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.*

Introduction

It’s now time to think about your token’s value accrual and complete “Step 2: Value Accrual” in the Tokenomics Design Canvas.

This is a crucial step, as how value accrues to your token can be largely influenced by even seemingly small differences in your tokenomics.

For instance, something as simple as switching from charging sellers a commission to sell their NFT to charging buyers a fee to purchase the NFT can make a large difference:

• Charging sellers means that supply is less likely to use that marketplace, and naturally buyers will look to go to marketplaces with the most available supply.
• Charging buyers on the other hand means sellers can use the marketplace for free, and thus will be more likely to list their supply there, in turn bringing more buyers, in turn resulting in higher overall fees than charging the same transaction fees to sellers.

https://twitter.com/beeple/status/1581351398259597312?s=20&t=ENl5ytcXgAE__Z4gt9YNRQ

Value creation, value capture, and value accrual are the three relevant core concepts that are often conflated and misunderstood. It’s important to understand how each relate to your product and token.

Value Creation

It’s late 2018 - you have some ETH and some LINK tokens.

You’d like to keep both but earn a yield on your tokens at the same time.

In theory, you could earn a yield by market making on the order book of a centralized exchange - but doing so requires constant and sophisticated management of your bid and offer sizes, spread, skew, inventory, etc.

Along comes a new product called Uniswap, an AMM (Automated Market Maker), allowing you to deposit equal values of your ETH and LINK to automatically provide liquidity and earn a portion of trading fees. And all without the custodial risk of a centralized exchange or the prohibitive barriers to active market making.

Uniswap has created value for you as a liquidity provider.