1/ Tokenomics is on 🔥. Some disdainfully label it "the gift card economy". Others devote a life to perfecting parameters of virtual block rewards. There’s 1000s of tokens out there, and countless cute diagrams for explaining them. Stake, mint, slash - you’ve heard all buzzwords. 
2/ The lowest-level primitives at hand here are rewards and punishments. Carrots and sticks. Incentives and disincentives. In tokenised systems, as @trentmc0 says, rewards = block rewards, and punishments = slashing stake.
3/ @lkngtn states that “tokens uniquely required to incentivize or disincentivize behavior in order to provide a service accrue value relative to that service’s utility”. But is that an absolute truth? Do tokens really capture the value produced by underlying networks?
5/ Traditionally, as @peterthiel says, there’s little correlation between value creation and value capture. Even if valuation models have found their way to assess this disparity in stocks (which is essentially the “glue” of P/E ratios), in crypto it might be more complex.
6/ Value capture happens uniformly in traditional business: work -> value -> price -> sale -> profits (-> dividends). It’s the same framework for all public companies. But not for tokenised networks. Are we talking a means of payment token? A stake-based one? One burnt when used?
7/ Turns out there’s been a lot of experimentation here. What’s the most effective ways for tokens to accrue value? Note that accrue != capture. There’s usually no company to capture and redistribute value, above a blockchain. The network creates and distributes value by itself.
8/ ‘Value accretion' can happen in a range of manners, and that’s why ‘cryptoassets' are a broad category. Within it, there’s 'securitised tokens', that pay dividends; 'stores of value', which encompass BTC and arguably some others; and utility tokens, which are complex beasts.
9/ @KyleSamani has ‘formalised’ a definition for “work tokens” (e.g. @AugurProject, @LivepeerOrg) and “burn & mint” tokens (e.g. @factom, arguably even @blockstack). We’d say “discount tokens” (e.g. $TAY) and “usage tokens” are also parts of the “utility token” genealogy tree.
10/ Each of this ‘categories’ have ‘types’. Work tokens -> stake coins for access to perform work + earn rewards from the network. Work can be objective/commodit. ('pure work token'), subjective (‘TCR token'), or involve minting a new token along the way ('access-based token').
11/ Check the full descriptions on the link 👇. Cool thing is formalisations are starting to pop up. A @multicoincap piece shows that work tokens can accrue up to ~100x more value than a 'proprietary means of payment' token designed for the same purpose.
medium.com/paratii/on-the…
medium.com/paratii/on-the…
12/ Each token 'type' implies different value accretion principles. Some pull demand up when usage grows. Others push supply down.
Some focus on being competitive for miners (value from objective work). Others, on being ‘rewardful' with end-users (value from subjective work).
Some focus on being competitive for miners (value from objective work). Others, on being ‘rewardful' with end-users (value from subjective work).
13/ Inside the "stable coins” group only, there’s 3 main approaches that have been tried so far. Each of them has its own way of accruing value (usually via a dual-token model, since the stable token can’t appreciate by definition).
multicoin.capital/2018/01/17/an-…
multicoin.capital/2018/01/17/an-…
14/ It is a fair critique that a good part of the teams contributing to the entropic experimentation here is underprepared (the argument is weighted by the amount of money in the table).
15/ But it’s worth noting that the amount of brainpower dedicated to experimenting with monetary policies and practical microeconomic modelling is unprecedented. Deploying a currency was simply not something you could do, 10 years ago.
16/ [Side-topic provocation: how much of these designs were driven by regulatory pressure, and how many were actually triggered by the 'organic’ will to accrue more value? - e.g. medium.com/@ethbet/change…]
17/ Anyone is free to be hopeful or panicked by stuff people are trying to do with code and money together. Selectorate theory gives us some hope, though. More people playing with distributing value in large scale = healthier the outcome for society in the long-run.
18/ Not because democratic leaders are intrinsically better people than dictators, as @TaylorPearsonMe puts it, but simply because democracy leaves leaders less agency and power than in the case of dictators.
taylorpearson.me/disintermediat…
taylorpearson.me/disintermediat…
19/ Most of these ‘token models’ will probably die or be crushed by the law, but the few that endure may become subject of the books of the @MichaelEPorter’s of tomorrow. So be patient + enjoy the ride: there will still be a lot of experimentation and bumps along the road. {end
