Capturing the value of Bearer Health Records Network in Iryo tokens
In the previous article the defining characteristics of a new data asset — Bearer Health Records were laid out.
The Network effects made possible by this new design of what a record should be was part of the second article in the series.
But let’s be honest; nobody cares enough to contribute to new technology and the promise it holds until the most important network effect that acts as the true trigger kicks in; the token value.
There are different ways to capture the upside of the Bearer Health Record proposition:
1. Equity
Traditionally, ways of equity ownership were preferred, where the network was permissioned- and you, as an owner, were entitled to a share of the profit. But that model does not scale well over the borders, because different jurisdictions require different rules (and global solution needs to bow to each jurisdiction separately) and different limits on investments.
The inability to resell the investment all worked against the legacy system and produce the alternative; a utility token.
2. Utility token
Utility token model was proposed to better fund open source projects. Instead of strong regulatory limitations and protections that kill liquidity and access to the deals early on, utility token:
• Allows for more widespread distribution.
• Help build a saturated group of people who care about the project more importantly and want to see it succeed.
• Token exchanges offer high liquidity, thus allowing the token ownership base to grow faster and organically, which in turn means the chances of succeeding are higher.
There is one catch though; it is much harder to protect the link between product adoption/profitability and the value of the token. Iryo conducted research on what works and what doesn’t/can’t.
Let’s see first what you don’t want to do when designing the tokenomics of a system:
Payment token for resources or services (fees)
Tokens used (and enforced as exclusive) for payments within the system sounds like a good idea, which however doesn’t stand on its own. Services like Shapeshift/Changenly allow liquid exchange of any token, and usually within your wallet. Even for the people that want to pay using the token, there is no reason to attribute value to your token. They can’t expect others to do the same and offer the price support- therefore converting on the spot makes more sense. Those tokens/currencies will sadly correct sooner or later. With the advent of lightning network, and EOS scaling solution, the exchange of tokens would happen in seconds thus reducing the incentive to hold even further.
Masternode system, with token incentives
Many projects went a different route; they present a type of game for their supporters; set up a node (or 600 of them, if there are limits on staking), stake all the coins you have and receive the token reward. Use the reward to set up more nodes, until gradually nobody but the biggest group can stake with profit. Giving those nodes more stake to be selected, more often to perform the work (either some type of computation, storage, oracle data reporting,..) or their vote being weighted by the amount of coins. The problem with this system is that stake does not solve the issue of Sybil (so the security guarantees are questionable). It keeps late adopters out of the rewards and squeezes the profitability of small holders out of the system- being unable to stake enough or play with specialised hardware that lets you be selected more often.
Projects with master nodes initially lock some liquidity to provide the price pump, but they are not welcoming for new token holders. What’s worse, developing the code for the whole system designed to serve dummy nodes and protecting them “ddosing” each other (it pays to keep the competition down) is hard and time consuming. It distracts the team from trying to build the product people would actually like to use. Complexity is an enemy of security and adoption.
The Iryo way:
Intertwines the token in a way to provide maximum locking potential, but without increasing the complexity of the system too much, hence making it viable in the long run.
Payment token
A solid estimate; accounts for only 10% of all tokens to be locked.
• A payment token with health record query tokens researchers would be able to incentivize end users to allow anonymous queries.
• Services performed in the clinics who have adopted Iryo could be paid with IRYO tokens instead of credit cards.
• Iryo adopted clinics can use the tokens to settle cross-border expenses.
Staking token
Same as above; provides for 90% of all tokens to be locked. It’s also performed without staking rewards, to avoid ownership centralisation, and fake (Sybil attacked) node count.
• All institutions would have to provide a stake of $10,000 worth of IRYO tokens for their accounts (this value is adjustable).
• The clinic staking requirement would be used to cover the cost of storing EHR data for their patients.
• Cases of medical emergency.
We modelled the idea after the EOS proposed ‘stacking+inflation’ instead fees structure and were glad to see their (later published) storage proposal to be in line with the Iryo storage design.
For an extended (technical) explanation please visit the ‘Token utility section’ in our whitepaper.
All of the cases lock liquidity very slightly (and forcing the participant to buy more at exchanges). Getting paid for research would mean a lot of people would just leave tokens there, holding to spend later on services but those cases won’t amount to much on their own.
The majority (90%+) of the token locking would happen with health institutions staking coins for access to backup storage. Instead of patients buying the tokens off exchanges, the clinic that serves them would pay (stake) for them. that The minimum amount of 10k$ was set to get some liquidity off the table even when they don’t use much space in the system. This would buy some free space for each person; the amount being set by how much cost of space 1% yearly inflation can cover.
If the amount of space being used by patients in the Iryo system is growing; the 1% inflation needs to be worth more, to cover the cost of the backup space. That means more space used= higher cost of a token (linearly); more tokens will need to be staked in order to ensure that 1% inflation is worth the amount of space consumed by the encrypted health records in the system.
In principle, that will be how the Iryo software (in absence of regulation) ensures and enforces the link between the token and the adoption of the Iryo network.
In addition, when the ICO funds run out, the inflation aligns the incentive for the Iryo team to keep driving the adoption and consequently increase the value of the token (that means the 1% inflation is worth more to the team).
But where does this leave us in the meantime? Until the platform building is underway, we can only speculate what the Iryo token should be worth. The easiest way to make a reasonable estimate is to check our competitors, compare the platforms and try to predict future market caps based on the available data.
Additional clarification on the yearly inflation — I only talk about the 1%, because that’s the only part that ‘stays with the team’. In total, there is 2% yearly inflation, that starts when the Iryo Network platform (not just the token) is live.
1% yearly inflation for Iryo
Development + cost of free backup storage.
• Iryo decides how to spend those funds (full transparency).
• Full reports every half a year (“after the fact”).
1% yearly inflation for researchers + airdrops
Strictly no ‘Iryo connected’ back-room deals, but actual distribution for research and network effects of the token.
• Iryo reserves the right to set parameters, vets the researchers and provides Sybil protection for reward distribution.
• Fully open proposals, reports after the fact and possibly token voting vetted proposals.
This article is part of the series on Bearer Health Records;
2.) What previously unseen network effects do Bearer Health Records enable?
3.) How Iryo token captures the value of the Bearer Health Record
4.) Lastly, see why our competitors are unable to deliver on that promise.
