Cryptocurrency Projects fail for different reasons from fraud founders to poor marketing, and more often than not, poor token economics (Usually to save a few bucks trying to DIY but put the project at risk, Fair deal I suppose?)
Mistakes that I’ve seen while Auditing Tokenomics –
1️⃣ Poor Vesting Schedules: Too Fast or Too Slow, The balance is your friend because a bad vesting schedule leads to uncontrollable sell pressure or a liquidity crunch
🚨 Too fast = Early investors & team members dump tokens immediately, crashing the price.
🚨 Too slow = Market lacks liquidity, scaring off new investors.
2️⃣ High Token Prices at Launch + no Market-Making Funds is a recipe for selling pressure, snipers, and poor liquidity. Many projects overprice their tokens during launch but fail to allocate funds for market-making.
🚨 No liquidity = No price stability. Even if demand exists, without liquidity, price fluctuations become extreme.
3️⃣ No Real Incentives for Users to Stay 🎯, You’re Marketing gimmicks and KOL hype can only attract users temporarily. But if there’s no reason to keep using the token, demand dies quickly.
🚨 Example: Many casino tokens fail because they don’t gamify the experience even though the whole point of a casino is gamification like that is your underlying business (Casino = Gamification) Whereas Rollbit succeeded because users buy the token to engage with the platform.
4️⃣ Lack of Usability: “A Token Without Purpose has no lifecycle” — If your token has no real function, it’s like handing out free coupons for a trip to Venus -exciting, but worthless (96.5% Carbon dioxide, as bad as 90% Token holding by the founder in 20 different wallets with cool names)
🚨 Example: Projects that create native tokens without any use case beyond trading often fade into irrelevance.
5️⃣ Team Holding More Than 20% Without a Clear Roadmap
🚨 Over-concentrated supply in the hands of the team or investors raises red flags. If there’s no vesting schedule or transparency, it signals a potential exit scam. You’ll see the “We were hacked” Tweet soon after they rug you!
Tokenomics = Long-Term Success
Tokenomics isn’t just about supply mechanics — it’s about building a sustainable ecosystem. If the crypto project lacks liquidity, incentives, usability, or proper vesting, failure is inevitable.