Justin
@justinzhang
Fascinating talks by @eddy on Tokenomics Design at @a16zcrypto CSX. Here are my notes: Network Effect * Tokenomics is all about defining and reinforcing network effects. It’s crucial to outline core metrics tied to the network’s primary behaviors—where value is truly created. These metrics guide the incentives. * For example, in Uber’s case, core metrics might include rider wait times and driver utilization. Enhancing these metrics draws more participants, thereby strengthening the network effect. * Network effects differ from reflexive effects (e.g., price increases leading to further price increases), which are self-reinforcing but less sustainable. ⤵️
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Justin
@justinzhang
Faucets and Sinks * Faucets expand the network effect; sinks defend it. * Faucets should directly incentivize the core metrics, not proxies. Subsidizing proxies may lead to wasting resources as they’re easily faked. * Never subsidize demand; it creates low-quality growth. Subsidize supply through verified mechanisms, such as staking or using web2 identities. * Sinks should preserve the token’s value and be linked to value creation events. Avoid simplistic sinks like buy-and-burn during the early stages when all resources should be spent on strengthening the network effect. ⤵️
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Phil Cockfield
@pjc
cc @ro
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tomu
@tomu.eth
“governance only when absolutely necessary” - finally!! governance shouldn’t be a utility; it’s useless. users don’t participate and end up delegating to the same 4 people who participate in most 'DAOs.'
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