problematic. To achieve a successful and sustainable token ecosystem, there needs to be a BALANCE ⚖️
The balance we seek is between providing incentives for liquidity providers and swappers, while ensuring an adequate initial supply for hodlers 🌱
WHY?
Too little initial supply means that a lot of tokens are emitted later, causing the token price to suffer. A lower price leads to lower incentives for LPs. This results in lower liquidity and, consequently, reduced trading volume. As a consequence, the platform’s intrinsic value decreases, and the token price falls, creating a harmful cycle that keeps repeating. In the end, the sustainability of the platform becomes compromised 📖
On the other hand, if there’s too much initial supply, it can also lead to problems. This could result in less incentive for liquidity providers and lead to a similar negative loop as mentioned earlier. As a result, sustainability is once again at risk.
Yin-Yang balance should be sought for a platform to thrive 📖
To avoid these issues, it’s essential to strike a balance in tokenomics right from the start. At zkSwap, we have carefully considered and implemented approximately balanced allocations for TGE, initial liquidity, as well as LPs and traders’ incentives, besides rewards for early supporters and staking hodlers 💪
Our goal at zkSwap is to build a sustainable future, and a crucial part of that is ensuring a well-designed and balanced tokenomics system. 💎
Come read our tokenomics and join us for a sustainable future of the 1st swap-to-earn platform on zkSync 🚀
