ERC20 Token Total Supply, When to Mint, When to Burn?

Question

1. What formula should be used to determine the initial amount of tokens you want to be in your total supply?
2. When does it make sense to mint tokens?
3. When does it make sense to burn tokens

For question one, would it be simply based on how you would want your token used? For example, I rather have people commonly send 100 myCoins rather than .0001 myCoins and therefore I would need a bigger supply. I guess we would also have to consider the amount of coins that would potentially be used on a daily basis to interact with your dApp.

As for questions two and three, would those be just for simple control over supply / demand? What scenarios would you use mint/burn for?

Answer 1

For question 1 I think you're point about the scale being important is correct, buying something with 10 tokens instead of .0000001 or 1000000 tokens. You should come up with a best estimate of the range you expect the market cap to be and have the supply be within an order of magnitude of that so the range of normal amounts is what most people are used to dealing with.

As for minting/burning, this is dependent specifically on the project. MKR for example is minted only in the case of under-collateralization in an effort to pay off debt via inflation, and it's burned whenever someone uses it to pay off debt. Many tokens just don't have any minting or burning. It completely depends on how the economics are supposed to work.

Answer 2

In my opinion, initial supply is determined at the planning stage.

During the process of ICO sale, minting and burning will be helpful for you. For example, you want to decrease your token price by minting, assuming that total value is the same. Burning would be a good news for investor who likes low circulating supply.

In a sentence, you can control your token price and circulating supply in sale period.