I read a very interesting paper called Community Token Economy written by Outlier Venture.
Community Token Economy is a framework to fund an open source project and create a network effect around it with blockchain token.
Beautiful, isn’t it?
I founded a couple startups and all of my startups have used opensource softwares like Linux and MySQL. They still do.
That’s why I am fond of the idea of opensource naturally.
So when I watched the video of Siraj Raval called Web 3.0 Explained, I was thrilled.
Because according to Siraj, decentralization is the only way to compete against big companies. In other word we can compete against big companies.
How sweat!
But question was how could I execute the idea of disrupting big companies with token economy and what kind of opensource projects can utilize the idea of Web 3.0?
What kind of opensource projects can utilize the idea of Web 3.0?
This is rather easy question.
An open source product which is useful on it own is not eligible for Web 3.0.
Meaning opensource products like Linux and MySQL are not for Web3.0.
Think about it.
Linux is the most successful opensource project in our history. They could raise ton of money if there was Ethereum 27 years ago. But because anybody can download and use it without depending others, there is no need to spend and earn token, meaning there is no need for token economy.
So opensource project for Web3.0 should be …
- Not useful by itself.
- Gets useful with other node or shared (decentralized ) data
- It should not FREE. No way to spend token otherwise.
How could I execute the idea of Web 3.0
Here Community Token Economy comes in.
CTE paper explains how to architect tech stack.
According to the paper, we can define roughly 3 to 4 layers.
First layer is Base Distributed Ledger Layer which is responsible for infrastructure. You can choose existing projects as the base layer.
Since blockchain technology is not matured you may have to develop it by your own. But in my opinion Ethereum is the best option so far because even though Ethereum has issue around speed and gas cost, they seems to have ability to fix it in the long run.
Second layer is called Core Protocol Layer which is responsible for governance and shared smart contracts. I understand it’s kind of like DAO smart contract controlling other contracts including token.
Then each projects can create their own smart contracts and applications. They call smart contract layer as Service Layer and applications as App.
Now technically it’s clear.
All we have to do is…
- Based on Ethereum or other existing blockchain network, develop a DAO to control token and other shared smart contracts.
- Then develop a real use case on top of Core Layer and make it buyable with token.
- Then let other guys join
How can we encourage other companies and individuals to join?
They even explain how we can encourage other players.
According to the paper, we can grow our community with token.
First, founding team need to develop core products and make it open. They get token in return.
Second encourage other companies and individuals to join in the token ecosystem. As far as I understand founding team/partners give token to new comers in exchange for source code (make some relevant source code open?) or business use cases.
Then keep the circle bigger and bigger like orbit.
That does make sense and I want to try it.
Of course it’s not easy and still there are questions to answer.
How to handle complicated system like multiple token ecosystem
Projects want their own token. If one of projects make ton of money with their app token instead of community token, how can we align our interest? Paper showed an example of Steemit. But for me it was not so clear.
How each companies business model work
Some community member are real businesses and they need to make fiat money instead of token. Let’s say a company member set the transaction fee as $100. Company member want their customer to pay with fiat. Community may want their customer to pay with token.
If nobody purchase anything with token, there is no economy anyway.
Anyway this is a very interesting paper.
Please read it and give me feedback if you find some flaws!
