I. Overview

I. Overview

Token is an electronic certificate that can be issued, circulated, destroyed, etc. in blockchain projects. It is also translated as "pass", "pass" or "token". One of the applications of Token is encrypted digital currency. In recent years, research on Token issuance and circulation has attracted more and more attention. The Token economic system is considered by many people in the industry to be an equally important or even more important blockchain value creation point than public chain projects and Dapps (decentralized applications). A complete system for designing and managing Token is called "Token Economic System". The system is the economic environment that includes various economic roles and conducts activities such as issuing, trading, transferring, and destroying specific Tokens.

2. Background and principles

The Token economic system has attracted people's attention and heated discussions at this stage. It has its background: with the great development of the Internet industry in the 21st century, the product- and service-oriented business model developed in the second industrial revolution has gradually Change to a user-oriented model. In the history of the evolution of labor production, the main productive forces have changed from primitive communes, handicraft workshops, workshops, joint-stock companies, etc. to more general organizational forms. Today, the status of users has become so important: users are the fundamental core of consumption. In some fields, the company has not achieved profitability for a long time, but the large number of users it attracts can still make the company stand out in the financial market; The network effect formed by gathering a large number of users has become an important factor for giant companies to expand their industries and defeat the enemy. The huge effect of user agglomeration is also an important reason why many small companies quickly grow into giants. Conversely, today, when the status of users is becoming more and more important and users generate more and more value, users themselves also expect the value they create to be able to give feedback to themselves; and the Token economic system is expected to achieve this.

Token can be used as an encrypted digital currency. In addition to the nature of currency circulation, it can also store data and be programmed. This feature allows us to use Token to make a more refined and richer design of the economic system, assign more rights to users, and treat users as members of "enterprises"; for example, to establish an autonomous community with blurred boundaries, The user's contribution is measured and rewarded through Token, and Token can also help users obtain income, vote to influence community decision-making, etc.

Essentially, Token brings new possibilities for benefit distribution. Circulating Token in a suitable way allows us to:

(1) Create an economic system in a more convenient and compliant manner;

(2) Control the circulation of currency in a more refined and controllable manner;

(3) Expand the boundaries of the economy and attract more people to join the community.

The Token economic system can bring many benefits to enterprises and organizations, but it is still not easy to design a relatively complete Token economic system. For the existing Token economic design cases, an important principle is: Token needs to have a solid value foundation.

The legal currency is issued by the country, and the country's credit establishes the basic value foundation for the legal currency. Cases of the collapse of national credit and the subsequent sharp depreciation of the currency are not uncommon in history. The most recent example is Venezuela. Token also needs a certain value base, which can be some kind of trust endorsement, or some kind of value exchange (such as GUSD for 1:1 exchange with the US dollar, etc.), or some kind of usage scenario (such as business management dividend rights, etc.). All in all, Token needs to have a certain "value" before it can meet the conditions for its transaction and circulation.

3. Practice: Cold Start and Distributed Autonomous Organization

At present, the research on the Token economic system is still in progress, but there is no mature and complete theory or solution in the industry yet. Although the theory is not fully mature, there are already many examples of trying and exploring the Token economic system in the market, and "cold start" and "distributed autonomous organization" are application cases that have made rapid progress and accumulated certain experience.

The cold start focuses on the rapid growth of the core users of the project in a short period of time. Taking the FCOIN exchange as an example, the exchange pioneered "transaction is mining". The user's transaction fee generated by the exchange will be returned by the equivalent FT (Token issued by FCOIN) the next day.

The core value of the exchange is to match transactions, and the depth of the transaction is the core business data for the exchange. The transaction of each token is a kind of network behavior, which is technically very suitable for incentives using Token. Therefore, FCOIN provides strong incentives for the depth of transactions, and the transaction volume accumulates to a very considerable level in a short period of time. The benefit brought by "transaction is mining" is that FCOIN has grown into the world's largest exchange in terms of transaction volume in just one week.

In the design of FT, "equal return" and "dividend" provide it with a certain value basis. "Equivalent return" is equivalent to exempting the transaction fee (according to the earliest rules, users can even get more FT than the transaction fee). And "dividend" means that users can enjoy the profit dividends of the FCOIN exchange in the later stage according to the proportion of FT held. Therefore, the essence of FT is to cash out the future dividend income of the exchange in advance, and use it to return user fees in the early stage. In this process, as long as the exchange can maintain stable income in the future, users can get the return of handling fees and dividends. The essence is that the exchange obtains a large number of users through profit distribution, which is a win-win situation for both parties.

However, in real life, two months after FCOIN started "transaction is mining", the unit price of FT plummeted, and the community voted to destroy all remaining FT and shut down mining. This is mainly related to the fact that the FCOIN team underestimated the scale of user mining and the premature release of the exchange's future profit dividends. In the final analysis, the value foundation of FT is still weak, and it has not played a role in stabilizing the price of Token.

However, FT still brings a lot of inspiration to people, and its approach may be translated to projects with specific offline application scenarios. As for the value anchoring of Token, in addition to the way of dividends, methods such as repurchase, contraction, and exchange can also be considered according to actual scenarios, or methods similar to financial means; Tokens with a gradually decreasing amount can be used to encourage users to hold them for a long time and reduce selling; or to reward users who have held them for a certain period of time as the number of token changes increases, so as to encourage early purchases, etc.

In the early stage of the company's operation, the Token economic system can provide an effective form of cold start; in the later stage of the company's operation, the system can develop into a community operation method. Still taking FCOIN as an example, in the design of FT, the number of FT held by the team is unlocked synchronously with user mining. In this scheme, the team has no incentive to hold FT for a long time. If the team sells immediately after obtaining FT, the number of FT held by the team will decrease, and eventually the team will exit and all FT will be circulated in the market.

Users can use FT as a vote for community decisions through pledges and other methods. The main business of the exchange is the "boarding" of blockchain projects, and this business can be decided by community users' votes. And because the FT held by the user can get the dividends of the exchange, so the user's vote has the power to make the exchange develop better. In this way, it is equivalent to the start-up team leaving after receiving the benefits of creating the community, and the company is transformed into a community, which is jointly operated by community users.

This governance scheme is also known as a Distributed Autonomous Organization (DAO). The traditional company system often has a clear superior-subordinate relationship, and because the demands of employees and users are different, the company's decision-making often fails to reflect the changes in the needs of users. However, in this community-based organizational form, except for a small number of fixed maintenance personnel, most of the remaining members are users. The will of users can be directly reflected in the decisions of the community. This form of organization should be very beneficial in areas where user needs need to be sensitively and quickly reflected in company decisions.

Four. Summary

Four. Summary

In the user-centered Internet economic environment, the Token economic system has gradually attracted people's attention. Today, when the Token economic system is not yet fully mature, the practice of cold start and community operation can already bring us some inspiration. However, no matter what function is implemented, the value basis of Token is still the core problem that needs to be solved. In the final analysis, only a token with a solid value foundation can have a stable price, and then be held and circulated by people for a long time in the system.