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    Tokenomics

    Tokenomics (“token economics”) refers to the design of a cryptocurrency that encompasses aspects like supply, allocation, and utility.

    Geoffrey Lyons

    By Geoffrey Lyons

    Published on Aug 2, 2024

    Last modified on Feb 26, 2026

    Tokenomics (“token economics”) refers to the design of a cryptocurrency that encompasses aspects like supply, allocation, and utility. 

    There are tens of thousands of cryptocurrencies and they all work in different ways. Bitcoin has a fixed supply of 21 million whereas Ethereum has no supply cap. Solana allows token holders to nominate validators (those who verify transactions), whereas many cryptocurrencies don’t even have validators.

    Broadly speaking, these cryptocurrencies have different tokenomics. 

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    Whitepapers

    Usually a cryptocurrency’s tokenomics are laid out in a blockchain’s whitepaper, a short document that outlines the project’s:

    Vision

    The ultimate aim of the project

    Technical details 

    How things will work under the hood

    Early sale info

    How tokens will be distributed

    Some whitepapers just focus on one of these elements. Solana’s whitepaper, for example, focuses mainly on the project’s technical details.

    Comparing tokenomics

    Supply (amount of tokens)

    Bitcoin
    Max supply 21M

    Ethereum
    No supply cap

    Solana
    No supply cap

    Utility (a token’s primary use cases)

    Bitcoin
    P2P exchange

    Ethereum
    P2P exchange, pays network transaction fees

    Solana
    P2P exchange, pays network transaction fees

    Burning (removing tokens from circulation) 

    Bitcoin
    No tokens burned

    Ethereum
    Small amount burned every transaction

    Solana
    50% of each transaction fee burned 

    Allocation (how tokens are distributed at launch)

    Bitcoin
    Only obtainable through mining or P2P exchange

    Ethereum
    Crowdsale (83%), early contributors (8.5%), and Ethereum Foundation (8.5%)

    Solana
    Team, foundation, and community reserve (63%), four private sales (35.4%), one public sale (1.6%)

    Staking (locking tokens to support network operations)

    Bitcoin
    Cannot be staked

    Ethereum
    Staked to secure the network

    Solana
    Staked to secure the network

    Governance (power of token holders to govern blockchain)

    Bitcoin
    Fully decentralized, so changes happen only if vast majority of participants agree

    Ethereum
    Governance happens off-chain by a variety of stakeholders

    Solana
    Governance happens on-chain through community of validators

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