4D Explains the Design Principles, Application Scenarios, Advantages and Disadvantages of the Dual Token Model

The dual-token model is becoming more and more common in GameFi and other fields, but compared to the single-token model, whether dual-token is necessary, as well as the advantages and disadvantages of dual-token, how it is related, and design considerations are discussed in this article In-depth discussion.

Original Title: "Four-quadrant Token Economic Model (1): Double FT Model"

Written by: @Jane @Gannicus

Arrangement: @黑羽小斗

Introduction

Since Axie Infinity adopted dual tokens in 2020, dual tokens have almost become standard in the GameFi field. Its impact is not limited to this, as some projects in wider fields such as DeFi and Proof of Physical Work have also adopted a dual-token model. Compared with the single-token model, is it necessary to adopt dual-tokens; what are the advantages and disadvantages of dual-tokens; how are the two-tokens related; what can we refer to from previous dual-token projects ; What considerations can we make when doing dual-token design. This article wants to do some research on these issues.

Projects mentioned in the article include StepN, Axie Infinity, Crabada, Helium, Hive Mapper, etc.

Introduction to Dual Token Model

The dual-token model refers to segregating tokens according to their main usage. In the "Web3 New Economy and Tokenization White Paper" published by Hashkey, they defined the "three token models": functional tokens, equity tokens, and non-homogeneous tokens (NFT), representing Usage rights, equity and digital tokens.

However, in the discussion of the Buidler DAO economic model group, we believe that the distinction between functional and equity is focused on the use/equity dimension of tokens, and NFT (SBT) cannot be simply put together with them into the third category . Because the opposite of NFT is FT (ordinary homogeneous token) without granularity. Their differentiating variable is granularity and with it flowability which is another dimension.

Based on the two dimensions of tokens, we have drawn a four-quadrant diagram, tentatively named Four-quadrant Token Economic Model. This model framework solves some contradictory problems in the "three-token model", such as certain tokens can be both NFT and utility tokens, or both NFT and equity tokens. In the figure below, we have separately displayed the case where SBT is regarded as NFT's liquidity = 0.

As the first article in this series, we mainly discuss the content of the first quadrant and the second quadrant, that is, the dual-token model of **FT as a functional token and an equity token. **In a follow-up article we will continue to discuss some more imaginative scenarios - NFT (SBT) as utility and equity tokens.

Among them, functional tokens are mainly used to implement specific mechanisms in the system, such as asset upgrades, service payments, etc., and in some scenarios, they are similar to currencies in the system. It will also be used as a reward and distributed to users who participate in the interaction according to certain rules. Utility tokens are generated and issued on-demand, usually with no upper limit.

Equity tokens, as their name suggests, include "rights" and "benefits". "Quan" is the right to govern the project. Owners can participate in governance processes such as voting. For example, the tokens of Uniswap and Lido are pure voting rights; "Yi" means that the token itself is scarce and can increase in value in the market. It is also possible to enjoy project dividends like stocks. For example, many VE-structured projects use stake tokens to obtain VE tokens that can vote and distribute dividends. In the early days, there were many projects in the market that defined equity tokens as "shares" that were held for dividends. However, due to the huge US market that cannot be easily let go, and in order to avoid being recognized as stocks by the SEC, most tokens now try their best to avoid designing equity tokens as pure dividend tokens in order to choose themselves. In the original design, equity tokens are often the most important means of financing, and potential investors can buy equity tokens during public sales. In order to give investors relatively stable psychological expectations, it often adopts a classic fixed total amount design similar to Bitcoin.

Advantages and Disadvantages of Dual Tokens

The separation of equity tokens and functional tokens avoids the infinite dilution of governance rights caused by the continuous issuance of utility tokens to a certain extent, and helps to form a relatively stable governance structure. **On the other hand, since equity tokens usually carry more speculative buying pressure, the price of utility tokens can be relatively controlled. Taking the game scene as an example, dual tokens can alleviate the high price of functional tokens caused by speculation as much as possible, so that the excessive entry capital threshold causes the narrowing of the audience, and ordinary players can participate in the game more freely . The economic cycle in the game can also be maintained in a relatively healthy and stable state. For system designers, the means to control the stability of the system can be effectively increased.

The flip side of flexibility is its complexity. To manage a two-token system, the difficulty is not just multiplying by two, given the possible correlation between tokens and tokens. (In a report by Binance, it conducted a correlation analysis on the two tokens of Axie, and the results showed that the correlation coefficient between the two is 0.47, which is a positive correlation.) And when there are more than one token in the system Finally, how to reasonably allocate value has also become a necessary consideration. In addition, since utility tokens are often issued indefinitely, it is easy to fall into an inflationary situation. If excessive inflation or other related reasons lead to a price drop, in order to maintain a sufficient level of incentives for users, more tokens will need to be issued, which will further strengthen inflation. Therefore, how to dynamically manage the balance of supply and demand in the economic system is a big challenge. We can clearly see this in past instances such as GameFi. For ordinary users, the increase in the number of tokens may also increase the difficulty of understanding.

Qualitatively look at the price of dual tokens

There are two types of prices for utility tokens: fixed and variable. When the price is fixed, the utility token price is linked to the fiat currency. For example, in the Internet of Things project Helium, the price of its functional token Data Credits is always maintained at 1 Data Credit = $0.00001, that is, the money spent on using a certain amount of network services is fixed. In this case, users do not need to hoard DC, they only need to buy it when there is a need for use, and they will often use it immediately after purchase, which is reflected in the very fast flow rate of the token. When the price is variable, excluding pure speculative factors, when the growth rate of economic activities in the system is greater than the inflation rate of functional tokens, the intrinsic value of a single functional token can increase, thus having a certain investment value .

Equity tokens are similar to stocks. In addition to the intrinsic value itself, its price also depends on investors' expectations, including judgments on the future development of the project, team confidence, etc., and is greatly affected by the market environment. On the other hand, for ordinary users, since the number of equity tokens they hold is often limited, it is difficult to have a substantial impact on governance. If the equity tokens are only used for voting, it may not be able to effectively motivate them to continue to hold and participate vote. Wider application scenarios will increase investors' motivation to hold coins and reduce selling pressure to a certain extent. It can be seen that in some projects, owning equity tokens is endowed with other benefits besides governance rights, such as:

• Holders can enjoy more benefits through staking

In Axie Infinity, players can obtain more AXS rewards by staking the equity token AXS to further increase the rate of return.

• Participation in governance can determine the benefit distribution mechanism

If participation in governance can determine the distribution of rewards, which affects their own vital interests, and users have a strong incentive to continue to hold tokens, they can refer to Curve's reward distribution decision mechanism.

• Equity tokens also have certain utility functions

That is, in some scenarios, in addition to using functional tokens, it is also necessary to combine equity tokens. However, the side effect of this move is that it will blur the boundaries between utility tokens and equity tokens, which requires careful consideration.

In addition, if the system designer combines some token burning mechanisms, the supply of tokens can be reduced in the system, which will also help stabilize the token price.

Discussion on the relationship between double tokens

The existence of dual tokens undoubtedly gives system designers greater control space. In the design of dual tokens, the two tokens are not necessarily completely independent. Some mechanisms can be used to make the two related, thereby affecting the quantity and price of the tokens, and making the system move towards an equilibrium state or design development in the desired direction. There are interesting interactions and hierarchical relationships hidden here, which is also the subtlety of the dual token model.

Dynamic interaction between two tokens

Let's take StepN and Helium as an example to see how the two tokens can interact.

StepN: GST VS GMT

The two tokens of StepN are GST (utility token) and GMT (equity token). In the process of continuously adjusting its economic model, the two tokens also continue to influence each other.

a) OPTIONAL BONUS

In StepN's design, when running shoes reach level 30, users can choose to receive GST or GMT rewards. Since the total amount of GMT rewards is fixed, if a considerable number of users choose GMT, the per capita GMT rewards will decrease. After reaching a critical point, they may choose to switch to GST rewards, and vice versa. Here, by introducing uncertainty of reward, users have the motivation to adjust and switch their choices. Ideally, this would help the two tokens reach a dynamic equilibrium in price.

b) GMT Burning Mechanism

Through the series of combustion mechanisms, users' demand for GST will also affect the supply and price of GMT. Some scenarios such as:

1. Users of different levels of sneakers have different GST upper limits (5-300) per day. When the user has reached the upper limit (300) that can be achieved by sneaker upgrades and reaches 90% of the GST limit of the day, he can further increase the upper limit of GST acquisition by burning GMT;

2. Upgrading to a specific level (level 5/10/20/29/30) requires burning GMT. After the sneakers are upgraded, as described in 1), the daily amount of GST that can be obtained will increase

c) Dynamic shoemaking cost

The casting of running shoes is the core of StepN. Another example of dynamic adjustment is reflected in the cost of casting shoes.

According to its update records, it can be seen that casting shoes only cost GST in the original design. As the price of GST rises, as one of the means to reduce the demand for GST, it introduces part of GMT as the cost of casting shoes. The ratio of GST and GMT required was subsequently further adjusted.

However, whether it is for users or investors, the unstable expectations caused by excessive human intervention are not a good thing. If the amount of GST required to cast shoes can be linked to the price of GST, the system can enter the self-regulating phase. To this end, the team has further introduced a dynamic shoe casting mechanism, the latest formula is as follows:

Minting cost = GST (A) + base GMT (B) + additional GMT ([A+B]*x)

Among them, the value of x changes with the fluctuation of GST price:

Under the dynamic adjustment mechanism, the required GST is a constant. If the price of GST rises, the amount of GMT required for shoemaking will increase accordingly, thereby increasing the demand for GMT. In this way, the proportion of GST in the cost of casting shoes can be controlled, and users may need to sell GST in exchange for GMT, which will increase the selling pressure of GST, so that the price will fall to a certain extent. From this we can find that the team does not want the price of GST to be too high, but wants it to remain within a certain range. In addition, the design of transferring buying pressure to GMT when the price of GST is too high indicates to a certain extent that **GMT is a more value-attributed token. **

Behind different tokens are different holders, and different value attributions can also reflect the team's business considerations. In view of the fact that only users with high-end running shoes can get GMT rewards, other users have to purchase the GMT needed for upgrading and casting in the open market. Some community users believe that this is an unfair reflection of relatively low-ranking users. Regarding big and small players, the founder Yawn Rong once replied in an AMA, "In the economic model, the big players are those who support the GST price and the floor price of running shoes. In the x2e project, the source of income needs to be considered clearly, otherwise there will be destruction from the perspective of the operation itself, it is understandable to pay attention to income and risk management, but to build a vibrant community, it is also necessary to balance the interests of the majority of players. I am afraid that it is not advisable to be one-sided or pursue absolute fairness. Through the shoe-making formula of double tokens, we can get a glimpse of the original intention of the team's design, and we can continue to observe the changes in the team's philosophy through its iterations.

In summary, the team uses the cost of the casting process to affect the demand and supply of GST and GMT, and thereby regulate the price. The dynamic influence between GST and GMT is fully reflected in this process.

d) More GMT usage

Currently in the StepN app, GMT is mainly used for upgrading and casting. Developing more usage scenarios and uses for GMT is one of the team's core goals. In addition to increasing the attractiveness of GMT, this move may further stimulate the demand for GST. The founder also expressed this in an AMA in January, and believes that in the recent market recovery, relevant signs can already be seen. However, whether the similar driving is endogenous mechanism type, or other reasons such as partial emotion, still needs more research.

Helium: BME Model

Helium mainly introduces a mechanism to associate dual tokens from the perspective of burning, which uses the Burn-and-Mint Equilibrium model (hereinafter referred to as the BME model).

a) Introduction to BME Model

The two tokens of Helium are HNT and DC. Among them, HNT is an equity token, the total amount is fixed (223 million), and the generation rate is halved every two years, and will be distributed according to certain rules as a reward for miners providing services. DC is a utility token. The Helium network is billed by DC, which costs 1 DC = $.00001 for every 24 bytes transferred. Users who need to use network services obtain DC by purchasing and burning HNT. Due to the fluctuation of HNT price, the amount of HNT to be burned needs to be determined according to the quotation of the oracle machine.

In the BME model, burning is only the first step, and the system will re-cast HNT in the next time unit, and the casting amount is a certain function of the burning amount, depending on the specific project. In Helium, this function has been adjusted several times. The relationship between the current casting amount and the burning amount is: when the burning amount is less than a certain value (indicated by B), the casting amount is equal to the burning amount, which is a balanced state; if the burning amount exceeds B, then the casting amount is still B, that is, B is the upper limit of the casting amount.

b) Dual Token Linking in BME

DC stands for quantity demanded. Through the asynchronous mechanism of burning-minting, the quantity and price of equity tokens can be automatically related to the demand. For example, when the market demand is strong and the burning amount exceeds the upper limit of the casting amount, HNT will enter a deflationary state. The smaller the total amount of tokens, the higher their price may be. The ingenious thing here is that when the price of HNT increases, the amount of HNT burned for the subsequent purchase of the same service will decrease, which will help the system return to a balanced state.

It can be seen that under the BME model, HNT can better capture the value of the platform's economic activities. Compared with purely dedicated payment tokens, users' motivation to hold coins is significantly enhanced. On the other hand, by separating functional tokens from equity tokens, the network usage price of ** users will not fluctuate with HNT. This stable expectation is also an important benefit of BME. **

However, in the actual situation of Helium, it is currently facing a situation of insufficient demand, that is, the amount of burned tokens is far from reaching the upper limit of the minted amount. So there is still a time dislocation between the two tokens. If Helium is regarded as a two-sided platform, by rewarding HNT to miners, Helium prioritizes the efficient development of the supply side, while the demand side represented by DC needs to be developed.

Incentives through tokens are a common means in the blockchain field. Extending from the Helium case, how to stimulate the demand side, is there a way for supply and demand to occur at the same time? This may correspond to a new design idea and reward method that is different from Helium's current dual-token design. If supply and demand can stimulate each other, the relationship between the two tokens will be closer to synchronization in time.

Hierarchical relationship between two tokens

When more than one token appears in the system, in addition to the mutual relationship between tokens, it will also reflect a hierarchical relationship, such as level or cross-level. There will be different ways of interaction between different levels of tokens.

In Helium, HNT and DC represent supply and demand respectively, and are tokens of the same level. The design of this same layer is also related to the initial design ideas of their respective supply and demand.

In StepN, GMT is obviously a higher-level token than GST. As the main value attribution entity, GMT can be used across realms (in StepN) and projects (in the FSL ecosystem of the parent company). In the team's new project NFT trading platform MOOAR, GMT is also adopted as an equity token. In addition, GMT also has clear benefits, such as being the denomination currency for NFT transactions, Launchpad votes, and burning GMT to generate AIGC NFTs.

The GMT rewards in Mooar come from the 30% ecological part of the StepN token distribution (as shown in the figure below). It is expected that it will continue to launch projects that are beneficial to the entire ecology in the future. What the designers hope is that the development of different projects will jointly contribute to the prosperity of GMT. GMT holders introduced by other projects may also flow to StepN, indirectly increasing the demand for GST.

• *

Summary

Compared with the fragmented one-way design, the most effective interactive design will add vitality and endogenous stability mechanism to the token system, and may generate interesting ecology beyond linear expectations in the continuous interaction. **With the combination of hierarchical design, system designers can fully develop their ideas. This also involves how to set up a reasonable value attribution mechanism to give effective incentives to each token holder. There's a lot to explore here.

The evolution of dual tokens

Dual Token —> Multi Token

From dual tokens, we can naturally extend to multi-coin scenarios. An intuitive speculation is whether the more tokens introduced, the more complex the mechanism, the larger the operating space, and the more prosperous the system will be. the answer is negative. Let's take the P2E game Crabada as an example to see an attempt of three tokens.

In addition to utility tokens (TUS) and equity tokens (CRA), in December 2021, CRAM was introduced in the game as a staking reward. There is no upper limit on the total supply of CRAM. Every 50 CRA staked corresponds to 1 CRAM per week. Users can directly sell CRAM for profit, use it as a ticket to participate in lottery activities or expand the team size in the game, etc. CRAM and TUS are also traded interchangeably on Trader Joe's.

As mentioned above, in Axie, the reward for staking AXS is still AXS. Crabada chooses to introduce the third token in the pledge link, which has a greater intention to further improve the playability of the game by launching more gameplay and interactive rewards during the evolution of the game. At the same time, it hopes to build a more robust Game economy system. Another point here is that if the staking reward is the local currency, staking is essentially just a way to delay the reward, which may increase inflationary pressure in the later stage. By rewarding other tokens and assuming that the third token has enough consumption scenarios, it not only reduces the selling pressure of the local currency, but also increases the fun of the game, which can be said to kill two birds with one stone.

However, this attempt did not go as expected. The team announced in May 2022 that it would gradually replace CRAM with TUS, and CRAM would withdraw from the game system. It is not sure what specific business indicators other than the macro factors mentioned in the announcement prompted the team to make this decision, such as whether the continuous decline in CRA prices since the end of March made CRA pledge meaningless.

CRA price source: CoinMarkerCap

It is conceivable that the three-token system presents greater challenges than the two-token system. In the attempt to switch from Play to Earn to Play and Earn, simply increasing the number of tokens may not be a good solution. In addition, is the third token derived from the pledge scenario a better entry point? If the team introduces CRAM in a bull market, will there be another ending? These are all things to think about.

Of course, Crabada's retreat does not mean that multi-tokens are definitely not advisable. Some starting points for introducing multi-tokens are:

1. Introduce the required number of tokens based on token positioning and purpose;

2. Considering the difficulty of managing tokens and the relationship between tokens, try to keep the system in a stable state.

Dual Token —> Single Token

When dual tokens are almost the default, if we fall back to single tokens does it achieve what it was designed to do? Nat Eliason suggested a nice solution. His design shows that even within a single token, we have a lot of design freedom to implement.

Taking Fixed Supply Single Token (FST for short) as an example, it will serve as an investment asset and a bridge connecting the in-game currency and Crypto. The variable-supply currency (VST for short) still exists, but it does not directly communicate with Crypto outside the game, and only circulates within the game. Designers also need to build DEX to make FST and VST and other in-game assets interchangeable, as shown in the following figure:

In addition to the DEX between currencies, there is also an exchange for commodities. Commodities can choose to use Crypto such as FST or ETH as the consideration. The platform can earn income by charging transaction fees. The design of FST's value creation and attribution mechanism here is relatively clear, such as burning the received FST transaction fees, or distributing the received Crypto as a pledge reward to FST holders.

In this system, since the items in the system will continue to increase and the total amount of tokens is fixed, the purchasing power of a single token will theoretically continue to increase, that is, users have the motivation to continue to hold FST and pledge. Of course, another arrow of FST is connected to Crypto, which will definitely be affected by the macro environment. However, compared to the failure of the Crabada pledge scheme, FST has more in-game value support, and its impact on the macro may be relatively small. Moreover, if commodity trading can remain active, that is, there is a stable transaction fee income, the decline in FST prices may have a better rate of return.

Nat's design actually puts forward different ideas on the circulation relationship between project tokens and Crypto. Not all in-game currencies need to have liquidity directly connected to the real world. A certain degree of closure and a single token system may contribute to the stability of currency prices and clearer value attribution. The founder of StepN has also expressed his desire to maintain GST in the game system. In addition to maintaining relatively large design flexibility, compared with non-token games, this model also retains certain speculative and investment attributes related to Crypto, which can be regarded as achieving a certain sense of balance.

Reputation System Dual Tokens

In the above discussion, we have not touched on reputation tokens, i.e. tokens related to authentication of user contributions. The difficulty here is that if the reputation token can be traded, its original identification will be weakened; how to keep its identity while enabling the holder to obtain economic benefits.

In the article "A Novel Framework for Reputation-Based s", Jad Esber, founder of koodos labs, and Scott Kominers, a Harvard professor, made a wonderful discussion on how to crack the incompatibility of reputation signals and rewards, and proposed a dual-generation Coin reputation system. In its vision, the two tokens are "points" (non-transferable reputation signals), and "coins" (transferable assets that are distributed to point holders on a regular basis). Coins are distributed to point holders as bonuses, and the amount issued is related to point holdings. The positive loop that exists here is that users' demand for coins drives them to want more points, which in turn encourages them to contribute more.

The key to the design is how to use the points to effectively connect the holder and the source of the reputation, that is, to make incentives in the right place. And the rules for issuing points need to be relatively clear, so that participants can adjust their behavior according to the rules. In addition, according to the purpose of the system designer, detailed design can be made in terms of the quantity of a single bonus, the period of distribution, the relationship between the number of bonuses and points, and whether the points will expire. Of course, excessive incentives are also not advisable, and the project itself is the right way to achieve PMF and an excellent incentive mechanism. In practice, reputation-related incentives will be realized through NFT.

Jad and Scott's model balances the token value and liquidity of reputation well. The newly released mainnet Endurance of the blockchain game Fusionist also adopts a similar dual-token reputation system. If it goes further, such as how to identify the contributions that most need incentives at different stages, how the iteration of the reputation system responds to the development of the contributor community, how to include all types of contributors as much as possible, and how the reputation label corresponds to the governance weight,** The refinement of these issues will help us get a better reputation and the design of the incentive system, which has great practical significance in many specific scenarios such as the governance and operation of DAO. **

Some considerations in the design of dual tokens

Token reward design

Reward rules are the invisible baton in the system, the most invisible and tangible way to influence users. Some reward rules are directly linked to user behavior. Therefore, before setting incentive rules, the purpose of incentives must be very clear. If you simply give incentives aimlessly and frantically, trying to win by quantity, even if you accumulate a short-term scale, it will disappear quickly. Knowing the purpose is only the first step. How to extract the most appropriate indicators to make rewards occur at the right point. If multiple participants are involved in the system, how to solve problems such as reward distribution can make the rewards truly implemented. Furthermore, a living system is constantly imbued with new changes. **With the evolution of the system, the subjects of incentives, core behaviors, and reward distribution rules at different stages may need to be iterated. **These all need to follow the development of the system, constantly observe data and community feedback, and also reflect changes in strategy and business priorities.

Taking the decentralized digital map builder Hive Mapper as an example, it proposes three important dimensions for evaluating a map product: coverage, freshness, and quality. In the initial stage of the system, 90% of the rewards will be distributed to users who contribute to the coverage. When the system gradually matures and the map product has already taken shape, the rewards will be shifted towards quality assurance and map labeling. This is a typical case of using goals to drive reward design and adjusting the focus as the system develops. The subtlety here is that different designers have different opinions on the priority reward focus. For example, if you think that entering from coverage may be difficult to leverage existing competitors, you must think about which point of entry is the most differentiated, and this advantage can be accumulated. It can be seen that the point of reward deployment is like a leverage point, which reflects the designer's consideration of the competition situation and the key to victory.

To sum up, a good incentive design system should be an appropriate match, just as the sub-means the measurement is appropriate, and the match refers to the correct card position and impartiality. Conversely, if rewards and goals are misaligned, the system will also be deformed. The setting of goals reflects the values and original intentions of the team. In addition, token rewards are not costless, and it is also necessary to measure the relationship between the cost paid and the value generated, and whether there is a possibility of ROI becoming positive in the long run.

Utility Token Inflation Control

In view of the fact that functional tokens are usually issued indefinitely, with no limit on the total amount, in many past cases, it was inevitable that they would eventually fall into the predicament of over-issuing. The difficulty of managing a dynamic and open economic system is evident. Qualitatively, some of the potential tools for designers are as follows:

• Control the source, that is, prudently treat the issuance of tokens, and limit the total amount and frequency of issuance;
• Increase exports, that is, build as many and reasonable consumption scenarios as possible; it should be noted here that under some designs, current consumption of tokens will enhance future token earning capabilities, and such exports only delay inflation Stress is not the way to long-term stability;
• Combining repurchase, burning mechanism, etc. to reduce circulation supply;
• If the national treasury has accumulated, its ability to deal with inflation will also be enhanced; in times of downwind such as the bull market, it is necessary to make reserves as much as possible

Equity token release and value attribution mechanism

In order to make equity tokens have holding value, it is necessary to set up a clear value attribution mechanism. Potential methods include revenue sharing, pledge rewards, repurchase, burning, etc. In addition, as mentioned above, if equity tokens are endowed with utility functions, it is also necessary to pay attention to the distinction between them and real functional tokens, and use both in moderation. Otherwise, equity tokens are likely to cross too much with functional tokens, and the value attribution is likely to be confused.

In addition, the release mechanism of equity tokens also has room for adjustment. In common cases, the total amount and rate of release of equity tokens are fixed, or combined with a mechanism of halving every few years. But this is not an iron law that must be followed. In Hive Mapper, it explores another idea of variable rate.

The main token of Hive Mapper is HONEY, with a total supply of 1 billion, of which 400 million are used as contributor rewards. As can be seen from the contributor reward release curve in the figure below, the abscissa is not the usual time, but the progress of the map, which means that the release of tokens does not directly change with time. And the release function eventually presents a concave curve shape, which means that its rate is not constant, **This design aims to give more rewards to those who contribute to the progress of the map in the early stage. **

On this basis, another design of its superposition is (the rose red part in the figure below): HONEY tokens need to be burned to use the service, and then the system will mint a number of tokens equivalent to the amount burned and put them back into the reward pool. Issued together as rewards.

The ingenuity of this design is that the rewards received by miners are related to the supply side (map progress, blue part) and demand side (burning tokens, red part) at the same time. In order to continue to receive rewards, you must advance the progress of the map, or stimulate greater demand. And as the map progresses and new releases decrease, the volume on the demand side becomes crucial for miners to get a good return. **If the rules are properly designed (sufficient rewards), some interesting roles may be derived in the ecology, such as miners who stimulate demand.

With the help of Hive Mapper's somewhat unusual design, we can see that the degree of freedom in the design of dual tokens is very high, and changes and adjustments should serve to achieve better development and incentives without being completely constrained by existing rules and regulations. If the release mechanism is variable, how should the rate be changed, and whether the burned tokens should be recovered and reissued, it means that the total amount is also changing, and there is a lot of room for play here.

Whether to create value outside the virtual world

If we further think about why Hive Mapper can design such a model, one of the reasons is that in this type of PoPW project, its purpose is quite clear, such as map progress, and the realization of this purpose will create value in the real world. On the contrary, if you only do fine-grained fork design and parameter adjustment in the virtual world, and ignore the exploration of the purpose behind it, first, the means will become more and more limited, and second, it is very likely that you can only rely on the Ponzi method Rapid rise tall buildings, rapid collapse.

This is also the logic that we see that Axie continues to work hard from Play to Earn to Play and Earn, and StepN also hopes to iterate its own gamefi logic, which is related to sports and health. The opening of these greater values helps ** bring a way to build an economic system from a higher dimension, and it is likely to be more sustainable. **A senior user of StepN once suggested that we should try our best to open up external income, so as to reduce the dependence on running shoe income and giant whales, such as cooperating with insurance companies. Although the current income may be minimal, the cost is relatively low, and It can reach audiences other than Crypto and get more portraits of people.

Of course, there are also challenges here, such as how to match the virtual world with the physical world, how to extract appropriate indicators and abstract them into the virtual world, etc. But if the purpose is particularly clear, the means can be constantly adjusted. It is still more difficult to make the choice to break out of the internal cycle of the economic system and build a larger economic system, which means that longer-term and arduous efforts may be required.

Summary

The innovation and application of the dual token model is still happening. Compared with single tokens, the design space of dual tokens is greatly opened, especially when it comes to the connection between the two tokens. We can carefully create subtle interaction mechanisms between tokens to guide users to generate different Behavior. On this basis, we can also design diversified systems such as multi-tokens and reputation tokens based on needs and extensions.

If we divide model design into purpose and means, the purpose determines the design direction, and the quality of the means is closely related to the continuity of the model. Aleksander Larsen, the founder of Axie, mentioned in an interview that when they designed the economic model with delphi digital, the starting point was to make users who actively participate in contributions and active users get more rewards. This design idea will eventually be beneficial to The system is favorable. **Secondly, as mentioned above, we can also think about whether ** can be related to the real world and generate value outside the virtual system. ** On this basis, we will go to more detailed mechanism design and parameter consideration. The ideal design should be two-way, that is, ** creates real value through a good economic system, and the real value feeds back the stability of the economic system. **

It will also be interesting if we extend it further to see whether the dual-token model can play a role in a wider field, such as how to design the membership system of consumer products, how the advertising system can really reward users, etc. It is in these processes that we can see continued iterations of economic model design methods that will hopefully eventually lead to the formation of some new and more efficient business models and companies.

Reference