Tag: whitepaper

Tokenomics Explained: How to Analyze a Crypto Project Before Buying

Crypto tokenomics analysis illustration showing coin stacks, financial charts, and magnifying glass evaluating cryptocurrency supply and distribution

Most people who lose money in crypto do not lose it because they picked the wrong technology. They lose it because they ignored the economics. A project can have brilliant engineers, a real use case, and strong community backing — and still collapse if the underlying token model is broken.

That is what tokenomics is. It is the economic design of a crypto token: how it is created, distributed, used, and removed from circulation. Understanding it is one of the most practical skills any investor can develop before putting capital into a project.

What Tokenomics Actually Covers

The word combines “token” and “economics.” In practice, it refers to everything that governs a token’s supply and demand over time — total supply, how tokens are distributed, when they unlock, what utility they serve, and whether the model is sustainable or just designed to attract early buyers.

Every serious crypto project publishes this information in its whitepaper. The whitepaper database at AllCryptoWhitepapers covers over 3,900 projects, giving researchers direct access to the original documentation rather than relying on marketing summaries. Before you evaluate any token, start there.

Token Supply: The First Number to Check

There are three supply figures that matter. Total supply is the maximum number of tokens that will ever exist. Circulating supply is what is currently in the market. And fully diluted valuation (FDV) is what the project would be worth if all tokens were already in circulation at the current price.

That last number matters more than most investors realize. A token priced at $0.50 with a $500 million FDV is not cheap. It just has not released most of its supply yet.

Bitcoin’s fixed cap of 21 million coins is the most famous example of supply discipline. By contrast, many DeFi projects launched in 2021 with unlimited or loosely capped supplies, printing new tokens as staking rewards. When demand slowed, inflation outpaced it, and prices collapsed.

Check the Bitcoin whitepaper and compare its supply mechanics against newer projects—the contrast in design philosophy is immediately clear.

Token Distribution: Who Holds What

How tokens are divided among stakeholders reveals a project’s true priorities. The rough benchmarks that serious investors use today are 35 to 45 percent for community and ecosystem, 20 to 25 percent for treasury, 18 to 20 percent for the core team, 12 to 18 percent for investors, and a small allocation for advisors and public sale.

When team and investor allocations exceed 40 to 50 percent combined, the community is effectively funding insider enrichment. That is not speculation — it is what the numbers show when large unlocks hit the market.

Uniswap’s UNI token allocated 60 percent to the community at launch. That kind of distribution signals a project built for long-term users, not a quick exit for founders.

Vesting Schedules: The Most Overlooked Red Flag

Vesting controls when tokens are released to team members, investors, and advisors. A four-year vesting period with a one-year cliff—meaning no tokens are released for the first year, then gradually after that—is considered the current standard for team allocations. For investors, two to three year lockups with a six-month cliff are typical in well-structured projects.

Why does this matter? Because early investors and team members often bought or received tokens at prices far below market. Without vesting, nothing stops them from selling immediately after launch.

Terra/LUNA is the extreme case study. Anchor Protocol offered 20 percent annual yields on UST deposits, funded not by real revenue but by LUNA inflation and the expectation of perpetual new demand. When growth slowed, the model unraveled catastrophically. Both tokens collapsed to near zero within days. The tokenomics made that outcome inevitable — it was only a question of timing.

Always check when the next major token unlock is before buying. Large upcoming unlocks create predictable selling pressure, and the market often prices this in weeks before the event.

Token Utility: What the Token Is Actually For

A token without genuine utility is just speculation dressed up in a whitepaper. Ask a simple question: what happens to demand for this token if the price stops going up?

If the honest answer is “people stop buying it,” the utility is weak. Tokens with durable demand serve a function—they are required to pay transaction fees. participate in governance over valuable protocol decisions, access services, or earn a share of real protocol revenue.

Ethereum’s ETH is needed to pay gas fees on one of the most used blockchains in the world. Demand for block space creates demand for ETH independent of price speculation. The Ethereum whitepaper lays out this design explicitly. Compare it to any project where the token’s only stated use is governance over an empty protocol.

Inflation and Burn Mechanisms

Projects that issue new tokens as staking rewards are essentially running an inflation engine. This is not automatically bad — it depends on whether growing network usage absorbs the new supply. If it does not, inflation dilutes existing holders.

Deflationary mechanisms work in the opposite direction. Ethereum’s EIP-1559 upgrade introduced a fee burn that, during periods of high network activity, removes more ETH from circulation than is issued. That creates deflationary pressure tied directly to real usage. Binance runs quarterly BNB burns funded by exchange profits. Both are examples of supply reduction mechanisms grounded in actual revenue.

If a project burns tokens using proceeds from selling other tokens or from new investor capital rather than operating revenue, that is a warning sign. The model is circular and collapses when new money stops coming in.

A Practical Checklist Before You Buy

Before committing capital to any crypto project, work through these questions using the whitepaper as your primary source:

What are the total and circulating supplies, and what does the fully diluted valuation look like at the current price? How are tokens allocated between the team, investors, and community? When do major unlocks happen, and how large are they? What is the token used for, and does that use create organic demand? Is supply inflationary, deflationary, or capped, and does it make sense for the project’s stage?

The Crypto Definitions glossary at AllCryptoWhitepapers covers terms like token burn, vesting, circulating supply, and governance in plain language — useful context if any part of a whitepaper’s tokenomics section is unclear.

Frequently Asked Questions

What is tokenomics in simple terms?

“Tokenomics” describes the economic rules governing a cryptocurrency—how many tokens exist, but how they are distributed, what they are used for, and whether the model creates lasting value or just short-term price pressure are important questions.

Why do vesting schedules matter to investors?

Vesting prevents early holders from selling immediately after launch. Short or absent vesting on team and investor allocations is one of the most reliable warning signs that a project is not built for long-term users.

What is a red flag in token distribution?

When team and investor allocations together exceed 40 to 50 percent of total supply, or when vesting periods are under 12 months, expect significant sell pressure as those tokens unlock.

What is the difference between circulating supply and total supply?

Circulating supply is the number of tokens currently trading in the market. Total supply is the maximum that will ever exist. The gap between them represents future inflation — tokens that have not yet entered circulation.

Where can I find a project’s tokenomics data?

The whitepaper is the authoritative source. The AllCryptoWhitepapers database provides direct links to official whitepapers for over 3,900 actively traded projects.

How to find new cryptocurrency projects?

One of the biggest challenges in the crypto space is to find the right projects at the right time. There are hundreds of projects launched each month and it’s very difficult to pick the right ones. Most of the projects won’t last a year and some of them are only launched to scam you out of your money fast. The only option you have to navigate through this jungle of crypto projects, is to Do Your Own Research. I’ve made a short list with tips on how to find new cryptocurrency projects and how to research them. Hopefully you learn some new tricks and pick the right project!

Where do I find new tokens?

1. Social media
Check the buzz on social media. What I usually do is going to the accounts on Twitter that have a lot of followers. Those followers take every chance to shill their investments in their replies to the ‘crypto influencer’. Click on the articles, links and cash tags (the project’s abbreviation > $ followed by a few letters) and start your research. Or take a look at sites that keep track of new or trending accounts, such as Semrush. You can also subscribe to different trading groups in which lots of new projects are shilled. Those groups are risky though, because there are a lot of scammers in there and people who want to dump their bags on dumb investors, so do your proper research before jumping in.

2. Crypto charts
There are a few websites out there that make charts for almost every token. A great example is dextools.io. If you go to the site you can see the trending tokens (top 10). Click on those and start your research.

3. Trending coins
Coinmarketcap and coingecko both have a trending coin section. These are usually the coins that are looked up the most on the sites. Go to these project’s pages and research the tokens.

4. Verified Ethereum contracts
Etherscan has a great little features that not many know about, an overview of the smart contracts that have their source code checked. You can check all the verified contracts here. This is a great start for your research. I look for a project with a normal name  and high number of Txns and start from there. You click on the contract and on the contract page under ‘More Info’ you click on the Token Tracker ( if any). The next step is to look at the ‘Holders’ tab to see what the distribution is. The little document icon means that it’s a contract and contracts that look like this are burn addresses > 0x0000000000, so you can ignore those holders. You can check if the distribution is fine, not too many whales and not too many tokens airdropped via e.g. Disperse.app. I also check the tab ‘DEX TRADES’ to make sure the token is traded properly and is not being dumped (dextools is also good to check that).

5. Track whale wallets
To find these wallets you need to do some digging. There are multiple telegram and twitter accounts that show the big trades of whale wallets. When you have found these wallets, go to etherscan, check what they have in their bags and go from there. Always check if they bought these coins themselves or if they got them for advising or promoting, since this will make a difference in their ‘commitment to their bag’. You can also subscribe to certain services, such as nansen.ai, on which you can see all the trades of the wallets. Take into account that you aren’t the first to see those trades, so invest with caution.

6. Track newly registered crypto domains
This one requires a bit more knowledge of the existing crypto projects and their domains, but if you know what to look for you’ll definitely find some new projects early on! The trick is to go to websites like Whoisds or DNPedia and to research all the newly registered domains on a daily basis. Search for domains with tld’s like .finance or .app, depending on the current trend. Also look for domains that contain ‘token’, ‘swap’, ‘seigniorage’ or anything that is hyped. Make a list of all those domains and check them regularly for any updates and filter out the nonsense. I find about 2-5 domains each time that are promising. After you found the domains, start your research!

I’ve written multiple guides on whitepaper research, here’s one: Cryptocurrency Whitepaper Research for Beginners. We have thousands of whitepapers on file here.

How do I research these tokens?

1. Read the whitepaper :)!
For me this is always the first step. Don’t worry about the technical buzzwords, you just need to verify the following things.
– What problem are they solving?
– What is the token distribution/token economics? How much tokens are allocated to the team, used for marketing, % for public sale
– What is the token price for each stage of investments? Was their a seed sale and for how much? When do these tokens unlock (vesting)?
– What’s the public sale price? Fully diluted market cap? Runway for the team?
– Etc.

2. Social media
Search the project on social media. Go to their Twitter, Telegram, Discord etc. and read what the community says about the project. Focus on the people that are unhappy to see if there’s anything you should know, it’s ok to be skeptical, since you’re about to invest in the project. Follow the right people and ask questions.

3. Contracts
As explained above, you can get a lot of useful information by looking at the contracts and token on etherscan. Check if the contract is verified. You can also go to certain telegram groups to get them verified. Look at the trading patterns under DEX Trades, because when everybody is selling it’s usually not good news. Next thing is to check the holders and how the tokens are distributed and if there’s been a massive airdrop. Go to the wallets of the Whales (biggest holders) and see how they got their tokens, multiple buys or airdropped etc.).

4. Github
As a no-coder Github looks difficult. The best tip I can give is to check the number of commits. The more commits from different developers, the more work is done on the project and the bigger the chance is that they’re the real deal. Remember that Github is open source and most crypto projects will keep the most important parts of their code to themselves to avoid being copied, so when in doubt always ask the team if/when they’re open-sourcing their code.

5. Google is your friend
Google is your friend. Search the project’s name, the team, the token, partners etc. Make sure they are the real deal and can deliver what they promise. Google certain texts on their site and the whitepaper to verify that they’ve written that themselves and are not a copy or fork of a different project. Make sure to put the text between ” and ” to search for those exact words.

6. Ask questions
On discord, telegram, twitter you name is. There are no dumb questions and the team should be willing to answer them or to direct you to the right place with the answers. Do check pinned messages, medium articles and FAQ’s first since that would cover the most of your ‘dumb’ questions.

Conclusion

So that was my short list on how to find proper cryptocurrency projects and how to research them. I will update this list regularly and add things I missed!

John,

CEO All Crypto Whitepapers

Follow me on Twitter or Linkedin.

 

5 things you need to check before buying crypto

Whitepaper Research 5 things you need to check before buying crypto

Read more below:

In this article I will give you 5 pointers on how to recognize scam coins & projects through whitepaper research. Although most projects that turned out to be a scam had a great whitepaper, some of them gave away their bad intentions in the whitepaper. So before investing in any cryptocurrency, you should always check the whitepaper!

What is a whitepaper?
So what is a Whitepaper exactly? When a company intends to launch a new cryptocurrency, they usually set out all the details in a Whitepaper. This document contains the technical, financial and commercial information about the project. This document normally explains in plain language what they’re planning to build, to attract investors and other interested parties. In other words, the whitepaper explains the project’s purpose and process, the Why and the How.

Not every project or coin starts with a whitepaper. Litecoin started by giving a video presentation on ‘Creating Litecoin’ at a Coinbase event. Loom Network decided not to write a whitepaper, but immediately started developing and delivering code. Others are just forks of existing projects, like Bitcoin, so they don’t have their own whitepaper. Some projects bring out a Pink Paper, Green Paper or Yellow Paper and other projects, such as Cardano, bring out multiple whitepapers to describe every part of the tech they are building. Luckily, 99% of the cryptocurrencies and ICO’s still release a whitepaper at some point to outline their project and tech. So if you thinking about investing in a new coin or ICO (and to avoid scams) your first stop is reading the whitepaper.

What parts of a whitepaper do I need to check before investing in a cryptocurrency?
Although scam projects are getting better and better in not raising any suspicion, there are some sections of the whitepaper which you need to take a closer look at to filter out unreliable projects.

1 – Technology
The most important thing is the project’s proposed (technical) solution to a real and relevant problem. It makes no difference if it’s something new or a better application of existing tech, when the problem they’re trying to solve doesn’t need solving, there’s a big chance the project will fail or is set up to raise a quick buck. This is usually the most difficult to verify, but keep an eye out for common buzzwords that are solely used to confuse u without really explaining what the project is about.

2 – Team, Advisors & Partnerships
The people behind the project should be easy to verify. Check their Linkedin, online profiles, company profiles, any addresses you find, advisors, partnerships etc. Don’t be afraid to openly ask them if they’re involved in the project. Fitrova, a project that did an exit scam, boasted about great partnerships, but after checking with those partners they denied even knowing the CEO. Declouds, also a scam, wanted to prove his alleged partnership with a bank, by photoshopping himself into a picture of the board members of that bank. And finally I almost participated in an ICO with fake team members, but just in time the community found out that all the pictures where stolen from some Australian School Board website. So always doublecheck the information provided to you about the people behind the project and don’t forget to do a reverse image search on their pictures.

3 – Roadmap
Technical development always takes longer than promised, but a roadmap gives you an idea if they’re realistic about their goals. If the roadmap states that a mainnet will be delivered within a few months, that would be great, but could also indicate that they’re trying to make a quick buck (unless the started the development way before the ICO/STO/IEO of course).

4 – Token Allocation & Price
Things to look at are the amount of tokens they are going to bring out. It’s a difficult factor, but it might give you an idea if they’re realistic about the project or just want to make a lot of money. If their total token supply and pricing results in a really high marketcap, you should be suspicious about their intentions. Other thing to look at: Will the tokens be locked up (vesting) for team members? Will they burn unsold tokens? Can they bring out extra tokens whenever they decide to do so? Normally the best token allocation for investors is projects with a low token supply, so you get a bigger piece of the pie when you invest, but this strongly depends on the other factors.

5 – The Rest
There are so many things that could be red flags. Make sure to also verify the information on their websites and social media, does it look real or are they just using empty words, fake testimonials and social media bots. It wouldn’t be the first time that you are let to believe they already have a nice User Interface for their wallet, but in reality that are just stolen pictures from another project. Also beware of dubious statements, like stating they’re SEC-compliant or already have secured listing on big exchanges. Or things like saying their product can be used in any store or with every bank. Watch out for Ponzi Schemes like Bitconnect, with promised returns on investment for holding their coins. Sometimes they bloat with big whales who have invested already. Always check out the contribution address and try to trace back those big whales, to make sure it’s not the team contributing to itself faking that they already have landed investors.

Conclusion
In the end, you must feel safe about the project’s intent after reading the whitepaper. A lot of projects that turned out to be a scam had a legit whitepaper at first sight. But after looking closer into the promises they make in the document, how they’re going to build it and with whom they plan to make it a success, it should’ve been possible for investors to pick out the red flags. Of course there are many other factors that could lead to the conclusion that the project is a scam, but researching the whitepaper is one of the most accessible ways for you to verify it yourself.
Fortunately, www.allcryptowhitepapers.com has the largest whitepaper database in the world. With almost 1700 projects in our database, it’s the best place to start your research. Also don’t forget to check out the Whitepaper of the Week and News section, so you don’t miss out on anything. Knowledge is power!

The SEC also has made a great website to warn people about risky ICO’s and scams and they also included a whitepaper about their fake-scamproject, in which you will recognize many of the pointers I brought up in this article, You can check that out here:Howeycoin.