This is a chapter from **Tokenomics for Builders: The Practitioner’s Guide to Token Design.*

This document and all resources, threads, models, and materials linked to within are for informational purposes only. None of this document’s contents, nor the contents linked to within, should be construed as legal advice, financial advice, technical advice, investment advice, accounting advice, or representations in any way regarding legal, technical, financial, investment, or accounting matters by the author. The author is not a lawyer or financial advisor in any jurisdiction, and highly encourages readers to engage with registered professionals to ensure compliance with any and all relevant laws and regulations.*

We’ve seen that tokens can help with directing user behaviors, bootstrapping network effects, and enabling user ownership - but that they do not replace the need for a solid product that solves a real user problem.

A good product does not automatically mean any tokenomics you pick will work. Good Product + Bad Tokenomics = Bad Outcome ex. STEEM, UST, STEPN
Good tokenomics will not save a bad product if no one wants to use it. Bad Product + Good Tokenomics = Bad Outcome ex. Buggy, low liquidity CEX that copies BNB’s tokenomics
And both a bad product and bad tokenomics is (not surprisingly) bad. Bad Product + Bad Tokenomics = Bad Outcome ex. CEL token (Celsius)
You need good tokenomics and a good product. Good Product + Good Tokenomics = Game Changes BTC, ETH, LQTY, GMX, MKR, CRV, HEGIC (This is not an endorsement or recommendation to buy or invest in any of these tokens or their associated protocols)

https://x.com/Evan_ss6/status/1707052945315930471?s=20

Good vs Bad: Web3 Uber Case Study

Imagine a fictional Web3 competitor to Uber with a native token, UBR. Imagine the product itself is functioning well and already has riders and drivers using it.

Let’s consider a couple of possible tokenomics designs for this fictional UBR token by using a simplified version of the Incentives Mechanism Framework from the Tokenomics Design Canvas. We’ll cover the full canvas step by step in Part Two of this guide.

UBR Tokenomics - Alternative A

Simplified version of Incentives Mechanism Framework from the Tokenomics Design Canvas

(A) Role	(B) Desired Behaviors	(C) Frictions to Desired Behaviors	(F) Incentive Mechanisms
Riders	Book rides	Costs money, faster or cheaper alternatives	To make rides cheaper: riders earn 10% of their spending as “ride-to-earn” UBR rewards.
Drivers	Provide rides	Providing rides requires time and money	To make drivers more likely to offer rides, drivers get paid by riders in UBR, and earn 10% extra “drive-to-earn” UBR rewards.