“In 5 years, only a few major coins will stand out”: tokenomics expert Eloisa Marchesoni on the future of crypto

Tokenomics is the economic basis of blockchain — the science of how tokens are created, their business model is thought through, and their price is determined. Boring? Possibly. But this knowledge helps you better navigate what’s happening and what to invest in.

Luckily, Eloisa Marchesoni, a tokenomics expert with 6+ years of experience and Web3 advisor, talks to buidlbee about the most important things in simple terms:

• about tokenomics and how the market works;
• about the future, changes, and education;
• about FTX and its impact on the market and other exchanges;
• and, of course, about investing.

About tokenomics and how the market works: “Poorly designed tokenomics can lead to the collapse of the ecosystem”

Tokenomics is a fairly new and complex concept, mainly referring to the design of the architecture of a token model, meant to prove the protocol’s utility to investors and/or users, thus driving its adoption and helping the ecosystem built around the token itself to grow.

Tokenomics can be further divided into:

1. Microtokenomics, dealing with a single ledger system;
2. Macrotokenomics, dealing with the entire ecosystem of a DLT network, including its interaction with third parties like exchanges, regulators, partners, etc.

Well-designed token economics, with rules and incentives, can define the long-term outcomes of token ecosystems. Poorly designed tokenomics can lead to the collapse of the ecosystem.

About the future, changes, and education: “Blockchain will stop being an industry”

All projects are overvalued now, including Bitcoin and Ethereum. I am expecting a dramatic drop in prices.

Among the coins I like are BTC, ETH, DOT, KSM, GTC, ADA, MATIC, LINK, ATOM, and NEAR. The only stablecoins I feel safe with are USDT and USDC, with a preference for the first one.

It’s really bad that we have so many altcoins, as these alts cause a lot of confusion, and most of them are just experiments, not meant to be assigned any financial value just yet. Only a few major coins will stand out in 5-10 years at a specific state of the tech. Blockchain will stop being an industry. It will become a new standard for various applications, which will be regulated. Bitcoin will remain the e-gold of the future.

Web3 is very lacking in education. Regulation and integration with TradFi are necessary to bring everyone else into crypto. Conceiving crypto as an elite industry is not what Satoshi had in mind. Suppose the elites manage to protect the opportunity within a closed circle. In that case, it means it was never really meant to change the world, as, by now, the information is publicly available, and experts like myself that take the time to educate people are growing in number. 

By the way, an interview with the HUMANS service, where you can find your own Web3 advisor, can be found here.

You don’t have to be an expert in tokenomics to be a successful investor, but it is helpful to understand it at least superficially. The basics are very intuitive, especially for those having an education in economics and finance. Feel free to educate yourself in my blog. For example, here is a detailed explanation of how crypto assets can be valued. 

About FTX and its impact on the market and other exchanges: “There will be open overreach by regulatory boards or governments into crypto markets”

They are going to call for more regulation. And it is a good thing — because exchanges will be forced to perform the due diligence that will ultimately serve the customer. People who have lost money would be willing to put up with more regulation if it means a safer investment for them and their families.

But it is a question of transparency: if there is overreach by regulatory boards or governments into crypto markets in the future, it will happen in public.

The large, strong community of peers that crypto has built over the years will have an equal opportunity to voice their concerns and lobby for a compromise that serves the investor’s interests while still protecting them.

About investing: “When the bottom will be in, buy some classic coins and forever stay out of investment opportunities that seem too shiny”

When choosing a project to invest in, I look at the applications and sustainability of the business and token model (not the same!). Basic questions I ask:

1. How do tokens improve the current business model? What is the value-add of the token model?
2. Is the business dependent on its tokens? Is the token convenient to have, or is it an essential part of the business model?
3. How will the project gain value (not the token)?
4. How does the token interact with the environment?

The more structural analysis includes questions about main system mechanisms and interactions like cash flows, game-theoretic mechanisms, consensus, etc. Besides, edge cases are essential. For example, is the system susceptible to internal shocks or only external shocks? And does the system have feedback loops, which could accelerate a crash (like in the Terra/Luna case)?

If you have $100 in your pocket for investing, you’re lucky to be assisting the great reset of crypto without having lost any of your funds because you’re still an outsider.

Don’t lose faith in technological progress, but take this as a lesson for your understanding of human nature and understand that this is precisely why Bitcoin was introduced: the need for a trust-less ecosystem in which peers should be able to interact, without having to count on each other but only on the tech. For now, dear newbie, just wait and take this time to learn. When the bottom will be in, buy some classic coins and forever stay out of investment opportunities that seem too shiny. Don’t FOMO!