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Economics and Math of Token Engineering and DeFi

Author: Lisa JY Tan

Fundamentals of Token Economics

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Hardcover, Kindle, Paperback

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Categories: , Tag: Product ID: 19812


Economics is a science. It primarily examines how decisions are made, which alternatives provide the greatest benefits to various stakeholders. Contrary to popular belief, economics is not about money. It has and continues to be about the study of the allocation of scarce resources (behaviours). We enforce them through incentives and disincentives (punishments). The difference between economics (soft science) and physics (hard science) is that economics is continuously evolving because it is a study of human behaviours. As we moved from Web 1 to Web 2 and now Web 3, the economics 101 that we initially understood has changed. While is important to be coding the tech infrastructure of Web 3.0 and have ideas of what Web 3.0 is like, an important aspect is the economics and incentive alignment of Web 3.0 users. It is easy to create a token or currency out of thin air. The token is only valuable when the economics make sense. The aim of this book is to dive into the core foundational principles of economics in Web 3.0. We explore the evolution of economics, the change in principles we learnt in Econs 101, and the new environment that economics will exist in. Then, we explore ways to apply these foundational principles in Web 3.0, with or without a token. We also tap into the general mathematics that defines economic mechanisms. You don’t need to be an economist or technologist to understand the book. We keep things high-level to digest the information, yet coming from fundamental academic research.


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