Tokenomics Autopsy: Supply Schedules, Unlocks, and the Games Tokens Play
Tokenomics determine whether a token succeeds or dumps. Supply schedules, vesting unlocks, and inflation mechanics can make or break a project. Let's dissect how tokenomics actually work and what red flags to watch for.
TLDR
- Tokenomics determine supply, distribution, and inflation - critical for price stability
- Vesting schedules lock tokens for insiders, but unlocks can cause massive dumps
- Inflation (token printing) dilutes holders - check emission rates and schedules
- Red flags: large insider allocations, short vesting, high inflation, unclear tokenomics
- Always check token unlock schedules before investing - upcoming unlocks can crash prices
By William S. · Published November 26, 2025
What Are Tokenomics?
Tokenomics (token economics) is how a token works: supply, distribution, inflation, deflation, and how tokens flow through the system. Good tokenomics align incentives. Bad tokenomics enrich insiders and dump on retail.
I've seen hundreds of token launches. Most have terrible tokenomics designed to pump and dump. Understanding tokenomics helps you spot the good ones and avoid the scams.
Key Concepts
Total Supply vs Circulating Supply
Total supply: All tokens that will ever exist (or current max if uncapped).
Circulating supply: Tokens actually in circulation (not locked, not burned).
Why it matters: Market cap = price × circulating supply. If total supply is much higher than circulating, massive dilution is coming.
Example: Token has 1B total supply, 100M circulating. Price is $1, market cap $100M. But if 900M unlock, that's 9x dilution. Price will likely crash.
Vesting and Unlocks
Vesting means tokens are locked and release over time. Unlocks are when locked tokens become available.
Common vesting schedules:
- Linear: Unlock evenly over time (e.g., 10% per month for 10 months)
- Cliff: Nothing unlocks, then everything at once (dangerous)
- Graduated: Small unlocks early, larger later
Red flags: Short vesting (unlocks in months, not years), large cliffs (massive dumps), team/VC tokens unlocking early.
Inflation and Emissions
Inflation means new tokens are created (minted/printed). This dilutes existing holders.
Common sources:
- Staking rewards (new tokens minted for stakers)
- Liquidity mining (tokens distributed to LPs)
- Team/treasury allocations (unlocking over time)
Why it matters: High inflation = price pressure. If supply increases 50% per year, price needs to increase 50% just to maintain value.
Token Distribution: Who Gets What
How tokens are distributed matters. Here's what to look for:
Team/Founders
Usually 10-30% of supply. Should be locked for 2-4 years minimum. Red flag if unlocking in months.
Investors/VCs
Usually 10-40% of supply. Often get best prices and short vesting. Red flag if large allocation with short lock.
Public Sale
Usually 5-20% of supply. This is what retail buys. Should be fair launch or public sale, not just insiders.
Treasury/DAO
Usually 10-30% of supply. For protocol development, grants, etc. Should be controlled by DAO, not team.
Community/Liquidity Mining
Usually 20-50% of supply. Distributed to users, LPs, stakers. This is good - rewards real users.
Red Flags in Tokenomics
1. Large Insider Allocation
If team + VCs own 70%+ of supply, retail gets rekt. They'll dump when unlocks happen.
2. Short Vesting
If tokens unlock in 6-12 months instead of years, expect dumps. Good projects lock for 2-4 years minimum.
3. High Inflation
If supply increases 50%+ per year from emissions, price will struggle. Sustainable inflation is usually 5-15% annually.
4. Unclear Tokenomics
If you can't find clear info on supply, distribution, vesting, it's probably hiding something bad.
5. No Utility
If token has no real use case (just governance or speculation), it's likely to dump.
6. Premine/ICO Scams
If insiders got tokens for free/cheap and retail pays market price, that's a red flag.
How to Read Tokenomics
When evaluating a token, check:
1. Total vs Circulating Supply
Check CoinGecko or the project's docs. What's the ratio? If circulating is tiny compared to total, massive dilution coming.
2. Unlock Schedule
Find the vesting schedule. When do team/VC tokens unlock? Use tools like TokenUnlocks.app to visualize.
3. Inflation Rate
How many new tokens per year? Calculate inflation: (new tokens / circulating supply) × 100. Over 20% is high.
4. Distribution
Who owns what? Check on-chain (Etherscan) or project docs. Large insider holdings = risk.
5. Token Utility
What does the token actually do? Governance? Staking? Protocol fees? If it's just speculation, avoid.
Common Tokenomics Patterns
Pump and Dump
Pattern: Small circulating supply, massive total supply, short vesting, high inflation.
How it works: Price pumps on low supply, then dumps when unlocks/inflation hit.
Example: 10M circulating, 1B total, team unlocks in 6 months. Price goes to $10, then crashes to $0.10 when supply increases.
Fair Launch
Pattern: No premine, public distribution, long vesting for team (if any), sustainable inflation.
How it works: Everyone gets fair access, no insider advantage, sustainable tokenomics.
Example: Bitcoin, some DeFi protocols. Fair distribution, no premine, sustainable emissions.
VC Dump
Pattern: VCs get large allocation at low price, short vesting, dump on retail.
How it works: VCs buy cheap, price pumps, they dump when unlocked, retail gets rekt.
Example: Many 2021 launches. VCs got tokens at $0.10, retail bought at $10, VCs dumped at $5, retail lost 50%+.
Real-World Examples
Good Tokenomics: Ethereum
Supply: Uncapped, but issuance reduced over time (EIP-1559 burns fees).
Distribution: Fair launch (ICO, but public), no premine for team.
Inflation: Low (~0.5% post-merge), deflationary when network busy.
Utility: Gas fees, staking, DeFi collateral.
Why it works: Sustainable, fair, real utility, low inflation.
Bad Tokenomics: Typical 2021 Launch
Supply: 1B total, 50M circulating (95% locked).
Distribution: 40% team, 30% VCs, 20% public, 10% treasury.
Vesting: Team/VCs unlock in 6-12 months.
Inflation: 100%+ per year from staking rewards.
Utility: Governance only (weak).
What happened: Price pumped to $10, then crashed to $0.10 when unlocks hit. Classic pump and dump.
How to Protect Yourself
- Check unlock schedules: Use TokenUnlocks.app or similar tools. Avoid tokens with large unlocks soon.
- Calculate inflation: Check emission rates. High inflation = price pressure.
- Verify distribution: Check on-chain who owns what. Large insider holdings = risk.
- Understand utility: If token has no real use, it's speculation. Risky.
- Avoid short vesting: Prefer projects with 2-4 year locks for team/VCs.
- Watch for dumps: If price pumps before unlocks, expect dump. Sell or avoid.
Final Thoughts
Tokenomics determine whether a token succeeds long-term. Good tokenomics align incentives and create sustainable value. Bad tokenomics enrich insiders and dump on retail.
Always check tokenomics before investing. Understand supply, distribution, vesting, and inflation. If something looks too good to be true, it probably is. Most tokens have terrible tokenomics designed to pump and dump.
Focus on projects with fair distribution, long vesting, sustainable inflation, and real utility. Everything else is gambling. Stay safe out there.
Frequently Asked Questions
What's a good vesting schedule?
For team/VCs: 2-4 years minimum, linear or graduated (not cliff). Short vesting (6-12 months) is a red flag. Good projects lock for years to align long-term incentives.
How do I check token unlock schedules?
Use tools like TokenUnlocks.app, check project documentation, or look on-chain. Always verify - don't trust project claims without checking.
What's considered high inflation?
Over 20% annual inflation is high. 5-15% is moderate. Under 5% is low. High inflation dilutes holders and creates price pressure. Check emission rates and calculate inflation yourself.
Should I avoid tokens with large insider allocations?
Not necessarily, but check vesting. If team/VCs own 50%+ and unlock soon, expect dumps. If locked for years, less risk. Always check unlock schedules.
What's the difference between total and circulating supply?
Total supply is all tokens that exist (or max if uncapped). Circulating supply is tokens actually in circulation (not locked). If circulating is much smaller than total, massive dilution is coming when unlocks happen.
Can good tokenomics guarantee a token won't dump?
No. Good tokenomics reduce risk, but tokens can still dump for other reasons (market conditions, protocol failures, competition). Tokenomics is one factor - also check utility, team, and market conditions.