What does deflationary tokenomics mean, and why is it important?
Token economics or tokenomics is a term that describes the study of economic incentive models and token distribution. Token needs to have some incentive to have any value. This value will create demand for the token and then dictate its price.
Many tokens’ value lies in their utility. For example, Geco.one token GEC allows Geco.one user to create a trading account for the GEC token and start using it as collateral for trading on all available crypto derivatives pairs. Every trade made in the Geco.one is subject to a 0.03% maker and taker fee. GEC holders can cut their expenses by 20%, which is a cut from 0.03% to just 0.024%. Also, GEC is used for a monthly subscription on the exchange — the subscription enables the possibility to stake currencies, including GEC.
There are different models of tokenomics. For example, Bitcoin (BTC) has a fixed maximum supply of 21 million — this is the limit that cannot be exceeded. However, not all coins are in circulation — Bitcoin is mined until it reaches its limit. So, currently, the number of BTC is growing, and the growth will stop in the future.
The deflationary token model was popularized by Binance Coin (BNB). This model creates a concrete number of tokens, which are never adjusted upward. It makes a deflationary currency where even as demand increases, supply does not. It generates natural demand as the supply shrinks. It also eliminates the worry of inflation, so popular among fiat currencies. Thus, cryptocurrencies with a deflationary model aim to solve problems faced by the traditional finance sector.
Gecoin also has a deflationary token model; it is burned every three months to lower its supply. But what does it mean, exactly?
Every GEC used on the exchange is transferred to the unique wallet without the key. No one can use tokens anymore — that’s a “burning” procedure.
The total amount of GEC tokens created was 173 105 106 GEC. The first burning occurred in December 2021; since then, GEC has been burned every quarter. For Gecoin, the goal of coin-burning events is slowly reducing its total supply to 88 million GEC (just below 50% of the initial supply).
(Current Gecoin total supply 166,780,000 GEC as of 28.06.2022)
It’s time to finally get down to business. Start serious trading with Geco.one.
Top 20 cryptocurrencies, 1:100 leverage, staking, low fees, intuitive design, unrivalled liquidity & instant order execution.
Trading on derivatives has never been easier. Join us https://app.geco.one
