Token Engineering

Token engineering is the discipline of designing, analysing, and operating the incentive mechanisms and economic systems behind crypto tokens. It borrows from control theory, game theory, and simulation to reason about stocks (distribution), sources (issuance), and sinks (utility and burn), and about how governance and incentives shape long-run behaviour.

Case Studies

• Nethermind Research
  • Analysis and proposals on dYdX Chain and dYdX tokenomics
• Gauntlet
  • How to Measure Risk Models
  • Probabilistic Liquidity Attacks: Bayesian Fuzzing for DeFi (related: Fuzz Testing)
• Chaos Labs
  • dYdX v4 launch incentives
  • Locke and Latham goal-setting retrospective (PDF)

Notes

• Token Distribution (Stock)
• Token Issuance (Source)
• Token Utility (Sink)
• Tokenised Governance

Simulation-based token modelling often uses tools like Machinations Economic Models to explore feedback loops before committing to a design.

References

• Towards a Practice of Token Engineering — Trent McConaghy