@The token economy model of cz-binance has some interesting design points, but it also faces many challenges and potential issues. Let's analyze its core mechanism, advantages, and possible difficulties. Core mechanism 1. TGE releases 10% initially: This portion can be used to raise funds to support development, operation, and marketing. 2. Future unlocking conditions: Time lock: Each unlock must be separated by 6 months. Price threshold: The next unlocking is only allowed if the price exceeds twice the previous unlocking price within 30 days. Unlock limit: Up to 5% of tokens can be unlocked each time. The team can choose not to unlock, but cannot shorten the time or increase the unlocking amount. This design aims to prevent the rapid release of tokens in the market, avoid price crashes, and encourage the team to operate for the long term. ------ advantage 1. Avoid a large number of token crashes The traditional Token Unlock method often leads to significant selling pressure for teams and early investors during unlocking, resulting in a price collapse. This mechanism requires a price increase before allowing new unlocking, reducing unnecessary selling pressure. 2. Create better market expectations and FOMO Due to the fact that the price must double in order to unlock new tokens, the market has higher expectations of appreciation, which may attract investors to hold on for the long term rather than selling after short-term speculation. This also creates a mentality of 'no price increase, no lock up' in the market, which may strengthen liquidity. 3. Forcing the team to focus on long-term development The team can only obtain new funds when the token price rises for a long time, which gives developers stronger motivation to ensure the continuous development of the project, rather than running away after short-term speculation. ------ Potential problems and challenges 1. Easy to fall into a death spiral If the token price cannot exceed the threshold of 2 times in a certain market cycle, the team's funding source will be depleted. This is a great risk for projects without other sources of income, which may lead to financial difficulties and affect development progress, forming a vicious cycle. Solution: The team needs to design a diversified revenue model in advance, such as product fees, agreement fees, or other revenue mechanisms, rather than just relying on token appreciation. 2. May induce market manipulation Due to the key condition for unlocking each time being that the price remains more than double for 30 consecutive days, this may incentivize investors or teams to deliberately manipulate the market to ensure that the price meets the standard in the short term to trigger unlocking. For example, some large players can artificially maintain prices at critical moments, causing the market to mistakenly believe that there is strong buying, but in reality, it is only to unlock more tokens. Solution: Consider adding a longer moving average price mechanism or using other market indicators to assess "price stability" and reduce manipulation risk. 3. Will affect liquidity This token economy model may result in a shortage of tradable liquid tokens in the market, leading to insufficient liquidity and making it easier for large transactions to affect market prices. If investors believe that the supply of tokens is extremely limited, they may not be willing to buy and sell easily, resulting in a decrease in market trading volume and affecting the token's price discovery mechanism. Solution: Consider gradually releasing a small portion of tokens as market liquidity, rather than letting the market rely entirely on price growth to determine unlocking time. 4. May deter investors Some institutional investors may not be willing to participate in this model because they want a more predictable exit mechanism. For example, VC Angel investors usually have a fixed investment return schedule, and this "price doubling unlocking" mechanism can make their liquidity extremely uncertain, and may even be trapped for a long time. Solution: The team can design some supplementary mechanisms in the token economy, such as providing liquidity mining, DAO governance incentives, or additional staking income, to reduce investors' concerns. 5. Limited applicability This model may be suitable for projects with rapidly increasing prices (such as GameFi, Memecoin, DeFi fever), but it may not be suitable for projects in the infrastructure category. For example, some memory blockchain infrastructure projects typically require longer development time, and the price growth rate may not be as fast as GameFi or Meme tokens, so unlocking conditions may not be triggered, resulting in a lack of funding for team development. ------ summarize The token economy model proposed by CZ is a "price driven unlocking" mechanism, which has the advantage of: ✅ Reduce market selling pressure and avoid price collapse caused by unlocking traditional tokens. ✅ Encourage long-term team building to ensure project value growth in order to obtain new funding. ✅ Creating market FOMO may make investors more willing to hold tokens. But it also has some challenges: ❌ It may fall into a death spiral, and if the price cannot double, the team's funds may dry up. ❌ May trigger market manipulation, and some may deliberately maintain prices to trigger unlocking. ❌ May lead to insufficient liquidity and make market trading inactive. ❌ Investors may hesitate because this model makes the exit time uncertain. ❌ Not applicable to all types of projects, especially long-term infrastructure development projects. ------ Improvement direction If you want to make this model more practical, you can consider: 1. Add more unlocking conditions, such as "protocol revenue", "TVL growth" and other indicators, rather than just price doubling. 2. Design a liquidity mechanism to ensure that there is still sufficient trading volume in the market. 3. Provide investors with the option to partially unlock to long-term holders without affecting the price driven unlocking mechanism. This model, although radical, may be an effective way of token management under suitable market conditions (such as bull markets). However, in the real world, balancing price drivers with market liquidity remains a major challenge. What do you think? BNB BNBCHAIN