Tokenomics, also known as Token Economics, is the study of parameters that determine the characteristics of cryptocurrencies (cryptos) or cryptographic tokens to create economic value. Both cryptocurrency and token are the subclasses of digital assets that use the technology of cryptography. Crypto is the native currency of a blockchain, and it is developed directly by the blockchain protocol. Tokens are created through a blockchain-based organization or application. For example, Ether (ETH) is the native crypto of Ethereum, while Axie Infinity Shards (AXS), the governance tokens of game Axie Infinity, lives on Ethereum, and users can use them to play game. In both cases, tokenomics acts as the incentives mechanism and monetary policy of the supply and demand of certain crypto or token. Tokenomics rules how and when a new crypto or token should be generated or removed from the system. Once the tokenomics is written into a smart contract, the system is automated.
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