Is your project idea stuck in the “what-if” stage? Project modeling empowers you to turn those what-ifs into actionable insights, giving you the roadmap to success. Let’s understand how it works.
What is project Modeling?
In cryptocurrency, modeling involves using software to simulate a project’s token economy, particularly the interactions between buying and selling pressures. This process helps projects understand the dynamics of their economy over time, such as token distribution, user spending patterns, and price fluctuations.
Types of Modeling in Web3
- Deterministic Modeling (Excel): Uses fixed input conditions to predict outcomes, such as token emissions over time or valuations based on projected revenue.
- Stochastic Modeling (Machinations): Incorporates randomness and recursion to model complex systems, allowing for the analysis of average outcomes and edge cases under varying conditions.
- Agent-Based Modeling (cadCAD): Simulates individual user behaviors within an ecosystem to understand detailed interactions and outcomes.
Deterministic Modeling with Excel (<$10,000) Similar to traditional financial modeling but focused on tokenomics and Web3. It provides consistent results based on set inputs, making it useful for high-level overviews and summarizing key data.
Stochastic Modeling with Machinations ($10,000-$100,000+) Originally designed for game economies, this method allows for dynamic modeling of randomness and recursive systems. It helps identify vulnerabilities, probabilities, causes, and effects within an economy, offering a deeper understanding of potential outcomes.
Agent-Based Modeling with cadCAD ($50,000-$Millions) This method models individual user behaviors, offering a granular view of interactions within the ecosystem. It allows for a bottom-up approach to understanding macro patterns based on individual actions.
Why Projects Need Modeling
Modeling helps projects:
- Visualize cause and effect
- Stress-test assumptions
- Minimize risks
- Find equilibrium points
- Plan for unexpected events
Understanding these factors before launching a project ensures smoother operations and better preparedness for potential issues.
Outsourcing Project Modeling
While projects can learn and implement modeling in-house, outsourcing to specialized agencies can save significant time and resources. Agencies bring broad and deep knowledge from working on multiple projects, providing invaluable insights and reducing the risk of catastrophic failures.
Conclusion
Project modeling is a critical tool for understanding and managing the complexities of a token economy. It helps projects prepare for various scenarios and make informed decisions, ultimately leading to a more robust and resilient ecosystem.
