In the sixth part of XENIRO thought leadership series, we demonstrated the potential of the xGRID infrastructure (5G + MEC + DLT) serving multiple disruptive use cases in Supply Chain, Autonomous Vehicle, Mixed Reality, Smart City, Mobile Supermarket and Smart Manufacturing.
The Part 7 of this series is entitled “DLT Token Economics for Mobile Operators”, where we describe accessing the “Digital Bank” platform at the edge, that is tokenized for IoT services on the DLT (Blockchain). Our discussion will center around:
- The benefits of programmable tokens
- What are token economics?
- Characteristics of tokens
- Applying stable token to the platform
- Token flow for IoT transactions on XENIRO SnapScale DLT
As highlighted in previous parts of our Thought Leadership Series, XENIRO’s DLT introduces a brand-new payment rail that addresses the issues of the IoT world by enabling thousands of concurrent M2M payments with minimal transaction fees at scale. Traditional means of payment (bank card, wire, mobile) have failed to offer the same level of performance, cost-efficiency, trust and security.
Unlike legacy payment rails, XENIRO’s solution is designed to use a token called XST. Compared to fiat money, this token has an additional characteristic: programmability. When using programmable money such as XST, the rules which define when and how value can be exchanged according to how IoT devices want to transact.
For transactions between two parties, programmable money can provide IoT devices greater range of parameters when exchanging value. It also enables a huge array of differentiated “valuables” to be exchanged — far more than conventional money — time, contracts, expertise, goods, services and more can all be traded through smart contracts.
By using programmable money, participants in the ecosystem can directly integrate terms & conditions into their transactions, which reduces the need for third parties to examine and validate payments on the platform, securing the transactions. XENIRO’s DLT will automatically reject any transaction that does not comply with the initial terms of the agreement. XST is a more trusted option than fiat money.
Token economics refers to the design and implementation of economic systems based on Distributed Ledger Technology (DLT) or also known as Blockchain. Every DLT platform and DLT applications has its own token economics model. Tokens make the construction of entirely new business and governance model possible. It’s also a mechanism to incentivize a whole ecosystem to work together in powering services for the network as a whole.
There are various types of tokens that perform various functions within the DLT platform:
A) Tokens backed up by assets: This category of tokens guarantee the rights of their owners in relation to objects of the material world. This may include property, antiques, precious stones, intellectual property or any traditional assets.
B) Tokens certifying rights: These tokens certify the rights to get issuers to perform certain actions. Usually this type of token is used as a security that guarantees certain rights through ownership (Eg. shareholders voting rights in a company or right to part of a profit).
C) Programmable tokens within a distributed platform : They are also known as protocol tokens or intrinsic tokens. The main characteristics is that they certify certain rights or assets inside the DLT platform. This is where a consensus mechanism is created in verifying the transactions through applying cryptographic algorithms that are secure.
For the mobile operator model, XENIRO will be designing the token economics around the programmable token (C), where enterprises top-up their wallets via Mobile Operators to access the decentralized Applications (DApps) platform services residing in the 5G MEC deployed at the Edge. This could relate to services for Mixed reality / Autonomous vehicle / Supply chain and so forth.
Tokens digitally represent a value associated with a good, service or a right. In this instance, XENIRO creates a value where IoT devices can interact and transact on the platform. They are united by characteristics with the following attributes:
One of the major hurdles to the adoption of blockchain technology so far has been the fact that most blockchains use tokens that are not backed by anything tangible and are mostly used as speculative instruments. In an effort to promote real-world adoption and use of tokens as means of payment rather than speculation, XENIRO’s model will adopt the stable token design. This digital asset is pegged to an asset with a stable value in the form of fiat (USD, EUR,…). In other words, it retains a 1:1 peg by utilizing reputable financial institutions to back-up the digital asset by holding an equivalent amount of legal tender in reserves. Meaning 1 XST stable token = USD$1 of fiat money. The benefits of adopting stable token onto the XENIRO platform are highlighted below :
The diagram below depicts XENIRO XST (stable token) flow within the operators’ ecosystem.
Point (A) : XENIRO issues XST stable token to Mobile Network Operators (MNOs) — Let’s assume 100,000 XST = USD$100,000
Point (B) : Let’s assume an autonomous vehicle company would like to utilize services on the XENIRO platform. They would procure the XST stable token from MNOs, and have the XST transferred directly onto the digital wallet of their vehicle ID.
Point (C): When the autonomous vehicle requires electric charging (Smart contracts will be deployed autonomously), the XST stable token will be deducted from its digital wallet and processed through the XENIRO SnapScale DLT. The EV charging station will be credited with tokens in its digital wallet.
Applying XST stable token is financially compliant, as IoT devices will be equipped with an eSIM that identifies ownership. This ensures that transactions are auditable and compliant with AML (Anti-Money Laundry) and KYC (Know Your Customer) regulations. The XENIRO Foundation will hold money-transmitter licenses in the relevant jurisdictions and the XST token will be subject to the same regulations as e-money (Apple Pay, Google Pay, etc.). A financial reporting governance framework will be setup for audit conformity (Independent entity) of XST stable token partnering with regulatory oversight for established transparency.
The advent of the Internet of Things puts Mobile Network Operators at the forefront of a new wave of technological change. The powerful combination of 5G+MEC+DLT opens new realms of opportunities for them to curate an ecosystem where they process and monetize every transaction. Not only does this new technology materialize into a new payment rail with higher performance and scalability than its counterparts, but it also promotes a new type of money in the form of programmable tokens, which builds trust, autonomy and business-efficiency within the new ecosystem operated by Mobile Operators. “IoT Digital Banks at the Edge of the network” mark the convergence between Telecom and Fintech and a completely new shift in 5G-paradigm.
Stay tuned for Part 8, welcome to visit us @ xeniro.io