Snark: Tokenomics Distribution
Disclaimer: These are not Snark’s token metrics. These are an illustration for research purposes.
We will illustrate a few distribution models
Case 1:
10% Team*
10% Community
10% Sale*
10% Marketing
10% Opex
50% Mining*
* 1 Year team vesting
* 4000 ETH sale
* Rewards can be less or more dependent on system adoption
Case 2:
10% Team*
30% Opex
10% Sale*
50% Mining*
Case 3:
20% Team
60% Opex
20% Sale
Mining left as variable
Each of the 3 cases we illustrated is the same. Our design model with mining means this is not a fixed number, but instead could reach the threshold number sooner with fees or even take longer to fully dilute.
The line between Marketing, Community, and Opex are also especially blurred and these are just secondary funding and raising mechanisms. These should be fueled by the sale and not be secondary reward structures. Otherwise why have the sale?
Each of these values can be changed for a specific beneficial outcome. We could also instead distribute as follows
90% Sale
10% Public
But these numbers create a fully diluted marketcap and at would require 36 000 ETH.
So instead, what do we want to achieve with the token?
- Liquidity
- Distribution
The best approach then is 100% public distribution.
There are currently 3 funding mechanisms available to a Cryptocurrency based entity
- Traditional funding via Equity
- Funding via Initial Coin Offering
- Secondary liquidation on exchanges
As a community we underestimate the sheer amount of funding opportunities and don’t seem to correlate the different components.
This raises an interesting discussion on Equity raises. A token, and specifically a blockchain, does not provide revenue. Revenue can only be created by continuous re-ownership of the token. Revenue can be created by dApps as they accept the token for exchange in services. Revenue can be created by validators, but this creates a competitive marketplace. For this reason, we often don’t see equity raises in this space, because there is no revenue stream. Why have ownership in an entity that does not have a revenue stream.
The nature of a decentralized solutions, and lack of ownership, is the lack of ownership. A Cryptocurrency based entity can create funds via
- Equity, no revenue so this is a difficult sell
- Initial Coin Offering (Once off)
- Secondary liquidation after Initial Coin Offering (Once off)
After events 2 and 3 there is no more income. That is the maximum life cycle of a non revenue generating entity.
It is therefor in a Cryptocurrency based entities best interest to invest in their own future success. They should minimize their raise during ICO and maximize their token ownership with a strong vesting schedule.
A new model is proposed
Tn Vesting Schedule; 8% released every month
10% Sale
10% T1 Starting at epoch 0 and finalizing at epoch 12
10% T2 Starting after T1 finalization
10% T3 Starting after T2 finalization
…
Fully diluted.
Otherwise explained as 0,8% released every month over 9 years to be used for running costs.
Then why have the initial sale? The initial sale security helps to facilitate staff, leases, and listings.
