Token economics refers to the study of how tokens function within a blockchain ecosystem, determining their value, utility, and overall economic model. It encompasses the incentives that drive user behavior, the distribution of tokens, and mechanisms for creating demand and value.Tokens can serve various purposes, such as currency, utility, or governance. Utility tokens provide access to specific features or services within a platform, while governance tokens allow holders to influence decisions regarding the project’s future.The supply of tokens plays a crucial role in their perceived value. Concepts like scarcity and inflation directly impact market dynamics. For example, a capped supply can create demand, while inflationary practices might diminish value over time.Understanding token economics helps users and investors make informed decisions about participating in a project. Clarity in distribution models, use cases, and incentives can signal a project’s potential for growth and sustainability.