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# System prepended metadata

title: Before

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# Before



 - Do you really need a parachain?
Before you start designing the tokenomicsof  your project,  you need  to ask yourself if  you indeed need to build a parachain. Sometimes a smart contract could be a better choice. See [contract vs parachain]. The tokenomics of smart contracts usually follow and/or highly dependent on the tokenomics of the  chain they are built on. Parachain's tokenomics is  more complex, although the Relay Chain makes it a bit easier by taking over the  need to secure validators pool. 

 - Do you really need your own token?

Not every parachain needs its own token. As stated above, the security  mechanisms are ecured by  the Polkadot network, so for some projects  there might be no  need for  introducing their token. Think about what you  project does and whether having own token is necessary. Ane example of parachains with no native tokens would be Statemint or any other common good parachain. 

 - Does your token have real utility  - is it economically viable?

you need to ensure that the tokenomics  is 




# Schedule and Sustainable Design

- When designing your project, keep in mind that tokenomics of your chain is not a static system - variables change and/or are cyclical. 
- Not only should you design your token distribution pie chart at the genesis, but also have in mind how it may change and possible outcomes.
    - Securing a slot/initially and continuously
    - Plan inflation/deflation - sinks and faucets. are there more sinks (burns, fees that go to treasury, users depositing things)? are there more faucets (staking rewards, releasing vesting supplies)?

you need to think aboiut whether the tokenomics will be inflationary or deflationary. Think about it as sinks and faucets. Are there more sinks (channels that get rid of your tokens) - burns, fees that go to the treasury, user deposits? Then your model is deflationary and you need to thoroughly  design   deflation rate. Are there more  faucets - staking rewards,r eleasing vesting supplies? then your model is inflationary and you need to take inflation rates into account and try to keep it steadya nd viable. 
    - How much token will be becoming liquid over time?
    
    - If you go with deflationary model, how do you sustain it? 
    - How are you going to prevent Spam?
    - Does your token model hold under low activity? - does your token work even if few people use it? (Kilt), Governance token wouldnt work
    - Long term plan for sustainability - community
    - Progressive decentralization of the chain = progressive decentralization of token supply

# Distribution
 - Set % for emergency, you don't have to plan 100% of token distributions
 - Whales (KYC to prevent whales)
 - Community
 - Maintenance (parachain slots)
 - Liquidity for trading for price discovery - market-making
     - contract somebody to do market making for legal safety, you can't do it (Jack Platt's story)
 - Team
 - VC 
     - Geographically diverse (legal protection)
     - Background diversity (different communities - they could control your project)
     - 

# Auctions
 - Are you manually bidding or crowdloan?
     - Check the price, can you pay for it?
     - if you manually bid, you can get your funds back and re-bid with that amount in the future
     - Crowdloan means people will withdraw their funds, so you'll have to campaign and give them incentive every time
     - You can do both. Do crowdloan the first time, and with the funding you get via transaction fees, treasury etc you can manually bid in the future

- Crowdloans
    - Fixed allocation of rewards, for every contribution you get x tokens
        - Setting a max cap is important
    - Proportional allocation based on total contribution
    - Attract early contributions - first X contributors get Y rewards
    - Is your token listed on exchanges at the time of the rewards?
    - Is token transferrable at the moment of reward distribution?
    - Will you apply vesting? How to distribute vested/unvested tokens? 
    - Set the price of your token based on competitors and market, do not set imaginary price

 # After
 List on other parachains via XCM? 
 


