What Does It Mean by Regenerative Economy in Web3? An applied Hyperstructure for Future Works.
I do believe the current state of NFT space is degenerative in which every effort doesn’t generate values and future earnings; the practice of make, use, and lose paradigm. Regenerative economy simply means how a household is able to thrive and recycle its resource and sustain for a long time, fulfilling the needs of the community within the means of ones capital.
THE TRIAD OF DOXA
Doxa is the basic principle, a tenet that shapes the paradigm of how we are going to see this new economic model in the space. Before engaging with all of the supporting variables, we need to comprehend this principle better to guide us to a regenerative system.
Restorative View
Restorative view is to restore, reuse, repair, recycle, refurbish, reintegrate, and maintain things in their best condition. “Let food be thy medicine and medicine be thy food”. This quote though thousands of years old, acknowledges the importance of maintaining and restoring one’s health condition. You may see this far fetch to the economy but really, the economy is people management. Economics boils down to what incentives drive the desired behaviors within the economy.
Distributive View
Distributive view is the goal to fight inequality and social disparity. This means by achieving equity (equality), how people can get the same access, not only based on those who have economical capital but also cultural capital and labor, which are essentially time and power. “Structuring an economy as a distributed network can more equitably distribute the income and wealth that it generates” excerpt from Kate Raworth. This can be strategized with hyper-structure and network thinking.
Composable View
Composable view is the ability to combine distinct components with a system that is not rigid. The goal is to create resiliency and freedom where people are able to mix&match things. It also has the ability to communicate and work with each other (interoperability). This means that any endeavours made should be able to be replicated, self-sustaining, freely used, and forked by everyone in order to achieve a regenerative culture. Composability will unleash unlimited creativity and give birth to the next astounding innovations.
LAYER OF INFRASTRUCTURE
Layer of infrastructure is the first layer of a regenerative economy, it is the predetermination and the igniter of the whole ecosystem.
Initiatives
Becoming an NFT project member means becoming the owner, customer, and active participant of the community. This is where initiatives take part in building a healthy and strong foundation of a project, from bottom to top, and a grass root endeavour. Community initiative is the fuel to fly a rocket to reach its destination, together with the founding members.
Value
The difference between doing trading and making business is in value creation. Running a business means generating value by solving people’s problems much better than anyone in the space, whether it is achieved through functional, self-expressiveness, or emotional benefits.
Revenue
In the conventional world, revenue simply means income. This income will feed the household operation, marketing, brand development, future roadmap, and anything that needs capital to growth, expand the household equity, and feed everyone who makes a contribution. Within this context, revenue doesn’t need to be imbued with margin. Let’s say you lend money to someone without expecting an interest or giving a grant to a non-profit organization. This is where compassion, benevolence, empathy, and contribution are taken into account in this new economic model. In a nutshell, this revenue can be something that represents a social cause, impact, movement, and any cost to incentivize people (revenue for their labor).
Treasury
Treasury is where wealth is kept, the place of deposit and disbursement of collected funds. More wealth means higher equity which makes a more resilient household. Imagine living in an underdeveloped state providing a low standard of living and quality of life compared to a developed state with a higher standard of living and quality of life, which one do you prefer to reside in?
LAYER OF TRANSFORMATION
Layer of transformation is the third layer of regenerative economy, it is transformation generated by several variables.
Co-Creation (Initiative to Value)
The old-fashioned way of creating value is one direction, centralised, driven by the company. While co-creation means making a value together with a community, interactive, giving opportunity and power to the people, essentially driven by the people who support the project.
Sustainability (Value to Revenue)
Sustainability pertains to a system that maintains its own viability that allows for continual reuse, and how a household is able to maintain or keep going as an action of a process. Sustainable products/services won’t be achieved without a value, a value that can benefit the ones who consume them, and also give incentive for those who have contributed to sustaining the regenerative ecosystem (retroactive reward).
Asset Growth (Revenue to Treasury)
NFT holds monetary value like a BV (Book Value) in stock. The formula to calculate the worth of the asset you hold is by dividing the supply of the project’s collection by its treasury. Take a Mindblowon Universe as an example. This project has 6,969 supply with 4,000,000 USD in treasury, which means the value of the NFT is (4,000,000 USD/ 6,969 NFT) equal 573 USD per NFT. That’s how much it is worth. Generating more revenue means holding more treasury. The higher the treasury the more valuable the project is. By knowing this concept, then we can have the paradigm to always grow and maintain one’s asset which will become equity.
Value Transformation (Treasury to Initiative)
You can judge a value of a project by its financial and non-financial benefits. Whether it is from the floor price, treasury, utility, perks, and access to capital or exclusive community. People will hold their assets if they think the holding value is greater than the selling value, and people will sell if they think the holding value is less than the selling value. Having an abundant or adequate treasury means a higher holding value and more access to do anything within the consensus of the community. But this treasury is worth nothing if it’s not transformed into ideas and invested in people through initiatives. Remember, money is a number and numbers don't end. You can eat all the money in the world and be nothing.
LAYER OF IMPACT
When all the layers of variables and transformation are intact, work as expected. The result will affect the community growth, IP expansion, financial growth, and the business’ health.
Community Growth
There is a qualitative and quantitative judgment within community growth. Quantitative judgment is the number of unique holders, the bigger the better. Qualitative judgment is looking at the understanding of project’s distinctive end goal and they believe that the end goal is beneficial to them. And as well as peoples abilities to grow, enrich, and transform themselves from zero to hero. All of these qualitative aspects will bring loyalty, which leads to referrals, creating an external demand and increasing the number of unique holders.
IP Expansion
Imagine Disney, they have all of these products from resorts to theme parks, tv channels, movies, toys, comics, and any products they can milk for commercialization. These expansions can be achieved through content distributions, experiences, products, and connections. But what makes it different in web3? these expansions will be driven by the community. There are 3 rules for creating projects within web3: crowdfunding, crowdsourcing, and crowd-building.
Financial Growth
Financial growth means the increase of accumulating assets over a period of time. This can be measured not only from the treasury, but social media followings, members network, brand equity, and portfolio which able to generate money.
Business Health
At last, the dreams of all builders are to make a healthy company not only from the financial performance but the well-being of all stakeholders both internally and externally.
Let’s go from degens to regens!
ADDITIONAL INFORMATION
Tooling and Tech Layer
These are the tools and tech layers to manifest a value creation ecosystem that aims to build a regenerative economy in their project.
Treasury to Initiative
- Gnosis
- DAO Contract
Initiatives to Value
- Discourse
- Decentralized Chat
- Snapshot
- Voting Mechanism
- DID (Social Credentials)
Value to Revenue
- Smart contract-based Marketplace
Co-Creation
- Coordinape, Sourcecred, POAP (To record contribution and attendance)
Sustainability
- DAO
- Tokens
AssetGrowth
- Holochip
- Smart Contract
- NFT
DISCLAIMER
This economic model is not peer-reviewed and was primarily built for Mindblowon Universe NFT value creation ecosystem and might need adjustment to implement in different cases of projects. This economic model will be improved overtime by observing actual use cases in various projects.
CREDITS
I’d like to thank everyone who inspired me to write and stitch all of these ideas; Buana Perkasa Putra — Project Lead of Mindblowon Universe NFT, Mario Nurcahyanto — Team Lead of Parallax Network, and Yanzero — Nouns Community. Some of the ideas are also recycled from Kate Raworth in her book Doughnut Economy and Kevin Owocki in his book GreenPilled.
ABOUT THE WRITER
Jagad Marcelleno is a marketing practitioner, art manager, climate activist, and web3 consultant. Jagad is experienced in leading various projects mainly in the creative industry with fundamental knowledge of branding, marketing, research, visual art, and web3.
Comes with a strong business mindset, management skills, and creative background, Jagad has the competence to manage projects end-to-end and work cross-functionally to implement strategy along with the team. Between his work, Jagad is resiliently sharing knowledge about climate activism, sustainability, the making of distributives and regeneratives economy through democracy, decentralization, blockchain, and Web3
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