In the summer of 2018, Fang Jun, Zhu Feng, and I jointly released “The Model and Practice of the Token Economy-A White Paper on the Commercial Landing of the Blockchain to Empower the Real Economy”, and for the first time proposed the DAC “distributed self-organized business body”. Concept and researched its formation mechanism. Now, a year and a half has passed, and we updated a version in the middle. With some practice and thinking, we have launched a new version of the “White Paper on Token Economic Models and Practices”.
This version of the white paper is still based on the formation mechanism of the DAC Distributed Autonomous Company concept. We have proposed a two-dimensional value representation model. This is a model that has been greatly improved. We reflect on the previous Defects of the token economic model. Two main points:
1) The issued “token” lacks value support
2) Overemphasis on the incentive attributes of “tokens”
These two issues can almost destroy the foundation of the token economic model. Should we “tokens”? Or the traditional Internet itself has incentives, why do we use blockchain? And compliance issues behind these issues. For example, everyone is now engaged in the alliance chain, which is actually a retrogression. These problems are the problems we have found through the practice of many projects in the past 2 years.
Therefore, there has been a view that the “token economy” does not need to exist in the decentralized world. This corresponds to the fact that the blockchain should not introduce the concept of “tokens”. This is very frustrating. We have also seen that the value expression of many “tokens” in the industry has always been the first level thing in monetary finance, the Fisher formula or something. Some of the “Low” statements are the logic of “continuous deposit, pattern lock-up, repurchase destruction”.
Therefore, our new version of the white paper emphasizes that the core model of the value Internet is still the token economy or the currently developing SSDE – Self Sustainable Decentralized Economy “endogenous decentralized economy”, Crypto Economics cryptoeconomics, etc. These theories all emphasize “Token The importance of tokens. If we think that the network platform has great value in the Internet era, the economic principle of the token enables “economic value” to be expressed on the network and form programmability, so that algorithm-based incentives and game rules can be designed to enable cross-domain competition Collaboration becomes possible, thus creating a new thing DAC distributed self-organizing business body, we think this concept is an important feature of “Internet of Value”.
Therefore, we propose a new paradigm for token economy. We proposed a two-dimensional value representation of “tokens”. XT is a value map of the real world, and UT is a representation of the new value created by DAC collaboration. We emphasize that there must be a basis for the issuance of any token. For example, the issuance of XT is similar to STO, and it can be achieved by current and future laws in the real world. The generation of UT is based on the on-chain disposal of XT. It cannot be issued directly and then “say” what value it corresponds to. XT + UT is a two-dimensional value representation, which is not equivalent to the dual token design. XT + UT is constrained by smart contracts.
These two tokens can carry all the information about the business activities that can be completed with this model, or in other words, all the information in the operation of the DAC. This information is not simple Internet information, but value information. Programmable to process; Secondly, we do not need the endogenous token of the public chain, but the public chain does “global verification”, XT registration, UT is generated through microservice processing XT, and a template we propose to connect these things DAC smart contract. Third, XT + UT can measure value. This measurement can rely on the power of the market. According to various policy environments, these markets can be implemented in a variety of ways from traditional markets to algorithmic markets such as Bancor and decentralized markets. In this way, a good mechanism design can form positive feedback to create a DAC.
The practical significance of this paradigm is to make blockchain compliance applicable to real economic activities, such as empowering the real economy. In fact, the traditional world also operates in a similar way. We process raw materials into commodities, which is value creation. We distribute goods to the people who need them. This is creation. However, we map these activities to the Internet and play the role of the value Internet. We also quoted Coase’s theory of institutional economics, hoping that the three elements of the operation of the market economy, the boundaries of companies, markets, and governance can be broken, which is exactly what we hope the value Internet does.
This method has its limitations, and we also pointed out in the white paper. Many scenarios cannot be handled at present. We propose a simple XT + UT model. More complex scenarios may require the concept of Positive Value (Entity) (PVE) in SSDE theory. PVE is a multi-dimensional value description. In addition, this model places new demands on governance and markets. These, we will continue to discuss in the new white paper, such as Canada’s Metis Lab, which studies blockchain governance, has provided a lot of help to this, its founder Kevin Liu is also the co-author of this white paper.
We hope that this model can help projects such as the sharing economy that are difficult to handle on the Internet. In fact, we have several projects that have begun to use this paradigm, such as our JM Wisky project, a niche single malt Wisky community economic project, and government-supported projects for rural revitalization. This model has more endogenous characteristics of the blockchain than the alliance chain. However, it is not a “coin circle” public chain game. We do not issue coins. We register assets and witness value creation. We hope that this new white paper will contribute to the development of our blockchain industry.