Token Economics / Token Craft - Reservoir

avatar

I've written on token economics a few times. Sometimes it's in reference to tribes on hive-engine/tribaldex. Other times it's in reference to Splinterlands.

Token economics basics

At the most fundamental level of creating tokens you have to worry about 3 things: faucets, sinks, and use cases.

  1. A faucet is where the tokens come from. There's typically a smart contract that's minting them for some reason.
  2. A sink is typically considered a burn case for the token. When you burn that token and it's permanently gone what thing does it provide you?
  3. A use case is what can you trade the token for or how you can use it. Some of this is just basic trading and using a token as a store of value. In other ways it can get you goods and/or services. In other ways it can help you earn.

That's old news; Today I'm adding another basic thing to consider "Reservoirs"

You should already know what this word means. it's a big body of water that towns and cities rely on to get fresh drinking water.

In this context I'm considering it a benevolent place where a crap ton of tokens can be stored for a long period of time.

You could argue that the Hive DAO is a reservoir (if you believe that the projects it funds are generally for the benefit of everyone and a useful deployment of funds). I'm not personally convinced the spending is appropriate, but at least you can get the sense of something that might be reservoir like.

Another example is the Splinterlands Corporation for the SPS token. Splinterlands takes a variety of tokens as payment and actually uses those tokens in different ways. Sometimes splinterlands takes tokens as income when it sells card packs. Sometimes it burns tokens. Sometimes the tokens go to the DAO. Overall though, splinterlands accepts SPS as a payment token. By doing this it's built up a large holding of SPS tokens. The company does not just randomly dump them back on the community but it also doesn't burn them. So, it continues to build what I'm calling a Reservoir of tokens.

What do you do with this information?

Ok, I see 2 use cases. You're thinking of apeing into some coin. I would encourage you to think through what are the faucets, sinks, use cases, and reservoirs that exist for that token before diving into it.

Also, I see this information may help you as you design token economics in your project. Why will you mint it? What will it do? Can you burn it for something cool? Is there a benevolent body that will be a large holder or buyer of last resort.

These are just concepts for you to think about as you make or buy tokens.



0
0
0.000
7 comments
avatar

Yeah, that's the basics of tokenomics. 😎👏

0
0
0.000
avatar

The sweet simplicity of this post is helpful- As a newbie to Hive, and the entire concept of tokens, it can be a bit much to take in initially. Posts that outline how any of this works in great detail are vaguely words to me at this stage lol! I can stumble through participating in tokens a bit, but they confuse me still.

The Faucet issues, but sometimes there's a bowl in the sink that catches some of the water (the tokens being used for something) and sometimes it flows down the drain- that I can get! The analogy is good for an entry level spectator. Although I don't suppose I'll be a token whiz anytime soon, it is a cool incentive for new users like myself to be involved in communities/ projects! I'll keep learning about tokens just because of the fun things they seem to inspire!

Thanks for sharing @aggroed!

0
0
0.000
avatar

wow, can't help but node my head while reading this grate piece of information.
Thank you for sharing

0
0
0.000
avatar

What about the first Hive-engine token PAL? What about the PAL information? Faucet? Sink? Reservoirs? Future plans? Is PAL a ghost project?

Posted using PALnet

0
0
0.000
avatar
(Edited)

Hi @aggroed,

Discord randomly stopped my account from interacting with discord today (9/20/2022). Which is the reason why I didn't finish the message I sent to you. It was a question regarding DEC transfers from Steem-Engine to Splinterlands in game. The option in game seems to be not working as I did a 5,000 DEC transfer from Steem-Engine to In game about 45+ minutes ago and it hasn't showed yet. I have another 398,000 I want to transfer, how do I proceed with future transfers? Sorry to bother you with this as I know its a very busy time in the Splinterverse.

0
0
0.000