Thread by @LadyofCrypto1

1/ Let's dive deeper into the distribution and vesting side of #Tokenomics

My three rules:

1. The fewer tokens sold presale, the better.
2. The longer the vesting the better.
3. The fewer tokens sold to VCs the better.

Read prev thread first

https://twitter.com/LadyofCrypto1/status/1467518754452090881

2/ -- PRESALE TOKENS SOLD --
The fewer tokens sold presale, the better. I prefer to see 20% or under, but I am willing to accept up to 30% if vesting is good.

If a project has less than 10% sold presale it's usually a very good sign.

3/ -- LONG VESTING --
Long vesting means that presale tokens get released slowly. I like to see at least 12 months of vesting. I also like to see a cliff of a few months. For a breakdown on vesting and cliffs read my first tokenomics thread.

https://twitter.com/LadyofCrypto1/status/1467518754452090881

4/ -- WHATS A VC --
VCs are small to large groups of people who pool money together until they have 100k+ and then approach projects offering the 100k in exchange for cheap tokens at presale prices.

It's rare for a project to not sell to VCs, but if it doesn't, BONUS!

5/ -- TOKEN RELEASES --
Sometimes short vesting periods aren't bad if the number of tokens sold presale are low. If a project sells 20% of tokens presale with 18 months vesting, then 1.11% of tokens will be released per month

If it's 5% sold with 6 months vesting, it's 0.83% pm

6/ -- TOKEN RELEASES cont--
So it's always good to calculate how many tokens are going to be released each month because short vesting periods can look worse than they actually are.

7/ -- GOOD TOKENOMICS eg --
Here is an example projects tokenomics:
IDO: 5% with 10% (0.5% of total) released at TGE and 15% (0.75% of total) over 6 months.

SEED: 2% with 10% (0.2% of total) released at TGE and 15% (0.3% of total) over 6 months.

In total 1.05% pm for 6 months.

8/ -- % OF CIRCULATING --
Now that we know % of total supply (1.05%) it can be helpful to know the % of the currently circulating supply.

If the circulating supply is 100 mill tokens and 1.05% of the total 1 bill supply is 10.5m tokens. We can easily calculate % of circ supply.

9/ -- % OF CIRCULATING cont --
To calculate the number of tokens added to the circulating supply in the first month, you would divide the tokens being released by the current supply and multiply by 100 to get a %

(10500000 / 100000000) * 100 = 10.05%

10/ -- % OF CIRCULATING cont --
In the first month, the token supply will increase by 10.5%. This sounds like a big increase in one month, but it's not uncommon.

What happens with that 10.5% is also important. Will it be dumped by presale buyers, or will they hold?

11/ -- HOLDER MOTIVATION --
You should always consider the motivation of holders. If holders are huge VC groups, they're likely to sell for quick profits. If a project has few or no VC groups, a long term mindset is more likely.

12/ -- HOLDER MOTIVATION cont --
Staking returns are also a huge motivator. If a project offers a large APY for staking, there is an incentive for holders to stay in. Since they know that price can remain stable or dip, and they will still make profit from holding.

13/ -- HOLDER MOTIVATION cont --
Another important consideration is how much the presale buyer is up. Usually, you can find this info in the project's whitepaper.

For example, if they are up 100x, they are likely to dump. If they are up 10x they might not be as inclined.

14/ -- HOLDER MOTIVATION cont --
Generally, the more presale holders are up, the more they are likely to dump. 20x is borderline okay, but anything over 20x, and you will generally see big sell-off from holders once tokens are unlocked

15/ -- CONCLUSION --
When looking at tokenomics you need to look at the whole picture. Long vesting is good but sometimes if presales are low, short vesting is acceptable. Conversely, a lot of tokens sold presale under several years vesting can also be okay.