Protocol Economics
Incentives, mechanism design, and token models that shape protocol behavior over time.
Guides
The monetary policy of Layer 1s: how token emission schedules mirror central banking
Compare Bitcoin halvings, Ethereum burns, and Solana disinflation to central bank monetary policy frameworks. Understand how protocol-level money supply rules shape token value.
MEV as a hidden tax: measuring the deadweight loss of blockchain extraction
Frame MEV through public finance economics: tax incidence, deadweight loss, and rent-seeking. Quantify how much MEV costs users and evaluate whether solutions like Flashbots reduce this invisible tax.
Harberger taxes and onchain property rights: radical markets meet NFTs and domain names
How blockchain enables the first real implementations of Harberger taxation for digital property. Analyze live experiments in partial common ownership across ENS names, virtual land, and NFTs.
Onchain treasury management: how DAOs allocate capital vs. corporate finance
Compare DAO treasury strategies to corporate capital allocation frameworks. Identify common failures in concentration risk, grant spending, buyback timing, and compensation structures.
RWA tokenization: how traditional assets become blockchain tokens
Understand the complete tokenization process from asset selection through token issuance to secondary market trading, including participant roles and economic considerations.
RWA finance: how real world assets are transforming DeFi
Understand how RWAs integrate with DeFi protocols, the benefits and risks of this integration, and how it's changing the decentralized finance landscape.
Oracle risk in prediction markets: what happens when resolution fails
How prediction markets determine truth through oracles, the economics of securing resolution, and what happens when the system fails.
Prediction market mechanics: where the odds actually come from
How prediction markets work at the protocol level, from order book and AMM designs to share pricing and resolution mechanisms.
Prediction market fees and value accrual: who captures the spread
How prediction markets generate revenue through trading fees, resolution fees, and spreads, with comparison across Polymarket, Kalshi, and decentralized alternatives.
Conditional prediction markets: building complex bets on-chain
How conditional prediction markets enable correlation trading, complex hedging, and composability with DeFi primitives.
Tokenomics red flags: 7 warning signs in a token's economic design
Identify bad tokenomics before investing using this checklist of concentrated ownership, aggressive vesting, unlimited supply, and other warning signs.
Token buybacks vs dividends: which value accrual mechanism works?
Compare buyback and dividend models for protocol value accrual with real data from MakerDAO, BNB, GMX, and Curve.
Stablecoin yield: where does the 5-8% actually come from?
Trace the actual cash flows behind stablecoin yields from T-bills to lending spreads to token incentives, with risk assessment framework.
How to read a protocol's revenue
Learn how to find, interpret, and analyze protocol revenue data using the five core metrics that separate sustainable projects from unsustainable ones.
Ponzinomics vs real yield: a framework for evaluating DeFi returns
Use the 5-point scoring system to distinguish sustainable protocol yields from unsustainable token emission schemes.
MEV explained for normal people: how bots profit from your trades
Understand what MEV is, how sandwich attacks and front-running work, and practical steps to protect your trades.
The real cost of Ethereum L2s: where your fees go
Trace L2 fee flows from your wallet through sequencer operations to L1 settlement, and understand who profits from each transaction.
Why gas fees don't go to ETH holders (and what actually does)
Understand exactly where your Ethereum gas fees go: base fee burns, validator tips, and how value actually accrues to ETH holders.
Bitcoin halving economics: what actually happens to miner revenue and network security
Analyze the real impact of Bitcoin halvings on miner economics, security budgets, and the long-term fee market sustainability question.
The hidden economics of airdrops: who pays when tokens are 'free'?
Understand who actually bears the cost of airdrops through dilution, treasury depletion, and sell pressure dynamics.
Onchain profit: why most protocols don't have it
Profit is revenue minus all expenses including emissions. Most DeFi protocols are unprofitable when token incentives are properly accounted.
DeFi business models explained
How DEXs, lending protocols, perps, LSTs, and L2s generate revenue with different cost structures and sustainability profiles.
Sequencer revenue and L2 economics
L2 sequencers earn fees from users and pay costs to Ethereum. Learn how margins vary with L1 gas and why most sequencer revenue doesn't reach tokenholders.
Emissions vs revenue: why token incentives are expenses
Token emissions are costs, not revenue. Learn how to measure emissions-to-revenue ratios and assess protocol sustainability.
How to read a DeFi income statement
Apply GAAP-like income statement principles to protocol economics: map fees, revenue, and profit for any DeFi protocol.
Tokenholder revenue vs protocol revenue
Protocol revenue and tokenholder revenue are different. Most protocols earn revenue but deliver nothing to tokenholders without explicit mechanisms.
Treasury management for protocols
How protocols should manage treasuries: runway calculation, diversification, burn rate control, and common mistakes to avoid.
Protocol economics primitives: a starter mental model
A lightweight framework for thinking about incentives, value flows, and constraints in onchain protocols.
MEV explained like an income statement
MEV is revenue when captured by protocols, a hidden tax when extracted from users. Learn who captures MEV and why it rarely accrues to tokenholders.
Cost of funds in DeFi
What protocols pay capital providers (LPs, stakers, validators) is cost of funds, not profit sharing. Learn why ignoring this breaks profitability analysis.
Bribes, rebates, and kickbacks in DeFi
How to account for bribes as expenses when paid and revenue when received, with correct income statement treatment.
Liquidity mining: what worked and what didn't
Why early liquidity mining succeeded, why returns diminished, and lessons for rational incentive program design.