We upgraded from DeFi 1.0 to DeFi 2.0. What does that mean for the economics?

Here's Tokenomics 2.0 🧵

TLDR: economic balance.
DeFi 1.0 was to build the infrastructure and tools in finance. Think of it as the basic foundation in your skyscraper.

DeFi 2.0 is to use that existing foundation and built that skyscraper.

E.g. stablecoin for transaction.
Interest-bearing stablecoin for capital leverage.
Tokenomics 1.0 is to realise the existence of the tokens to create value. To look at bootstrapping your community with tokens, gov tokens, native incentives.

Tokenomics 2.0 is to leverage the community and start looking at long-term value growth.
We look at general cycle flow: value creation -> value distribution -> value realisation

(FYI: That is the basic core definition of #economics) Image
What is that?

Value creation = long-term growth
Value distribution = short-term growth and asset inflation
Value realisation = real value growth to your active users
In Tokenomics 1.0, we focused a lot on yield farming, short-term growth, token inflation, and hopefully real value to your users.
The conversation now is to move towards creating a sustainable long-term growth in your market.

That could be to leverage the existing community and protocol infrastructure to think more long-term.
You don't build an anti-fragile market without thinking more long-term.
Okay, that is nice. But how does that look like IRL?

We partnered with @VesperFi to look at their long-term growth strategy.
1. Reduce withdrawal fees
2. Increase yield fee for long-term growth
3. Fee revenue allocation
4. Replenish VSP reserves
5. Multi-currency treasury
6. New treasury maintenance
Check out this video to understand this macro economic balance that you need to do, as an economist.

Long-term growth or short-term rewards. I hope you choose the former.

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More from @EconsDesign

7 Dec
What is @oceanprotocol ?

At its core, Ocean empowers and works to give data publishers the power to take control of their data, share data the way they want to, and monetise it.

#data #Web3 #decentralized #cryptocurrency $OCEAN
The main problem that Ocean tries to solve is that we do not feel comfortable sharing our data and also do not really know the true value of our data or how to accurately price it.
If data could be traded openly then the barriers or costs of sharing data could plummet and if we could do that, we could unlock a brand new data economy breaking down the silos that these organisations have created and opening up access to quality data.
Read 7 tweets
26 Aug
Mirror Derivative

@mirror_protocol allows users to create synthetic assets based on real assets, thereby making it easier for users to buy and sell ($mAssets).

#Derivatives #DeFi #cryptocurrency #Blockchain #cryptoderivatives
Example: If a house costs $100,000 but the user only wants to buy $50,000 worth. Then, it can be purchased by splitting 100,000 tokens, each worth $1. The user only purchases 50,000 tokens.
To generate $mAssets, users must collateralise assets worth > 150% (if using stablecoin) or > 200% (if using $mAsset). For example: If you want to mint $100 worth of $mXAU, you must collateralise 150 $USDT or $mBTC worth $200.
Read 5 tweets
25 Aug
Type of Decentralised Bonds

Most projects offer two products at the same time to take full advantage of blockchain and as a mechanism to transfer risk between two groups of people:

#decentralised #bonds #cryptocurrency #DeFi
(1) those wanting a fixed interest rate and (2) those wanting to speculate based on fluctuations in interest rates.
Barnbridge SMART Yield, 88mph, Pendle, APWine, Element and Swivel are focused on this decomposing:
Read 6 tweets
24 Aug
Gyroscope is an all-weather stablecoin that is decentralized, scalable, and highly liquid based on revolutionary new designs. It's not out yet, still in testnet phase. But we'd like to share how the protocol works.

#stablecoin #decentralized @GyroStable
3 main highlights of GYD:

1. All-Weather Stablecoin
2. Dual AMM Mechanism
3. Still in development
Mechanisms:

1. Reserve Based: The reserve ratio, in the long run, is supposed to be 100%
2. Algorithmic: It has a dual AMM model which is basically an AMM in the primary market and an AMM in the secondary market.
Read 10 tweets
30 May
Crypto Economics vs Tokenomics (Thread)

Are crypto economics and tokenomics the same thing? No. Tokenomics is a subset of crypto economics.

#economics #tokens #cryptocurrency #DeFi #blockchain #incentives
Crypto economics is about 3 things:

1. Messages in the past (through cryptography)

2. Economic incentives to be used in the present (through game theory and mechanism design)

3. Desired system properties in the future (through token design)
Tokenomics (or token economics) is a subset of crypto economics. It is basically economics of the token; aka the crypto project. It does not include the crypto-system (aka blockchain technology like #ETH, #NEO, #NEM).
Read 5 tweets
29 May
Supply and Demand 101

In #economics, we always talk about supply and demand. They are 2 lines. And usually when they intersect, that is what we call "market equilibrium". That point where the 2 lines meet is the market price and market quantity.

#market #demand #supply
But what these lines share, is the relationship between both parties. When prices are low, buyers will demand more. When prices are high, buyers will demand less.
It is the opposite for sellers. When prices are high, sellers want to sell more. When prices are low, sellers want to sell less.
Read 5 tweets

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