πUnstable Uses of Tokens
Why crypto prices and dex/yield farm tokens are so unstable:
DeFi has used tokenomics on DLT with little economic efficiency and less real-use viability.
1) βEmissionsβ are only rewards if tokens have value, digital assets are βetherealβ and do not require physical work (or mining) beyond what a developer requires. However, the principle of supply and demand is real.
2) Halving-supplying events are unstable & unnecessary, causing valuation-system shocks that encourage and discourage group demand with no underlying reason beyond multipliers.
3) Extreme supply amounts that do not reflect potential token holders are unstable and fuel higher or lower demand by creating misperceptions of value.
4) Rewards provided for unnecessary technical prerequisites (i.e. computational mining) and/or usage (gas) fees, inhibit DLT growth and misallocate real resources.
5) A schedule of reward distribution set beyond several weeks cannot take into account the future.
6) Algorithmic determinations of the future probability of an outcome occurring in socio-political economics are not developed enough to exceed the collective cognition of an educated collective of people.
7) Reward for participation is real, and must align with growth and equitably compensate participants for their contributions.
A DeFi-DAO tokenomics system must ensure that the objectives are achievable, and by design the system will automatically achieve its goals.
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