The evolution of tokenomics: going from capturing value to creating lasting value

Transcript

so hi everyone i'm kaley buchel and today i'm going to be talking about the evolution of tokenomics from capturing value to creating lasting value and what that means so before i get started a little bit about myself before i got into the space i was in traditional finance and got involved in crypto through the d5 side of things seeing what could be built um you know these different products that can be built in the d5 space that you can't build nutritional finance currently i'm chief of staff at decentology which is a

developer tooling company we focus on building products for web 2 devs to start building in web 3 without needing to know any smart contract code i'm also a product at cryptonomic which is a gated nft studio i've been an angel investor in the space previously was it idle dao contributing on the finance and biz dev side of things and just all around but in the space advising or around advising it protocols and projects around tokenomics and strategy so just i mean there's a lot when we look at tokenomics and think about tokenomics

there's just a lot of different stuff in the space a lot of you know we see so many different projects going about it different ways but you know some of the main things i like to think about in question when i look at projects is number one how to create lasting value for users and what does that mean and what does capturing value mean and how protocols are going about this number two how to bootstrap a community with a token and really how to maintain that community and create you know lasting value within your community number two does your project need a token you know we've seen so many projects that

don't even don't have tokens that are very successful projects that have tokens that you know haven't been as successful and some projects that have launched tokens later on in the form of an air dropper and other ways that have been successful and not been successful so just you know talking about that and what that means um so base plate and fat protocol thesis i know this has been talked about from a lot of big players in the space read about this initially from um sammy which he will touched on this but the main idea is when you look at web 2 you see

a lot of value is being trapped a lot of value is produced at the protocol level but the actual value got captured in the application layer like google facebook so if you were an investor in the space if you invested in google facebook or the applications you actually you know made a lot more money than or than investing in the protocol layer but in web 3 we see this as flipped which is where the fat protocol thesis comes in we see the fat protocols and thin applications which is um you know you look at all the l1s and l2s there's so much more value there is if you're investing

within the protocol level i mean the market cap is just so much higher in the l1 and l2s versus the application layer um so something to think about what we're seeing this evolution you know from web 2 to web where value is being stored and you know how protocols are going about you know their tokenomics and thinking of this and what we're seeing in the space so creating lasting value i mean this has been a big topic within you know this these ideas but first off i mean what is capturing value what is creating value mean so capturing value is essentially a

closed-loop system meaning that you know everything is trapped within your own ecosystem your incentives value governance everything's within that ecosystem one example to point out is um sushi you know for example you look at sushi's model if i you know have sushi if i hold the token of sushi i can take sushi stake it and receive ex sushi in return so essentially you are you know trapping value within that protocol um and you know what they're doing is you know they're making it so you're not selling sushi it's locked up within sushi and in turn you know it's a

closed-loop system value incentives and all that was is within their ecosystem um another example of this is you know we've seen this model the past few months and another you know abracadabra which is you know they're instituting um they're just buying back their tokens so that's just another example of close loop system and you know how that's capturing value rather than creating value which is you know the opposite i'd say which is an open looses open loop system so what you're doing there is creating value for other ecosystems um and the reliance on external factors so you have other protocols building on top

of your ecosystem you have other protocols utilizing your token for other um you know for other resources for their own good and um you know again adding to that open loop system and i guess one of the prominent examples of this is curve you know we all read about um curve the curve was back in the day and how curve is making it so there's so much demand for ve curve and their token for all these other protocols you know they're fighting over curve and creating that open loop system and actually creating value and of course another example is ethereum with the open loop system as well um

so yeah just diving more into curve and how we see what curve is building and just just a case study of what we see with curve is curve is essentially the bass plays i talked about earlier with the fat protocol thesis and that whole idea is curve is the base plate and the other dots are really the legos on top and yeah just you know diving deeper into this idea of you know creating value so what curve is doing is they're um you know they're making it so other protocols want to essentially fighting over liquidity and you know protocols need to get ve curved to direct liquidity to their protocol and then in turn

they're able to decide you know curve doesn't decide the use cases for its token rather the protocols do meaning that the protocols are able to use that liquidity how they want direct um or again utilize curve how they want so and again the open loop system where a curve is or they're able to direct um governance how they want direct um you know a lot of different things in the space um so again what curve is doing is they're creating an open loop system making it the base place for others and you know this is how they

structure their tokenomics and creating a lot of demand for the outside ecosystem okay and i guess the third question to touch on you know i talked about the whole idea of creating value base plate um that protocol thesis and just how curve is doing that how other communities are doing that but another question to touch on within tokenomics is you know our tokens really needed you know we've seen so many especially in this market we've seen so many innovative ideas um you know you look at olympus bonds to service a very innovative idea

but in terms of the token you know we've seen so many tokens come down and tokens you may don't have utility in the sense where you know they tie into the innovative ideas and when the token dumps then the project is essentially you know not looked at in the same light um and then also just thinking about how tokens the type of utility for tokens you know what is your token going to be used for i think we see you know a lot of projects like really pushing to have a token but you know it ends up just being governance token there there's not much utility or there's no need for the token initially and we've seen this with projects although we have seen projects where

governance tokens can be very powerful it's just about you know bootstrapping the community and really seeing what your project needs and where your project is headed and you know what i guess is the roadmap for your project [Music] and another thing to think about is timing you know we've again we've seen projects that haven't had tokens or just never had tokens like arbitrom hasn't had a token um and you know they don't have a token so it's you know one thing they don't have to worry about when you know it's just they're focused on the ecosystem they're focused on the dapps built on top and they don't have to worry about the value

of their token and especially in this market you know that's one thing they don't have to focus on right now and maybe it's a timing thing like we saw optimism later on have an airdrop ens had an airdrop and you know it was positive for the community they were able to build up the community that way and figure out you know what was the utility for their token and you know what they needed for their community so some something something to think about on you know timing and you know are tokens needed but you know also what is your token going to be used for i'd say so yeah that's a little bit about you know

tokenomics rundown about you know thoughts about creating value versus you know do you need a token bootstrapping community and thank you for your time [Applause] you