Folks Finance Case Study

How We Helped Folks Finance Redesign Their Tokenomics Before Launch

Folks Finance is a cross-chain DeFi lending protocol that simplifies complex DeFi interactions through chain abstraction. Two months before their token generation event, they engaged Simplicity Group to audit and redesign their tokenomics to ensure a strong launch.

Sector: DeFi / Cross-Chain Lending Services: Tokenomics Audit, Token Economy Design, Token Modelling, Exchange Listing Support Duration: 3 months

What Problems Did Folks Finance Have With Their Tokenomics?

Despite building a strong product, Folks Finance had several tokenomics problems that would have undermined their launch.

Staking Tiers With No Economic Basis

Their staking tier requirements had no connection to the value of the rewards offered. The numbers were arbitrary, which would have resulted in low staking participation and weak buy pressure.

Related: Why staking design matters for token economies

Overestimated Buyback Revenue

The team projected buybacks based on optimistic revenue assumptions. When modelled against realistic scenarios, the expected buy pressure collapsed.

Utilities That Extracted Value Instead of Creating It

Features like yield boosting rewarded short-term capital extractors rather than genuine protocol users. This is a common tokenomics mistake where mercenary capital is subsidised at the expense of real users.

Related: How anti-mercenary tokenomics converts vagrants into users

Missing Tokenomics Fundamentals

Their documentation lacked vesting schedules, emission curves, and clear distribution breakdowns. For a project approaching launch, this was a significant gap.

Related: Why you should not DIY your tokenomics

What Would Have Happened Without a Tokenomics Redesign?

• Users would not participate in staking due to poor reward-to-cost ratios

• Yield boosters would extract value at the expense of genuine users

• An inflated launch FDV would lead to sustained post-launch price decline

• Investors and exchanges would lose confidence in incomplete documentation

How Did Simplicity Group Approach the Tokenomics Redesign?

We used a three-stage methodology combining qualitative audit, quantitative modelling, and full tokenomics redesign.

Stage 1: Tokenomics Audit

A comprehensive audit of every token utility, staking tier, economic policy, and assumption. Each element was evaluated against real-world user behaviour and protocol economics.

Stage 2: Token Modelling

Deterministic modelling in Excel to project buy and sell pressure, staking participation rates, treasury sustainability, and token price performance under defined scenarios.

Stochastic modelling in Machinations to stress-test the tokenomics across thousands of randomised scenarios, capturing unpredictable market conditions that deterministic models miss.

Related: Why you need token modelling before launch

Stage 3: Tokenomics Redesign

Using our proprietary tokenomics framework, we rebuilt the token economy from first principles with new utilities, policies, valuations, vesting schedules, and emissions.

What Did We Change in Folks Finance's Tokenomics?

Redesigned Staking Tiers Based on Behavioural Economics

We recalculated every staking tier so that the perceived value of each tier's benefits matched the cost of participation. When users feel the reward justifies their stake, participation rates increase significantly.

Before: Random staking requirements with no economic basis After: Tier values grounded in quantifiable benefit-to-cost ratios

Removed Value-Extracting Token Utilities

We eliminated the yield boost utility, which functioned as a subsidy for mercenary capital. Every remaining utility was redesigned to align protocol incentives with genuine user behaviour.

Reduced the Fully Diluted Valuation at Launch

We reduced the launch FDV to below $100 million. Launching at a realistic valuation gives the token room to appreciate based on real adoption, rather than launching inflated and collapsing.

Built Proper Vesting Schedules and Emission Curves

We designed transparent vesting schedules and predictable emission curves that were previously missing, giving investors and community members clear visibility on token supply.

What Were the Results?

$1B+ Fully Diluted Valuation at Launch

Folks Finance launched successfully, with the token reaching above a $1 billion fully diluted valuation and a market cap of several hundred million dollars.

Sustainable Post-Launch Price at $60M FDV

The token currently sits at a healthy $60 million FDV, reflecting real protocol usage. Had they launched at an inflated valuation, a sustained price decline would have branded the project as a poor investment and damaged long-term confidence.

Centralised Exchange Listings Secured

We supported Folks Finance in securing centralised exchange listings and negotiated listing terms on their behalf. When exchanges requested large token allocations for community programmes, we provided data-backed counterarguments from an economic safety perspective to negotiate more favourable terms.

3-Month End-to-End Engagement

The engagement covered the full period from initial audit through to launch day, with continuous support for last-minute adjustments and exchange negotiations.

Key Takeaways From the Folks Finance Engagement

Staking tiers must be grounded in real value exchange. When the cost of staking matches the perceived benefit, participation rates increase. Arbitrary tier requirements are one of the most common tokenomics design mistakes.

Not every token utility creates value. Yield boosting and governance for the sake of governance can harm a protocol by rewarding the wrong participants. Every utility must serve a measurable purpose.

Launch valuation determines long-term price trajectory. Launching below $100M FDV gave Folks Finance room for organic growth. Projects that launch at inflated valuations rarely recover from the correction.

Quantitative modelling reveals what assumptions hide. The team had reasonable intuitions, but modelling those intuitions against realistic scenarios exposed critical gaps.

Exchange negotiations need economic reasoning. Having a tokenomics consultant present data-backed arguments protects a project's token supply from excessive exchange demands.

Ready to Launch With Confidence?

Simplicity Group has helped over 200 projects design, audit, and model their tokenomics before launch. Whether you need a full tokenomics redesign or a pre-launch audit, our research-driven approach ensures your token economy is built on solid foundations.

Book a consultation | Learn about our tokenomics consultancy |