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https://warpcast.com/~/channel/cryptoeconomics
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Hugo May
@jahm
🧵 1/ THE 7 FUNCTIONALITIES The JCE Token Functionality Framework shapes a token’s role in a system’s economy and provides the foundation for thinking about value accrual. 🌐 indicates real-world comparables.
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2/ Service Provision: Right to perform work or provide resources and earn fees Participate in block validation ($ETH) Indexing data ($GRT) Transcoding video ($LPT). 🌐 Taxi medallions grant exclusive rights to operate cabs.
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3/ Governance: Right to influence decisions Voting on upgrades, setting economic parameters, allocating treasury funds, electing committees. 🌐 Equity shares confer voting rights in a corporation.
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4/ Value Distribution: Right to share surplus Protocol fee burns ($ETH) Dividends Buybacks/burns ($BNB) MEV extraction ($JTO). 🌐 Dividend rights let shareholders share company profits.
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5/ Membership: Right to access perks Launchpad allocations ($BNB) Discounted borrowing rates ($AAVE) Premium content/tools ($IP). 🌐 Country club memberships unlock exclusive facilities and events.
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6/ Payments: Utility to use as money Gas fees ($BTC, $ETH) Onchain commerce ($USDC, $USDT) Cross-system settlements Real-world payments. 🌐 Fiat currencies serve as legal tender for goods and services.
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7/ Collateral: Utility to stake or pledge for security or financial leverage Validator staking ($DOT) Borrowing on DeFi ($ETH) Underwriting protocol risks ($AAVE). 🌐 Real estate used as loan collateral by banks.
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8/ Asset Ownership: Right to claim underlying assets Tokenized fiat ($USDC) Pooled staked assets ($stETH) Onchain asset certificates (LP tokens) 🌐 Property title deeds confer legal ownership rights.
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9/ Part of the complexity of token design is that the sky is the ceiling: a token can embed multiple functionalities in one system. Take $ETH: validators earn block rewards (Service Provision), users pay gas fees (Payments), EIP-1559 burns fees (Value Distribution), staking secures consensus (Collateral), and $stETH holders claim pooled $ETH (Asset Ownership). The difficulty in designing tokens is to finding right mix that unlocks system value.
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