Tokenomics is the economics of a token: how many exist, who holds them, how many more are coming, and whether anything the project does sends value back to the people holding it. Most of the information you need is public. Most people skip it anyway, which is how "great project, terrible token" becomes a genre.
This guide walks through the five questions we ask on every Token Autopsy, in the order that matters.
1. How much supply exists, and how much is actually trading?
Start with three numbers:
- Circulating supply: tokens that are unlocked and can be traded today.
- Total supply: tokens that have been created, minus anything burned. Some of these are still locked.
- Max supply: the hard ceiling, if one exists. Some tokens have no cap and inflate forever.
The gap between circulating supply and max supply is the first thing to check. If 25% of the supply is circulating, the other 75% exists on paper and is waiting for its turn. That is not automatically bad. New projects almost always start with a small float. But it means today's price is set by a small slice of the eventual supply, and the rest of it will arrive over time.
2. Market cap vs. fully diluted valuation
Market cap is price multiplied by circulating supply. Fully diluted valuation (FDV) is price multiplied by max supply (or total supply when there is no cap).
If a token trades at $1 with 100 million circulating and 1 billion max supply, the market cap is $100 million and the FDV is $1 billion. The FDV is what the whole thing would be worth at today's price once every token exists. If you think the project is worth $100 million, ask yourself whether you also think it is worth $1 billion, because that is what the current price implies long term.
A low market cap with a huge FDV is the classic "low float, high FDV" setup. The price can look cheap on a chart while the fully diluted number is already pricing in years of success. Our dilution calculator does this math for you.
3. Who got the tokens, and when can they sell?
Every project publishes (or should publish) an allocation: what percentage went to the team, investors, the treasury, the community, ecosystem incentives and any public sale. Then look at the vesting schedule for each group:
- A cliff is a period where nothing unlocks. A 12-month cliff means insiders get zero tokens for a year, then a chunk at once.
- Linear vesting releases tokens gradually, often monthly, after the cliff.
Team and investor tokens usually come with a low cost basis. Early investors may have bought at a fraction of the public price. That does not mean they will all sell, but it means they can sell at a profit almost regardless of where the market goes. When team and investor allocations together approach half the supply, the unlock calendar deserves a permanent spot in your notes.
Our guide on how token unlocks affect price goes deeper here.
4. Where do new tokens come from?
Separate from vesting, many tokens have emissions: new tokens created and handed out as staking rewards, liquidity incentives, or validator payments. Emissions are inflation, whatever the dashboard calls them.
The useful question is simple: how many tokens enter circulation each year, and how many leave? Tokens leave through burns (sent to an address nobody controls) or are effectively removed through long-term locks. If issuance outpaces demand, holders get diluted, even if the staking APY looks generous. A 10% staking reward on a token inflating 10% a year mostly keeps stakers in the same place while non-stakers shrink.
5. Does the token capture any value?
This is the question most projects hope you never ask. A protocol can have millions in fees and the token can still receive none of it. Look for an actual mechanism that connects usage to the token:
- Fee sharing: a portion of protocol revenue goes to stakers.
- Buybacks: revenue buys tokens on the open market. Check whether those tokens are burned, held by a treasury, or redistributed, because each means something different.
- Required utility: the token must be spent or locked to use the product (for example, paying gas on its own chain).
- Governance only: the token lets you vote. This is the weakest form of value capture, and sometimes it is the only one.
Then check whether the mechanism is live, and who can turn it off. A buyback that governance can pause next quarter is a policy, not a property of the token. Several of our streams have come down to this exact point: the product works, the token's claim on it is thinner than the marketing suggests.
A five-minute checklist
Before you buy anything, write down:
- Circulating, total and max supply, and the ratio between them.
- Market cap and FDV.
- The allocation table and the next three unlock dates.
- Annual emissions and any burn mechanism.
- The specific route by which protocol activity reaches the token, and whether it is live.
If you cannot fill in all five from official docs and an on-chain source, that is information too.
Where to find the data
- The project's official docs or token page (allocation and vesting).
- A block explorer for the token contract (holders, burns, supply).
- Aggregators such as CoinGecko or CoinMarketCap for circulating supply, cross-checked against the docs, because they disagree more often than you'd hope.
- Unlock trackers for upcoming vesting events.
- Protocol revenue dashboards such as DefiLlama for fees and revenue.
The bottom line
Tokenomics will not tell you whether a price goes up next week. It will tell you who is likely to be selling, how much new supply is coming, and whether the project's success has any reason to show up in the token at all. That is most of the job.
Want to test yourself? Take the Crypto IQ quiz, or watch a full Token Autopsy on the videos page.
Educational content only. Not financial advice.