Every token project has a tokenomics page. Most investors don't read it. Those who do rarely understand it.This is your edge. Learning to read tokenomics separates informed investors from exit liquidity. For an even deeper dive, see our guide on reading tokenomics like a VC.Here's what to look for.
Red Flag #1: Team Owns Too MuchIf team/founders own 30%+ of supply, be cautious.Why it matters:Massive sell pressure when they unlockIncentive misalignment - they can dump on communityControl concentration undermines decentralizationGreen light: Team owns 10-20% with 3-4 year vesting.
Red Flag #2: Short or No VestingIf insider tokens are unlocked or vest quickly, expect dumps.Why it matters:Early investors want profits, not long-term holdingUnlocked tokens = immediate sell pressureShort vesting (6-12 months) suggests quick exit mentalityGreen light: 2-4 year vesting with 6-12 month cliff. Aligned with project timeline.
Red Flag #3: High InflationIf new tokens are minted faster than demand grows, price goes down.Watch for:"Staking rewards" that are just printing new tokensNo caps on total supplyEmission schedules that accelerateGreen light: Fixed supply or declining emissions. Burns tied to revenue. Deflationary mechanics.
Red Flag #4: Unclear UtilityIf you can't explain what the token does in one sentence, neither can the team. We dive into why this matters in why 99% of tokens have no real utility.Vague utility language:"Governance" without meaningful governance"Ecosystem token" without ecosystem"Utility token" without specific utilityGreen light: Clear, specific utility. "Hold to access X." "Stake to earn from Y."
Green Light PatternsPositive signals to look for:Revenue-Tied ValueToken value connected to actual protocol revenue through burns, buybacks, or distributions.Required UtilityUsers MUST hold token to use the platform. Creates constant demand.Long-Term AlignmentTeam has long vesting, community owns majority, incentives align with holders.Transparent MetricsOn-chain data, published revenue, clear allocation breakdowns. Nothing hidden.
$IPO Tokenomics ReviewApplying these frameworks to $IPO:Team allocation: Within reasonable range with vestingUtility: Clear - hold for access to dealsValue accrual: Platform fees support token through staking rewardsSupply: Fixed supply with no inflationary emissionsDoes it pass all tests perfectly? No tokenomics is perfect. But it avoids major red flags and has clear green lights.Related: What is Tokenomics? | Vesting Explained
Why This Matters for YouMost retail investors skip the tokenomics page. They look at the logo, check if the price is going up, and buy. This is exactly what projects with bad tokenomics want - uninformed buyers who become exit liquidity.By spending 15 minutes reading tokenomics documents and applying these red flag/green light frameworks, you immediately move into the top 10% of informed crypto investors. It's not complicated - it just requires actually doing the work.Consider it free alpha: the information is public, the frameworks are simple, and most people won't bother.
The Bottom LineTokenomics isn't sexy, but it's the difference between investing and gambling. Before your next token purchase, spend 15 minutes checking: team allocation, vesting schedules, inflation mechanics, and utility clarity.If you can't find this information - that's the biggest red flag of all. Projects with nothing to hide make their tokenomics transparent. See IPO Genie's tokenomics here as an example of what transparency looks like.
Frequently Asked QuestionsQ: Where do I find tokenomics information?Whitepapers, official docs, and token unlock trackers (Token Unlocks, CoinGecko). Always verify with multiple sources.Q: Can bad tokenomics be fixed?Sometimes, but rarely. Projects occasionally do token migrations or buybacks, but it's risky to invest hoping for future fixes.Q: What's the most important red flag?Short vesting. If insiders can dump in months, they probably will - especially after a pump.Q: Should tokenomics be my only consideration?No - team quality, product-market fit, and market conditions all matter. But bad tokenomics can doom even great projects. It's a necessary but not sufficient condition for success.
