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, the original author: Sergiy Golubyev, compiled by Odaily translator Katie Ku.Chris Snook (the founder of the World Token Economy Forum) firmly believes that the blockchain will become an important driving force for the transformation of the traditional standard market economy into a token economy.
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If you are a project party (token economy designer), here are 4 points for attention
People are used to the current traditional economic model, in this case, the emergence of token economy will be considered too simple or cautious.
There are differences in peoples psychology. Some people are accustomed to the system, while others tend to be free.
Wrong choices made by artificial intelligence will hinder the development of the token economy.
National jurisdictions with different rules and restrictions have different token economy requirements. The token economy conflicts with certain rules and laws and regulations and structures. It is mainly reflected in the management system, and there are fewer conflicts in resource reallocation.Designing a token requires a clear and systematic process and creates a token economy on the project.
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Nine-part introduction
1. Project and product introduction. Assign product value and identify consumer attributes. Analyze results from project activities and extract tokenizable products from them.
2. Analyze all stakeholders. For example, discover potential customers who are interested in the project and parties that may have an impact on the project, including investors (token holders), product consumers, ordinary consumers, developers, partners (logistics staff, suppliers and intermediaries) and regulators.3. The interests of all parties involved are determined. The token economy considers the interests of all parties to the greatest extent by introducing mechanisms. Mechanisms have different impacts on organizers and project participants, and mechanisms can play a coordinating role in mediating conflicts of interest. For example, by giving benefits and purchase discounts to users with a large amount of currency when purchasing tokens, they can freeze their token sales to achieve the purpose of providing compensation for users.
The goal of the token economy is to combine the effective value of the various activities that the project participates in, while also creating links between the project and other projects.
4. Design token types to maximize the function of ensuring the interests of stakeholders, comply with legal standards, and meet technical requirements (such as utility, security, cryptocurrency, equity, and mixing mechanisms).
5. Design the function of the token on the blockchain platform: such as Ethereum, Stellar, NEO, NEM, Waves, BitShares, Omni and other platforms.
6. Design the token circulation model under the ecosystem. Design basic mechanisms to motivate token holders and stakeholders. Mechanisms include: burning tokens, cashbacks, discounts on purchases, voting, freezing, holding and charging interest and incentivizing token usage. The token model needs to be subject to the national circulation supervision.
7. Design the cost and structure of the project. Plan the development path for the business with the injected investment funds. Fees for project architecture and volume should be aligned with the project roadmap.
8. Token distribution. Such as token distribution structure. Due to the issuance of tokens, the project requires two types of funds for business development, including the sale of tokens by the project party and the acquisition of funds by the project token itself, and the allocation of tokens by token holders, teams, consultants or project communities.9. The forecast economic model composition of the token economy.The pros and cons of the project are reflected in the details of the economic model
, which helps in estimating initial costs and gaining an overall understanding of ecosystem functions and mechanisms. It is important to note the general trend of capitalization of the cryptocurrency market for economic development inferences. Moreover, no economic model is perfect and cannot accurately predict future economic trends.
Usually, the detailed content of the token economy will be displayed on the project white paper. With the design and issuance of tokens, the project can create a unique token economy and ensure the smooth progress of the project.
In 2016, after the issuance of tokens, all functions and mechanisms can be used for free on the token economy structure. With the rapid development of the encryption market and the increase of regulatory authorities in 2017, the legality of token issuance has attracted more and more attention. After the encryption market experienced a market downturn in 2018, the standard business model has attracted the attention of the industry. Currently, cryptocurrency developers have developed more than 3,000 token models, but not all of them are legally compliant and cost-effective. Since the nine keys to the token economy mentioned above have been disregarded, it has become more difficult to create a quality economic model. However, there are a few more things to keep in mind:
Rapid development (or potential for rapid development).
Incentivize ecosystem participants to hold coins, or design longer-term transaction processing to motivate users to continue holding coins. Or encourage token holders and raise exit barriers.
Allowable trading liquidity or other standard quantities are linked to market capitalization.The ultimate goal of an ecosystem is to involve both buyers and sellers.Token sellers in the market need to be paired with this token buyer, not just with fiat or other cryptocurrencies.The key to the business development of the token economy model is to solve the demand, but the token economic model cannot guarantee that the desired goal will always be achieved. Token economy business models need to be clear, while allowing for mandatory changes
