What are the important things in designing a cryptocurrency token model?
On decentralized networks, there is no central manager.
So, the system for compensation of the central management system is much more difficult.
It is like a group of participants gathered from the equal position and operating a penalty system.
To design a token model without a central authority, you should be able to answer several questions:
1. How to make the participants want to have tokens?
2. What action is desirable? How much tokens will be given for each action?
3. How would you prove action or information that occurred outside the chain?
4. If there is a need to change the rules, who and how will change it?
There may be other questions as well.
Designing a token model that is maintained without a central authority is not as easy as it sounds.
How to make token to be a good incentive?
To run the token model correctly, participants must react to the thing that basically, tokens have value.
In addition, the value of the incentive that called token - must be interlinked with the growth of the total network usage.
Thus, it can be a better incentive to match growth and incentives of each participant of the total network usage.
If the value of the incentive is interlinked to the growth of the entire network, participants that have tokens are better able to grow the network and as a result, can create a virtuous circle structure in which the value of the token is higher.
However, in fact, there are many cases in various blockchain projects, when the basic principle that the value of the token should be interlinked with the usage of the network - is not kept well.
Even in the case when the market cap is very high.
So far, the value of tokens and coins is mostly the expectation of future value.
But it is a completely different matter that there are a lot of people who believe in the future value and a lot of real users of the service that are willing to pay.
This means that the value of the token may not be interlinked with the usage value of the network at all.
You should consider the following questions to make sure the network usage and token value are interlinked.
First, is the network usage and token acceptance well interlocked?
This means as much as network usage grows, token demand also grows proportionately.
Second, is there a limit to increasing the token circulation amount when the token demand increases?
When the network usage increasing, so does the token demand and therefore prices will increase.
In response, however, the token supply curve can also be moved.
Moving the token's supply curve to the right means that the token's issuance will increase, or that more people will sell the token to the market much more and quickly.
Therefore, in terms of design, the linkage between network usage and token value can be said to be better if the network usage and token demand are well interlocked, and , the more limited the supply increase of token, when the token demand increases – the better.
