Blockchain Token Design
Valsen Fiduciaries provides advice on token quantity, utility value, and user interaction – giving value to one’s own token is the key to long-term success. Furthermore, we are specialists in aligning economic interests of network and platform participants with tokenization.
To ensure that issued tokens have utility and attract and retain value, it is necessary to design a micro-economy around a token supply, so there will be demand and supply for the token and economic incentives to hold, stake or exchange the token.
A token design is a comprehensive blueprint that sets out how to:
- Issue the new token with terms that encourage long-term participation in the network;
- Create demand for the token inside the product, service or protocol; and
- Incentivize the appropriate types of behavior across the network that ensures the network is censorship resistant, attack resistant and incentivizes network users to hold tokens.
We work with startups to implement the blueprint recommendation inside their product, service or protocol, as part of the process of embedding an issued token. Token design services offered include:
Phase 1: Summary token economy design
Develop a high-level token economy design that includes the following:
- Decentralized business model design;
- Identify stakeholders, their motivations and functions performed in the network;
- Stakeholder incentivization strategies and use cases;
- Crypto-economic macroeconomy design, including stakeholder allocations of pre-minted tokens, reward function(s) and supply schedule;
- Review and advise on blockchain technology choices; and
- Assist in briefing the client’s legal counsel to formulate the desired legal form of tokens issued.
Phase 2: Detailed token economy design
Develop a detailed written blueprint that describes the functionality of and models behaviors inside the desired token economy, including the following:
- Micro-economic reward, penalty and staking functions and associated formulae;
- Reputation systems to ensure trust between stakeholders exchanging services; and
- Static game-theoretic crypto-economic mode.
Phase 3: Implementation and maintenance
Following the conclusion of the Token Issuance Event, we provide the following optional services on an ongoing basis to help ensure the proper implementation, functioning and success of the token economy:
- Establishing token economy Key Performance Indicators (KPIs);
- Product implementation support;
- Creation of a dynamic crypto-economic model;
- Token economy performance monitoring in accordance with KPIs; and
- Updating the crypto-economic model with real-world data and performing further scenario analysis assistance with the further design and implementation of adjustments to the token economy.