This article will be the further discussion of my previous article “Tokennomics model for SASS platform” and the first release of the Tokenomic series in the next weeks since it is more reasonable to send out the practical and pragmatic examples instead of merely describing the graph and explaining some technical noun with tedious annotation.
Some required premises we have defined last week:
- Supply/ Demand mechanism
- POL
- Retain customer (*Sustainable external cash flow)
1.Supply and Demand
Outstanding smart contract design and robust incentive system will be the main idea and key to the successful protocol that most projects fail to become. To fulfill the above visions, the law of Demand and Supply must come in, being baked into your Tokenomic model.
Let’s take some evident examples on web2.0, Uber.
We could see the price floating depending on multiple factors such as distance miles, the number of passengers, weather, following the law of demand and supply; therefore, the price and service quantity/ quality are all come down to supply/demand. Uber could introduce some web3.0 ideas to their existing model to make it whole by disclosing how price is calculated or rewarding loyal customer over a long period.
Back to the Medium topic, it is clearer we define what Medium’s platform is selling beforehand, as it’s not hard to guess, articles writers have produced and published on the platform are core products sitting at the center of this Tokenomic model, besides, it is also one of the reasons we say C2C is our ideal model for both customer and seller can affect the price.
2. POL ( Protocol Owned Liquidity )
Honestly saying, the concept of acquiring own governance token should not only be limited to this model but all the protocols looking for a sustainable business model in the crypto world. I am tired of keeping seeing protocols promise high APY by rewarding and releasing their governance token without caring about the inflation problem, it tells no difference from defrauding customers to me.
There are some mature ideas of POL working on-chain currently, notably Curve and Olympus on Ethereum, PsyOptions, and Lifinity on Solana are great references worth giving a bite.
When governance token is retained, price stability assures we could add some value to our token by coming up with exclusive and innovative features. For example, Medium could improve current clapping features by allowing readers to lock up governance tokens in exchange for voting escrow tokens, which we could not only define who is reliable and loyal but use limited voting power to select high-quality articles or outstanding readers. In addition, a reader could stake the pool standing for individual writers to share the revenue along with giving both financial and spiritual support.
3. Retain customer
I redefined this assumption from “keep sustainable cash flow” for the previous premise is not generic and comprehensive enough to additionally explain those protocols excluding Defi. In Defi, it will be probably the simplest and easiest for being focused on some problems like creating liquidity and avoiding inflation, which could be solved by rewarding a steady stream of promised yield returns, locking up tokens and releasing bond or option.
However, it becomes an extra task for those protocols like play-to-earn games — Stepn or content-sharing platform — Audius. When asking how we receive the sustainable cash flow, it is seemingly we are eager to how to retain customers on our App or platform. Web3.0 is not a panacea or remedy for kinds of apps being reborn and successful, in fact, the first principle of the app, being useful and meeting the needs, can’t be discarded.
As a result, it will be convenient for those successful web 2.0 companies like Uber or Medium as they have a solid customer base, steady revenue, and a healthy business model to support and explore features relating to blockchain and crypto. Instead of discouraging startups from stepping into the web 3.0 world, it is more reasonable to say web3.0 companies should also make the Dapp appealing and usable but distinct from web 2.0 technology, being attained by combinations of blockchain technology, namely NFT, metaverse inventions…etc.
Interaction
It is visible that the brilliant smart contract-designed protocol outperforms and stands out in web 3.0, which required not only designing business ideas but promising the shared opportunity and fairness among the participants. In other words, the platform is required to come up with a program comprising 2 ideas, a supply/ demand mechanism, and extended features.
There are lots of ideas of supply/ demand mechanism that have been launched and tested out, for example, AMM’s xyk model, curve DAO model…etc, kindly taking refers to the whitepapers yourself, and currently, I have come up with a fundamental mechanism transformed from xyk model, which simply discards the deposit of a single token in the pools to determine the voting weight.
Being simple, let’s say we have the below equation to determine the voting weight, to make it leaner, simply make i= 1,
For example, each pool stands for a single writer who has been selected under some gauges like high read ratio or followers. When readers who have locked their governance token could be seen as loyal customers and contributors to the platform depending on the amount of their voting escrow token, they are entitled to vote for their beloved writer to share their revenue or additional premium when voted writer wins.
Diving into a formula, setting a minimum of voting weight and a maximum of deposit to 1 and 100, meaning we got the minimum of voting weight being unit when the deposit of voting token of single pool attain the maximum. The purpose of this design is to prevent the monopoly of famous writers and having minor writers still have the opportunity to emerge, being decentralized as possibly as we could.
When the interaction, supply, and demand mechanism, works fluently without problems like governance token inflation or bribing voters, it is likely we could step further to accrue more value to our business model, building some unique features for the winner of the voting such as minting exclusive NFT or free branding and marketing, trying to make the voting more charming and scarce with some burning and backup methods.
While the model is around with some fundamental but shabby ideas, the core concept has been listed to prototype what should SAAS platform looks like. I will keep diving into related implementations such as Maker DAO with DAI, trying to make the concept perfectly.
Thanks for your reading.
: )
Join Coinmonks Telegram Channel and Youtube Channel learn about crypto trading and investing
