Tokenomics is the study of how cryptocurrencies work within the broader ecosystem. This includes such things like token distribution as well as how they can be used to incentivize positive behavior in the network. A healthy tokenomic environment is crucial for a blockchain-oriented project to succeed.
How is the price of a Talent Token determined?
The price of a Talent Token is algorithmically determined by a Token Bonding Curve (TBC) based on the current supply of that coin, and the current market price of $TAL.
The fewer coins exist in circulation (supply), the less $TAL is required to mint a new coin (price). By contrast, the more coins exist, the more $TAL is needed to mint a new coin.
A TBC provides continuous liquidity for swaps between any Talent Token and $TAL, which means prices are predictable, and you can trade large volumes without significant price impact.
In practice, the TBC is a smart contract for each Talent Token that acts as an Automated Market Maker (AMM) providing a counterparty to anyone interested in buying or selling a Talent Token.
This AMM’s behavior is governed by a pricing curve that establishes a functional relationship between the supply of a Talent Tokens and its current price.
Buying: the money (fiat or crypto) the sponsor uses to buy Talent Tokens is automatically converted to $TAL and gets “locked” in the talent’s smart contract in exchange for the coins, while pushing the price up.
Selling: burns Talent Tokens while pushing the price down and unlocking $TAL from the talent's profile.
Pricing Curve: Coming Soon 🚧 (the curve function is the predefined rate at which Talent Tokenn price grows in relation to its supply; the curve should incentivize early investment without actively disincentivizing late investment).
Have questions or feedback? Join the Creator Coin conversation on Discord.
Do all Talent Tokens have the same fixed supply?
Yes. During Beta stage, all Talent Tokens minted by Talent Protocol will have the same fixed total supply and token bonding curve. This helps the overall user experience by facilitating Talent Tokens in price comparison.
How we control volatility and avoid bad actors?
Flow controls (or vesting) make sure that the talent’s incentives as a coin issuer are aligned with those of the sponsors that hold their Talent Tokens, over the long-term. It discourages pump & dump schemes.
And the Talent Reward - a small extra share of coins that is sent directly to the talent - disincentivizes market manipulation, and builds long-term commitment. We’re also considering a lag between the cash out order and the actual transaction.
Talent Tokens have a maximum amount an individual sponsor can buy to prevent whales and protect the talent from too much pressure from one single person. This also helps maximize participation and ensure balanced governance.
Talent Tokens are designed to constantly align the talent and sponsor incentives. We are using the private and public beta as a 'sandbox' to test and refine our economic design.