Thread by @fin_nexus

True #DeFi #ecosystem development takes time, dedication and, most importantly, proper #Token incentivization methods.

Here's a thread from @shanghaipreneur about #crypto monetary policy

&

The $FNX strategy to bootstrap network effects.

1/23

medium.com/finnexus/finne…

@shanghaipreneur #DeFi is a movement - the collective vision of everyone all over the world working feverishly towards bringing about a viable alternative to the global financial system.

After all, it's a #brrrrr #brrrr world and, for now, we're just livin' in it.

2/23

@shanghaipreneur Like it or not, every #crypto project starts out as a central bank, like the Federal Reserve.

They then have to figure out how to #decentralize those roles. After all, they are creating a #token that powers their own micro-economy.

3/23

We firmly believe in the ideals of #DeFi, or decentralized finance.

Given the absolute craziness of the past few #Covid_19 months, DeFi represents a satisfying potential way forward that avoids the future unknown consequences of QE Infinity.

4/23

@BorisYangFNX & @rainiefield say in our whitepaper:

“the ultimate goal of FinNexus is to become a fully decentralized open collaborative financial protocol, and a distributed self-evolving business community with open governance.”

finnexus.github.io/Pdfs/FinNexus_…

5/23

However, one does not just snap one’s fingers and say “Decentralize this!” 👌

If it were that easy, we’d already live in a world ruled by little @MolochDAO's everywhere. But we don’t.

True decentralization must be bootstrapped.

And to do that, you need NETWORK EFFECTS.

6/23

Distribution of #token supply must be wide. Network nodes must come from all over the world. The participants in the #ecosystem must be diverse.

In the long run ideal state of a decentralized #network, #governance should not be concentrated in the hands of a few people.

7/23

That ideal state cannot be created by fiat.

(And it is even harder to create by fiat with fiat!) 😂

No, true decentralization takes time. In a rapidly growing industry like #DeFi, in a landscape that changes by the week, flexibility in a #token #economy is critical.

8/23

The $FNX utility token is the key to bootstrapping network effects.

$FNX use cases will evolve over time.

@rainiefield's post here outlines our #token economy.

Max supply: 500mm $FNX
Initial circ supply: 44mm $FNX

Lockup period info here too:
medium.com/finnexus/fnx-t…

9/23

Our monetary policy is like @wanchain_org – capped inflation.

We may live in a #brrrr #brrr world. But that doesn’t mean we should recreate #QEinfinity on the #blockchain!

The proper ethos of crypto, inherited from #bitcoin, is that of disinflationary assets.

10/23

@wanchain_org $FNX inflation will not begin until fees start to be earned via our products & platform.

But pls know that we will never have “inflation for inflation’s sake” as this would ruin the value of the token.

We plan to jealously guard our $FNX like a dragon hoards his gold.

11/23

We have observed the token economies of other second-layer DeFi niche ecosystems, namely @synthetix_io $SNX.

We hope to apply their lessons learned to our own path. What was an also-ran token back in mid-2018 is now a top-50 token with a $150mm mkt cap for 2 main reasons.

12/23

@synthetix_io 1st reason - $SNX founder @kaiynne pivoted his Havven project to something “so much more than just a stablecoin” and rebranded to @synthetix_io

The word “#DeFi” is not even mentioned once in this rebranding blog post:

blog.havven.io/havven-is-tran…

13/23

2nd reason – They established the $SNX inflation pool, a tough decision to inflate by 150%.

On face, it sounds awful, esp. to #bitcoin maximalists and #TradFi guys, particularly occurring when it did at the deepest depths of the crypto winter.

blog.synthetix.io/synthetix-mone…

14/23

The inflation of $SNX turned out to be a roaring success. That’s because the inflation pool “adds incentive for people to participate and contribute at an early stage in the system’s life, which is when it’s most important due to the compounding nature of network effects.”

15/23

At the very nadir of the #crypto bear market, #token holders simply did not want to be active participants in your project.

But stake their tokens and earn some more $SNX by interacting with your platform?

Boom! #DeFi in the @synthetix_io #ecosystem was off to the races.

16/23

The $FNX monetary policy will be a capped inflationary model similar to $SNX or $WAN @wanchain_org.

At launch, 75mm $FNX are for “variable issuance” based on a “fee scale” formula.

Another 150mm $FNX are “operational reserves” that will be more experimental in nature.

17/23

@wanchain_org pp. 26-27 of our whitepaper outlines a basic model based on a “fee scale” formula that will be “automatically adjusted according to the usage of the platform.”

25% of fees collected here go to a “Buffer Fund” 4 insurance like @binance #SAFU Fund or the @BitMEXdotcom fund

18/23

Remaining 75% collected will be returned to $FNX token holders who are active participants on the platform, receiving pro-rata $FNX via the “fee scale” formula. This is a Dynamic Inflation model. A market mechanism determines the appropriate level of $FNX supply inflation.

19/23

We maintain operational reserves of 150mm $FNX.

1/5 will unlock 1 year after 1st listing on @BitrueOfficial then 30mm $FNX tokens each year for 5 years.

We plan to use these $FNX to bootstrap true decentralization via network effects.

20/23

@BitrueOfficial We will incentivize people with $FNX from the FNX op reserves to stake FNX (and other assets, if necessary) into our #ecosystem as we perceive a need for those assets or as issues inevitably arise.

After all, this is #DeFi. And it’s still early on in the industry.

21/23

@BitrueOfficial We want the flexibility to point a monetary policy “bazooka” wherever it provides the most functionality to the project.

As we evolve our cross-chain #DeFi ecosystem, our overarching intention is to reward token holders for their active participation on our platform.

22/23

@BitrueOfficial If you’ve made it here, thanks for reading. We hope it helps answer any questions u might have about how the $FNX team plans on bringing value to (and keeping value in) its #crypto-economic #DeFi ecosystem.

The full Medium post can be found below.

23/23

medium.com/finnexus/finne…