What is Tokenomics?

Tokenization is the process of converting real-world or digital assets into tokens on a blockchain. These tokens can represent ownership rights, assets, or utility within a decentralized ecosystem. On Cardano, tokenization enables the creation of custom assets and digital tokens that can be securely transacted, traded, and programmed within smart contracts. Tokenization opens up new possibilities for asset management, fundraising, and decentralized finance (DeFi).

Cardano's treasury system plays a critical role in funding development, research, and community projects through a decentralized funding pool, where a portion of transaction fees and inflationary rewards are allocated to a common pool of funds that can be allocated through community governance processes for ecosystem development and maintenance.

Cardano achieves transaction finality through its consensus mechanism, Ouroboros, which relies on the longest-chain rule to determine the valid chain of blocks and ensure that once a transaction is included in a block and added to the blockchain, it is considered final and irreversible.

Transaction mempools in Cardano's blockchain serve as temporary storage pools for pending transactions awaiting validation and inclusion in blocks by network validators, enabling efficient propagation, validation, and prioritization of transactions based on fee rates, gas limits, and other parameters.