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Decoding Token Economics: Token Economy Design Workshop - OST | Open Simple Token

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Decoding Token Economics: Insights from our Token Engineering & Token Economy Design Workshop at Berlin Blockchain Week

On 6 September 2018, Token Engineering Berlin, Ocean Protocol and OST co-organized a workshop to discuss why businesses tokenize, the optimal use cases for tokenization and the best approach to engineering and designing token economies.

Mohit Anand, Director of Blockchain Strategy Consulting, OST.

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Decoding Token Economics: Token Economy Design Workshop - OST | Open Simple Token

  1. Engage OST Decoding Token Economics: Token Economy Design Workshop Mohit Anand, Director of Blockchain Strategy Consulting, OST @anandm86 Ben Bollen, Chief Blockchain Scientist, OST @benjaminbollen Berlin Blockchain Week September 6, 2018
  2. Part 1: Why tokenize? Part 2: Designing token economies
  3. Part 1: Why tokenize?
  4. Historically, major leaps in technology have been transformative for society GUTENBERG PRESS PARCHMENT ▼ PAPER KNOWLEDGE Renaissance Scientific Revolution RELATIONSHIPS Protestant Reformation Nation State MONEY Bank Notes Banking System INSTITUTIONS Corporation Bureaucracy ONE-TO-ONE ▼ ONE-TO-MANY Credit: Mark Bonchek, Shift Thinking, OST Advisor
  5. In the Internet era, Blockchain has the potential to drive radical transformation INTERNET ANALOG ▼ DIGITAL MONEY Cryptocurrency & Branded Tokens ONE-TO-MANY ▼ MANY-TO-MANY Blockchain KNOWLEDGE World Wide Web Web 1.0 RELATIONSHIPS Social Media Web 2.0 INSTITUTIONS DApps & DAOs Web 3.0 Credit: Mark Bonchek, Shift Thinking, OST Advisor
  6. At the core of this transformation is the changing nature of trust in transactions SENDER SELLER BUYER RECEIVER Trusted Intermediary Trust Through Credibility Blockchain Trustless Through Transparency SENDER SELLER BUYER RECEIVER Past Now Credit: Mark Bonchek, Shift Thinking, OST Advisor ; OSTCredit: Mark Bonchek, Shift Thinking, OST Advisor ; OST
  7. …and the power of dynamic digital communities Photo by rawpixel on Unsplash
  8. For many, this is an opportunity to recapture value from entrenched giants Early Internet Open Protocols (1980s-2000s) Recent Internet Tech giants (2000s-now) Coming Internet DApps (now-future) MANY-TO-MANY (negligible marginal cost) FEW-TO-FEW (exploit economies of scale) EVERYBODY-TO- EVERYBODY! (reduce negative externalities) Credit: OST
  9. For others, tokenization can transform businesses into valuable, self-growing economies SOCIAL NETWORKS ▼ USER COMMUNITIES MULTI-SIDED PLATFORMS ▼ MARKETPLACES TOKENS ▼ MEDIUM OF EXCHANGE ON-CHAIN RULES ▼ TRUST BUSINESSES AS MICRO-ECONOMIES Credit: Mark Bonchek, Shift Thinking, OST Advisor ; OST
  10. Tokenized Waze - where community is empowered to get much more from its contributions Photo by Fahrul Azmi on Unsplash Financial Incentives Social Incentives BRANDED TOKENS Credit: Mark Bonchek, Shift Thinking, OST Advisor ; OST
  11. This gives a wide spectrum of tokenization use cases…. Transactions On-Chain Incentive Games On-Chain Governance On-Chain Degrees of Decentralization Token Use Cases Proof of Stake, Proof of Work, Proof of Location, DAOs Increasing Decentralization Community Markets, Trust-less Registries, Collaboration Markets, Information Arbitrage Rewards, Payments, P2P Transfers Off-Chain Transactions Token Models Micro and Behavioral Economics of Token Flows Token Primitives Protocols Example Businesses OST Works With Company to User Rewards P2P Transfers Cross-Ecosystem Payments User Reputation Market Photo Attribution Market Ecosystem Curation Market ? ? ?(250m users) (70m users) (25m users) Credit: OST
  12. Governance On-Chain This spectrum of decentralization gives a rising curve of value shared with digital communities Increasing Decentralization Transactions On-Chain Incentive Games On-Chain Net Value Shared Web 2.0 To Web 3.0 0 Negative net value shared Increasing, positive net value shared Credit: OST
  13. Part 2: Designing token economies
  14. For businesses, their goals define the scope of their token economy GOAL Actions Actors Incentives (Social & Financial) Attacks Credit: OST
  15. We use micro and behavioral economics to model economies with transactions on-chain General users in community Power users in community Shaded area shows in-economy flows due to tokenization: Buy Hold/Exchange Earn Spend 0 + + + + 1. Rewards for user contributions 2. P2P transfers for sharing and collaborations 3. In-platform purchases 4. Attribution for user contributions 5. Recognizing user reputation 6. Recognizing user loyalty 7. Distributing platform value Simple Transactions On-Chain Credit: OST
  16. We use token primitives to model economies with transaction rules on the Blockchain Validated Lists Validated Quality of Work Validated Contribution Validated Expectations of Future State Prediction Markets Curation Markets Reputation Markets Attribution Markets 1. Content curation market 2. Curated registries 3. Proof of ownership market 4. Proof of origin market 5. Decentralized collaboration driven by community validated attribution 6. Information arbitrage market Token Primitives - Building Blocks Incentive Games On-Chain
  17. Let’s see how that works using the example of Medium 180 mn MAU 2.16 avg page visits 1.51min avg visit 6-7min avg article length
  18. Let’s see how that works using the example of Medium
  19. Workshop exercise: Solving ‘Actors’ for Medium Audience to fill out all the actors involved in the Medium platform Goal/Objective: 10X growth in platform use Actions Actors XXXX Incentives… YYYY ZZZZ …. …. …. Handout
  20. Audience to fill out all the actions involved on the Medium platform Goal/Objective: 10X growth in platform use Workshop exercise: Solving ‘Actions’ for Medium Actions Actors … … … … … … Normal readers Incentives… Premium readers Writers
  21. Goal/Objective: 10X growth in platform use Workshop exercise: Solving ‘Incentives’ for Medium Actions Actors Read Write Clap Comment Highlight Share Tag Follow Flag Normal readers Incentives … Premium readers Writers Audience to fill out all the incentives involved on the Medium platform
  22. Goal/Objective: 10X growth in platform use Workshop exercise: Solving ‘Incentives’ for Medium Actions Actors Read Write Clap Comment Highlight Share Tag Follow Flag Normal readers Be entertained - Support Engage - - - - - Premium readers Knowledge - Support Share ideas Draw attention to important points Distribute Increase discovery Curated feed Writers - Share ideas/ knowledge - Respond - Distribute Discovery - -
  23. Workshop exercise: Illustrating incentive group interaction for Medium General users in community Power users in community Shaded area shows in-economy flows due to tokenization: Buy Hold/Exchange Earn Spend 0 + + + + ‘MediumCoin’ Earn Buy Spend Credit: OST
  24. Workshop exercise: Incentive mechanisms for Medium - today ‘MediumCoin’ EARN BUY SPEND Claps $5/month Claps Claps Actions Actors Read Write Clap Comment Highlight Share Tag Follow Flag Normal readers Be entertained - Support Engage - - - - - Premium readers Knowledge - Support Share ideas Draw attention to important points Distribute Increase discovery Curated feed Protect Writers - Share ideas/ knowledge - Respond - Distribute Discovery - - Goal/Objective: 10X growth in platform use Audience to fill out earn, buy, spend involved using a MediumCoin
  25. Workshop exercise: Implementing incentive mechanisms for Medium ‘MediumCoin’ EARN BUY SPEND 10 10 20 80 20 100 120 - - Actions Actors Read Write Clap Comment Highlight Share Tag Follow Flag Normal readers Be entertained - Support Engage - - - - - Premium readers Knowledge - Support Share ideas Draw attention to important points Distribute Increase discovery Curated feed Protect Writers - Share ideas/ knowledge - Respond - Distribute Discovery - - Goal/Objective: 10X growth in platform use
  26. Workshop exercise: Implementing primitives to validate incentives for Medium ‘MediumCoin’ BUT to 10X growth in platform use we need more reputable articles Flag content Violate TOS (Yes/No) Publish article Vote (Standards enforced by community) Mechanism for improving standards in a decentralized way? —> Curation Markets? Mechanism for recognizing writer reputation in a decentralized way? —> Reputation Markets? List of articles that meet the Terms of Service standard
  27. Engage OST Decoding Token Economics: Token Economy Design Workshop Ben Bollen, Chief Blockchain Scientist, OST @benjaminbollen Mohit Anand, Director of Blockchain Strategy Consulting, OST @anandm86 Berlin Blockchain Week September 6, 2018

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