Trying To Understand The Tokenomics Of The New 3Speak Network

in LeoFinancelast month (edited)

3Speak announced their tokenomics on Hivefest The Speak Network Incentive Layer.

At first glance it appears complicated and hard to understand. It has a three tokens system plus Hive on top of it.

Let’s try to break it down and see what is this all about.

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First thing first. The 3Speak network has three tokens:

  • LARYNX, miner token
  • SPEAK, governance token
  • BROCA, resource credits token (gas)

The LARYNX token is a miner token. Think of it as a mining rig for PoW coins (Bitcoin, Ethereum, etc). Just in this case its digital. Digital miners although intangible at first look and hard to be taken seriously are actually much better solution to mining from the old school hardware miners. Simply put digital miners are fairer. They cost the same, have the same performance and are not dependent on cheep electricity. Meaning everyone gets a fair start in mining and distributing coins.
The first round of LARYNX miners will be distributed to the Hive stakeholders. Then each year new and better version of the LARYNX miners will come out. This is trying to mimic the improvement in the physical miners where better miners are coming out every year.

Ok, so what are these digital miners going to mine?


SPEAK

SPEAK is the second token of the three token system of the 3Speak network. It is the governance token of the network. Unlike LARYNX, that have unlimited supply (at least to my understanding), the SPEAK token is capped has limited supply.

SPEAK is a governance token that can be used for voting proposals. Another use that is mentioned is earning BROCA. But probably the most important use case is the ability to buy new miners with SPEAK.

Remember the LARYNX token from the above? Each year new improved LARYNX tokens will come out.

Who is selling these new miners? The answer Service Infrastructure Pool (SIP)

SIP is a version of the liquidity pools that we are now seeing in the DeFi world. In the case above it doesn’t actually have LARYNX tokens but SPEAK, BROCA and HIVE.

Everyone that wants new miners (or BROCA?) will need to send SPEAK to this pool, where SPEAK is locked forever. This SPEAK was mined from the initial distribution of the LARYNX tokens.
The interesting things is that when SPEAK tokens are sent to the SIP it is split in three portions:

  • SPEAK
  • BROCA (mined from share of the SPEAK that is burned)
  • HIVE (bought with SPEAK and locked forever in the SIP)

What the above means is that this SIP pool will have a three tokens locked inside SPEAK/BROCA/HIVE.

From what I understand, by locked forever it doesn’t mean that these tokens can’t be taken out of the pool. Just the only way to take them out of the pool will be by buying them, adding a new token in the pool. It’s basically the equivalent of forever locked liquidity on a DEX.

This type of pools where the liquidity is locked forever ae starting to pop up more in crypto (one example the WISE token) and the buzz word for them is ownerless pools. Basically, once the provided liquidity is locked forever in a sense it provides a floor for the price.

At the end the BROCA token is needed for users to be able to upload videos on the network. It’s the equivalent of resource credits on Hive or GAS on Ethereum. From mine understanding these tokens will be spendable. There will not be a staking model, as for HP, where you stake some amount of BROCA and then you can make operations, but each operation spends some BROCA.
The way that BROCA is generated is by sending SPEAK to the SIP. As from the already mentioned when users send SPEAK to the SIP, they will receive miners LARYNX and BROCA as a gas token.

There are even more elements to the system as more payments to the SIP from ads and from fees generation increasing the liquidity forever. Also, there is rewards for the users that runs nodes etc. but we will not go into this here, as we are looking only the tokenomics.

Open questions

Having in mind the above there is some open questions at the moment or simply things that need more clarification. Probably some these things are still under review and not decided but let’s take a look.

Here some of them.

What will be the new supply/inflation of the LARYNX tokens?
As we know, at first their will be a one year claim drop to the Hive stakeholders. All unclaimed tokens then will be a subject for the community to vote how to distribute them. What this means is an initial supply of around 400M LARYNX tokens. Each year their will be a new better version of these digital miners’ tokens. How much of them? 50% of the supply, 40%, 30%, unlimited?
Actually, at first it looks like these new miners will be basically unlimited. The only limitation is the amount of SPEAK one can send to the SIP. What this means if there is high interest in new miners the old ones can be out of date very fast, just because competition. But in the first years it will be hard to get the new type of miners because the only way to get them will be by sending SPEAK in the pool and since it is year one of mining SPEAK their will not be a lot of it.

Also, very interesting question is what the initial pricing of the SPEAK-LARYNX pair will be. In time the market will determine the price, but an initial price needs to be set for the pool when the first SPEAK enters it. How much LARYNX will one get for 1 SPEAK token?

What will be the supply of the SPEAK token and its mining rate?
More or less the same question as for the LARYNX token, goes for the SPEAK as well. SPEAK is the central token of the network. It is used to buy both LARYNX and BROCA, plus HIVE. As we know it is capped. How much of it will there be? 100M, 200M? For how long will the initial mining of the token continues? As we know Bitcoin is also capped, but its mining will continue for a 100 years. How many years before all the SPEAK is mined? How much of it will be mined per year? Will there be halving’s, or some similar mechanism put in place that will make it harder for mining as times progress?
How will be miners be rewarded ones all the SPEAK is mined? I guess it will be from the fees and other payments in the SIP?

What will be the supply of the BROCA token and its mining rate?
The same for the gas token. How much BROCA will be generated from 1 SPEAK token? Will there be some cap or yearly distribution rate? What will be the cost for uploading videos in BROCA? I guess there will be a resource allocation mechanism that will adjust the price dynamically depending on the usage of the system. What type of mechanism will be put in place for this?
Another thing is that in the first year there will no new miners’ tokens, but users will need BROCA. How can one obtain the BROCA token in the first year? Will SPEAK sent to the SIP in the first year will generate BROCA only?

Smart Contracts
All the above and more needs to be put in a smart contract/s. I cannot tell for sure, but from the look of it, its not an easy task. A lot of things need to enter in this smart contracts. A lot of testing. Its mentioned that the smart contract layer will be used from Hive. Will this be the mentioned smart contacts from blocktrades or someone else?

Final thoughts

Although a bit complicated at first and with a lot of open questions the idea for the 3Speak network looks very interesting and appealing.
More complicated tokenomics will most likely come in the next years and they will become a standard thing. Some DeFi projects have these things already.

The ownerless pool, SIP concept looks amazing. One thing that should be taking into consideration is that even with liquidity locked forever and constant increase, these types of pools require activity, or simply put volume. Without a volume, even with large liquidity in it, it will just be a locked funds not generating revenues. More volume means more fees, more activity, more liquidity. That will most probably be the challenge. Attract volume.

Another thing to be considered is that this system is designed with long term goals in place. A one year claim drop for the LARYNX token. New type of miners on yearly basis. It will literally take years for the system to takes off. First the development, the smart contract system, next all the miners to be claimed, then initial supply of SPEAK and BROCA to be mined, then new version of miners and initial capital to enter in the SIP. It will be a slow process 😊. Might be wrong, its crypto, but at first that’s how it looks.

A very important thing in the tokenomica above. No ICO, no premine, no large funders share!

Tokens meaning

  • LARYNX - The larynx (/ˈlærɪŋks/), commonly called the voice box, is an organ in the top of the neck involved in breathing, producing sound and protecting the trachea against food aspiration. The larynx houses the vocal folds, and manipulates pitch and volume, which is essential for phonation (Wikipedia),
  • BROCA - The Broca area lies specifically in the third frontal convolution, just anterior to the face area of the motor cortex and just above the Sylvian fissure. It is made up of two areas: the pars triangularis (Brodmann area 45) and the pars opercularis (Brodmann area 44), with functions linked to speech production (Britanica),
  • SPEAK - speaks for itself 😊.

All the best
@dalz

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After trying to read a couple of these posts I have absolutely no clue whatsoever what all this is about. All it just reads like bla bla bla to me honestly. It would be nice to get a short version on why exactly there are these tokens and what gives them value in human language without the requirement for any mental effort. 99% of people will just go pass on this right now imo.

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LOL
Here is a another try:

  • LARYNX, a digital mining rig mining SPEAK... what gives it value? What gives the physical mining rigs value ... the ability to mine BTC. Meaning LARYNX value will be dependent on the SPEAK token value
  • SPEAK - a governance token that also can provide the other two tokens as well.... what gives a governance token value? The ability to distributed funds (if there is any) from the pool + few other things
  • BROCA - a gas token.... what gives it value? It is need if anyone want to upload (post videos) stuff on the network. The more people want to make uploads the higher the value .... basically the same as ETH GAS

I don't think the tokenomics system is build to attract the masses and it doesn't have to. It is build to create a decentralized foundation for video and image hosting, which by itself is already pretty niche itself. People like us, who are already deeply involved in crypto and social media will be those who provide their storage and bandwidth and in return profit from the tokenomics. Or you simply mine SPEAK with your airdropped LARYNX and do just that and nothing else, while others buy your mined SPEAK gladly off your hands.

Try to explain BitTorrent to the 99% and they will bleed from their ears. But using a BitTorrent client to download a file is already much less complicated and reaches a far greater audience. 3Speak will be similar, except that it will be much easier to use in terms of watching videos, compared to downloading from the torrent network.

Pretty much, and the creators will have their own tokens plus a sink to support them in low network usage periods. Plus nft memes that get issued to top token stakers like dividends get issued to stock holders

Maybe I'll start to get it on the 6th post I read about it. xD

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Lol .... took me a while as well and probably there are stuff I'm overlooking

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I wholeheartedly agree. It will take more than one explanation for me to grasp the intricacies of these interactions and how to utilize them properly.

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LOL 😂
This is only my second post, but I understand what your saying. I am also at that stage. I read @taskmaster4450, now @dalz, now I will reread @taskmaster 😂

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same

I listened to Dan's talk at HiveFest and just switched off, then I listened to it again and after a bit of a chat with some peops on Discord, it's quite easy to get your head around - but you do have to think it through a bit.

Nice explanation.

Looking forward to seeing this rolled out this year!

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It sure takes some time to get your head around it .... I went trough it a couple of times as well. Also writing this post helpes :)

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To clarify, there will be a constant demand for larynx due to them deprecating each year. Their efficiency will drop and so users will need to send speak to the SIP to purchase the new miners that are issued that day. Additionally input to the SIP is driven by advertisers buying ad rights to the system. These two factors, along with staking to the sip for Defi fees should help keep a flow of payments into the sip. If we can make the sip a joint hive community project, where most of the sales / conversions of hive speak and Brocca are done, we can create a huge sink for hive and large volumes of trades that the whole community benefits from that is then used to fund / support video infrastructure and other digital services / community projects that the chain needs

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Additionally input to the SIP is driven by advertisers buying ad rights to the system.

Would this mean there will only be one frontend for the 3Speak network? Isn't the end goal that everyone can build on top of it?

End goal of course is that multiple platforms build on it. Infact we plan to let the community vote on which existing alt tech platforms get an equal amount of the unclaimed larynx miner tokens from the claim drop. This includes 3speak. So we will have to compete on an equal playing furled with everyone else to get initial miner tokens. Idea is that this will bring new platforms into the distribution and in return they will get access to storage, Infrastructure nodes and token systems including NFTs

So platforms like DTube, Minds, LBRY and BitChute could use the 3Speak system to host their own videos, while profiting from its economics and still continue their own platforms and tokens as they are?

The intention is that the community can vote these platforms in to receive an equal share of the unclaimed miner tokens as 3speak

Great project premise and revolutionary on its own. Can barely wait to see how it unfolds, getting the airdrop and see all the tokenomics in action. This will open a new ecosystem for both video content creation and also earning by supporting it. A place for everyone to be part of it and earn based on its stake or video abilities.

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Just be patiance :)

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It's still pretty much confusing but the motive of having it locked in forever in a liquidity is one promising more. The more tokens pushed in that will be staked there for the long run, the more chances for a healthy token. The sad part here is that I don't use 3speak, I doubt being as close to getting any drops :(

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You dont need to use it, you just need to have hive :)

Really? Then am on the lucky side of getting a fraction of it

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3speak the platform and the speak network are two very very different things

This totally seems complicating and you lost me when you talked about BROCA. Nevertheless, I believe it's exciting development with the speak token and all. Still waiting for more development.

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This interesting and it makes me rethink some of my desire not to stake hive (converting to staked leo). My major question is how easy is the platform going to be for the end-user. I had such a hard time onboarding video creators to dtube when it started.

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Thanks for the education

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Glad if it was helpful :)

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I am excited to get some.

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Incredibly excited for this to launch

The complex part is the SPEAK emission rate as that depends on the performance of the hosts - the KPI should be sent to the chain for minting SPEAK.

Hm ... now that is somethig that I missed. Is it described somewhere that the emission rate of the SPEAK token will depend on network performance?

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i was not sure what will be mined but it makes sense that it depends on network performance because i think dan said that every miner will mine if you have stored (part of the video) the block that it hit.
So if everyone are hosting one video that was the hit, everyone will mine that one.

now that i am writing it could be that every block will have X amount of speak and it is shared by the amount of people that host that specific video.

wow, not sure do even i understand what i wrote :D

Initially speak will be distributed along side broca as rewards for being a miner or node operator in the network. However speak is capped and eventually only broca rewards will be earned from providing infrastructure to the network.

i seen Dan post after i wrote this. it is still over my head :D i will just have to experience it, i bet then it will not be complicated.

i am not sure how will my provider of unlimited bandwidth will feel about that :)

We believe it is the most simplified version it can be fir video infrastructure , however we welcome methods to improve it as we release the white paper had are happy to revise to simplify if it’s justified or integrate-able with hive more directly. No one has any idea how the internet works, but it works. This is probably the same type of thing. Once it is set up in the desktop app and a couple of other front ends are operating on it, it should become very clear what is happening

@bil.prag - ideally someone who hosting all the videos in the network with sufficient amount of LARNYX will be a better miner and anyone trying to access any video can be delivered by this host (provided she is geographically closer to the user accessing the video). If you host entire network but don't have any LARNYX, your chances of getting return is going to be zero.

She would need those LARYNX combined with those resources. I wonder what the plural of larynx is...

@dalz : So, the SPEAK emission rate, aka minting is done by the miners who stake/vest/lock LARYNX. If you have very large amount of LARYNX but a small amount of disc space on a dial-up connection, your miner will be having negligible effect on the entire eco-system. Thus, the SPEAK mining should be a function of LARYNX + available resources on the miner.

Available resources on the miner = disc, network speed, throughput etc etc.

This is what I understand :)

Correct. Available Resources provided will be the major factor in amount of speak mined, however amount of miners will play a part. Miner efficiency will also drop slightly each year for about 4 years. Each year a new, more efficient will be available. Miners will come off the ‘production line’ each day. We hope that this will create a continuous demand for miners and therefore continuous payments into the SIP each day that are locked away forever to help back the SIP liquidity pool

In addition to storage, This will also be applied to users running CDN, encoding, service and video cashing nodes. Whether or not a user runs one of these nodes will be toggled through the desktop app initially.

yea video trans-code pipelines, search, log aggregation pipelines etc are going to be needed

We are creating a list of variables with the white paper, our intention is that the community can set the variables with their stake weighted votes. The emission rate will be one of these variables, unless of course there is a more elegant way to manage this automatically based on other kpis of the system that are monitored

In Bitshares and similar networks there is a concept of advisors aka committee which can vote to change global parameters like emission rate. ie, there are users, witnesses and then a committee which governors the system. Not saying its the best or anything, just pointing out that there is a model.

This information is pure dynamite!

I had a lot of questions about this and I haven't really found much useful information that talks about it other than in a video.

Thanks brother, now I am more aware of this 3Speak mega project.

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Thanks!

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A bit complicated?

Lol

You don't say...

Thank you @daltz for a very informative post, which really helps with this complicated new ecosystem.
@shortsegments

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Great explainer, Dalz.

I've gotta echo the sentiments of everyone else that this is complicated as fuck haha... But the potential is there for the project to not only be a huge boom for Hive, but to properly solve the problem of decentralising video services.

Keen to see how the 3Speak team goes about this one. Gotta deliver now!

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Thanks!

The SIP will also be an incredible container of HIVE that will be blocked and generate a shortage of HIVE and an increase in its value over the years. Brilliant!

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We like to think so, but this will be more successful if the idea of using SIPs on Hive for other service infrastructure is taken up and we use them outside of just video infrastructure provisions

The tokenomics are too complex. Three tokens plus HIVE is too much. I hope I am wrong.

Users will only ever need to stake a little speak usually. The Broca will regenerate to their accounts like gas in eth so unless they are posting a huge video or multiple videos that n a short period, the experience of uploading should be a free feel.

It will be in the interests of he platforms to make sure they have enough broca to give free experiences to their new users, often without the user even knowing that they have consumed broca

Miners / network node operators need larynx

Governance votes are done with speak,

So hopefully the three tokens are not regular use by normal users and uploaded and are often not touched and certainly not a requirement. For example, for most users and most activities, how often do they actually use stake weighted votes or need resource credits on Hive? Not often. Will be similar thing with speak network

by locked forever it doesn’t mean that these tokens can’t be taken out of the pool. Just the only way to take them out of the pool will be by buying them, adding a new token in the pool.

Doesn't it sounds sketchy? Funds locked forever in a pool, but can be taken out some way or another 🤷‍♂️ it's too complicated

No .... its basically equivalent to forever locked liquidity on swap DEXs, like Uniswap, Sushi, Balancer etc .... they already have billion in them ...

But you can pull out your funds any time from uniswap. By forever locked I understand forever, not until someone decides to

Not sure what you mean .... forever locked liquidity is forever .....on DEX or in this case SIP..... BUT that liquidity is still available for trading .... thats the purpose of it ..... If I go now in a pool that has forever locked liquidity and I buy the token X.... it is mine now, I have taken it out of the pool.... BUT I have put in token Y

Only payments in fir larynx miners and advertisements are locked into the sip. Normal users can stake and unstake to the sip at will like any other defi pool

I am very impressed by what @threespeak is doing here. At this rate they can at least become a real competitor to LBRY. Thank you for the well explained breakdown as usual. I feel like there are lot of details to be cleared out. Since I will be getting tokens airdropped anyways, I don't have much to c\worry about (except marketing reach of the project).

@vimukthi - thanks for pointing out LBRY. Looks to be a very interesting marriage of DLT and DHT

I'm surprised you managed to avoid it so far. I have seen people who are not even that much into cryptocurrency talk about LBRY.
https://www.nytimes.com/2021/01/26/technology/big-tech-power-bitcoin.html

Alexa rankings are impressive too:
https://www.alexa.com/siteinfo/odysee.com
https://www.alexa.com/siteinfo/lbry.tv

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I think I might have skipped it after seeing the storage aspect. I am not very interested in storage tech and AI due to no-particular reason. I end up skipping both :)

The intention is that lbry can use and own part of the the speak network like 3speak will use it. It will even have an equal amount of the network to 3speak if the community votes both platforms in

I saw the original announcement and this post seems even better. It's easy to read & understand. You're pretty good with content writing. @theycallmedan should seriously hire you as the guy to write thier whitepaper and any other guides/tutorials. Thanks a lot for the explanation.

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I don't quite get it but when I see it practically, I think it will become clearer. For now though, the most important thing is to stack up Hive and increase the amount of tokens I'll claim in the Airdrop.

Also, it does sound like this project is going to absorb quit a lot of Hive in the process.

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This is fascinating

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Names could be easier like 3speak miner 3 speak gov and gas.

Any date for the start?

This is an excellent breakdown. Thanks for sharing you knowledge!

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Nice to learn about this. Cool!

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