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TL;DR Tokenomics must evolve alongside a project’s growth. In Bifrost’s case, the journey can be seen in three phases. Phase I: Organizing productive resources to launch the project. At this stage, the primary focus is on token supply and allocation, ensuring that capital, talent, and community incentives are properly coordinated to bootstrap the network. Phase II: Aligning fair and sustainable incentives to drive expansion. The emphasis shifted toward fair, systematic, and sustainable incentive mechanisms that could drive ongoing business growth, user adoption, and ecosystem participation. Phase III: Achieving maturity and distributing profits back to the community. Once the project reached a stable, revenue-generating phase, the main job is to reward contributors and align the community through a growth flywheel. Why Tokenomics Defines Web3 Tokenomics emerged alongside Web3 as a new form of economic coordination — a model that redefines how productive resources are organized, how value is distributed, and how communities sustain collective growth. In fact, the introduction of Tokenomics is what fundamentally separates Web3 from Web2. Through tokenomics, crypto projects can achieve multiple goals more efficiently — raising funds, acquiring seed users, aligning incentives, building loyal communities, and distributing project income fairly. A well-designed tokenomics doesn’t just support growth — it shapes it. Phase 1: Organizing Productive Resources Token distribution, at its core, is the process of organizing productive resources — capital, talent, users, and liquidity. A project needs funding, so it allocates tokens to institutional or public investors through private or public sales. It needs people, so it reserves allocations for the core team and advisors. It needs users, especially early adopters, so it conducts fair and effective airdrops (often balancing between real users and farming bots). It needs liquidity and TVL, so it launches farming campaigns to incentivize deposits. And if it’s building an ecosystem, it issues grants to attract other projects to join. When designing a tokenomics, the first step is to understand what productive resources your business must organize — their relative importance, and how that importance will evolve over time. Once this is clear, questions such as how tokens are generated, distributed, and vested are merely matters of execution. BNC’s total supply is fixed at 80,000,000, with no inflation, distributed as follows: 10% held by the foundation 20% allocated to the early team (unlocking over 2 years after a 6-month TGE cliff) 15% allocated to early investors across 4 rounds (a small portion unlocked at TGE, the rest linearly over 8 months) 5% gradually distributed to Bifrost parachain collators 5% reserved as a risk control fund for vTokens to cover slash events 45% reserved as ecosystem funds, governed via proposals for parachain crowdloan incentives, vToken minting rewards, liquidity incentives, and other market initiatives. Through this allocation, Bifrost successfully recruited its founding team, raised development funding, secured marketing resources, won Polkadot parachain slots, and grew its seed community — ultimately achieving product-market fit. BNC’s Token Generation Event took place on October 21, 2021. Most allocations for the team and investors are now fully unlocked. Roughly half of the collator and ecosystem incentive funds remain unspent. With Bifrost now generating profit, 20% of tokens remain unallocated, giving us enough flexibility to address future distribution needs. Phase 2 — Sustaining Growth Through Aligned Incentives Bifrost’s growth stems from three forces: persistent product improvement, long-term brand credibility, and the ability to capture market opportunities through rapid execution. During key moments — Polkadot/Kusama slot auctions, vToken expansions, the Ethereum Shanghai upgrade, or major DOT/KSM unlocks — Bifrost maintains flexible incentive spending to move quickly and capitalize on momentum. Rather than locking in long-term mint-drop or farming policies, we deploy ecosystem funds through governance proposals for targeted campaigns. In practice, Bifrost’s largest growth spurts came from short, concentrated opportunity windows. For example, during the Polkadot Unlock Harvest event in October 2023, with 50,000 BNC in rewards, Bifrost attracted 2,310,000 DOT minted as vDOT in just 42 days — boosting TVL by over $12 million. Each campaign is designed with a clear target and a fixed total reward pool. Once the total reward pool is set, the reward intensity becomes fixed and controllable. This ensures incentives remain attractive yet controllable. Even if participation exceeds expectations, the budget impact remains manageable. That’s why Bifrost avoids “quest-style” farming or empty engagement campaigns. We want authentic users to participate — staking or providing liquidity. Even if some funds leave after an event, each interaction builds a connection, and many users eventually return. Ultimately, growth doesn’t come from temporary campaigns, but from sustainable yield-stacking scenarios that give vTokens long-term utility and attractiveness. Issuing token rewards is essentially a marketing expense. Even for projects without a TGE, it’s crucial to avoid overusing incentives. We’ve seen projects fail because they didn’t plan reward intensity properly — causing drastic discrepancies between campaigns. Bifrost’s campaigns always require genuine participation rather than simple “click-to-earn” tasks. Meanwhile, we continue to enhance productive capacity by expanding use cases and cross-chain composability — the fundamental drivers of vToken competitiveness. Phase 3: Flywheel and Profit Distribution No matter how sophisticated a tokenomics looks, without revenues and profits, the token is no different from a meme coin. For Bifrost, the key word is certainty. “Certainty” means a strong correlation between revenue and token value. There are two ways to achieve it: Binding token utility to essential services (e.g., gas fees on L1s), Using project profits to buy back tokens from the market — a model widely adopted by leading DeFi protocols. As the Web3 bubble cools and projects mature, the community’s focus is shifting from speculation to predictable value. Many DeFi projects are shifting to profit-sharing, as communities increasingly reject “governance-only” tokens disconnected from real revenue. Bifrost’s approach to certainty is rigid buybacks and revenue sharing. Traditionally, buybacks are executed via governance proposals — with repurchased tokens burned or stored in the treasury. While this can support prices, it leaves token holders uncertain about timing, scale, or follow-through, since teams still influence proposal results. In contrast, Bifrost Tokenomics 2.0 implements fixed, monthly buybacks: 100% of protocol profits are used to repurchase BNC from the market. 10% of buybacked tokens are burned (deflationary), and 90% are redistributed to bbBNC holders. The 10% burn creates long-term scarcity and upward price expectations. The 90% redistribution acts as a dividend mechanism for bbBNC holders. So what is bbBNC, and why we redistribute profits this way? bbBNC is a non-transferable token and revenue-sharing representation voucher, obtained by locking BNC or vBNC. The more and the longer you lock, the more bbBNC you receive. The maximum lock duration is 4 years. As time passes and the unlock date approaches, bbBNC linearly decays. If you’re familiar with Curve’s veCRV, this should sound familiar. This model ensures that greater rewards flow to long-term believers rather than short-term speculators. Those believers — who share Bifrost’s mission and contribute consistently — form the backbone of our community. Final Thoughts In designing Bifrost’s tokenomics, one principle has guided us throughout: Build to Earn. Token rewards are distributed according to each participant’s contribution to the network’s development and resilience. Under this principle, we choose to walk with long-term builders. It is the builders — those who stay, build, and believe — who sustain a protocol’s productive capacity. Speculators will always be part of the market — and that’s healthy. But for a project to truly thrive, it must cultivate a strong, committed base of stakeholders — its community. These are the thoughts I’d like to share with fellows.