Technology, Economics, and Human Behavior: The Art of Token Engineering with Naty Shi

During the final week of Aleph—Crecimiento’s pop-up city in the Web3 hub of LATAM, Buenos Aires—I attended a workshop that really pushed our thinking. Naty Shi, a graduate of the Token Engineering Academy, walked us through the complex layers of designing token economics for various use cases. A few weeks later, we caught up again to explore the subtle art of token design and its vital role in building balanced, sustainable Web3 ecosystems for the future.

Let’s start with the basics. How would you describe token engineering?

Token engineering is a relatively new discipline that pulls from many different areas. People often think it's just about finance, but actually, it’s much broader. It combines elements from finance, technology (like blockchain and smart contracts), psychology, economic behavior, AI, and even law.

\ The goal of token engineering is to create systems that consider human behavior, incentives, and long-term sustainability. It’s about designing ecosystems where people, technology, and economics interact in a balanced way. 

\ What we’re trying to do is build systems that motivate people to engage with Web3 projects and stay involved long-term by aligning their motivations with the project’s goals.

Great! Can you share more about the different roles tokens can play in communities?

Tokens can serve many purposes beyond just being a currency; they can represent reputation, influence, or power within a community. They can be used to reward members who contribute value by mentoring others, sharing knowledge, or supporting various community initiatives. These tokens might then grant decision-making power or offer other benefits within the community.

\ One example is clean energy communities. In these settings, tokens are used to incentivize energy sharing among members. If someone generates excess energy, they can earn tokens that could be traded for resources or used to access other services within the community. Another example could be carpooling, where people earn tokens for sharing rides. In all these cases, token engineers work behind the scenes to ensure the systems run smoothly and sustainably.

What sparked your interest in token engineering?

I’ve been an engineer for over 20 years, but my background is in chemistry, not coding or software. What drew me to token engineering was the process of creating value. I’ve always believed in starting with a clear problem, understanding what users need, and then developing a solution through a well-thought-out process.

\ But in Web3, I noticed that many projects were launching quickly without enough due diligence or quality control. It made me wonder why we aren’t applying the same rigor that civil engineers use to build bridges—structures meant to last. That led me to explore token engineering, where I found a framework that applied the same thoughtful, process-driven approach I was used to. 

\ I started studying at Token Engineering Academy, and it felt like a natural extension of my experience. Now, it’s what I want to dedicate my future to!

Let’s dive more into the connection between human behavior and token engineering.

Sure! Token engineering focuses on creating systems that are sustainable and scalable, but it’s not just about the technical aspects. One of the key principles is designing incentives that align human behavior with the goals of a project. You’re not only assigning value to tokens—you’re building systems that influence how people engage with a community. The goal is to guide individuals toward positive actions and discourage negative ones.

\ This is where psychology and game theory really come into play. Human behavior is unpredictable, shaped by experiences, culture, and emotions. Here in Latin America, for example, where people have faced economic instability more often, they might respond to financial volatility with a sense of resilience. In contrast, someone from a stable economy might show more concern in the same situations.

\ As a token engineer, you have to consider these different reactions. While game theory helps predict certain behaviors, human psychology adds another layer of complexity. The most effective token systems are flexible enough to adapt when people act in unexpected ways. 

\ It’s all about creating frameworks that motivate positive contributions while keeping the system stable, even when things don’t go as planned.

Is there a framework you’d recommend to someone starting out with token design?

The first step is to define the purpose of your token. This means being clear about what problem the token is solving and how it uniquely adds value to the ecosystem. Are you addressing a gap in the market or creating incentives that weren’t possible before? Understanding this will help guide your decisions, from tokenomics to governance models. Without a clear purpose, the token is unlikely to deliver meaningful value.

\ The second step is to ask yourself whether you even need a token. It can be tempting to create one just because it’s trendy, but tokens should only exist if they solve a real, critical problem for your project. Could you achieve the same results without a token? If a token isn’t adding clear utility or value, it’s often better to explore alternatives.

\ Next, step three is about identifying your users and actors. Tokens don’t operate in isolation, so you need to understand who will interact with your system and their needs. Your users actively engage with your product, but you also need to consider external actors—investors or stakeholders who may influence the ecosystem without using the product directly. Knowing these groups and their motivations will shape how your token functions and the incentives you create.

\ Step four involves deciding on the type of token. For most projects, utility tokens are the simplest and most flexible option, designed to provide access to a product or service within your ecosystem. Security tokens, on the other hand, come with stricter regulatory requirements and are better suited for projects with complex financial structures. Starting with a utility token allows you to focus on building the core of your project before diving into more legally complex options.

\ Once the token type is clear, the fifth step is generating value. Your token should represent more than just financial value—it should reflect the expertise of your team, the vision behind the project, and its potential for long-term growth. Both investors and users will look for evidence that your token holds value beyond speculation, and trust will come from how well you articulate and deliver on that value over time.

\ For step six, focus on distribution. This is one of the trickier aspects. Your tokens need to be distributed in a way that encourages long-term engagement, not just short-term speculation. Poor distribution can lead to a price crash, damaging the project’s credibility. Consider distributing tokens over time or tying them to key milestones to keep users invested in the project’s success.

\ Finally, step seven is all about documentation. Properly documenting your token’s design and functionality is crucial for transparency. Good documentation builds trust with users and investors, showing that you’ve considered potential challenges and solutions. It’s not just about having a great idea—you also need to show that you’ve planned for the long term and are ready to adapt as the project evolves.

When you analyze token ecosystems, what are some common red flags?

The first thing I look at is the purpose of the project. If it feels like a copy-paste of something else without bringing anything new, that’s a big red flag. After that, I check the documentation—it always reveals whether the team has really planned their approach and how they’ll grow over time. If the documentation is missing or unclear, it’s usually a sign that the project might not be fully ready.

\ I also focus on how the token is structured, especially when it comes to voting power. If a few whales have too much control, it can lead to centralization, which hurts the project in the long run. A good governance model should make sure things stay balanced.

And finally, I have to ask—what’s your take on memecoins?

Memecoins aren’t really my thing, haha! But I do think more people should learn about token engineering hands-on. It’s a powerful tool for bridging Web3 and traditional industries. In traditional businesses, there are set processes to ensure quality, but in Web3, things can move so fast that sometimes quality gets overlooked.

\ The challenge is to find a balance between innovation and responsibility. There’s a lot of room for experimentation, but we also need to focus on building robust and sustainable systems. Especially here in Latin America, with so many projects taking off, it’s key to focus that growth on building something that lasts.