The Main Aspects That Projects Fail To Recognise, But That Affect The Token Price
When entering the cryptocurrency market, businesses oftentimes focus on very near-term prospects, preferring quick returns to long-term support. However, the low-hanging fruit does not always turn out to be ripe.
In this case, issuing project tokens can quickly turn from a financially promising venture into a loss-making one.
We continue speaking about the aspects you need to pay close attention to if you want to successfully launch your token. This time, we will drill down on advisory, token strategy, and tokenomics.
Launching a token is an important and lengthy process that requires a deliberate approach and careful preparation.
Focusing on the concept of locked tokens, you need to consider critical factors such as total token capitalization and the token’s unlock period (i.e. the timeframe in which the token will inflate the market).
By setting a short unlock period, you run the risk of undermining the token price. This in turn will lead to selling pressure and the subsequent negative token price dynamics.
Furthermore, the resulting token price can be affected by uncontrolled airdrops (free distribution of tokens to investors’ wallets) and payments made in project tokens to key opinion leaders and marketing agencies.
Such uncontrolled, and in most cases unjustified, release of tokens into the market will lead to an even greater decline in the token price in the short term and an increase in the overall cost of maintaining the price in the long run.
In the pursuit of quick profits, projects may also face the fact that followers interested in the success of the project may not comprehend all the benefits of the token at a certain point in time and, as a result, drive down its price through mass sales.
Therefore, the work of communicating the token value should be done on a daily basis.
The day-to-day grind should also be done with key supporters. Rather than trying to attract contributors with quick unlocks, it’s worth doing your best to retain the part of the audience that holds the majority of tokens.
Try to develop a reward system that incentivizes them to stay token holders for a longer period, rather than selling them at the first practicable opportunity.
By ramping up the encouraging quotient in your offers to loyal followers, you are instilling values that your contributors will embrace. Ultimately, it is this part of the community that will directly influence the future price of the token.
In terms of tokenomics, it is important to take into account the proportion of tokens you expect to use as rewards for winning draws and other promotional programs. Too many, as well as the amount of rewards allocated to these tasks, will also have an impact on token pricing.
Kaizen’s unique approach to locked tokens allows you to build long-term and transparent relationships with investors by focusing on the sustainable growth of a project’s token price.
And Kaizen’s token development strategy and token price management consulting services can help you design a well-balanced tokenomics that addresses the interests of projects, venture capitalists, and retail investors.