How to Design a Sustainable Tokenomics Model in a Defi Project?

Karolina

26 Feb 2024
How to Design a Sustainable Tokenomics Model in a Defi Project?

Investors look for projects that not only develop innovative products but also do it sustainably. In a way that allows for long-term growth, and resistance to uneasy conditions in the crypto market. Projects can achieve this through a studious design of their tokenomics model.

Understanding Tokenomics

Tokenomics, short for token economics, refers to the study and design of economic systems within blockchain networks and crypto projects. At its core, tokenomics encompasses the distribution, circulation, and utilization of tokens to incentivize various stakeholders and drive desired behaviors within the ecosystem.

Key Components of Sustainable Tokenomics

Token Allocation

Defining clear purposes and rules for the treasury fund to align the interests is essential. A well-defined allocation strategy ensures that tokens are distributed in a good manner. That it promotes decentralization, fosters community participation, and supports the long-term growth of the ecosystem.

Token Allocation
Source: https://messari.io/article/power-and-wealth-in-cryptoeconomies

Maintaining a balanced token allocation to achieve decentralized governance and organic project growth is critical. By distributing tokens equitably among stakeholders, projects can mitigate the risk of centralization, and foster a diverse and engaged community. While it may be tempting to allocate most tokens for the founding team and institutional investors, projects should remember that the value of their tokens is in large part determined by how decentralized the ownership structure is.

Token Vesting Schedule

Token Vesting Schedule
For example: Thetan Arena token vesting schedule: the square marks out the period September 2021 to March 2022. (https://doc.thetanarena.com/ economy/theta-gem)

Implementing a structured vesting schedule for team members, investors, and advisors is crucial to ensure the alignment of incentives and commitment. A vesting schedule gradually releases tokens over a specified period, incentivizing continued participation and discouraging short-term speculation.

Maximum Inflation

Managing inflation is a delicate balancing act for crypto projects, as excessive inflation can erode the purchasing power of tokens. Insufficient inflation may hinder growth and adoption. An important metric in that regard is Maximum Inflation, which refers to the total supply increase over time. It is calculated through dividing maximum supply by the initial supply.

Projects must carefully calibrate their inflationary policies to maintain a healthy balance between supply and demand. While also incentivizing long-term holding and participation. By adjusting maximum inflation rates in response to project needs, crypto projects can optimize tokenomics for sustainable growth and stability.

Bitcoin inflation vs. time
Bitcoin inflation vs. time. Source: Research Gate

Value Accrual

Ensuring that tokens accrue tangible value to holders is essential for fostering long-term engagement and participation within the ecosystem. Value accrual mechanisms may include utility features, governance rights, revenue-sharing mechanisms, or other incentives that incentivize holding and active participation in the project.

Strategies for Designing Sustainable Tokenomics Models

Designing Sustainable Tokenomic Models

Defining Clear Objectives

Establishing clear objectives and goals for the project's economic model is fundamental to its success. By articulating a compelling vision and roadmap, projects can attract stakeholders, align incentives, and rally support for their long-term mission. Clear objectives also provide a framework for decision-making and resource allocation, guiding the project towards sustainable growth.

Incorporating Governance Mechanisms

Implementing robust governance mechanisms is essential for ensuring democratic decision-making and community involvement in protocol upgrades and changes. By empowering token holders to vote on proposals, participate in governance discussions, and shape the future direction of the project, projects can foster a sense of ownership and accountability within the community.

Ensuring Transparency and Accountability

Promoting transparency and accountability in tokenomics design and fund management is critical for building trust and confidence among stakeholders. By providing regular updates, financial reports, and disclosures, projects can demonstrate their commitment to integrity

Case Studies: Examining Sustainable Tokenomics Models

Ethereum (ETH)

Ethereum, often regarded as the pioneer of smart contract platforms, boasts a robust tokenomics model that underpins its vibrant ecosystem. ETH serves as the native currency of the Ethereum network, facilitating transactions, powering decentralized applications (dApps), and serving as collateral for various DeFi protocols. With a clear distribution schedule, Ethereum incentivizes miners, validators, developers, and users to contribute to the network's security, scalability, and innovation.

Cardano (ADA)

Cardano ADA Allocation
Source: Coin Gecko

Cardano, one of the most prominent Layer 1 platforms, attributes much of its success to a tokenomics model focused on long-term growth. The platform itself states in its whitepaper: “The overall focus beyond a particular set of innovations is to provide a more balanced and sustainable ecosystem that better accounts for the needs of its users as well as other systems seeking integration”. Cardano tokenomics model supports sustainable development goals through research-based approach, decentralized governance structure, and well-thought treasury system. Unfortunately, commitment to sustainable growth came with a cost. Cardano Blockchain is much slower than many of its competitors, which reflects the famous blockchain trilemma (hypothesis that blockchain can’t be secure, scalable, and decentralized at the same time).

Challenges and Future Directions

Tokenomics has emerged as a powerful tool for incentivizing and coordinating decentralized networks. It also presents various challenges and areas for improvement. Addressing issues such as governance effectiveness, economic sustainability, and regulatory compliance will be crucial for advancing crypto projects, in the face of progressing regulatory scrutiny.

MUST READ: "Tokenization Regulations"

Conclusion

Tokenomics represents a foundational aspect of crypto and Web3 projects, providing the economic infrastructure needed to incentivize participation, coordinate activity, and drive value creation within decentralized networks. By designing sustainable economic models that align incentives, foster community engagement, and promote long-term growth, projects can get the best out of blockchain technology

If you're looking to design a sustainable tokenomics model for your DeFi project, please reach out to contact@nextrope.com. Our team is ready to help you create a tokenomics structure that aligns with your project's long-term growth and market resilience.

FAQ

Why is token allocation important?

  • Proper token allocation promotes decentralization and community engagement, vital for a project's success.

What's a token vesting schedule?

  • A schedule ensuring stakeholders remain committed by gradually releasing their tokens over time.

How can DeFi tokens retain value?

  • By implementing supply control mechanisms and expanding utility within the ecosystem.

What are key challenges in tokenomics design?

  • Balancing incentives, managing inflation, and navigating regulatory landscapes are significant challenges.

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AI in Real Estate: How Does It Support the Housing Market?

Miłosz Mach

18 Mar 2025
AI in Real Estate: How Does It Support the Housing Market?

The digital transformation is reshaping numerous sectors of the economy, and real estate is no exception. By 2025, AI will no longer be a mere gadget but a powerful tool that facilitates customer interactions, streamlines decision-making processes, and optimizes sales operations. Simultaneously, blockchain technology ensures security, transparency, and scalability in transactions. With this article, we launch a series of publications exploring AI in business, focusing today on the application of artificial intelligence within the real estate industry.

AI vs. Tradition: Key Implementations of AI in Real Estate

Designing, selling, and managing properties—traditional methods are increasingly giving way to data-driven decision-making.

Breakthroughs in Customer Service

AI-powered chatbots and virtual assistants are revolutionizing how companies interact with their customers. These tools handle hundreds of inquiries simultaneously, personalize offers, and guide clients through the purchasing process. Implementing AI agents can lead to higher-quality leads for developers and automate responses to most standard customer queries. However, technical challenges in deploying such systems include:

  • Integration with existing real estate databases: Chatbots must have access to up-to-date listings, prices, and availability.
  • Personalization of communication: Systems must adapt their interactions to individual customer needs.
  • Management of industry-specific knowledge: Chatbots require specialized expertise about local real estate markets.

Advanced Data Analysis

Cognitive AI systems utilize deep learning to analyze complex relationships within the real estate market, such as macroeconomic trends, local zoning plans, and user behavior on social media platforms. Deploying such solutions necessitates:

  • Collecting high-quality historical data.
  • Building infrastructure for real-time data processing.
  • Developing appropriate machine learning models.
  • Continuously monitoring and updating models based on new data.

Intelligent Design

Generative artificial intelligence is revolutionizing architectural design. These advanced algorithms can produce dozens of building design variants that account for site constraints, legal requirements, energy efficiency considerations, and aesthetic preferences.

Optimizing Building Energy Efficiency

Smart building management systems (BMS) leverage AI to optimize energy consumption while maintaining resident comfort. Reinforcement learning algorithms analyze data from temperature, humidity, and air quality sensors to adjust heating, cooling, and ventilation parameters effectively.

Integration of AI with Blockchain in Real Estate

The convergence of AI with blockchain technology opens up new possibilities for the real estate sector. Blockchain is a distributed database where information is stored in immutable "blocks." It ensures transaction security and data transparency while AI analyzes these data points to derive actionable insights. In practice, this means that ownership histories, all transactions, and property modifications are recorded in an unalterable format, with AI aiding in interpreting these records and informing decision-making processes.

AI has the potential to bring significant value to the real estate sector—estimated between $110 billion and $180 billion by experts at McKinsey & Company.

Key development directions over the coming years include:

  • Autonomous negotiation systems: AI agents equipped with game theory strategies capable of conducting complex negotiations.
  • AI in urban planning: Algorithms designed to plan city development and optimize spatial allocation.
  • Property tokenization: Leveraging blockchain technology to divide properties into digital tokens that enable fractional investment opportunities.

Conclusion

For companies today, the question is no longer "if" but "how" to implement AI to maximize benefits and enhance competitiveness. A strategic approach begins with identifying specific business challenges followed by selecting appropriate technologies.

What values could AI potentially bring to your organization?
  • Reduction of operational costs through automation
  • Enhanced customer experience and shorter transaction times
  • Increased accuracy in forecasts and valuations, minimizing business risks
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Want to implement AI in your real estate business?

Nextrope specializes in implementing AI and blockchain solutions tailored to specific business needs. Our expertise allows us to:

  • Create intelligent chatbots that serve customers 24/7
  • Implement analytical systems for property valuation
  • Build secure blockchain solutions for real estate transactions
Schedule a free consultation

Or check out other articles from the "AI in Business" series

AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

Gracjan Prusik

11 Mar 2025
AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

AI Revolution in the Frontend Developer's Workshop

In today's world, programming without AI support means giving up a powerful tool that radically increases a developer's productivity and efficiency. For the modern developer, AI in frontend automation is not just a curiosity, but a key tool that enhances productivity. From automatically generating components, to refactoring, and testing – AI tools are fundamentally changing our daily work, allowing us to focus on the creative aspects of programming instead of the tedious task of writing repetitive code. In this article, I will show how these tools are most commonly used to work faster, smarter, and with greater satisfaction.

This post kicks off a series dedicated to the use of AI in frontend automation, where we will analyze and discuss specific tools, techniques, and practical use cases of AI that help developers in their everyday tasks.

AI in Frontend Automation – How It Helps with Code Refactoring

One of the most common uses of AI is improving code quality and finding errors. These tools can analyze code and suggest optimizations. As a result, we will be able to write code much faster and significantly reduce the risk of human error.

How AI Saves Us from Frustrating Bugs

Imagine this situation: you spend hours debugging an application, not understanding why data isn't being fetched. Everything seems correct, the syntax is fine, yet something isn't working. Often, the problem lies in small details that are hard to catch when reviewing the code.

Let’s take a look at an example:

function fetchData() {
    fetch("htts://jsonplaceholder.typicode.com/posts")
      .then((response) => response.json())
      .then((data) => console.log(data))
      .catch((error) => console.error(error));
}

At first glance, the code looks correct. However, upon running it, no data is retrieved. Why? There’s a typo in the URL – "htts" instead of "https." This is a classic example of an error that could cost a developer hours of frustrating debugging.

When we ask AI to refactor this code, not only will we receive a more readable version using newer patterns (async/await), but also – and most importantly – AI will automatically detect and fix the typo in the URL:

async function fetchPosts() {
    try {
      const response = await fetch(
        "https://jsonplaceholder.typicode.com/posts"
      );
      const data = await response.json();
      console.log(data);
    } catch (error) {
      console.error(error);
    }
}

How AI in Frontend Automation Speeds Up UI Creation

One of the most obvious applications of AI in frontend development is generating UI components. Tools like GitHub Copilot, ChatGPT, or Claude can generate component code based on a short description or an image provided to them.

With these tools, we can create complex user interfaces in just a few seconds. Generating a complete, functional UI component often takes less than a minute. Furthermore, the generated code is typically error-free, includes appropriate animations, and is fully responsive, adapting to different screen sizes. It is important to describe exactly what we expect.

Here’s a view generated by Claude after entering the request: “Based on the loaded data, display posts. The page should be responsive. The main colors are: #CCFF89, #151515, and #E4E4E4.”

Generated posts view

AI in Code Analysis and Understanding

AI can analyze existing code and help understand it, which is particularly useful in large, complex projects or code written by someone else.

Example: Generating a summary of a function's behavior

Let’s assume we have a function for processing user data, the workings of which we don’t understand at first glance. AI can analyze the code and generate a readable explanation:

function processUserData(users) {
  return users
    .filter(user => user.isActive) // Checks the `isActive` value for each user and keeps only the objects where `isActive` is true
    .map(user => ({ 
      id: user.id, // Retrieves the `id` value from each user object
      name: `${user.firstName} ${user.lastName}`, // Creates a new string by combining `firstName` and `lastName`
      email: user.email.toLowerCase(), // Converts the email address to lowercase
    }));
}

In this case, AI not only summarizes the code's functionality but also breaks down individual operations into easier-to-understand segments.

AI in Frontend Automation – Translations and Error Detection

Every frontend developer knows that programming isn’t just about creatively building interfaces—it also involves many repetitive, tedious tasks. One of these is implementing translations for multilingual applications (i18n). Adding translations for each key in JSON files and then verifying them can be time-consuming and error-prone.

However, AI can significantly speed up this process. Using ChatGPT, DeepSeek, or Claude allows for automatic generation of translations for the user interface, as well as detecting linguistic and stylistic errors.

Example:

We have a translation file in JSON format:

{
  "welcome_message": "Welcome to our application!",
  "logout_button": "Log out",
  "error_message": "Something went wrong. Please try again later."
}

AI can automatically generate its Polish version:

{
  "welcome_message": "Witaj w naszej aplikacji!",
  "logout_button": "Wyloguj się",
  "error_message": "Coś poszło nie tak. Spróbuj ponownie później."
}

Moreover, AI can detect spelling errors or inconsistencies in translations. For example, if one part of the application uses "Log out" and another says "Exit," AI can suggest unifying the terminology.

This type of automation not only saves time but also minimizes the risk of human errors. And this is just one example – AI also assists in generating documentation, writing tests, and optimizing performance, which we will discuss in upcoming articles.

Summary

Artificial intelligence is transforming the way frontend developers work daily. From generating components and refactoring code to detecting errors, automating testing, and documentation—AI significantly accelerates and streamlines the development process. Without these tools, we would lose a lot of valuable time, which we certainly want to avoid.

In the next parts of this series, we will cover topics such as:

Stay tuned to keep up with the latest insights!