Santiment aims to be the market data layer for the cryptocurrency economy. The Santiment Token (SAN) will be a huge part of that, as the driving force behind our business development strategy. SAN lets us transform Santiment into a market data network. It’s a key feature of the Santiment product, and it gives Santiment a massive edge over potential competitors.
With SAN, we’re showing the world how future businesses can interact with blockchain-based token and incentive structures to distribute benefits to their users while claiming market share at scale. As far as we know, SAN is the first token incentive structure of its kind.
This post will have 3 sections.
- First, I’ll will outline the core utility of SAN on the Santiment network
- Second, I’ll reveal how SAN drives our business development strategy forward.
- Third, I’ll close with how we’re making progress with our bizdev strategy.
The Core Utility of SAN
SAN has 3 main functions on the Santiment network:
- Payments for subscriptions & auctions (as a price discovery and value flow mechanism)
- Staking (as an onboarding mechanism)
- Rewards for crowdsourcing (as a network rewards mechanism)
These 3 functions combine to psychologically engage not just individual purchasers of Santiment services, but also strategic business partners and collaborating networks.
This is the secret to SAN; It’s design to create network effects in market data collection and analysis at scale.
SAN as Payment
SAN’s first function is as a payment for accessing exclusive datafeeds and content. While many content streams and datafeeds will be available for purchase in fiat, the most valuable datafeeds will be reserved for SAN holders. Many of these datafeeds will be available via auction that only SAN holders can participate in, while others will be available for subscription. The use of auction purchases here lets us crowdsource price discovery, insuring that the market pays the fairest price for it. Auctions also let us restrict who gets access, thereby preserving the value of content and data that diminishes in relation to how many people have access.
A good example would be aggregated crowd sentiment. Predictive crowd sentiment signals are extremely valuable, but they have limitations. As more people get access to a signal and trade either on or against it, it quickly loses effectiveness. Like the first Twitter trading bots for Bitcoin — these early sentiment bots were making around 100% in profit per month (according to the academic paper that released the information) but as more people discovered the signal, the information advantage was lost.
An auction for high value datafeeds and content solves 3 problems in one: First, it establishes the ‘true value’ of the purchase, as determined by a free and open market. Second, it bypasses the incentive to sell valuable data to as many buyers as possible, which devalues the data. Third, it reserves the value created by Santiment’s most valuable datafeeds and content directly to our community members who deal in SAN. The value of these feeds is the best proxy for the quality of service Santiment provides, and by delivering the benefits to SAN holders exclusively we are returning that value.
The second form of payment SAN will be used for is subscriptions themselves. A small number of datafeeds will be used for testing SAN subscriptions, while most datafeeds and content streams will be priced in fiat subscriptions. At this time, the market for these content streams and datafeeds (new traders, hedge funds, family investment offices) is not ready to purchase subscriptions in cryptocurrency, and to price them in cryptocurrency would cost us this market. But eventually, if cryptocurrency continues to grow, people will begin pricing goods and services in cryptocurrency, and be willing to keep cryptocurrency on their accounting books. These traditional SAN subscriptions will be our way of gauging market interest. By watching the market using experimental subscriptions in SAN, we will know if and when it is feasible to price most Santiment services in SAN as well.
SAN as Stake
SAN’s second function is staking. Users and institutions can stake — or ‘lock’ — their SAN in our smart contract, thereby freezing them and keeping them off the market. When our system sees that these tokens have been staked, the owner will receive free access to a stream of curated content and select datafeeds.
This staking function is a key component of our business development strategy. First, it makes onboarding and testing the service far easier, since no ‘payment’ needs to take place. Second, the parties staking the tokens become actively invested in Santiment’s success, since they will want the service (and therefore their SAN) to gain value. Third, staking lets us provide value to SAN holders while taking those SAN out of circulation, at least for the duration of their staking (which SAN holders can select). While individual traders will enjoy this system, the real benefits of staking are clear when it comes to institutional players. Staking creates an incentive structure for making and supporting long term strategic partnerships.
Larger institutional players like exchanges (Bitfinex, Bittrex, etc), asset management platforms (ICONOMI, Prism, etc), and other order execution services (DEXs, decentralized platforms, etc) will get advantageous staking arrangements. In exchange for staking a much larger amount of SAN, they will secure content and datafeed access for their entire userbase. Staking makes it far easier to onboard these institutional players, since they never have to actually ‘pay’ for the service, and can end the arrangement at any time.
This is where the incentive system goes into full gear. Staking still has a cost insofar as capital is ‘locked’, and for this reason institutional stakers will also become invested in the success of SAN, since they want their stake to maintain its value. They can support SAN in several ways:
1) First, they can benefit from revenue sharing; The more their clients use Santiment’s services, the more value they get in turn.
2) Second, institutional players like exchanges are the gatekeepers to the most valuable information in financial markets… but all the data is siloed. Santiment makes it advantageous to share this data.
Institutional partners will be allowed to sell and share this data under whatever circumstances they wish (including auctions) on the Santiment datafeeds platform. They will have the means of reaching the widest market for data while carefully controlling its distribution. By providing this high value data on the platform, they will also create value for Santiment, thereby supporting their personal SAN stake. Not only are incentives aligned, but they also tie partners to Santiment.
On the user facing side, the first exchange who can provide comprehensive content and datafeeds service to their customers for free will have a massive edge. This edge will be a great magnet for pulling in new customers, especially institutional players new to crypto. As customers are drawn to this service, more exchanges and asset management platforms will either integrate a service like Santiment or build their own. At a certain point the demand for high quality datafeeds and content streams will hit critical mass, and it will be merely another expected feature for order execution services. Then these services will add datafeed and content services en masse to maintain competitiveness.
With the staking function, Santiment aims to be the datafeeds platform that all these order execution services decide to use, and by doing so create increasingly powerful network effects. The more order execution services (exchanges, asset management platforms, etc) partner with Santiment, the more compelling and ubiquitious Santiment becomes, the larger Santiment’s market grows, the more access to financial data it receives, and the more value there is in selling data on Santiment as a 3rd party. As the network of partners grows, the value of each function increases dramatically, as Santiment pools the market for data and information. Additionally, when these services partner with Santiment, they become invested in Santiment’s success, both in terms of maintaining the value of their stake and in potential revenue sharing and data auctions potential.
In short, the staking system is the key for getting 3rd party services to sign up and use Santiment, for which they will pay almost nothing, receive revenues, and create a network effect for Santiment as a datafeeds network. This is the first business development incentive system we’ve yet seen in cryptocurrency, but if it works it could lead Santiment to dominance over cryptocurrency market data, especially as demand for high quality content and datafeeds cascades throughout the market.
SAN as Reward
The final function of SAN also expands the network effect, and that function is crowdsourcing. SAN will be used as an incentive to crowdsource and curate data and information in both the Santiment database (SANbase). Creating a working and scaleable database of crypto projects is a large task, and crowdsourced updates curated by experts will go a long way towards making that vision scaleable. It will also be used as the incentive tool backing crowdsourced sentiment datafeeds, which we’ll also be building. This SAN will invest users into the success of the network, insofar as they’re rewarding as the data and information from Santiment gets better and better.
That was long, so let’s summarize all this in simpler terms:
SAN as payment crowdsources pricing for Santiment services, while reserving and creating value for SAN holders.
SAN as staking incentivizes strategic partners to support and enhance Santiment as a datafeeds platform.
SAN as a reward for crowdsourcing data and information increases the value of Santiment services, which create more value for the whole network.
Here’s the SAN utility cycle in action:
SANs staked for data/information, onboards users to Santiment →
Users are incentivized to contribute effort/data/info to network →
Utility of service increases, especially for buyers of datafeeds and content →
Increases incentive to stake to get access to service →
And the cycle repeats…
As you can see, the actual value of SAN will inevitably be the result of how good and how useful Santiment’s datafeeds and content service is. If the datafeeds are good and the business development skills are there, it’s possible that this new incentive system could drive Santiment all the way to dominance in crypto-market data. That’s certainly the goal.
And we’re already on our way. From the very beginning we’ve been in talks with exchanges and asset management platforms about letting Santiment solve their problems. As our datafeeds library grows, we’ll see how the SAN incentive system performs, and how much value it delivers to token holders.
SAN’s incentive structure is an innovation in the cryptocurrency space. It’s a model for a new kind of crypto-business: A centralized corporation heading towards a decentralized future, that uses an incentive structure to distribute value in a way that drives growth. Santiment is the middle path and bridge between the Bloomberg model of datafeeds and market data as a public good, and for this reason it’s the right model for the current market.
We’re going to transform crypto-markets with hard numbers and objective data, and we invite you to be a part of it. Join our newsletter NOW to get informed, as it happens: http://eepurl.com/cfgl3n
