Reflections on the economics of blockchain tokens

Recently, ICO has been so rampant that various MLM organizations have used the technology and concepts of blockchain to use their blockchain technology to circumcise money (cheat). This madness is transmitted to some blockchain startups with certain value. The pressure from these equity investors is: too expensive to prepare for ICO projects!

Therefore, although I have recently invested 100% in the blockchain field, I really can't get it, it's expensive. If it is not a blockchain project, there is no hot ICO, I have to think about the project for 30 million valuations. I will give you a 300 million valuation today and still get a 50% discount. I know that they can get 3000 BTCs (worth 100 million RMB) in minutes and minutes, because even worse projects have already been obtained, they have no reason to get them, so people give me 50% off to 300 million. The valuation is also very good.

In fact, I have always hoped that the supervision can intervene in the ICO field, suppress the arrogance of irresponsible scammers, and let the leeks who think about the riches of the night wash and sleep, and don’t take the initial valuation of the blockchain start-ups. Pulling up 10 times, because this is not reasonable, a company will not ensure that the success rate will increase because of the angel's round of 3,000 bitcoins. The financing amount and success rate are not necessarily proportional. On the contrary, it may take too many bits early. The currency, on the other hand, leads to a distorted mentality and an increase in the failure rate.

But the recent ICO madness and the soaring prices of various currency exchanges on the digital currency exchange have made me see the value of “liquidity” for investors:

The greater the liquidity, the greater the bubble.

Without good liquidity assets, the bubble will be small or not. Just like many projects that our angels invest in, they have to lock for 7 years or even longer. Investors in the middle want to come out in advance, even if the assets are good, they may also be sold at a discount.

I have done a lot of learning and thinking about blockchain, bitcoin, token economics and ICO, and I have done more than 100 pages of PPT, and I have done several 3 hours of in-depth sharing (internal sharing only, no foreign). This is really the greatest opportunity that the times have given us. This potential is far beyond the Internet in 1997.

But I am not talking about ICO, I am talking about token economics.

The blockchain technology allows a start-up to issue an eco-token (Token) at a very low cost. I have repeatedly stressed that this is a product-level application token, not an equity image of the equity token. There are essential differences. 90% of the ICOs sold by ICO in the market are designed to have a constant total amount, mirroring the company's future income rights. This is actually a disguised equity financing, which is an illegal fundraising against the securities laws. Although there is no touch of the French currency, the BTC and ETH obtained through the first public sale of the virtual token ICO are highly liquid, and the regulatory authorities are not stupid. They just don’t want to ruin the food and give everyone a tolerant and innovative environment.

But many speculators and blockchain entrepreneurs who lack innovative thinking are still pledging in the white paper to use the company's future earnings to pay dividends to token holders (or buy back tokens), which is about blockchain technology and generation. The insult of currency economics.

I am inside us, telling our CEOs:

The application token (Token) can be exchanged for the products or services you produce, so the total amount cannot be constant. No company will say that we only produce 10,000 color TV sets and never sell them. In most cases, only securities (stocks) need a constant total amount. Products and services should be provided as infinitely as possible. How many people buy me and how much they sell, and it is too late to be happy. The constant set of tokens (Token) is essentially in the gray area of equity crowdfunding! It is against the product sales thinking.

P.S. Special merchandise and membership certificates such as limited-edition luxury goods do limit the total amount, but this is not what we call mass consumer goods and services, not the scope of the discussion here.

The core of blockchain token economics is to activate the internal ecology with tokens, which allows a startup to operate like a big eco company on the first day. This poses a great challenge to management, but the blockchain gives The decentralized self-organizing management system and tools have given the ecological tokens for circulation and incentives, all of which are much simpler than in the past. Funding here through ICO is essentially “pre-sales”, not “equity crowdfunding”; it is to pre-sell the product or product voucher to future consumers, instead of turning the company’s shares into encrypted digital currency. Distribute to equity investors.

90% of the blockchain entrepreneurs have used the wrong ICO, which caused the entire industry to be quickly speculated by speculators. It also quickly attracted the attention of the regulators. This is for those who want to use blockchain technology and generations. The theory of economics of coins is a huge influence for entrepreneurs who do ecological projects. It is also a huge obstacle to our value investors in these blockchain areas. Angel investment in this high-risk investment stage, it is necessary to compete with the "secondary market retail investors", the valuation is pulled up 10 times, this is really crazy. I still hope that ICO will return to the private equity era and make private placements of ICOs for qualified investors, instead of directly selling them to the public. This is too big a bubble. In the future, the victims will really affect the loss-bearing aunts.

The cognition of blockchain token economics is the most easily realized cognition. Mastering this cognition and redesigning the business model can significantly shorten the project development cycle and quickly gain market recognition.

Because through the decentralized network structure, the decentralized trust mechanism, the design of excellent product logic and ecological consensus mechanism, and the economic model of ecological incentive mechanism that conforms to the laws of humanity and economics, the product can be detonated in a short time. Every role that was involved in the early stages of ecological construction can be motivated by tokens.

P.S. The meaning of ecological incentives: not only can the author get a reasonable return, the reader can also be allocated advertising fees, and those who participate in the communication can also be rewarded.

However, whether you want to pre-sell tokens in advance to potential users in the future, just like a project with advertising as the main business model, whether you want to receive some advertising fees in advance through token pre-sale, as your own early development funds, this Depending on whether the company is currently lacking start-up capital and operating expenses. However, there is a fundamental difference between the advance advertising fee and the pre-sale equity (future equity). Advertisers who pre-purchased advertising fees (tokens) did not expect the advertising fee tokens to have huge value-added space. The company can promise that the advertising fees will be paid in advance, and there will be a certain discount in the future; Investors have clear expectations about the rise in “stock price” (coin price), and today, ICO is expected to be more than 10 times.

Tokens are the best narrow body for pre-sale of products and services, but 90% of blockchain entrepreneurs are used in equity crowdfunding. This is a manifestation of lack of innovation, sad!

I hope that in the future, our CEOs of PreAngel will take a good start and design some token Tokens that are truly in line with the pre-sales positioning of the products, and pre-sell them to prospective customers and buyers (not stock speculators) on their official website. I will also personally help entrepreneurs who are really doing value creation, using the technology of blockchain, introducing the essence of token economics, designing the economic model of the internal ecosystem, and giving the technology tools that the times have given us to the existing ones. The ultimate use of the legal framework system.