Definition ∞ Tokenomics risk refers to the potential negative consequences arising from flaws or instability in a digital asset’s economic model and distribution mechanisms. These risks can include hyperinflation, insufficient utility, or an inability to sustain network participation. Poorly designed tokenomics can undermine a project’s long-term viability and value proposition.
Context ∞ Tokenomics risk is a critical factor for investors and participants evaluating digital asset projects, as it directly impacts a token’s sustainability and price stability. Analysts scrutinize supply schedules, utility mechanisms, and incentive structures to assess these inherent dangers. The continuous evolution of token economic models aims to create more resilient and equitable systems.
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