Designing a Token Economy: Incentives, Governance, and Tokenomics
In recent years, tokenomic systems, decentralized systems that use cryptographic tokens to represent value and rights, have evolved considerably. Growing complexity in incentive structures has expanded the applicability of blockchain beyond purely transactional use. Existing research predominantly examines token economies within specific use cases, proposes conceptual frameworks, or studies isolated aspects such as governance, incentive design, and tokenomics. However, the literature offers limited empirically grounded, end-to-end guidance that integrates these dimensions into a coherent, step-by-step design approach informed by concrete token-economy development efforts. To address this gap, this paper presents the Token Economy Design Method (TEDM), a design-science artifact that synthesizes stepwise design propositions for token-economy design across incentives, governance, and tokenomics. TEDM is derived through an iterative qualitative synthesis of prior contributions and refined through a co-designed case. The artifact is formatively evaluated via the Currynomics case study and additional expert interviews. Currynomics is an ecosystem that maintains the Redcurry stablecoin, using real estate as the underlying asset. TEDM is positioned as reusable design guidance that facilitates the analysis of foundational requirements of tokenized ecosystems. The specificity of the proposed approach lies in the focus on the socio-technical context of the system and early stages of its design.