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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
Part 1: Why tokenize?
Part 2: Designing token economies
Part 1: Why tokenize?
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
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
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
…and the power of dynamic digital communities
Photo by rawpixel on Unsplash
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
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
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
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
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
Part 2: Designing token economies
For businesses, their goals define the scope of their token economy
GOAL
Actions
Actors
Incentives
(Social & Financial)
Attacks
Credit: OST
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
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
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
Let’s see how that works using the example of Medium
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
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
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
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 - -
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
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
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
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
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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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