QBX Token Economics & Velocity

Dear qiibeeans, what an awesome start we had with our Binance DEX listing, earlier this week and the excitement is also with our newest partner, the Swiss credit card issuer which will be rolling out their loyalty system on the blockchain, during Q4 this year.

A quick recap for you; the Swiss credit card provider opened up a subscription option where you can subscribe to be one of the pioneers in making use of the world’s first Crypto-Cashback-Card and get real value in cryptocurrency for your spendings and benefit of major other advantages.

Now you might ask yourself, why does the Swiss credit card issuer need QBX for the roll-out of their blockchain-based loyalty system in Q4 2019? Since we got this question a few times, we prepared a short overview of all QBX utilities and the impact on the token velocity.

Companies need our token for:

• reward / redemption transaction fees
• exchange of loyalty tokens to QBX
• back-up loyalty tokens with QBX (these QBX are frozen during the circulation of the backed loyalty tokens)
• direct QBX reward to customers

For example, the Swiss credit card issuer will reward you with 100 Swiss Francs worth of QBX for getting their new crypto-cash-back card! And another benefit is that you will be able to exchange the points earned on their loyalty program for QBX. These points are also stored on our blockchain, this means they need QBX also to pay the transaction fees. These are only a few examples why the Swiss credit card issuer and all other companies using our technology will need to buy QBX.

And customers, users or in future also traders need the QBX for:

• transaction fees when exchanging loyalty tokens
• buying loyalty tokens to receive exclusive offers
• participating in surveys (only QBX and loyalty token holders can take part)

Besides these use cases, there are many more, very cool utilities of the QBX in the pipeline for companies and customers to constantly increase the value of our token. Of course all new utilities will be announced during the next few months, so make sure to stay tuned.

As mentioned before these utilities have an impact on token velocity. But what is token velocity? It’s a term used to express the speed in which a token gets bought and sold.

Just to give you an example; Imagine a project that creates an Uber on the blockchain and in that app you could only pay with their specific token. So on the one side you have customers buying that token to pay this driving service. On the other side you have drivers receiving these tokens for each ride. Since the drivers need to pay their rent, bills and other living costs in FIAT, they will sell their tokens on the market to convert in FIAT. In this case the demand created from the customer balances out the supply created by the drivers, so that it does not have any effect on the price. Leaving out the aspect of speculation, that means that the slower the tokens flow through an ecosystem, the smaller is the selling pressure, thereby (theoretically) creating a sustainable price growth.

Now how does the token velocity of the QBX look like? This is not based on financial models or calculations, but on a theoretical level. Here are the most important drivers that decrease the token velocity in our case:

• Back-Up loyalty tokens: companies working with us back-up their loyalty points, rewards, vouchers, etc. (represented by loyalty tokens) with QBX, which get frozen in a smart contract until a customer decides to claim them; during the time these tokens are frozen they are not in circulation
• Breakage: a common phenomenon in the world of loyalty programs is that a huge amount of users forget their loyalty points and they remain unspent; whether or not the customers that receive the loyalty tokens convert them into QBX, if they don’t spend them at all, the QBX will remain forgotten on wallets and never be in circulation again
• Circle flow: since QBX can be used by both companies and users, they will actually both reuse their QBX for different utilities. Imagine the following example, company A rewards the user with loyalty token A. The customer then redeems the loyalty token A at company A which on the other hand can reuse the received loyalty token A to reward a new customer. Therefore no sell pressure will reach the exchanges. Imagine another case where the user received loyalty token A but the exchanges them for loyalty Token B, the exact same thing happens again. First the user exchanges loyalty token A to QBX and then uses these QBX to purchase loyalty token B. The QBX will back the newly received loyalty token B and therefore stay out of circulation.

There is of course a lot more details to think about and calculate when looking at token economics and velocity. With this post we aimed to give you a short overview for an otherwise very lengthy topic. In the following weeks and months, we will give you more insight with more details based on real use cases.

Loyally yours,

Team qiibee