🤔In the first part, we talked about the concept of Tokenomics and its function.
also , finally we explained how a blockchain or first layer protocol works with tokonomics.
🔰 In this section, we want to examine the tokonomics in the second layer protocol and what that make it valuable:.
before going further lets take a look at initial offering types :
Project developers must have a source of fund to create and execute their projects. They do this through public sales (ICO, STO, IEO).
ICO>>(An initial coin offering (ICO) is the cryptocurrency industry's equivalent to an initial public offering (IPO). A company seeking to raise money to create a ...)
STO>>(The acronym STO stands for Security Token Offering, an increasingly important concept in the financial world. STO is a process in which (investors are issued a crypto coin or token.)
IEO>>( An initial exchange offering (IEO) is a way for start-up companies to raise capital by selling utility tokens which confer preferred status with the company through a cryptocurrency exchange platform)
In the meantime, aspiring investors can buy in-app tokens and fund developers through first-class tokens (in most cases). Achieving this goal means answering several questions.
⚪How does the app respond to the Initial Offering ?
⚪How do first recipients receive rewards?
⚪Who are software developers responsible for?
For the ICO to be successful, the token must be fully dispersed in the ecosystem. Since the main goal is to build a decentralized environment, scattered token distribution is highly desirable. This goal can be achieved in different ways:
⚫Make sure the tokens are widely distributed and not owned by the whales. Whales are wealthy investors who tend to have large amounts of tokens.
⚫Whales already pay for gas to be ahead of the rest. The ICO must find a way to prevent it.
To develop the flow of tokens in the ecosystem, people are rewarded for the work they do, which leads to increased project participation. To do this, the following must happen:
⚫The team behind the project must receive money for the time it spends.
⚫With this in mind, there should be certain restrictions that prevent them from removing tokens quickly. To do this, there must be a waiting
a certain time before they can convert the token into cash.
⚫People who quickly embrace the ecosystem should be encouraged to receive rewards.
✳️How should an Initial offering be designed?
We need to know a few things before understanding the initial release design. Let's first look at the general issues and principles of initial public offering:
-Sufficient fund must be obtained during the initial public offering process. The company must have an amount of capital in mind that will help the company invest and pay its employees.
-The earlier people how trust in the company are the first people to participate in the initial public offering.
✳️As you might have guessed, the value of a token is essential to the success of an initial public offering. This is important for several reasons:
-Increase the company's reputation and increase attention to products
-Pay bonuses to investors
-Attract more investors to the ecosystem. This investment is of two types. People who suffer from FOMO and want to buy the tokens immediately . Other ---> traders who have more experience buying the token after careful consideration.
🔰 Factors determining the value of the token:
This issue has two parts. The token value consists of the following:
1-Intrinsic value: The value that a token gains from the credibility and usefulness of its project.( EXP: ethereum ,matic ,fantom ,solana &... )
2-Speculation Value: The value of a token from speculators who expect its price to fluctuate in the near future.(EXP: Like what we have seen in dogecoin and shiba token growth by whales)
Speculative investors are an important part of an ecosystem. However, it is dangerous for tokens to be fully priced by speculators. For stability, a token must be strongly based on its intrinsic value. So how does a token get intrinsic value? Intrinsic value is obtained through the project and how much of this value is received by the token.
🔰 This is one of the main functions of tokens. William Mougayar coined the term with three principles behind token value.
According to Mougayar, the three principles behind token value include the following:
1-Role
2-Features
3-Goals
Each role has a key purpose, as depicted in the above chart.
⚪The Right
Owning a token bestows a right that results in product usage, a governance action, a given contribution, voting, or plain access to the product or market. In some cases, tokens will grant real ownership, even if most organizations are trying to avoid passing the Howey Test by skirting around the ownership aspect. For examples, look at Numerai, DigixDAO, FirstBlood and Tezos.
⚪The Value Exchange
The token is also an atomic unit of value exchange inside a particular market or app, resulting in the creation of a transactional economy between buyers and sellers. This consists of features that allow users to earn value and to spend it on services that are internal to the inherent ecosystem. They can earn it by doing active work (real work and actions), or passive work (e.g. sharing data). The creation of such an internal economy is arguably one of the most important outcomes, and one that must be sustained over time. For examples, look at Steemit, Kik, Tezos, and Augur.
⚪The Toll
Just like paying a toll to use a freeway, the token can be the pay-per-use rail for getting on the blockchain infrastructure or for using the product. This also ensures that users have skin in the game. It can include running smart contracts to perform a specific function, paying for a security deposit, or plain usage fees in the form of transaction fees or other metered metric. For examples, look at Gnosis, Augur, Melonport, Tezos, Dfinity, Ethereum, and Bitcoin.
⚪The Function
The token can also be used as a lever to enrich the user experience, including basic actions like joining a network, or connecting with users. It can also be used as an incentive, if it is given in return to begin usage or for on-boarding. For examples, look at Dfinity, Steemit, Civic, and Brave.
⚪The Currency
The token is a very efficient payment method and transaction engine of choice. This is key for enabling frictionless transactions inside these closed environments. For the first time, companies can be their own payment processors without the cumbersome or costly aspects of traditional financial settlement options. Tokens offer a much lower barrier for processing end-to-end transactions inside a given market.
⚪The Earnings
An equitable redistribution of the resulting increased value is part of what blockchain-based models can enable. Whether it is profit sharing, benefits sharing or other benefits (such as from inflation), sharing the upside with all the stakeholders is expected.
Sources:medium
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate.
🔰 In this section, we want to examine the tokonomics in the second layer protocol and what that make it valuable:.
before going further lets take a look at initial offering types :
Project developers must have a source of fund to create and execute their projects. They do this through public sales (ICO, STO, IEO).
ICO>>(An initial coin offering (ICO) is the cryptocurrency industry's equivalent to an initial public offering (IPO). A company seeking to raise money to create a ...)
STO>>(The acronym STO stands for Security Token Offering, an increasingly important concept in the financial world. STO is a process in which (investors are issued a crypto coin or token.)
IEO>>( An initial exchange offering (IEO) is a way for start-up companies to raise capital by selling utility tokens which confer preferred status with the company through a cryptocurrency exchange platform)
In the meantime, aspiring investors can buy in-app tokens and fund developers through first-class tokens (in most cases). Achieving this goal means answering several questions.
⚪How does the app respond to the Initial Offering ?
⚪How do first recipients receive rewards?
⚪Who are software developers responsible for?
For the ICO to be successful, the token must be fully dispersed in the ecosystem. Since the main goal is to build a decentralized environment, scattered token distribution is highly desirable. This goal can be achieved in different ways:
⚫Make sure the tokens are widely distributed and not owned by the whales. Whales are wealthy investors who tend to have large amounts of tokens.
⚫Whales already pay for gas to be ahead of the rest. The ICO must find a way to prevent it.
To develop the flow of tokens in the ecosystem, people are rewarded for the work they do, which leads to increased project participation. To do this, the following must happen:
⚫The team behind the project must receive money for the time it spends.
⚫With this in mind, there should be certain restrictions that prevent them from removing tokens quickly. To do this, there must be a waiting
a certain time before they can convert the token into cash.
⚫People who quickly embrace the ecosystem should be encouraged to receive rewards.
✳️How should an Initial offering be designed?
We need to know a few things before understanding the initial release design. Let's first look at the general issues and principles of initial public offering:
-Sufficient fund must be obtained during the initial public offering process. The company must have an amount of capital in mind that will help the company invest and pay its employees.
-The earlier people how trust in the company are the first people to participate in the initial public offering.
✳️As you might have guessed, the value of a token is essential to the success of an initial public offering. This is important for several reasons:
-Increase the company's reputation and increase attention to products
-Pay bonuses to investors
-Attract more investors to the ecosystem. This investment is of two types. People who suffer from FOMO and want to buy the tokens immediately . Other ---> traders who have more experience buying the token after careful consideration.
🔰 Factors determining the value of the token:
This issue has two parts. The token value consists of the following:
1-Intrinsic value: The value that a token gains from the credibility and usefulness of its project.( EXP: ethereum ,matic ,fantom ,solana &... )
2-Speculation Value: The value of a token from speculators who expect its price to fluctuate in the near future.(EXP: Like what we have seen in dogecoin and shiba token growth by whales)
Speculative investors are an important part of an ecosystem. However, it is dangerous for tokens to be fully priced by speculators. For stability, a token must be strongly based on its intrinsic value. So how does a token get intrinsic value? Intrinsic value is obtained through the project and how much of this value is received by the token.
🔰 This is one of the main functions of tokens. William Mougayar coined the term with three principles behind token value.
According to Mougayar, the three principles behind token value include the following:
1-Role
2-Features
3-Goals
Each role has a key purpose, as depicted in the above chart.
⚪The Right
Owning a token bestows a right that results in product usage, a governance action, a given contribution, voting, or plain access to the product or market. In some cases, tokens will grant real ownership, even if most organizations are trying to avoid passing the Howey Test by skirting around the ownership aspect. For examples, look at Numerai, DigixDAO, FirstBlood and Tezos.
⚪The Value Exchange
The token is also an atomic unit of value exchange inside a particular market or app, resulting in the creation of a transactional economy between buyers and sellers. This consists of features that allow users to earn value and to spend it on services that are internal to the inherent ecosystem. They can earn it by doing active work (real work and actions), or passive work (e.g. sharing data). The creation of such an internal economy is arguably one of the most important outcomes, and one that must be sustained over time. For examples, look at Steemit, Kik, Tezos, and Augur.
⚪The Toll
Just like paying a toll to use a freeway, the token can be the pay-per-use rail for getting on the blockchain infrastructure or for using the product. This also ensures that users have skin in the game. It can include running smart contracts to perform a specific function, paying for a security deposit, or plain usage fees in the form of transaction fees or other metered metric. For examples, look at Gnosis, Augur, Melonport, Tezos, Dfinity, Ethereum, and Bitcoin.
⚪The Function
The token can also be used as a lever to enrich the user experience, including basic actions like joining a network, or connecting with users. It can also be used as an incentive, if it is given in return to begin usage or for on-boarding. For examples, look at Dfinity, Steemit, Civic, and Brave.
⚪The Currency
The token is a very efficient payment method and transaction engine of choice. This is key for enabling frictionless transactions inside these closed environments. For the first time, companies can be their own payment processors without the cumbersome or costly aspects of traditional financial settlement options. Tokens offer a much lower barrier for processing end-to-end transactions inside a given market.
⚪The Earnings
An equitable redistribution of the resulting increased value is part of what blockchain-based models can enable. Whether it is profit sharing, benefits sharing or other benefits (such as from inflation), sharing the upside with all the stakeholders is expected.
Sources:medium
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate.
