<s>
Tokenomics	B-Protocol
,	O
also	O
known	O
as	O
token	O
economics	O
,	O
is	O
an	O
emerging	O
field	O
concerned	O
with	O
the	O
economic	O
properties	O
of	O
agent-driven	O
systems	O
that	O
use	O
cryptographic	B-Protocol
tokens	I-Protocol
that	O
are	O
typically	O
created	O
and	O
managed	O
on	O
blockchain-based	O
distributed	O
ledgers	O
.	O
</s>
<s>
Crypto	O
is	O
the	O
native	O
currency	O
of	O
a	O
blockchain	B-Application
,	O
and	O
it	O
is	O
developed	O
directly	O
by	O
the	O
blockchain	B-Application
protocol	O
.	O
</s>
<s>
Tokens	O
are	O
created	O
through	O
a	O
blockchain-based	O
organization	O
or	O
application	O
.	O
</s>
<s>
For	O
example	O
,	O
Ether	B-Application
(	O
ETH	O
)	O
is	O
the	O
native	O
crypto	O
of	O
Ethereum	B-Application
,	O
while	O
Axie	B-Protocol
Infinity	I-Protocol
Shards	O
(	O
AXS	O
)	O
,	O
the	O
governance	O
tokens	O
of	O
the	O
game	O
Axie	B-Protocol
Infinity	I-Protocol
,	O
lives	O
on	O
Ethereum	B-Application
,	O
and	O
users	O
can	O
use	O
them	O
to	O
play	O
games	O
.	O
</s>
<s>
In	O
both	O
cases	O
,	O
tokenomics	B-Protocol
acts	O
as	O
an	O
incentive	O
mechanism	O
and	O
monetary	O
policy	O
of	O
the	O
supply	O
and	O
demand	O
of	O
certain	O
crypto	O
or	O
token	O
.	O
</s>
<s>
Tokenomics	B-Protocol
rules	O
how	O
and	O
when	O
a	O
new	O
crypto	O
or	O
token	O
should	O
be	O
generated	O
or	O
removed	O
from	O
the	O
system	O
.	O
</s>
<s>
Once	O
the	O
tokenomics	B-Protocol
is	O
written	O
into	O
a	O
smart	B-Application
contract	I-Application
,	O
the	O
system	O
is	O
automated	O
.	O
</s>
<s>
In	O
the	O
real-world	O
economics	O
system	O
,	O
the	O
economy	O
is	O
subject	O
to	O
fluctuations	O
like	O
inflation	O
and	O
deflation	B-Algorithm
.	O
</s>
<s>
Tokenonomics	O
can	O
be	O
thought	O
of	O
as	O
an	O
approach	O
to	O
implementing	O
monetary	O
policies	O
and	O
economic	O
rules	O
via	O
automated	O
smart	B-Application
contracts	I-Application
.	O
</s>
<s>
On	O
the	O
blockchain	B-Application
,	O
different	O
projects	O
may	O
issue	O
their	O
own	O
tokens	O
with	O
different	O
tokenomics	B-Protocol
to	O
complete	O
their	O
ecosystem	O
for	O
various	O
purposes	O
,	O
such	O
as	O
fundraising	O
and	O
governance	O
.	O
</s>
<s>
Some	O
common	O
tokenomics	B-Protocol
models	O
include	O
the	O
deflationary	O
model	O
,	O
inflationary	O
model	O
,	O
and	O
dual-token	O
model	O
.	O
</s>
<s>
For	O
instance	O
,	O
before	O
the	O
very	O
last	O
Bitcoin	B-Protocol
is	O
added	O
to	O
the	O
Bitcoin	B-Protocol
pool	O
,	O
it	O
is	O
inflationary	O
because	O
as	O
miners	O
(	O
people	O
who	O
find	O
Bitcoin	B-Protocol
by	O
using	O
algorithms	O
to	O
solve	O
mathematical	O
puzzles	O
)	O
keep	O
mining	O
Bitcoins	B-Protocol
,	O
the	O
amount	O
of	O
Bitcoins	B-Protocol
increases	O
and	O
the	O
purchasing	O
power	O
of	O
each	O
Bitcoin	B-Protocol
decrease	O
.	O
</s>
<s>
However	O
,	O
the	O
tokenomics	B-Protocol
of	O
Bitcoin	B-Protocol
has	O
multiple	O
mechanisms	O
to	O
lower	O
the	O
rate	O
of	O
inflation	O
,	O
such	O
as	O
making	O
mathematical	O
puzzles	O
harder	O
and	O
harder	O
to	O
solve	O
and	O
allowing	O
fewer	O
and	O
fewer	O
miners	O
to	O
receive	O
the	O
coin	O
.	O
</s>
<s>
To	O
achieve	O
the	O
purposes	O
and	O
function	O
of	O
the	O
tokens	O
created	O
,	O
a	O
fine	O
tokenomics	B-Protocol
structure	O
is	O
needed	O
.	O
</s>
<s>
In	O
the	O
decentralized	O
,	O
automated	O
world	O
,	O
with	O
lower	O
cost	O
,	O
tokens	O
can	O
be	O
created	O
by	O
anyone	O
,	O
with	O
fundamental	O
parameters	O
and	O
functions	O
described	O
by	O
tokenomics	B-Protocol
.	O
</s>
<s>
Instead	O
of	O
equities	O
,	O
blockchain	B-Application
companies	O
raise	O
funds	O
through	O
the	O
issuing	O
of	O
tokens	O
in	O
the	O
process	O
of	O
initial	B-Application
coin	I-Application
offerings	I-Application
.	O
</s>
<s>
The	O
security	O
tokens	O
can	O
be	O
thought	O
of	O
as	O
equity	O
shares	O
of	O
the	O
blockchain	B-Application
companies	O
.	O
</s>
<s>
For	O
example	O
,	O
with	O
a	O
token	O
named	O
Smooth	B-Protocol
Love	I-Protocol
Potion	I-Protocol
(	O
SLP	O
)	O
in	O
the	O
game	O
Axie	B-Protocol
Infinity	I-Protocol
,	O
players	O
can	O
use	O
it	O
to	O
breed	O
desired	O
spirits	O
.	O
</s>
<s>
Each	O
tokenomics	B-Protocol
model	O
has	O
its	O
disadvantages	O
and	O
advantages	O
.	O
</s>
