In April 2019, I wrote an article analyzing the ten basic elements of the token economic model (“Ten Basic Elements of the Token Economic Model”). After a year of development, new forms of token applications have emerged in the market. In June 2020, since the Compound team introduced the COMP token, the market immediately saw the impact of COMP on Compound's business volume. This has stimulated the adoption of tokens by various projects and led to the prosperity of the current DeFi and encrypted digital currency markets. This article is some thoughts on the application of the current token model.
There are two factors driving this cryptocurrency bull market, the purchase and holding of Bitcoin by American institutions and the outbreak of DeFi caused by the introduction of tokens.
The governance attributes of tokens are an excuse for the speculative power of the market. Among corporate stocks, the value of governance attributes is only valuable in large-scale companies that have developed. For ordinary users and most companies, governance attributes are not valuable.
The open source of blockchain projects makes technology no longer the decisive factor in determining its success. Other factors, including the token model, determine whether it can be applied and promoted in the market.
In DeFi and public chain projects, ownership does not exist, and the maximum value of the token should be the value it can capture, that is, the input of external value, rather than issuing additional tokens out of thin air.
It is also a feasible option to issue its own tokens to reward staking participants, after all, the Federal Reserve does the same. The key is whether the supported ecology can continue to generate value.
For ecology such as Polkadot and Cardano, its token value is the volume of stable coins and encrypted digital assets input into the ecology.
The pass can be used for fundraising before the product goes online, and it can also be used to reward user participation. But to meet the local regulations.
The distribution of tokens among the team, investors and users depends on the stage of the project, its needs and the purpose it hopes to achieve.
Except for public chain tokens, other tokens may not include payment attributes. The payment attribute increases the burden of the certificate and is not conducive to the value-added of the certificate.
The sustainability of the project determines the long-term value of the token, and sustainability should be designed into the token model.
The design of the token model determines short-term impact or long-term impact. The short-term effect is the overdraft of the future effect.
The total amount of tokens must or can be increased, depending on whether its attributes are closer to stocks or closer to currencies.
If there is no better logic, the total amount of tokens can be set at 1 billion.
Lock drop is an inefficient choice between compliance and helping the project grow
100% fair distribution is not optimal.
