Introducing FMF Intake: Stake, Burn and Earn
For many projects with associated utility tokens, defining precise use cases and their corresponding value proposition forms the crux of a healthy ecosystem. One that incentivizes certain behaviors, has positive feedback loops and grows value for all participants. At Formosa Financial, we are building two things in parallel- an API-based infrastructure aggregating services to be made available to users, namely custody, brokerage, and hedging the market risk of holding digital assets, alongside the FMF token ecosystem which plugs directly into this infrastructure.
In this post, I’d like to walk you through the mechanics of this second piece of what we are building — we call it FMF Intake. Think of the platform like a car — fuel needs to be injected into the combustion chamber so the expanding gas can push the cylinders in and out, powering the axles so that the wheels spin and the car moves forward (this is a vast oversimplification of how a car works but I digress). In the Formosa Financial platform, FMF is that high-octane gas — you need it to keep your account fueled and make the transaction motor purr.
1. Staking FMF for Tiered Services
Across our three core service offerings, there are various features that can be unlocked by staking FMF tokens on the platform. These were previously outlined in our whitepaper and can be found below. Now that we are moving from the development and partnerships phase of the project into an operational ecosystem with live funds we want to share the specifics of our stake and burn model.
As a foundational principle of token economics, staking makes sense because it requires those who derive the most potential value from an ecosystem to contribute resources to access it. In the case of the Formosa Financial platform, this value is delivered in the form of critical treasury management services. Staking also allows us to better vet clients, for example by helping to ensure users are sufficiently committed to using the platform regularly to access features and functionality.
The more you stake, the more you can do. Simple.
2. Burning FMF to Pay Service Fees
Almost all activities in the digital realm require computational power to complete. This is especially true in the blockchain space, where solving cryptographic hashes to mine blocks and verify transactions and calculating rates across multiple trading pairs before execution are commonplace tasks. As our platform manages confirmations for deposits and withdrawals across multiple blockchains and looks across exchanges to source liquidity and find opportunities for best price execution we think it fitting to have platform users to burn FMF in order to pay service fees.
Burning tokens is a proven model for incentivizing usage, as clients actively staking FMF on the platform will also have good reason to spend tokens to cover service fees as these will be provided at a discounted price (compared to if you were just paying in the quote currency for the transaction). As FMF is burned, the total circulating supply is reduced but the market cap (in theory) should remain roughly the same, thus returning value to the remaining tokens available in supply. Think about the feedback loop here — you need to stake tokens to access key platform features, then have the ability to burn tokens to cover fees, thus increasing the value of your remaining staked tokens. With access to wholesale rates and complete market coverage, using FMF as a means to cover service fees on the platform is a win-win situation.
3. Earning Bonuses for Platform Usage
Last but not least, we want to make sure that the incentives for staking and burning FMF aren’t purely economic but rather driven by substantive motivations to improve and grow the Formosa Financial ecosystem. Firstly, top stakers and burners of FMF will have dedicated account support directly from the team as we want to provide priority service to clients who get the most value from the platform. This program could also include invites to special events, early access to new platform features, and more. Our goal is to make usage and collaboration with our clients an engine of iterative innovation on the platform, so stay tuned for details on how the formal program shapes up.
In addition to the more community-oriented aspects of rewards earning, we are also exploring potential opportunities for synergies within the community, such as providing existing users with [exclusive]/[early-bird]/[special] access to new projects from other FMF clients. As we continue to roll out the platform into private beta and start gathering feature feedback we’d love to hear from the FMF community on additional use cases for FMF that we can create together!
With our private beta for corporate clients ongoing, we are eager to share our learnings and ideas on how we can broaden the FMF ecosystem to include other players in the blockchain space, including exchanges, hedge funds, and retail users. Stay tuned to our social media channels for the latest status on our platform progress.
We’ll be sharing more posts on blockchain and the Formosa Financial platform on our official website — An institutional grade digital asset management tool for blockchain innovators.
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