3Speak announced their tokenomics on Hivefest The Speak Network Incentive Layer.
At first glance it appears complicated and hard to understand. It has a three tokens system plus Hive on top of it.
Let’s try to break it down and see what is this all about.
First thing first. The 3Speak network has three tokens:
- LARYNX, miner token
- SPEAK, governance token
- BROCA, resource credits token (gas)
The LARYNX token is a miner token. Think of it as a mining rig for PoW coins (Bitcoin, Ethereum, etc). Just in this case its digital. Digital miners although intangible at first look and hard to be taken seriously are actually much better solution to mining from the old school hardware miners. Simply put digital miners are fairer. They cost the same, have the same performance and are not dependent on cheep electricity. Meaning everyone gets a fair start in mining and distributing coins.
The first round of LARYNX miners will be distributed to the Hive stakeholders. Then each year new and better version of the LARYNX miners will come out. This is trying to mimic the improvement in the physical miners where better miners are coming out every year.
Ok, so what are these digital miners going to mine?
SPEAK
SPEAK is the second token of the three token system of the 3Speak network. It is the governance token of the network. Unlike LARYNX, that have unlimited supply (at least to my understanding), the SPEAK token is capped has limited supply.
SPEAK is a governance token that can be used for voting proposals. Another use that is mentioned is earning BROCA. But probably the most important use case is the ability to buy new miners with SPEAK.
Remember the LARYNX token from the above? Each year new improved LARYNX tokens will come out.
Who is selling these new miners? The answer Service Infrastructure Pool (SIP)
SIP is a version of the liquidity pools that we are now seeing in the DeFi world. In the case above it doesn’t actually have LARYNX tokens but SPEAK, BROCA and HIVE.
Everyone that wants new miners (or BROCA?) will need to send SPEAK to this pool, where SPEAK is locked forever. This SPEAK was mined from the initial distribution of the LARYNX tokens.
The interesting things is that when SPEAK tokens are sent to the SIP it is split in three portions:
- SPEAK
- BROCA (mined from share of the SPEAK that is burned)
- HIVE (bought with SPEAK and locked forever in the SIP)
What the above means is that this SIP pool will have a three tokens locked inside SPEAK/BROCA/HIVE.
From what I understand, by locked forever it doesn’t mean that these tokens can’t be taken out of the pool. Just the only way to take them out of the pool will be by buying them, adding a new token in the pool. It’s basically the equivalent of forever locked liquidity on a DEX.
This type of pools where the liquidity is locked forever ae starting to pop up more in crypto (one example the WISE token) and the buzz word for them is ownerless pools. Basically, once the provided liquidity is locked forever in a sense it provides a floor for the price.
At the end the BROCA token is needed for users to be able to upload videos on the network. It’s the equivalent of resource credits on Hive or GAS on Ethereum. From mine understanding these tokens will be spendable. There will not be a staking model, as for HP, where you stake some amount of BROCA and then you can make operations, but each operation spends some BROCA.
The way that BROCA is generated is by sending SPEAK to the SIP. As from the already mentioned when users send SPEAK to the SIP, they will receive miners LARYNX and BROCA as a gas token.
There are even more elements to the system as more payments to the SIP from ads and from fees generation increasing the liquidity forever. Also, there is rewards for the users that runs nodes etc. but we will not go into this here, as we are looking only the tokenomics.
Open questions
Having in mind the above there is some open questions at the moment or simply things that need more clarification. Probably some these things are still under review and not decided but let’s take a look.
Here some of them.
What will be the new supply/inflation of the LARYNX tokens?
As we know, at first their will be a one year claim drop to the Hive stakeholders. All unclaimed tokens then will be a subject for the community to vote how to distribute them. What this means is an initial supply of around 400M LARYNX tokens. Each year their will be a new better version of these digital miners’ tokens. How much of them? 50% of the supply, 40%, 30%, unlimited?
Actually, at first it looks like these new miners will be basically unlimited. The only limitation is the amount of SPEAK one can send to the SIP. What this means if there is high interest in new miners the old ones can be out of date very fast, just because competition. But in the first years it will be hard to get the new type of miners because the only way to get them will be by sending SPEAK in the pool and since it is year one of mining SPEAK their will not be a lot of it.
Also, very interesting question is what the initial pricing of the SPEAK-LARYNX pair will be. In time the market will determine the price, but an initial price needs to be set for the pool when the first SPEAK enters it. How much LARYNX will one get for 1 SPEAK token?
What will be the supply of the SPEAK token and its mining rate?
More or less the same question as for the LARYNX token, goes for the SPEAK as well. SPEAK is the central token of the network. It is used to buy both LARYNX and BROCA, plus HIVE. As we know it is capped. How much of it will there be? 100M, 200M? For how long will the initial mining of the token continues? As we know Bitcoin is also capped, but its mining will continue for a 100 years. How many years before all the SPEAK is mined? How much of it will be mined per year? Will there be halving’s, or some similar mechanism put in place that will make it harder for mining as times progress?
How will be miners be rewarded ones all the SPEAK is mined? I guess it will be from the fees and other payments in the SIP?
What will be the supply of the BROCA token and its mining rate?
The same for the gas token. How much BROCA will be generated from 1 SPEAK token? Will there be some cap or yearly distribution rate? What will be the cost for uploading videos in BROCA? I guess there will be a resource allocation mechanism that will adjust the price dynamically depending on the usage of the system. What type of mechanism will be put in place for this?
Another thing is that in the first year there will no new miners’ tokens, but users will need BROCA. How can one obtain the BROCA token in the first year? Will SPEAK sent to the SIP in the first year will generate BROCA only?
Smart Contracts
All the above and more needs to be put in a smart contract/s. I cannot tell for sure, but from the look of it, its not an easy task. A lot of things need to enter in this smart contracts. A lot of testing. Its mentioned that the smart contract layer will be used from Hive. Will this be the mentioned smart contacts from blocktrades or someone else?
Final thoughts
Although a bit complicated at first and with a lot of open questions the idea for the 3Speak network looks very interesting and appealing.
More complicated tokenomics will most likely come in the next years and they will become a standard thing. Some DeFi projects have these things already.
The ownerless pool, SIP concept looks amazing. One thing that should be taking into consideration is that even with liquidity locked forever and constant increase, these types of pools require activity, or simply put volume. Without a volume, even with large liquidity in it, it will just be a locked funds not generating revenues. More volume means more fees, more activity, more liquidity. That will most probably be the challenge. Attract volume.
Another thing to be considered is that this system is designed with long term goals in place. A one year claim drop for the LARYNX token. New type of miners on yearly basis. It will literally take years for the system to takes off. First the development, the smart contract system, next all the miners to be claimed, then initial supply of SPEAK and BROCA to be mined, then new version of miners and initial capital to enter in the SIP. It will be a slow process 😊. Might be wrong, its crypto, but at first that’s how it looks.
A very important thing in the tokenomica above. No ICO, no premine, no large funders share!
Tokens meaning
- LARYNX - The larynx (/ˈlærɪŋks/), commonly called the voice box, is an organ in the top of the neck involved in breathing, producing sound and protecting the trachea against food aspiration. The larynx houses the vocal folds, and manipulates pitch and volume, which is essential for phonation (Wikipedia),
- BROCA - The Broca area lies specifically in the third frontal convolution, just anterior to the face area of the motor cortex and just above the Sylvian fissure. It is made up of two areas: the pars triangularis (Brodmann area 45) and the pars opercularis (Brodmann area 44), with functions linked to speech production (Britanica),
- SPEAK - speaks for itself 😊.
All the best
@dalz