SuperEx Educational Series: Tokenomics — Why Do 90% of Projects Die at the Token Design Stage?

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#Tokenomics #Token

In the crypto world, there is a saying: “Technology determines the lower bound, while the economic model determines the upper bound.” But the more brutal truth is this: a flawed economic model can sentence a project to death outright.

In this article, we are not going to explain “textbook tokenomics,” nor are we going to copy whitepaper templates. Instead, from the perspectives of real market behavior, capital dynamics, and human incentives, we will fully deconstruct one question: what kind of economic model can truly allow a project to survive?

 

Why the Economic Model Is the “First Principle” of Crypto Projects

Many people understand blockchain projects as combinations of:

• technological innovation
• consensus mechanisms
• TPS, concurrency, modularity
• narratives, roadmaps, and visions

These views are not wrong, but they are incomplete. The market has repeatedly proven one thing: technology can iterate over time, but once the economic model is wrong, the project will not survive long enough to benefit from that iteration.

A brutal comparison from reality:

• average technology + strong economic model → survives, and may even outperform
• advanced technology + broken economic model → collapses rapidly

There is only one reason: the economic model determines why money stays.

What Is the Economic Model Actually Modeling?

Many whitepapers state that “the token is a value-capture tool for the network.” This sounds sophisticated, but it is not practical.

A more realistic definition is: the economic model is a system of incentives and constraints governing the behavior of three groups:

• users
• capital
• builders (developers)

If you remember these three roles, you already understand more than 80% of project teams.

These three groups form the foundation of any crypto ecosystem, and their behavior directly determines whether a project lives or dies.

The essence of an economic model is to design a set of rules that allow these three groups to form a dynamically balanced community of shared interests, rather than becoming participants in a zero-sum game.

• users are the ultimate expression of network value; without real users, a project is nothing more than an illusion
• capital is the blood of the system; inflows and outflows represent continuous market voting on value
• builders are the engine of the ecosystem; sustained innovation and long-term commitment drive evolution

A qualified economic model must clearly answer:

• why users are willing to join and continue participating
• why capital is willing to stay long term instead of leaving after short-term speculation
• why builders are properly compensated to continue building

Are incentives fair? Are they sustainable? Are constraints effective in preventing malicious behavior? If these questions are not answered properly, no amount of advanced technology or grand vision can prevent a project from peaking early and fading quickly.

Ultimately, every technological system is driven by people, and human behavior is largely shaped by economic incentives and constraints. Designing an economic model that aligns these behaviors toward long-term collaboration is the true first principle of crypto projects.

The Core Structure of a Healthy Economic Model: Three Layers

Layer One: Behavioral Motivation

• why do users come?
• why do they use the product after arriving?
• why do they stay instead of leaving?

Not because of lofty visions, but because:

• they can earn value
• they can save costs
• real problems are being solved

Layer Two: Capital Circulation

• where does money come from?
• how does money move within the system?
• where does money ultimately flow?

If your model is “new users pay old users,” then structurally it resembles a financial pyramid.

Layer Three: Value Accumulation

All successful projects share one trait: irreversible value accumulation mechanisms, such as:

• fee burning
• long-term lockups
• rights binding
• governance thresholds

The Most Common “Failure-Type” Economic Models

Let’s first define what not to do.

1. High APR With No Real Demand

Typical characteristics:

• annualized returns of 200% or 500%
• unclear revenue sources
• no real business cash flow

At its core, this model has only one truth: profits come from other participants’ losses. Such models only benefit early yield farmers and short-term speculators. For the project itself, it is slow self-destruction.

2. Tokens With No Core Utility, Only “Future Imagination”

Common descriptions include:

• governance usage
• ecosystem incentives
• future expansion

Translated plainly: the token has no real use now, but may have use later. The market no longer accepts this logic.

3. Team Unlock Schedules That Ignore Project Growth

This became a dominant issue in 2024–2025. Tokens begin linear unlocking before real usage appears, while market liquidity is insufficient to absorb supply. Every price increase becomes an opportunity for internal selling.

What Does a Truly Excellent Economic Model Look Like?

In a strong economic model, the team’s token release schedule is tightly bound to actual project growth, creating a positive cycle: the better the project performs, the more reasonable compensation the team receives.

Team token releases are tied to measurable milestones such as user growth thresholds, product breakthroughs, ecosystem expansion, or real revenue performance. This forces teams to focus on long-term value creation rather than early liquidation.

For example, token unlocks may only occur after daily active users reach specific benchmarks or after decentralized applications exceed defined transaction volumes.

Such mechanisms protect early investors and community members, reduce unnecessary selling pressure, and signal long-term commitment to the market.

More mature projects also introduce post-unlock linear release or staged vesting, ensuring tokens do not flood the market all at once. This smooths supply pressure and maintains market stability.

Common Traits of Strong Economic Models

1. Tokens Are Embedded in Core Actions

A simple test: if the token is removed, can the protocol still function?

• if yes, the token is redundant
• if no, the token is essential

2. Revenue Comes From Real Usage, Not Inflation

Successful models rely on:

• transaction fees
• service fees
• interest spreads
• enterprise payments

Not on:

• unlimited issuance
• mining subsidies
• inflation-driven TVL

3. Incentives Are Phased, Not Permanent

A mature model evolves:

• early stage: tokens exchange for growth
• middle stage: cash flow supports retention
• later stage: governance stabilizes the system

Subsidies are accelerators, not permanent engines.

Economic Models Differ by Sector

DeFi

Core focus:

• capital efficiency
• risk pricing
• incentive boundaries

Failure often comes from confusing subsidies with revenue.

Public Chains, Layer 1, Layer 2

Core focus:

• gas models
• developer incentives
• long-term security budgets

The key question remains: who pays for security?

Stablecoins and Payments

Core focus:

• scale
• compliance
• interest margins

Growth here comes from gradually absorbing real-world financial value, not price explosions.

AI and Web3

High risk, high potential:

• failed models treat tokens as decorative elements
• successful models bind tokens to computation, access, payments, and permissions

Why Strong Economic Models Often Look Unexciting

Because they tend to:

• grow slowly in early stages
• avoid exaggerated narratives
• produce smooth return curves

But they also tend to:

• survive longer
• endure market cycles
• expand significantly in later bull markets

Markets chase stories first and reward profitability last.

Special Warning for AI and Web3

When tokens are reduced to marketing tools or speculative symbols instead of being integrated into AI workflows, sustainability is lost.

Truly disruptive models use tokens as:

• bridges between compute supply and demand
• access credentials for AI models
• mediums of value exchange
• carriers of governance rights

Only by embedding token economics into every critical process can an AI and Web3 ecosystem achieve durable success.

Economic Models Are Not Math Problems, but Human Games

This is the most important point: economic models are not formulas, but reflections of human behavior.

• will people sell?
• will they stay?
• will they speculate?
• will they betray the system?

A mature economic model assumes people are self-interested, short-sighted, and profit-driven.

A Five-Question Checklist for Investors

Before investing in any project, ask:

• what is the token’s primary function?
• where does revenue come from, and is it self-sustaining?
• how long can the system survive without new users?
• does team unlocking precede real growth?
• does the model reward usage or speculation?

If these questions cannot be answered, you are not investing in a project, but in sentiment.

Conclusion: Economic Models Decide Who Survives

Bull markets reward narratives. Bear markets leave only cash flow.

Projects that endure cycles are those with economic models that are restrained, disciplined, counterintuitive, and grounded in reality.

The goal of the SuperEx educational series has never been to tell you what to buy, but to help you understand: why some projects are structurally built to survive longer.