Tokenomics is awesome, but doesn’t mean very much without any business context. If this is your first foray into SNC, please take a look at the project vision and introduction. Once that’s done, let’s start by defining tokenomics for us.
What is tokenomics?
I’m going to take a very narrow definition of tokenomics because defining it too broadly would render any helpful post, unhelpful or impossible to navigate. We here at SNC would define tokenomics by asking the following questions:
- Where would each participant use this token?
- What is the right amount of tokens to be issued?
- Where would each participant find token liquidity?
Before diving into tokenomics in the SNC ecosystem, it might be helpful to take a look at what is meant by the ecosystem, luckily, we have a helpful diagram for that, lifted directly from the deck:
- What’s it for? — From the very beginning, the SNC team has considered all the utilities that would accompany the token that we issue. We have painstakingly provided utilities for each ecosystem participant to make sure that the nature of the utility also incentivises the participants to demand the token over the long-run.
Supernodes — supernodes are required to keep 0.25% of tokens to qualify for super node candidacy. This requires a minimum of 5.25% of circulating supply of tokens to be staked on a monthly basis. Supernodes will also be able to vote on minor governance decisions through staking. These opportunities for active participation will be rewarded through the SNC inflation model that we’ll discuss a bit later. These are the most prominent token uses for supernodes. However, this doesn’t preclude the supernodes from participating as service providers within the services marketplace.
Community — the community will use tokens for access and rights within the ecosystem. The number of tokens staked will provide a varying level of access to the community member. The more access the community member has, the better equipped they will be to make more informed decisions when voting for start up projects. Generally, the community will all be able to vote for Supernodes by staking with them, vote for cohort projects as an indication of interest in the project and syndicate with SNC tokens to invest in projects. As with the supernodes, the community will be encouraged to participate as a service provider, therefore increased knowledge of the cohort can confer economic benefits outside of the ecosystem.
Service providers — for service providers, SNCT will act as an access medium for the services marketplace. And a common payment medium that bypasses traditional financial infrastructure for quick and secure transfer.
Blockchain projects — will require SNC tokens to submit applications and solicit services from the services marketplace as well as receiving the token as an investment medium through the SNC Foundation and Community syndication.
One of the most elegant aspects about our participant ecosystem is that the Supernodes, community and service providers are highly fungible. Supernodes are by default important community members who can provide services, community members can become Supernodes or service providers, service providers are de facto community members who may become Supernodes if the SNC ecosystem provides a strong pipeline for their services.
2. What’s the right amount of tokens?
Forecasting the usage and adoption of the SNC ecosystem is like predicting a stock price in 5, 10 years time — more effort than it’s worth. We are confident not only in the need for a decentralised VC ecosystem, the likes of SNC, but we are also confident that we can deliver such an ecosystem.
At SNC, we firmly believe that token issuance should reflect the value creation of the ecosystem. We would ideally like the value creation to correlate to the circulating value of tokens, rather than use the circulating value of tokens as a proxy for the value created. In the absence of a crystal ball, we are using a combination of lock up, token volume inflation mechanism, as well as minor governance decisions to steadily increase circulating supply of tokens without overloading upward or downward pressure on token price. And where such pressure manifests, these governance decisions can be used to mitigate impact and improve price stability over time.
An example of this in action is our token volume inflation with a cessation based on circulating supply. Every year 5% of circulating supply will be inflated into the market, this is to account for the increased demand in token, also reflected by the growth of our community and service providers (we don’t anticipating Supernodes growing, but we do expect a dynamic exchange of voting power between them). Cessation for token inflation is set at the point of total circulating supply hitting 1.5bn tokens. At which point, one of two things would’ve happened — SNC as a project would have failed, or SNC as a project will be nearing market saturation i.e. anyone who wants to hold SNC tokens will hold SNC tokens. Minor governance decisions on the blockchain will help alleviate the pressures given these absolute assumptions.
3. How do I get out? Or, would you even want to?
Let me preface this section by reminding you that the SNC team cannot discuss listing or give indication of future listing and this is not intended as such.
Typically, creating or removing a position in cryptocurrency will require some sort of exchange. This secondary market facilitates liquidity and is currently a necessary feature of the cryptocurrency ecosystem.
In the SNC tokenomic design, we see the secondary market as an addition to a complete primary market where there is sufficient demand for the tokens that are being used in the ecosystem. Instead of asking how to sell their SNC tokens, our aspiration is for the participants to find more and more ways in which to use their SNC token within the ecosystem. The ecosystem is created for the investment community, breaking down the barriers between institution, community and individual assets. As such the incentives to use and retain SNC token are structured around this commonality.
The SNC token provides exclusive access to start ups, opportunities for service providers to provide services to start-ups, opportunities for lay investors to invest in start-ups at institutional rates and more, as well as the payment utility of cryptocurrencies in general. As long as each participant in looking to actively participate and invest favourably, this is the token of choice.
Thanks for reading! One last note, we at Supernode Community are actively looking for partnerships to build upon our amazing partnership portfolio and as always, feedback welcome!
Tim
