The Web3 Tokenomics Design Principle and Ecosystem Building Method

Transcript

welcome on stage [Applause] thank you thank you good afternoon my name is Charlie my name is [Music] um I have a hard time speed up actually one hour ago so today I want to talk about something might be interesting for somebody especially for the people who are doing grocery projects it's a workshop so I try to to be as this cell c as possible I'm not saying anything I'm trying to share information will be very freestyle there's been a lot of thoughts about

design principle how to build ecosystem how to design economics right um so a bit about me um I was building building polkadon ecosystem back in 2017 to 2020 . I was a dirty ecosystem for polygon last year as a head of China and South Asia in between I was also working for cancels for a bit so three major uh layer one happy change news and now we're running through time on my Venture Farm using Adventures we're setting up in front of Singapore as well so yeah previously could talk about legal structure and all that and it goes through that as well and how to find other projects actually building things giving her to myself so we saw a lot of GameFly metaverse

projects since last year some of our projects uh we helped on the economics and things so today is really kind of just trying to share some of the observations and results some might be a bit random it's not hard science it's really learning trying to error and I think tokenomics is an art it's not like a science so to speak it really varies a lot depends on timing depends on a specific product so before I picked four very interesting projects considering we are now introduce Vietnam right so one of the most famous projects is accent right everybody knows exit while the most iconic and I would say success successful but also controversial project

they hate they had their homework they actually it was one of the first categorical philosophical Empire to play they made everybody understand what is playing Webster gaming is not a new idea right I remember back in 2017 the Ico faced a lot of launching gamings already started but at that time there was no D5 there's no interesting tokenomic design around you know is relationship with each other and the chart is the chart doesn't say that much right Charlie is just the result so if we want to design a token we want to be the trader builder of course this may

not be the ones that result one engineer and to be honest those kind of charge to tell two things one is Alpha wise beta beta means when the market is everything pushed down including the Bitcoin ethereum all that things were crashed out in the unit of Fiat right right now this whole chart is all used US dollar as a as a way right so a lot of the a lot of the value goes down because ethereum oh Bitcoin goes down as well so it's very difficult to be the outlier right when everything is crashing your tokens the prior project you still have increasing a lot it's almost impossible but along the ways you want to see the offer you want to build it after yourself right so that's kind of what I'm trying to uh with my kind of

humble inspiration there's not approach over hundreds of projects to share some stuff [Music] SDK was a technically solid project uh they had a test drive right it was a bad design with elbow stable coin they used the Bitcoin as a collateral that was a mistake why you realize your fundamental collateral Assets in future value was an underlying asset which is actually a downtrend that's a problem right people don't realize it because they always have the assumption that some assets will ever always go up which is a very very difficult pretty much impossible

especially in crypto space a lot of things are very second right I'm in the space it's in 2014 so I saw multiple barrel and uh we are definitely right now it's doing a barrel and honestly is thinking one of the best projects always comes always comes from the better or less they start from the barrel um one of them I will say is curve while the most successful uh long-lasting D5 membership project because I'm serious many projects they started when they were nobody nobody understand their category and that was actually the time to build things and they kind of harvest in the program so what exactly is tokenomics right so

it's a very interesting chart very controversial I don't represent what they said but it's an interesting chart made by a tweet made by David wow the OG in the space but actually can summarize a lot of interesting stuff in the entire Capital space we have multiple consensus right start with big one let's prove a work proper work we use you know you know putting aside the spirit you know sha 26 256 shot you know the competition power or the equation all that right it's Google work meaning computation power is a way as a cost to have a fair way to my point right but there's a total Supply limitations activation model right and then we have cool stick Right theory now moved to

River State right there's many other layer ones and prostate proven stake is a different kind of philosophy right it's not focusing on computational power but there's a total Supply as well the trying to design utility around that uh normally it has a gas screen right for a network fee so that's a it's a consumption it's a deflation Model A lot of icos kind of use a very quick and dirty way to design Hoover state from tokens they have like proportion they sell to investors a lot of them didn't have any utility it was pretty much built from thing here that's why majority of the icos crash right because when they buy stuff they feel like okay I have nothing but besides a quick flip of their token of course or something

extra crash that was a big industrial failure was kind of a trial we're doing but then we have interesting model which is decentralized finance right so 2020 was an interesting year we realized the new tokenomics model right for token distribution for yield farming right there's a lot of interest here farming liquidity tools some are actually very risky and actually even understanding but I think some are actually with interest value with kind of financial as the kind of the utility with lending insurance and all that so I'm trying to kind of just give a bit example it's really just tipping that Iceberg about economics I think token office has a course or whatever can take

at least a day to talk about it and certainly not the real expert even though I saw hundreds of projects in space I would say less than 10 of the projects in the space have a very sorry token obvious so we try to share some stuff yeah so one of them in the D5 space I would say is really focusing on if you wanted to build a D5 product right so what is your value creation I'd rather recruiting right in the system so today I'm talking about design principle right so I try to not deep down into this project this is a project probably if you really are in the D5 OG you will know what it is you know deep dive into this specific project you see multiple elements here

right what element is the counterparties right who is actually interacting the product right who are the lender or the borrower what the political governance right so that's very important to understand who are coming to practice who was interacting with your product right who's providing liquidity and he was following you know assets who is giving collaterals and what's the inside to go around there right so um as I identify economics by a good understanding of a multi-party games what's the incentive for them when if they provide an infinity or whatever what are the rewards ideally you do not want to give the words too quick because it goes to the best driver very quickly

right things like that so of course we can go through a lot of details of the quantitative numbers that then we need to run situation because Excel sheet unfortunately this today I'm not that well prepared on that on the number part but with this kind of chart I want to give you some examples so if you if you're building a D5 stuff really need to drill down who are your content part is so um one kind of Renaissance after all the things happen recently it was on FTX right I think that was a very hard lesson the industry learn which is counterparty risk right how to calculate compared risk who are you coming who are you training against each other right what's your risk with it and then if

you're a builder if you're a platform Builder or for the computer you didn't understand who are the people you interact with right because that's very important if people buying a token with fundamentals see to understand it with a rational investor on it of course uh D5 sometimes unfortunately a lot of the consumers will talk about us are not necessarily always very rational but I think for the project we can go through the infinite games could go through the multiple background you need to design a sustainable to economics that a rational investor really includes users want to be interact with that right not just you know people could go for the home and if the moon works right and then we're talking about game file previous speakers I was talking about

now right so the web stream version of gaming gaming or when sit down or some other GameFly stuff the value transfer the value flow is very different because this is a nascent chart I think I use that a lot I talked with the founder Alex as well about this so I think the traditional gaming side oh let's say a lot of the content Services of our platform it's very mean right you produce something you create something it goes to platform distribution you go you let you talk to the consumers in the website space it's not just that linear it's not just like a user flow chart like a acquisition activation retention that's it we in fact a lot of the customers in the western gaming side

they actually are also the token holder nft holder which I default is part of the ownership right the owner of them they actually want to participate in the governance you know you by default you want to interact or building a dial system so a lot of the game five projects have a Governor's token right so what does it the governor's token mean really on this very promo code system right to build an interesting game of course when you have good content but what does this governance governance token really mean that in this whole process right so that's a harder question philosophically a lot of game five projects failed to answer right they kind of just issue a token for the sake of okay you use them for quick liquidity Farm I don't think that actually works after all the crashes

happened last December I would say majority game five project failed to what is the value recruiting system by being a user being a distributor or being a down member in the game five project oh what's your gaming party what does it really do what what kind of value they can really get by holding that token and so on so that's a that's a very uh important topic to design your tokenomics for what three games so then there's a bunch of other new protocols this isn't just one example as an energy follicle I don't want to give you I don't want to overcome ticket of Romeo with this over all this diagram out there because for me as an investor who look at the J chart I feel it's overwhelmingly confusing right for

successful tokenomics not only speaking it doesn't go through that route this you don't have to capture every single contractual relationship with each other make people get confused what exactly happens on that right so this is actually I would say this is a bad example of tokenomics try to overwhelm people especially investors who is over complicated diagrams right fundamentally doesn't design principle in the gaming side it goes to some stuff like we have been talking to a lot of interesting website and gaming Builders one is if you want to design a financial Financial incentive layer for your gaming users right so there's one like a

rebase model kind of interesting stable coin mechanism right which the other side which is actually the child of sop so why I want to put this as a comparison is if you wanted to have a token that kind of settled as a settlement layer for your gaining economy right intrinsically you need to design as a re-based Model A model that you use part of your revenue or profit which actually can buy back and so on so you need to have a dynamic stable price kind of payment in the token that can settle for the settlements within the game SLP model like Unlimited Supply their all-time high was they launched the product and

then perpetually goes down it's it's not really motivated for a lot of the gaming you know players and guilds right so that's actually the very hard argument for a lot of the games why would I actually spend you know the SLP the token when we are in your farm actually for for buying new token to breeds letting empties right so level up the whole purpose of level are we don't have to use to get more accessories whereas the SRP because of its you know it's not really stable the pressure it goes down right so it's very demotivated so for good and sustainable what's beginning a game the game five tokenovics finding a very solid a rebased you know Financial layer that I can for settlement is very

important so that's that's a topic that I see interestingly some other projects kind of do like Sky Weaver as well Sky Weaver is a polygon project they use ustc as a stable pointer and they raise money with Equity so it's a it was a game Studio it was Equity raised OT game but then have a settlement to visit you know the industrial accepted a stable point for settlement so that's that's a route I think more and more Triple A or high quality what we're giving projects kind of goes through as well because at the end of the day you want people to stay okay so they want they want to print they want to use the token that is stable we purchased they

had a way to work early by like right and whatever we call this okay to own but if the intrinsic value of the token will have to just perpetually goes down because of the you know the the total Supply issue and also with economics too it's not really motivating for the old players to stay and retain and also it's definitely not looking good for you and then become like a very short-term games so that's a that that's a problem for them as a team if you want to design a long system of Infinity games uh you need to think about of course token hours uh one final part is actually that's the easy part if you have a very sustainable mechanism to design then you have this chart right

this is charting every single product you need to go through if you want to issue a token whatever is your three is token or governance token or others you may have a distribution the numbers sometimes are very objects right you know you kind of play by always a vlog you know 10 20 of its foundation with team with VC a lot of these actually are very art like it varies a lot there is no hard rule in the industry so far I've been after seeing you know over a thousand colleges these numbers always change but I think at the end of the day there's a couple of things that doesn't change one is they want to know the initial Photo Supply right you do not want to have a town Fest when the project launch

everybody is dumping like crazy you encourage people to dump and then there's no way you can support you know the cell pressure right so lockup is really needed right you need to engage with a long-term investor buyer that actually willing to you know accept the you know the locker investment schedule and then for the Project's owners who wants to build interesting stuff right the foundation token the team token or some other token that it belongs to the team right it's not necessarily hard ownership right some of our government needs to go through a smart countries locker and have a release schedule so that was quite a lot of fun right it was a project actually everybody knows was called which is called Aptos right when they launched

I think I forgot the number it was like around like 80 80 or something percent of the token actually just are belongs to routine a lot of them actually have not going into the Smart Country Locker meaning they can actually dump it right you know practice and join in this liquidity pool so that's that was a huge fact right when they launched it so people actually questioning them so I think as uh if you want to build a sustainable cooking party which is transparent to the community members wants to respect that wants to extract wants to make sure you guys are trustworthy you know go through the smart contract Locker right you know have a programmable way to release token with a schedule right you know otherwise it's very difficult to justify okay you're not going to misbehave or not

right because people can question that um so that's the tokenomics right I wish I could have more to share because it's really Case by case there's no such a thing okay this is the best Pokemon before everything right very different different applications have different way of Economics because you're designing different features right and we're talking about different Vision so it really the case by case but uh I want the reason I want to talk about ecosystem building is whatever tokenomics you design if you don't have a really good ecosystem if you don't you're building a shitty product it doesn't matter because you're not creating values you can't really have a successful token or long sustainable everybody like it without providing

value right it doesn't doesn't make sense for me that's right like you need to have a starter project if the product is solid with a lot of users a lot of unique wallet addresses and fundamentals the tokenomics is something you shouldn't up but it's like something you design along the ways so I would say ecosystem building is more important than talking others uh it goes hand in hand right so what does it mean because it's a building right um that's what we know already right Syrian I think ethereum is one of the most important and most successful ecosystem with the best and the most developer in the world right so all these road maps right all these important Milestones is

very important for ecosystem meaning I think ecosystem Builder but I have to be humble enough I am not in the same level as like guys like retali right but I think it's guys like them they really see project from nowhere to nobody know I actually give a about them to now a lot of people have that kind of Defense right but the whole journey is difficult right so you need to find a way to really socially engage people build a consensus not just talk about technical consensus but also the community consensus right to have a common goal have a common Target to build up that right then with interesting Milestone like this we share the whole journey together right we feel

that we're part of the history I think that's the highest level of success of ecosystem I'm not talking about oh putting everything together whatever connecting the thoughts those are the Tactical stuff but the most successful ecosystem Builders I think they are able to connect people in a high level we feel like we're part of History we're part of the journey right we're building something which can change the world I think a lot of the ecosystems haven't really get there not even close right we have a lot of HPS alignment a lot of talking in the community but I think community of ethereum they get there right at least I feel that we're struggling of course there's a lot of other ethereans surrounded here to skating Solutions each project they need their

building that kind of ecosystem right we have quite a lot of good projects here in Vietnam like some others like skill and stuff away right like all these kind of having their own smart it's not a version of ecosystem right we're talking about different directions like CK obs for them I think the challenge really goes hand in hand into why this direction makes sense right how the Builder consensus around the builders developers that you believe in that's the future and that's the right future so you people kind of have to take a deeper face right you need to communicate the vision very well and also providing tools and support for the people who wants to feel on top of you guys

um and then we have all this I I want to have just paint drop a bit and then talk about how exactly what does it mean right as an equal sign before there's a bunch of other layer ones right some of them call themselves The raster based uh scalar solution right sharding right uh you know now that we have some others in the past they caught they claimed himself as an Easter I think nobody actually came and there to actually call that because most of the East killer whatever they claim it's all becoming a joke or failed one right uh even with that they build together a girl handy handicus ethereum they still need to figure out their ecosystem from from what I'm understanding a lot of those layer ones they're having a

hard time to really grow the critical mass of developers and actually let them stay sustainable I think the recent scenario happened with FTX really putting a hard challenge for Solana right I don't know what else is actually it's a lot of actually here I'm not sure if actually will be here but anyway you know when things like that happen they're crushing and challenging your belief on the right well that actually means system because their major whales actually go you know go busted right so things like that so good project like very like sister or higher level project which goes hand in hand with the ethereum with including

costs on some polka dot right um I was very very bullish on coconut I would say you know it also Cosmos in the past now we're iterating right I think it's not just myself and a bunch of other people um because their vision of building a interoperable new version of ethereum or like a networks right having a hard time to justify themselves economically and also thriving ecosystem right so that they're actually in the process of really uh validating what their vision is actually can empower the long-term work-free future the whole custom Sub Zone or relay chain Every Chain like they've been talking about in the last couple of years right but I think

there's a there's a hard time to really justify that especially during this move on cycling and then this year some interesting weird things happen right after the three two four more Facebook language scaling solution Paradigm execution and network really raised a lot of money they hit a home run all the big names back in them with barely any fundamentals of what I'm talking about you know interesting Builders good on top of them you need addresses and interesting projects still on top of that right but if they but they managed to raise over hundreds of millions of dollars or billions of Renovations day one right I think for this project they really need to go through the

Journey then move as a language in the future right it's a very difficult language even harder than rust people need to learn they need to go through the Journey it's you know not necessary evm compatible why developer building slot country on top of them which is solid right so that that's kind of they need to figure out so the technical stuff on ecosystem building normally start with that it's a very big hairy but important that can flowchart right it goes through the VD adoption communicate communication Venture now to and so on so that was kind of a simple version actually there's like a more complete version complicated version I designed the idea before from others so it's like a lot of a lot of effectives

right so you need to engage with different levels of people all the way from the researchers scientists to the common fan common fans like the people who just buy the token they don't necessarily have other developers or you know techners but it's all important part of the piece of the puzzle to build ecosystem you can engage in them different people need to engage in different ways you need to generate an interesting content and how to find a way to promote and distributor and the content needs to go through different routes right there's a lot of social media they have different interaction people's attention span is different I need to find a way to engage people and then you need to categorize the the fans or followers through

different routes right there's a Trader route which we call this investment so normally for some vehicles and they have like a Trader Community right so people talk about the sentiment talk about the interesting news and then you have the Enterprise right talk about only about them you see talk about adoption talk about b2p in collaboration right so I see some good power ecosystem including like polygon and so on they kind of categorize that yeah very clear uh different component you know all these partners that they find a ways to also you know collaborate each other right so you see a lot of the ecosystem map like that right putting things together and then another very important uh tactical stuff is for

engaging in the universities globally New York University because that's where the talent is right so I think the developeration AKA that University region is very important for a lot of the layer ones who wants to build a successful ecosystem and Regional adoption including APAC like Vietnam all these important regions is very important right I think we are seeing tremendous amount of new developers and we saw the projects come from Asia um but they need to grow Global there's no project can be very successful just limiting themselves in one region right so website project needs to be they won Global so if you are building a chain a building ecosystem how to empower those interesting adoption

funding to go Global I think that's very important to do to why you do an ecosystem building um yeah so these are the kind of the stuff right how about that project so if you're building a gaming project you're getting a better response you also need to have an ecosystem right so project like sandbox they have a very very thriving complicated ecosystem with a lot of the B2B Foundation a lot of user groups a lot of kols find a way to engage them tests and certified let them sustain your ecosystem right and how to engage with some other stakeholders investor a potential investor that exchanges Launchpad gaming guild if you're building a game and all the other chain selections if you're building a

application right it's multi-chained by default so those are all very important stakeholders if you want to build a application full system yeah so I think I'm running out of time and thank you very much to share uh give me a chance to share these two important topics thank you very much