Defining the tokenomics of the Tokenomics DAO

We have recently published our manifesto laying out where we want to take the Tokenomics DAO. Have a look here to find out what we think is important. While the community is approaching 500 members, we are seeing a whole bunch of interesting ideas pop-up. The drive and passion people have in this space is fascinating and we think it’s about time we  addressed the elephant in the room; The Tokenomics DAO does not have a token and isn’t a DAO either.

Everything starts small and many projects start centralised. We plan to do the same.

Nevertheless, decentralising this initiative and creating a token that helps align incentives of the community is what we aim for. It’s not an easy thing to do. The pressure is high. As  Tokenomics DAO we will obviously have to have some pretty great tokenomics. Therefore, to design our own tokenomics, we want to take our time and most importantly, take the community on this journey.

In our manifesto we’ve made it clear:

We are not credentialists.

We make Tokenomics Relevant. For Everyone.

We reduce uncertainty for web3 investors and builders.

We are free to explore anything web3.

We share our knowledge with the community.

Somehow a token needs to support all of the above. An open community that does not require a PHD to get involved, aligning our efforts to create great content and solve interesting problems and staying independent – curiosity driven – to create and share whatever we think is required.

There are many examples of great communities. Friends With BenefitsBankless DAO and  others come to mind. Without doubt a token has played a role in making these communities what they are today. Just check out what Lucas thinks about the impact of the social token $BANK on the Bankless DAO community and its long list of achievements in season 2.

How exactly ownership can support a community to achieve great things is not an easy question to answer. 

Certainly not novel or unique to the Bankless DAO is the gated community approach. New members are required to buy and hold a certain amount of tokens or earn and hold them through contribution. This is interesting as it creates a skin in the game effect. The second thing tokens enable is a payment mechanism without actually having raised capital. At genesis the DAO created a fixed number of tokens and used them to compensate members for their contribution. Raising time, instead of capital.

Even though there is no real use aside from this, the fact that a contributor will receive something rather than nothing is enough to motivate them to join calls, develop software or write articles in this community. All of this increases the value of the community and that value might to some degree also be reflected in the token. Here’s how value could flow within a DAO:

Many different aspects will influence how value flows and how it is captured within the token, many will depend on the design of the token. One thing is assured though; tokens somehow manage to unite a group of strangers behind common goals and values. Most importantly, it turns agents into principals. We discussed in our recent podcast episode (watch it on YouTubeSpotify or Substack and find it on other platforms) that by giving people equity – a stake in the business – they are not just employees following orders (agents). They actually move more towards the principal side of the spectrum, thinking for themselves, striving to increase the value of the venture and the token.

 

Ownership however, is only one piece of the puzzle, so within the next articles, we want to evaluate more and more of these aspects and see how they might support our goals. Part of this evaluation is the community and we hope for your feedback. Here are a few initial thoughts:

Why might Tokenomics DAO need a token?

  • Do we need a token at all? What good can a token do?

  • What value do we, as the Tokenomics DAO, want to create?

  • What is the mechanism of capturing the created value?

  • How to ensure not being a zero-sum-game? How is this not a Ponzi?

  • How can incentives be used to motivate the community to work towards a common goal?

  • Principal agent theory: does more ownership lead to better contribution?

  • How to pay for a contribution (P2P paychecks)?

  • Tokens to raise capital or tokens to raise time or both?

  • Retention of members

Launching a token 

  • How to best allocate/distribute tokens among the community and contributors (mechanism and quantity)?

  • Vesting and lockup periods and issuance.

  • What is the right token supply?

  • At what point should a token be launched?

  • How to ensure liquidity?

  • How to control the token once it’s released?

Demand for tokens

  • Why should holders hold tokens (gated community, dividends, special privileges,  etc.)? 

  • Where does token demand come from (utility)?

  • Governance.

  • How to reduce velocity?

If you would like to contribute on defining the tokenomics of the Tokenomics DAO, join our little working group here. More insights and articles will follow soon.