Tokenomics is a way of looking at the cost-benefit value of various projects and how to get the best results for your business, which also happen to be in alignment with blockchain technology. Developers in particular should pay more attention to these than most other industries for defi promotion, as there’s a near-limitless number of cases that can be optimized given ICO funding.
However, despite the overwhelming abundance of animal tokens and high-profile advertisers like Nike who have opted in on advertising campaigns involving blockchain tokens, there is still no clear guide for token marketing. From my personal experience I volunteered around 30 hours worth of time into the Stellar Lumens project with no financial incentives.
1. Save Your Tokens
While it’s important to spread the word about your ICO, be especially careful when it comes to using your ICO tokens. You might believe that giving out a small number of tokens to each person you talk to will encourage their participation, but this is simply not true. In my experience I was able to get multiple businesses onboard with Stellar Lumens without any considerable cost – and then I spent $200 in XLM that I didn’t have for an event sponsorship which yielded no results.
2. Never Use Pre-Activated Tokens
If the token is pre-activated, you can’t use it for your own ICO marketing. For example, some might say that you can use pre-activated Stellar Lumens for your own ICO marketing. This is not true! If you do this and then use the XLM to buy a Tesla for yourself, you will forever lose the ability to make any money off of your ICO. You also run into several risks here as well. First of all it technically means that there’s a “frozen” amount of Lumens out there on the market. TechCrunch wrote a great article on this in early 2017 when this first happened. So this will affect the supply of XLM in the future, which is a bad thing. The frozen funds also can be used by any group of people to buy assets on the open market. This means that no one party can control or manipulate the supply of Lumens in the future, which is a problem. Click here.
But this doesn’t stop tech companies from buying $30M worth of tokens for their ICOs! This is where I started to realize that a lot of ICO marketing was not using tokenomics at all. It was just throwing cash up in the air to hit a target. Only a few ICOs are starting to think about this way before sending out their tokens. But in the end, unfortunately for them, it won’t make any difference with the token value or the ICO marketing strategy itself.
3. Think About Your ROI Before You Buy
I spent many hours researching different ways to promote Stellar Lumens because I believed it to be an amazing project that could change everything for outreach. I found many of the ways to do this. The best, in my opinion, was simply talking to people about what Stellar Lumens is and why it’s the future of the global economy. So, I spent a few hours a day at Starbucks telling people what Stellar Lumens is and how it can change their lives. This was shocking to me because I am not at all a social person who likes to talk. Not only did I find that this method worked well for getting businesses onboard, but it also helped me gain confidence in myself to continue being more social and outgoing in everyday life.
4. Be Inclusive
One of the biggest mistakes I made after I had been promoting the Stellar Lumens project for a few days was to be exclusive and put up a wall between myself and other people. This way of doing things obviously didn’t work and is an example of not putting your own money in on other projects you believe in. It sounds extreme, but it’s true – my own projects in general were heavily influenced by how many tokens could be exchanged for other assets. I simply wanted more assets to buy more stuff with. This is not a sustainable system that will survive long term – companies like Facebook, Google, and Apple have shown us this for years now.
5. Be Informed Before You Tell Others
Since tokenomics or Bitcoin is a relatively new way of doing business, we don’t really know all of the repercussions that could happen if, for example, an exchange decides to burn all XLM they get their hands on. While I do believe that this would hurt the adoption of XLM in the short term and make it difficult for anyone to spend them, in the long term Stellar could easily buy back their tokens and create a more stable market.
6. Do Not Invest In Other Projects
This is a big one. One of the biggest mistakes I’ve made in my life was to believe that investing in other projects and helping them raise money would be a good idea if it meant that Stellar Lumens could get more attention, business partnerships, or even money itself. While this is sometimes true, it’s also important to understand that other people will take your tokens and do whatever they want with them. So before investing in someone else’s project you should think about what their situation is and your position within it long term.