Thinking about the token model: How to use tokens?

Translation: Vernacular Blockchain

Token model is a framework for designing and managing digital assets, aiming to generate long-term value through reasonable distribution and incentive mechanisms. Key elements include preventing Sybil attacks, designing effective incentive mechanisms (such as staking rewards, buyback and destruction), managing circulation and fully diluted valuation (FDV), and ensuring the utility and flexibility of the Token. Data-driven decisions can optimize token distribution and maximize market value and user participation.

The following are some thoughts on good Token design shared by @dberenzon:

1) A good Token model is a model that can produce wealth effects.

2) Even if your Token has limited functions, it can still have great value if it can be put into the hands of the right people as soon as possible.

3) The current problem is that Sybil attacks are making projects very difficult and this is one of the biggest unsolved problems in our industry.

4) In response, projects are increasingly using creative points programs to incentivize long-term holders and maintain network distribution.

5) Low circulation/high fully diluted valuation (FDV) is a real problem because projects usually cannot maintain enough buying pressure to counter token issuance, which will cause the token price to fall and affect community and team morale.

6) This problem can be alleviated if Token issuance can be allocated to suitable long-term holders, but currently few projects can be so data-driven.

7) A simpler solution is to launch the Token at a lower fully diluted valuation and give the global secondary market more equal access to the market.

8) Once again, the distribution and issuance of Token is very important. Unlike Token "utility", you only have one chance to do it well in this aspect.

9) In terms of utility, the methods that work better in large-scale applications today are basically staking/locking and buyback, destruction/redistribution (the latter has regulatory risks and requires consultation with a lawyer, etc.).

10) Staking/staking can be redefined as interest binding (thanks @NTmoney for this concept - not just for prediction markets!), which is a relatively powerful lever for both supply and demand to incentivize specific behaviors.

11) There has been nothing really new in the past few years except re-staking and lock-based allocations.

12) In addition, work tokens can facilitate digital resource provision (liquidity and hardware) and risk transfer (insurance/cutting), and are a good way of consumption.

13) Paying for tokens is still a terrible experience for the end user, so please avoid doing this unless you are a game project and users are already used to buying in-game currency.

14) In general, Token utility is effective in large-scale applications and long-term time frames, it is a living thing that should be adjusted over time (unless you are Bitcoin).

Some people pointed out the 2nd point "- If it can be handed into the hands of the right people as soon as possible, your Token can still have great value even if it has limited functions"

and the 3rd point "The current problem is that the Sybil attack makes the project... It’s very difficult, and it’s clearly one of the biggest unsolved problems in our industry.”

Asked: Assuming there was an identity + privacy solution that could solve the Sybil attack problem, what data attributes would be needed to target the “right people”?

In summary, a successful Token model must not only be economically and technically feasible, but also need to focus on preventing Sybil attacks, designing effective incentive mechanisms, managing reasonable circulation and FDV, and ensuring the practicality and effectiveness of the Token. flexibility. Data-driven decisions can further optimize the Token distribution strategy and maximize its market value and user participation.

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