A Consumer Token Framework: Forging a Path Towards Responsible Token Projects

If you are thinking about how to structure a token sale or distribution, The Brooklyn Project community has tapped into the expertise of its community and the industry to create an extensive consumer token framework, highlights of which are below. Check out the entire version 1.0 of the framework for a more comprehensive understanding of how to responsibly launch and evaluate a token-powered project.

Version 1.0 of the framework is the culmination of more than 8 months of industry and community collaboration. It has been an iterative and community-driven process, as is evident from the timeline of drafts and process summarized below.

Some of the key events in the 8-month collaboration leading up to the release of version 1.0 of the framework include:

• November 2017: Announcement of The Brooklyn Project in response to concerns about eroding trust in the blockchain ecosystem.
• January — February 2018: We started with this reddit page to identify what was at the top of people’s minds, asked for help to identify resources in a google doc, and put together a list of important topics.
• March — August 2018 : We released a draft of the consumer token framework, incorporating several rounds of feedback from lawyers, and a wide range of other individuals (if you’re curious, check out v0.4 here).
• TODAY: We are proud to release v1.0 with practical guidelines for projects and communities who want to hold themselves to a higher standard of accountability.

So, what does the framework say? We encourage everyone to read the framework in full. But, in short, the framework centers on the following 10 concepts:

1. Consumer Token Design: Is your token inherently consumptive or use-based in nature — in other words, does your token represent or provide access to a good, service, or content?
2. Project Governance and Operation: Does your project have an appropriate and transparent project governance and operation? Identify aspects of the project that are “decentralized,” “open-source,” and/or “forkable” by anyone.
3. Responsible Token Distribution: If you’re contemplating a token distribution as a crowd-based fundraising mechanism, are its terms transparent, responsible, and fair for the ultimate users and consumers of the token?
4. Purpose of Token Distribution: If conducting a token distribution, are the purpose of the token distribution and expected plans for the proceeds transparent?
5. Token Supply: Are the token supply parameters transparent? Make sure to responsibly manage any retained inventory. Clarify whether and how new tokens can be created and existing tokens can be destroyed.
6. Mitigation of Conflicts: Are you actively mitigating conflicts and do you have a procedure to address and counteract improper trading?
7. Token Safety and Security: Are the tokens safe to use and own? Have you subjected your smart contract code to third-party safety audits? Users should be made aware of the risks involved in a token purchase.
8. Marketing Practices: Does product marketing fairly and accurately represent the project? Avoid marketing the token sale as an investment unless it is fully compliant with applicable laws involving securities sales.
9. Protecting and Empowering Consumers: Are you sure your project is protecting and empowering your user base? Allow token holders to be recognized and receive value for their contributions to your project.
10. Compliance with Applicable Laws: Have you solicited the opinion of legal counsel in order to ensure compliance with relevant laws? The rapidly evolving regulatory landscape implies all projects should check for compliance with securities, data privacy, anti-money laundering, and tax laws, among others.

This version 1.0 is by no means a finished, static product. We encourage everyone to provide feedback and comments directly on the framework. You can even, for a limited time, earn bounties by giving feedback on the framework — but hurry, the bounties are limited in time and availability!

The consumer token framework is just a first step in our efforts to support innovators and protect consumers of this exciting new technology. Everyone interested in this space should become active members of The Brooklyn Project by visiting theBKP.com or joining our telegram channel. The success of these open, collaborative efforts depends on you!

Disclaimer: The views expressed by the author above do not necessarily represent the views of Consensys AG. ConsenSys is a decentralized community with ConsenSys Media being a platform for members to freely express their diverse ideas and perspectives. To learn more about ConsenSys and Ethereum, please visit our website.