What is tokenomics?
Explanation
Tokenomics covers supply, distribution, incentives, and value accrual mechanisms that govern a token’s economy.
Which token type provides voting rights on protocol changes?
Explanation
Governance tokens (e.g., UNI, AAVE) enable decentralized decision-making via on-chain voting.
Bitcoin has a maximum supply of 21 million and halves issuance every ≈4 years. What supply model is this?
Explanation
Bitcoin uses a fixed hard cap with block-reward halving every 210,000 blocks, producing decreasing emission.
Which of these is a “token sink” that removes tokens from circulation?
Explanation
Fee burns permanently destroy tokens, reducing circulating supply (e.g., EIP-1559 base-fee burn on Ethereum).
A DeFi protocol distributes 30% of trading fees to token holders. This is an example of:
Explanation
Fee distribution shares protocol revenue directly with holders (e.g., GMX), creating a tangible cash-flow incentive.
Using MV=PQ: supply (M)=200M, velocity (V)=5, transaction volume (Q)=$400M/year. What is the implied token price?
Explanation
P = Q/(M × V) = \400M/(200M × 5) = $0.40$ per token.
A protocol introduces staking with 2-year lock-ups. This primarily affects which variable in MV=PQ?
Explanation
Staking locks reduce V because locked tokens cannot change hands, lowering velocity and supporting price.
Why does high token velocity suppress token price, all else equal?
Explanation
When tokens flow rapidly through the economy without being held, there is no scarcity premium; MV=PQ shows P falls as V rises.
An ERC-20 token has 40% team allocation with no cliff and no vesting. How many red flags from the 8-warning-sign checklist does this trigger?
Explanation
Two red flags: (1) insider allocation exceeds the 30% guideline; (2) no cliff or vesting period signals low commitment.
Ethereum became net deflationary after the Merge (Sept 2022). Which TWO mechanisms caused this?
Explanation
EIP-1559 burns the base fee; the Merge cut new issuance by ≈90%, so burns routinely exceed new supply.
A vesting schedule shows 0% unlocked for 12 months, then linear release to 100% at month 48. What is the cliff period?
Explanation
The cliff is the initial period where zero tokens unlock; here that is 12 months before linear vesting begins.
Solana’s token allocation was ≈48% insiders at launch. What risk does this create?
Explanation
48% insider ownership is well above the 20% team-allocation guideline, concentrating power and creating dump risk.
NVT Ratio = Market Cap ÷ Daily Transaction Volume. BTC market cap = $1.3T, daily tx volume = $15B. What is NVT?
Explanation
NVT = 1,300B / 15B ≈ 87. A high NVT suggests network value is driven by store-of-value, not throughput.
A token has Market Cap = $500M and Fully Diluted Valuation (FDV) = $2B. What does this gap indicate?
Explanation
FDV/MCap = 4× means only 25% of tokens circulate; as the remaining 75% vest, supply increases and can pressure price.
According to the Howey Test, which criterion asks whether profits depend on the work of a third party?
Explanation
The “efforts of others” prong separates passive investment (security) from active use (utility); it is often the decisive criterion for tokens.
BTC scores 1/4 on the Howey Test (only “expectation of profits”). Why is it NOT classified as a security?
Explanation
BTC is mined permissionlessly with no central promoter and no common enterprise; buyers do not rely on others’ ongoing efforts.
Compare MiCA (EU) and the SEC (US) approach to crypto regulation. What is the key difference?
Explanation
MiCA provides upfront legal clarity (full implementation Dec 2024); the SEC has historically defined crypto rules via lawsuits rather than rulemaking.
Terra/Luna lost ≈$40B in May 2022. What was the root cause?
Explanation
UST lost its $1 peg; the mint/burn mechanism flooded the market with LUNA to defend the peg, causing hyperinflationary collapse.
A new DeFi protocol proposes 50% team allocation, no vesting, and 200% APY staking rewards. Using the 6-Question Framework, what is your assessment?
Explanation
Three simultaneous red flags: insider share >30%, zero vesting signals, and yields >100% APY indicate a Ponzi-like reward structure.
Which combination of tokenomics features is MOST likely to be sustainable long-term?
Explanation
Sustainable tokenomics combine diversified value accrual, long-term commitment signals via vesting, fair distribution, and genuine on-chain utility.
Quiz Complete!
0
out of 20 correct