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New Year's Special Session 2: Value Creation, Capture & Sharing
Live Sessions ahead on Token Model Generation & Cryptoeconomics Patterns
Our first session was really good for synching - also between us community writers. As announced it was a bird’s eye view on the track of these New Years Special Sessions “When Rubber Hits the Road” of a Hitchhiker’s Guide to Token Engineering. In this article we give a short recap in order to prepare for the more interactive 2nd Session on Monday Jan. 3rd 20:30 CET / 2:30pm ET (add to calendar, call link):
Finding out what values the token will represent and chosing (alternative) value capture mechanisms
We love engagement with supporters and “alpha readers” (hence these sessions), your questions and feedback are what keeps us going, focusing. Thank you for those! If you want to follow along here are the slides of the first session, and reacpture some moments from the recording.
In this second session, we will “debate” on what values and hence elaborate on some of the concepts we both refer to in the two chapters Token Model Generation and Cryptoeconomic Patterns:
The initial value network: raw value, system goals and policies
Ecosystem Valueflows to visualize and identify the origins of value: Value network is made up of agents (human and smart contracts that act), the actions (user or system policies according to which the agents carry out those actions), which make particular value flow and accumulate in a value stock.
In our debate we’ll (you can bring your favorite token network, too!) go into some examples and how one would visualize these valueflows.
In the first session (around 1hr mark of the recording) we briefly touched upon how to identify, sort this inital value network using the “playing cards” and the “rainbow canvas”. We will get back to this very human part of coordination (sorting and bootstrapping) in Session 3.
Once we identified the origin of the value of the token in a few example networks, and feel comfortable with the naming conventions (feedback welcome! we want this to be accessible, not academic, nor nerdy, nor taxonomic), we will dig deeper into potential value capture mechanisms. Remember those 9? The following are particularly interesting to discuss (indeed questions came up wrt them in the first session and later on in Token Engineering Commons Discord):
Where to locate Bonding Curve Mechanics, e.g. Bond-to-Mint, Burn-to-Witdraw? (Hint: policies)
Staking/Vesting: what (use) value does that action represent/create in combination with which other mechanisms?
Such composition by the way is what is meant by “value creation pattern”: a set of implementations that create the specific cryptoeconomic pattern of a token network, which might be usable in parts, same or modified for another token network / community.
This brings us to the climax of this session: Are we just unbundling the traditional firm? Are we creating something entirely new - especially in the abundance driven cyberspace / metaverse / digital supply chains? Or are we replicating old business and financial models of the scarcity-scarred, survival mode organizations in a decentralized manner. Some food for thought:
Equity vs Royalties:
Dividends (share of profit and retained earnings) and Capital Gains (appreciation of share price when there’s demand for the share on secondary market) is what shareholders get of owning a share of the company (with all its tangible, intangible, goodwill value stocks)
Royalties is what a company pays to the legal owner of a property (yes please get curious! As an employee of a company you trade your intellectual property for salary. How will that change in a decentralized autonomous organization? Aren’t then all contributors intellectual investors?)
Business Operations: the token does not coordinate all of operations - never, unless it could all be automated, digital or better crypto-native. Even if e.g. DeFi networks are entirely crypto-native, the product is entirely digital, the whole operation is still made up of humans coordinating their contributions, making decisions - and the qualit of the sum total of these will determine the fundamental value - always. What does operational excellence translate into in token networks?
good coordination among: accounting, finance seems a given thanks to blockchain technology. This holds for crypto-native protocols, likely for digital-only goods and services, less hope for all other domains in which the overhead of dealing with hacky DAO tooling and real world regulatory compliance like GAAP is more effort that is not yet worth the potential - but innovators die last.
how about: marketing, sales? what is the potential of a 1000 true fans?
What does operational excellence entail? System design (check! follow Token Model Generation), quality metrics (check! visible even in valueflow diagrams). How about project management (Join Session 3: 10th January same time!). Or inventory and supply chain management? Let’s sneak peak into Digital Supply Chains!
and of course how does one break the curse of operational excellence: short-termism (wrt strategy, innovation, or sustainability), (departmental) silos and competition; which will only get worse if decentralized organizations are driven by market speculation only, in which weekly news cycles and daily tweets determine stock value. Hint: Value Capture & Distribution Mechanism!
Ok! This should be sufficient to get you ready to join the more interactive session #2. We’ll try and employ some of the mentioned “Liberating Structures”, which will be the main topic together with “Radicle Agile” in Session #3: Embarking on the Everlasting Experiment. Mark your calendars!