This is article #7 of “180 Days to Startup” series documenting my entrepreneur journey. In case you want to start from the beginning, please click HERE to the first article.
Purpose of Token
To identify the tokenomic of a blockchain-based project, we need to first figure out how blockchain plays a part in it. Ultimately, tokens are bi-products served as reward for those that contribute to the ecosystem.
In our co-founder’s article, he talked about blockchain’s ability to eliminate the middleman. Applications that are **de**centralized doesn’t need a facilitator in between multiple parties to process transactions. Depending on the application and how that benefit is utilized, it can have have significant user-benefit.
Key word here is decentralization. In our opinion, it is blockchain’s BIGGEST selling point. Everything else (cryptocurrency, smart contract, tokenomics, etc) are all meant to support the decentralization aspect of the application. We believe that a blockchain-based product should have a decentralization aspect in it that’s actually beneficial for the users.
Nodis.io’s Use Case for the Blockchain
To avoid cheating, we need a gate keeping process to validate all the Challenge submissions. In our use case, blockchain plays a critical part in decentralizing the voting function of our platform. It effectively eliminates the need for an overseer of the Challenge submission approval process. If we were to do it the traditional way, we may have to ask the business owner themselves to be approving all submissions. This can potentially be problematic because:
- They may lack the time to review hundreds of submissions after working 12+ hours a day for 7 days in a week.
- Individual decision making is often clouded by bias or personal drives.
- Challenge participant may not trust business owners’ decision upon rejection.
By decentralizing the voting mechanism and allowing the whole network to help validate, we can transparently automate the process and minimize the time commitment from business users. It can also help businesses to avoid dealing directly with angry Challenge participants that got their submissions rejected.
As for the role of NODIS token itself, it is the reward system for those that contributed to giving businesses more online exposure. Both Challenges and submission voting are all a part of the cycle of getting businesses noticed online. On top of that, the ability to exchange for vouchers using their NODIS tokens will motivate the users to shop in-store, which means more traffic.
Characteristics of Token
Knowing the purpose of blockchain and tokens is key to developing a sustainable tokenomic. According to Nasser Rahal, tokens have a few buckets of characteristics to consider: type, purpose, values, utility, and legal status.
Image taken from Nasser’s Tokenomic presentation in York University of Canada
Effective integration of tokens into the ecosystem is absolutely critical to any project that uses cryptocurrency. Every token is unique by its characteristics in the different buckets. The red line above shows the positioning of NODIS token.
- GENERAL — (d)App Token — the voting mechanism is decentralized and it is essential to the ecosystem. Not only will all post-ICO new tokens be minted from Challenges, this is where businesses will reap the benefit of gaining online exposure.
- PURPOSE — Network Token— Nodis.io is a social media marketing platform that requires the network of people to contribute in order to increase the circulation of the tokens.
- UNDERLYING VALUE — Value based on the Network Effect —As more people contribute in helping businesses to gain exposure, more businesses will likely join the network. This will increase the utility potential due to more variety of vouchers and also in more locations.
- UTILITY —Work Token — Completing Challenges and vote for submissions are the work required to earn new tokens.
- LEGAL STATUS — Utility Token — NODIS token is meant to be used as a medium of exchange on Nodis.io for vouchers.
What does this all mean for our users?
In summary, our research/evaluation on blockchain usage and tokenomic helped us to designed Nodis.io to provide the following benefits to our users:
- Blockchain will allow transparency and automation in the submission voting mechanism —business saves time while still getting maximum exposure
- Businesses do not have to incur cost to entice people to do the Challenges as Challengers will be paid in tokens— business saves money
- All users can use the NODS tokens to buy vouchers — rewards for effort
- Tokens earned from selling vouchers can be used by businesses to buy more Challenges to gain even more exposure — utility that offsets the business cost of voucher discount
- Tokens have independent value that can be traded for fiat currency — another possible way for businesses to offset the cost of voucher discount
- Businesses can be associated with cryptocurrency — being trendy to attract the millennials (47% of them advise they would like to get cryptocurrency if it were easy to obtain)
- Nodis.io can benefit customers abroad as tokens do not have boarder — flexibility of location
In my next article, I want to talk about how I developed a message for my customers and the general public. Why is that important? Well, I confused 95% of the people that I surveyed when I first asked for people’s feedback on our idea. The concept of blockchain is confusing and the idea itself isn’t exactly easy to grasp at first.
Ultimately, my target customers are small businesses that are often late in adaptation of new technology. Getting their buy-in will be very difficult if I was to start with “blockchain” or “cryptocurrency”.
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