Masmic Tokenomics Explained: The Why and The How
Masmic’s token model and strategy is probably the first of its kind in the crypto industry, and through this approach, we also want to set a healthy precedent for the upcoming projects in this still nascent industry.
We hope that from here on, the crypto sector starts seeing a healthy trend and more projects use this token innovation judiciously.
Critique of the past scenario:
Most of the previous ICOs were conducted even before the launch of the product and in several cases, the success of a particular ICO decided whether the team will work on the product or not which puts into question whether the team was really committed to making the idea a reality. Additionally, high network valuations due to ICO in pre-product stage was always susceptible for disaster!
Teams usually sold a major percentage of tokens to public during ICOs (30–50% and even more) as a means of fundraising. But it caused an ‘incentive problem’ for the teams at the fundamental level, furthered by no regulatory oversight. With million of dollars raised through ICOs and low % ownership of tokens by the team, it had little incentive to pursue the project and thus most projects couldn’t even see day 1. Post ICO, it became only an exercise of exchange listings, and no one cared about actual utility for which token was proposed. Maybe it was a gambler’s paradise, but the whole industry suffered because of this.
So much for a new and revolutionary way of raising funds via ICOs/token sales!
It did more harm to the sector than anyone could have imagined. The whole sector went from everyone in the world taking about it in 2017 to the same people looking at it with a negative sentiment in 2019. The past trend led to an ICO bubble/burst just like there was a dot com bubble/burst in 1999–2002 — the difference is only that ICO bubble was caused by regular retail investors and dotcom bubble was caused by institutional investors/VCs.
But inspite of dotcom bubble, internet was still a revolution, just as crypto is! So, just as sanity for internet/dotcom’s potential was restored in the 2000s post-bubble period, we believe that Masmic has a chance to build the same credibility in the crypto sector. It’s always difficult to predict the actual future, but that doesn’t stop us from having this vision!
Although a crypto-native product from Day 1, Masmic team preferred using a well known currency — XLM instead of our own token. We’ve completely bootstrapped from our own funds to build a decent community of 60,000+ global members that we have today, and did not rely on ICO before product launch to raise funds like all other projects including Binance. Also, we preferred to launch at the peak of bear market to test the actual promise of the idea without any hype. And because of the same reason, you might not have come across any sponsored/paid article with a big media house as of yet, because we haven’t yet felt a need!
With this background, let’s look at how and why token model works in case of Masmic (the actual presale plan is at the bottom of the article):
i) Masmic Attention Token (MAT) is meant for company’s revenue generation and increasing earning opportunity for users, rather than fundraising. How? We would be selling MATs to buyers who want to generate awareness for their products/services on Masmic and majority of this would go to users in the form of incentives. Why would they buy MAT and not post using XLM? Because there will be a discount in transaction cost associated with use of MAT. This is similar to BNB (Binance’s native token) model where you get discounts on trading fees for using BNB and this generates demand to buy, hold and use BNB within Binance.
ii) As a marketplace for user attention, there is both demand side and supply side on Masmic. While supply side is mostly present in other crypto projects as well, demand side is usually missing, e.g. in Steemit (this will be explored in a detailed manner in a future article). A healthy balance between demand-supply is needed for sustainable tokenomics, and Masmic is fundamentally designed in this way.
When we talk about utility tokens, it means a token has some utility within the platform because of which demand side should be willing to buy, use and pay through utility tokens inside the platform, e.g. BNB. The same is going to be the case with MAT.
iii) For any tokenomics model to work well, four things are most important:
- Fixed total supply of token
- Actual demand/utility of token
- Growing demand/utility of this token with time as a result of platform growth
- Healthy balance between token demand and its circulating supply. An example of unhealthy balance is Augur (REP token) where the utility demand is still too small as compared to its circulating supply, showing that there really isn’t a big demand for decentralized prediction market as of now.
If all four factors become true, then based on demand-supply equation, as network becomes larger, the growing network value should accrue in fixed amount of tokens. You can see this in BNB token which has outperformed even BTC in 2018–19, and in case of Masmic as well, all these points will be important.
iv) Masmic is taking on the traditional adtech market which is the largest safe market. From a small blogger to a large social media company, most rely on advertising revenues to sustain themselves. If there is a regular large audience on a platform, it’s a given fact that it will be valuable to some advertiser which finds desirable audience for their products/services; the market for advertising is so huge!
But it’s also a reality that the value of the platform becomes better and attracts more advertisers with a large userbase than a small userbase. For e.g., Coindesk (a crypto news website) with just 1000 visits per day would be much less appealing to advertisers than Coindesk with 50000 visits per day.
Based on our current daily sessions of 5000+, it is worth atleast $5 (even for a lowly CPM of $1; Coindesk charges a CPM of $30) for advertisers to promote their product/service. If minimum cost becomes 1 MAT, it would hypothetically mean that 1 MAT is notionally worth $5 currently.
And here on Masmic, an advertiser gets engaged userbase because their incentives are aligned as opposed to annoying ads on Coindesk where users come for a different purpose, because of which ad click through rate and conversion rate are pretty low in traditional adtech in general.
Brave/BAT pioneered this new innovative model of ‘incentive based ads’ and we are further improvising on it (future article on ‘how MAT is an improvement over BAT’ coming soon).
As the number of daily sessions and userbase of Masmic keeps increasing, the value of the network for advertisers is only going to increase. This would also result from growing awareness of the platform among businesses/advertisers.
iv) Why pre launch sale at a discount? As 5 month countdown for our MAT market launch begins, we want to have some initial community ownership of tokens who could help us spread awareness about Masmic for growing userbase and getting the attention of businesses around the world. In order to incentivize our early buyers for supporting the project, we are offering MATs at discounts, with earliest supporters getting highest discounts and all presale buyers having an ability to hold/sell along with us after launch at market-determined price.
v) What will be MAT price during launch in Feb next year? A beautiful thing about crypto token is that it works on market principles on a worldwide scale 24x7. So, it’s actually not under our/anyone’s control what the actual price would be. What we will be able to control is the network cost which would be minimum 1 MAT and platform growth which would make a high and growing MAT price more probable.
Now as discussed above, the current notional fair value of 1 MAT comes out to be $5 which should grow further in the coming 5 months with growing userbase.
During presale, we are offering MATs at a low price of $1.2-$2 just as a safe strategy. And when market launches in Feb next year, we wouldn’t immediately start selling tokens ourselves and would first give an opportunity to presale buyers to become sellers to new buyers.
Only in case there is greater demand without corresponding supply provided by presale buyers, would we enter as sellers at a tentative minimum price of $2.5-$4 (still lower than $5). It might be higher than $4 depending on the situation, but wouldn’t be lower than $2.5 which is already undervalued price for the current scenario as well.
For the next few months before launch, we would start reaching out and engage with crypto businesses as we concurrently work on how business bounties/sponsored Q&A can be executed on the platform in the most user-friendly way.
That’s all for now! If you have any questions, please post it as a comment.
Some topics which will be covered in future articles very soon:
I. How MAT is a further improvement over BAT
II. Why Masmic has a chance to succeed when platforms like Steemit failed
III. Why only marketplaces are suitable as token projects
IV. How Masmic aims to reinvents adtech…
Presale Plan:
i) MATs will be available for buying within the platform itself (www.masmic.com), tentatively starting Oct 1 2019.
ii) MATs will be offered at 15 XLM/MAT during October (probably with further discount for initial few days of October), 18 XLM/MAT during November , 21 XLM/MAT during December and 24 XLM/MAT during January.
iii) Only crypto allowed — BTC/ETH/XLM/XRP/LTC to buy MAT. The range for buying allowed is — min. 100 MATs and max. 10000 MATs — to ensure diverse ownership of tokens.
iii) MAT market will be launched tentatively on Feb 15, 2020 and minimum bounty cost will be 1 MAT.
