Enhancing Tokenomics: A Comparative Study of Token Burning and Liquidity Pool Strategies for Sustainable Ecosystem Growth
Authors
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Mandeep Gupta
Director, Triple Dash Infotech
https://orcid.org/0009-0005-3542-1408
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Deepanshu Gupta
Chief Executive officer, Triple Dash Infotech Pvt. Ltd
https://orcid.org/0009-0006-6750-8433
DOI:
https://doi.org/10.36676/sjmbt.v3.i1.54Keywords:
Tokenomics, Liquidity pooling, crypto currency, leveraging, long term engagementAbstract
This research explores the comparative efficacy of token burning and liquidity pools as mechanisms to optimize tokenomics within blockchain ecosystems. Token burning, often used to create scarcity and drive value, has been critiqued for its short-term focus and limited contribution to ecosystem growth. Alternatively, liquidity pools, which pair tokens with stablecoins or cryptocurrencies on decentralized exchanges, offer a more sustainable approach by enhancing price stability, incentivizing community participation, and fostering long-term engagement. This study outlines a comprehensive framework for implementing liquidity pools, highlighting their advantages over token burning, such as creating recurring revenue for liquidity providers, mitigating volatility, and ensuring transparency. By leveraging liquidity pools, projects can align stakeholder incentives, build robust ecosystems, and achieve sustainable growth, positioning this approach as a superior alternative to token burning in most contexts.
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Funding data
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Shodh Sagar
Grant numbers 202412001
