Fundamentals of tokenomics in a decentralized open blockchain rely heavily on getting the gamification of the rewards/punishment correct in order to facilitate the human interactions that are desirable for the use of the blockchain.
In my last article, New Framework to Keep Smart Contracts from Outsmarting Us, I explored the issues surrounding Dapp interactions and the dangers of using Dapps that are not easy to understand. Dealing with high value transactions in blockchain without proper disclosures can leave people exposed to high risk misunderstandings of what they are agreeing to. I believe this is fundamentally wrong and contrary to the ethos of what the hope and dream of this technology is meant to achieve.
Application type operations are not just a straight forward transaction of currency as would be the case for something like Bitcoin. It’s been observed over the past four years while Peerplays has evolved, many networks have failed to gain momentum or build critical mass in part due to the conflation of game mechanics for single purpose currency blockchains being something which would drive a smart contract platform, or Dapps.
Repeatedly, there is a built-in need to find ways to increase demand and scarcity while also sacrificing user experience in the process.
And will continue to be so while taking the learnings of the past four years into consideration. In our estimation, tokens used in transactions are only a portion of the value which matters most to blockchains.
Peerplays has already taken its first steps by introducing Gamified Proof of Stake (GPOS). This new set of mechanics is designed to increase user participation, thus improving the overall security of the blockchain.
Extending GPOS features, the core operations of Peerplays will enable Dapp developers and users alike to become better aligned in delivering the value each is seeking.
Act as a node in the network providing various p2p services to other users and Dapps that they use. The complexities of operating many node services will be more ‘under the hood’ and largely reduced to end users choosing what types of services they want to provide depending upon the resources their systems may have.
Peerplays reward pools will provide incentives to end users to participate with an offset balance between their decentralized ID, and their active participation in claiming their rewards.
The user of Peerplays has a multiplier based on parameters associated with the usage of Dapps within the network.
These activities feed into the discovery algorithm which enables Dapp developers who create Dapps within a similar category to have them announced across the network with the ability to follow up their initial announcement with boost rewards for end users.
May spend as little or as much as they wish to increase Discovery of their Dapps in order to gain more nodes which will help create an independent sidechain that can then be linked to the Peerplays blockchain with its own independent rules and economy.
Each service operation within Peerplays derives its value from the rewards pool of the Peerplays blockchain based on a combination of gamified empowerment, loss avoidance, social influence, random reward, and of course epic meaning. This would be codified into the blockchain in order to facilitate adoption for users, Dapp developers, and other network participants.
The ability to multiply and progress in receiving rewards within Peerplays is predicated first by users of the network opting to participate in it by taking what PPY they have earned and staking it into GPOS. The rewards for those who are passive and not actively participating in network activity will find their rewards not substantial enough unless they proceed with taking the added steps of enabling additional services, playing other games or by using Dapps within the network.
Without this active interaction or service given by the peer user, their only other option is to simply buy PPY from the markets in order to ‘level up’. The value of time they spend in usage of the network is likened to ‘Proof of Skin in the Game’ once they have reached a certain time threshold at which point they will have ‘mined’ PPY from the rewards pool.
While the core token that drives Peerplays today revolves around PPY, it is abundantly clear that the future requires an ability to transact in numerous cryptocurrencies, therefore, operations will have a capacity to instantly convert and utilize all cryptocurrencies available in the Peerplays blockchain via SONs. Utilizing its built-in DEX, instant liquidity of all cryptocurrencies to PPY will be available to all users in order to utilize any Dapps and their respective choice of cryptocurrency which they may use.
Enables other cryptocurrencies such as BTC, ETH, EOS, USDT, or any other that are in demand to be transacted through the Sidechain Operating Nodes (SONs) that provides a decentralized means of users within the network maintaining control of their keys, while allowing the funds to remain liquid across the Peerplays blockchain.
This ease of tokens from other blockchains being able to be utilized within Peerplays for Dapp developers is a monumental advantage over other potential platforms to build on which will force platform lock-in. Most blockchains attempt to place all ‘demand’ on their core token alone and will act hostile towards others. This has no doubt hindered the development of sidechain technology. Peerplays however believes that the sum is greater than the parts, and that PPY’s inherent value will be realized by means of making the tokenomic environment more useful to developers in delivering a more seamless user experience.
In their use and interactions within Peerplays such as BTC, ETH, EOS, XMR, and other tokens native to Peerplays, and will always find instant liquidity within the internal DEX through added support to its decentralized order books via special API calls for ‘Peerswaps’.
All of this combined means that the value of PPY will be derived largely by the transactional volumes pushed through the Peerplays blockchain and the Dapps that utilize it as a Decentralized Autonomous Cooperative (DAC). Thus, in order to have the PPY tokenomic structure work, it will require usage more than it requires the purchasing of its core token from numerous exchanges.
I believe that by providing free flowing economics in a decentralized protocol this way, we will not only gain the satisfaction of the users on the network, but also the appreciation of Dapp developers by having an easier means to provide liquidity to their economics and systems of governance that Peerplays will support.
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This is the 13th in a series of articles I will be making over the next month. Be sure to subscribe to get notified of future posts to find out where this goes.
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