A simple analysis of token value — Part 3: IOV Token’s utility
After analyzing the origin of token value in Part 1 and Part 2 of this series, we enter now in a specific vision of a specific implementation. There are many ways to design a token economic cycle and derive value from providing service and usefulness as means of payment. A core question is obviously how to reward the validators, the gatekeepers to the blockchain, as well as other potential participants. This question is essentially linked to the mission of the blockchain itself and the alignment of incentives. This is why the larger analysis from Part 1 and Part 2 brings a useful light on the design conditions. All this work has been done in collaboration with Veltys.
IOV’s utility blockchain: the IOV Name Service
IOV is introducing a blockchain, whose mission is to serve as a IOV Name Service. The services it offers are:
- At launch, get a Personalized Value Address, replacing your usual crypto public key/value address by a much more readable address such as benjamin*iov. Several value addresses on different chains can be linked to the same personalized address, making it useful to receive any digital asset on any chain compatible with IOV. This personalized address is to the blockchain what the email is to the internet.
- As a second step, get a Namespace, which allows personalizing the second part of the value address. For example, if you get the Namespace ‘mynamespace’, you can create any Personalized Value Address such as benjamin*mynamespace and use them for yourself or distribute them as you wish. The namespace is to the blockchain what the domain name is to the internet.
We will publish soon more specific details on the features of the names on the IOV Name Service.
In addition, the IOV Name Service also hosts the IOV Token, which is the token of the IOV Name Service. It is a utility token. Its purpose is to pay for the registrations, update and all operations on the personalized value address and namespace. The IOV token can be transferred, this is another service offered by the IOV Name Service (for a fee in IOV token).
The turnover of the IOV Name Service is the total amount of IOV Tokens received as payment for all these services per unit of time. IOV is dedicated to grow the service utility, adoption and support the IOV Token valuation.
The main focus for the success of the IOV Name Service is the adoption of the Personalized names and Namespaces. As a secondary target, IOV is aiming at reflecting the economic value of the IOV Name Service in the IOV Token. Following the line of thoughts from Part 1 and Part 2, given the effort to improve Personalized name and Namespace usefulness and adoption, there are three ways to support IOV Token valuation:
- Increase the usefulness and value of the service offered by the IOV Name Service by improving names features
- Expand the demand for IOV Token beyond the IOV Name Service and have it used more broadly as a means of payment and
- Distribute the IOV Name Service turnover proportionally to a holding in IOV Token
Expanding utility for the IOV Token: the Atomic Swap
The second way to support the IOV token is to have it used in a wider environment than only the IOV Name Service. In this way, the settlement turnover of the IOV token will grow larger than the turnover of the IOV Name Service. IOV is developing an Atomic Swap technology and this will eventually open the way to use the IOV token to exchange against any other digital asset. As you can already see in the IOV Wallet Demo, the IOV token will be natively exchangeable with other compatible digital assets, be it fungible tokens as ETH, ERC20 or ERC1404, or Non Fungible Tokens (NFT) like Personalized value addresses and ERC721.
Thanks to IOV’s technological Core development, all blockchain projects are welcome to connect to this protocol and benefit for free from the interoperability with all other connected chains and assets. Anyone will be able to exchange with anyone any digital assets from various chains in a simple and safe manner.
You can find a technical explanation about how to connect your token to IOV-Core in this post.
Distribution of the IOV Name Service turnover
The IOV Token is a Utility token and once they are spent to pay for the service, the token economic cycle continues into turnover distribution.
Validators receive a Validator reward according to the quality of their validation work. Token holders will be able to deposit their IOV tokens into the IOV Name Service Term Deposit account. IOV incentivizes Validators to be also token holders.
This is covered in detail in this post on token distribution.
We hope that this series contributed to expose the origin of the value of a token and to explain the motivation and thinking behind IOV’s service and token economic design.
Once this design is established, IOV’s effort naturally continues on improving the IOV Name Service and the interoperability of the digital assets on the blockchains.
We are always happy to receive your constructive feedbacks and comments. If you wish to collaborate with us to connect your digital assets to the ecosystem, feel free to get in touch.