General:
To my knowledge, no blockchain has taken on a non-standard tokenomic structure. A “standard” structure would be a blockchain’s network token and a pair being sold on the free market. Now that cryptocurrencies and blockchain technology have been around for some time, we can look at non-standard tokenomic structures and use them if they are proven to work.
Why Change:
The standard structure is simple for retail market traders and a “safe bet” for blockchain architects. It allows market sentiment to have control of the network token’s liquidity and price action, and hope of recognition of their hard work becomes the blockchain architect’s tool for positive price action and growing liquidity. In a world with many blockchains this is not reliable, and hoping to be recognized for great tech may not happen without price action accompanying it. This leads to paying for marketing and hoping that people will hear about it and be impressed, which is also unreliable.
Unique mechanisms and ideas are consistently what draws eyes in the blockchain/crypto world. Notable price action is a “free” marketing tool that brings price action seekers, users, and then developers. Controlling liquidity, distribution, and incentivizing holding the network token will lead to notable price action, which will act as a “free” marketing tool.
Proposed Structure:
Olympus created mechanisms that have been copied time and time again by cryptocurrencies with limited functionality. The price action fell over time due to their platform not having a function purpose, although they tried to give it one in time. The difference between Olympus and Xian is obvious – Xian is a function and performant blockchain with a network token (which has long term prospects based on network use), and Olympus’s token did not have long term prospects.
- Bonding: Xian’s treasury would accumulate assets by selling Xian tokens in exchange for other cryptocurrencies (USDT, USDC, wBTC, wETH, DAI, etc), a process known as “bonding”. In this system, users could purchase Xian at a discount by providing liquidity to the protocol, which Xian would then lock in its treasury and use to benefit the network in a multitude of ways (token buybacks, bug bounties, etc). It also allows Xian to sell it’s tokens to benefit the network without selling them on the open market and cause negative price action. Bonds are sold at a discount making it attractive for users to buy Xian through bonding rather than on the open market. The exact discount can vary based on market conditions and the strategic needs of the treasury. The bond’s sale is time delayed, preventing immediate turnaround. Unlike Olympus, the bonding discount on Xian would be very small.
- Staking: Holders of Xian could stake their tokens in the protocol to earn network use rewards. These rewards would be distributed as more transactions occur on the network (small percentage of transaction fees being redirected to the staking pool, which sustains the reward system without inflating the token supply) and from initial Xian bootstrapping from the treasury. Staking is intended to incentivize users to hold onto their Xian and decrease circulating supply as well as give them a stake in how many transactions occur on the network. Unlike Olympus, the staking rewards on Xian would be very small. Compounding rewards from staking occur automatically, meaning that the additional Xian tokens received as rewards are immediately staked as well. This compounding effect is powerful in growing the staker’s holdings over time.
- Staking encourages Xian holders to keep their tokens, reducing effective circulating supply and theoretically stabilizing or increasing the token’s price.
- Bonding helps the treasury accumulate a diversified portfolio of assets, which supports treasury of Xian, and causes more price action for Xian.
This proposal is essentially that Xian mirror’s Olympus’s structure with greatly reduced rewards given that Olympus is inflationary and Xian is not. To replace the inflation, a non-fixed percent of every transaction goes into a pool to payout to stakers as well as an initial bootstrap of Xian. See: Protocol Owned Liquidity/Staking (POL (Protocol Owned Liquidity) - Decentralized Finance | IQ.wiki)
Conclusion
This idea is not finished and needs collaboration on the idea moving forward. Creating a non-standard tokenomic structure would bring in eyes from the crypto/blockchain world, create price action, and create “free” marketing. I look forward to collaboration on the idea to move Xian forward.