Ponzinomics -
Or why most yield in blockchain assets is fake.
- Thread Time 🧵-
#axotrade #cardano #cardanocommunity #ada $ada #defi
Or why most yield in blockchain assets is fake.
- Thread Time 🧵-
#axotrade #cardano #cardanocommunity #ada $ada #defi
1/ Intro
Blockchain projects have a problem where most business models could never work in the long run, or they're only sustainable with a HUGE volume of users
It's a chicken & egg problem, where you need users to have a good protocol, but you need a good protocol to get users
Blockchain projects have a problem where most business models could never work in the long run, or they're only sustainable with a HUGE volume of users
It's a chicken & egg problem, where you need users to have a good protocol, but you need a good protocol to get users
2/ Token Problem
The way most projects fund themselves is by issuing governance or access tokens, allowing you to affect and use the protocol in some way.
The issue is how do you incentivize early adopters into owning the token that won't have a use until much later, or ever?
The way most projects fund themselves is by issuing governance or access tokens, allowing you to affect and use the protocol in some way.
The issue is how do you incentivize early adopters into owning the token that won't have a use until much later, or ever?
3/ Loyalty Points
Projects technically have ultimate freedom in how tokens are created and distributed. So, many projects have taken to bribing early adopters by rewarding them with more tokens the longer they hold.
This is done by blurring the lines of what "staking" means.
Projects technically have ultimate freedom in how tokens are created and distributed. So, many projects have taken to bribing early adopters by rewarding them with more tokens the longer they hold.
This is done by blurring the lines of what "staking" means.
4/ Staking
In its true sense, staking is the act of enabling network security by giving a vote of trust to some entity to secure the network.
Most don't understand the technical nuances, so staking has just translated into inflation via high token rewards to existing users.
In its true sense, staking is the act of enabling network security by giving a vote of trust to some entity to secure the network.
Most don't understand the technical nuances, so staking has just translated into inflation via high token rewards to existing users.
5/ Inflation
Each token created in excess of what is needed to organically expand the project's use devalues all other tokens of its kind.
This is why fake "staking" often involves lockups, so artificially fewer tokens are in circulation, affecting the price.
Each token created in excess of what is needed to organically expand the project's use devalues all other tokens of its kind.
This is why fake "staking" often involves lockups, so artificially fewer tokens are in circulation, affecting the price.
6/ Pyramid-shaped
Given the artificially high paper returns that can be experienced by early adopters, others will be interested in these gains.
Current HODLers also have an economic incentive to "talk their book" and bring new people in, transforming paper gains into real ones
Given the artificially high paper returns that can be experienced by early adopters, others will be interested in these gains.
Current HODLers also have an economic incentive to "talk their book" and bring new people in, transforming paper gains into real ones
7/ Accidental Death
An issue that comes with making too strong of an incentive to stake is that you can potentially kill real desire to use the protocol.
The protocol itself might not provide enough benefits to forego passive staking rewards, so it never gains critical mass.
An issue that comes with making too strong of an incentive to stake is that you can potentially kill real desire to use the protocol.
The protocol itself might not provide enough benefits to forego passive staking rewards, so it never gains critical mass.
8/ Do or Die
There comes a point where a project has enough mainstream attention that it should be viable.
If the primary perceived utility of the tokens is getting more of them, then the project will begin to die as people will realize they're not worth owning.
There comes a point where a project has enough mainstream attention that it should be viable.
If the primary perceived utility of the tokens is getting more of them, then the project will begin to die as people will realize they're not worth owning.
9/ Axoally Real
Given the unsustainability and the degree of perception manipulation necessary with this approach, Axo has opted against offering any staking or automatic yield.
Returns will be gained through providing utility to the platform or via a user's own trading prowess
Given the unsustainability and the degree of perception manipulation necessary with this approach, Axo has opted against offering any staking or automatic yield.
Returns will be gained through providing utility to the platform or via a user's own trading prowess
10/ Doing Things Differently
It is not easy to do things the right way.
It presents its own set of challenges, but it has the potential to create a wholly unique & robust financial ecosystem that attracts real users instead of a mercenary audience that chases degen yield.
It is not easy to do things the right way.
It presents its own set of challenges, but it has the potential to create a wholly unique & robust financial ecosystem that attracts real users instead of a mercenary audience that chases degen yield.
11/ Real Yield
Ponzinomics must die for digital assets to thrive. The era where castles in the air are built should come to an end.
Metrics shouldn't be gamed to trick people.
If we are to change the world of finance, it must be built on solid ground - it must be built on Axo.
Ponzinomics must die for digital assets to thrive. The era where castles in the air are built should come to an end.
Metrics shouldn't be gamed to trick people.
If we are to change the world of finance, it must be built on solid ground - it must be built on Axo.
If you enjoyed this thread, please let us know in the comments, and subscribe to @axotrade 🧵
For something more in-depth, make sure to check out our ongoing History of Finance series:
axo.trade/newsroom/posts…
For something more in-depth, make sure to check out our ongoing History of Finance series:
axo.trade/newsroom/posts…
• • •
Missing some Tweet in this thread? You can try to
force a refresh
