Token Utility & Inflation Model
Last week we covered the Executive Summary of a business plan. This week we’re covering token utility and tokenomics. This is a very important section of your business plan for your decentralized application. The reason being the SEC regulation this year which classifies some tokens as securities and thus would fall under SEC regulations regarding securities (ie: companies have to register and only accredited investors can take part in any initial sale).
However if you are not raising funds through an ICO for your project you shouldn’t have to worry about this. This still makes it harder however to just create another pure cryptocurrency like Bitcoin. As always check with your legal counsel if you are unsure.
Projects with tokens that have other functionality within your dapp makes them more interesting anyways.
You need to think about how and why users need to use the tokens inside of the dapp.
Here are a few examples:
- Use as currency (transfer of value)
- Membership / registration token
- Ticketing usage
- Consumable item
- Voting or poll taking
- Staking, Wagering or Betting
- Ownership claims
- Gamification utility
- Unit of account
- Store of value
When you have an internal economy as with most decentralized blockchain apps, you need ways for users to obtain tokens, spend or use them, and for them to re-enter the economy.
Some economic books for consideration reading and research:
- Capital in the Twenty-First Century
- The Captured Economy
- Capital: A Critical Analysis of Capitalist Production
- Socialism by Ludwig von Mises
Other good read: Conscious Capitalism
Our example Dapp Futuratum (Prediction Engine/Market) With example diagrams which will be useful to create and think about.
|2||TOKEN UTILITY & INFLATION MODEL|
The Futum Token Provides the following:
- Access to predictive data and models via API will require payment in Futum.
- Users (Predictors) are rewarded with tokens for accurate predictive outcomes and data models. Gamification is introduced as accurate users rise in the Futuratum ranking board.
- Users (Speculator) will be able to wager by putting up stake in Futum towards price prediction positions and data models created by other users.
- Futum holders can vote on development and community decisions taken by the Futuratum foundation. Votes are weighted by total Futum holdings.
Our long term roadmap is committed to creating new revenue streams and incentives for users to continue building upon the platform.
After the initial token generation event where 140 million Futum are created, Futuratum will follow a similar DPoS (Delegated Proof of Stake) security model as Lisk. This model is not only energy efficient (unlike Proof of Work) but it incentivized users to be active and supportive of the community and network.
Users can earn Futum by becoming a Futuratum delegate and forging to secure the blockchain. Delegates can also be voted out of the top forging pool by users which promotes good actors and long term service.
Tokenomics & Futum Utility
Initially during the Futum token generation event, 140 million tokens will be created. Futuratum will also follow a similar diminishing return inflation model that Lisk uses, which will allow for Futuratum to build in new revenue streams for users as well as allowing room to grow for future predictive markets on the network.
Lisk Block Generation
Block Generation occurs every 10 seconds within the Lisk network using DPoS consensus, with a block reward of 5 lisk which goes down by 1 lisk every year and ending with 1 lisk indefinitely.
Token Roadmap Utility
|1||Access to predictive data and models via API will require Futum tokens (FUTR).|
|2||Users are rewarded with tokens for creating accurate predictive outcomes and data models.|
|3||All users will be able to incentivize the best predictors by putting up stake in Futum towards price prediction positions and data models created by those predictors.|
|4||Futum holders can cast votes on development and community decisions taken by the Futuratum foundation. Votes are weighted by total Futum holdings.|
Prediction Market Example
In the diagram above, users A, B and C have created a volume % movement predictions on NEO that will finalize in 24 hours. It costs users 1 Futum to create a prediction. Users D, E and F decide to take stake positions in A, B and C respectively with a 10 Futum each. As more users join in taking stakes the cost of taking a stake will go down.
In the following scenario User A’s prediction is the most accurate and wins. All Futum put in as stake on positions is divided evenly between the winning predictor and staker. The winning predictor also claims all prediction fees.
Next week: Competition Comparisons