Unchained - The Tokenomics Episode: Why ‘EIP 1559 Is Like Catnip for Investors’ - Ep.292

Starting point is 00:00:00 Hi, everyone. Welcome to Unchained, your No High Presource for All Things Crypto. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto six years ago, and as a senior editor at Forbes, was the first mainstream media reporter to cover cryptocurrency full-time. This is the November 23rd, 2021 episode of Unchained. My book, The Cryptopians, Idealism Greed, lies in the making of the first big cryptocurrency craze is available for pre-order on Amazon, Barnes & Noble. bookshop.org or any of your other favorite bookstores. Go to Bitley slash Cryptopians. That's B-I-T-L-Y slash C-R-Y-P-T-O-P-I-A-N-S and pre-order today. Buy, earn, and spend crypto on the crypto.com app. New users can enjoy

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Starting point is 00:01:07 Visit nodal.io slash unchained. That's NODLE.io slash unchained to start earning Nodal Cash. Today's topic is tokenomics, aka Crypto Economics. Here to discuss our Jan Lieberman, co-founder of Delphi Digital, and Victor Bunen, Protocol Specialist at Coinbase Cloud, formerly known as Bison Trails. Welcome, Yonan and Victor. Hey, so good to be here. Thanks for having me. Token designs are getting more diverse and more creative. But before we dive into the meat of the episode,

Starting point is 00:01:39 let's just make sure everybody even really understands what we're talking about. Why don't each of you say what you think the definition of tokenomics is and why it's important? And Victor, why don't we start with you? Sure. So the way that I think about tokenomics is the ability to use incentive design to set the behaviors that you want and consistently accomplish them. Normally, this includes the use of a token, but it doesn't always have to.

Starting point is 00:02:08 There's a lot of social pressures and other responsibilities and ethics and other cultural norms that also play into it. And, Jan, what about you? Yeah, not to restate too much of what Bickr mentioned, but yeah, the idea is a token is a kind of a mechanism to organize a set of individuals where, you know, if you assume that they all act in their own best interests or in a way that's most logical for them, how do you kind of organize that and combine that in a positive some way to create value or kind of accomplish what you want to accomplish?

Starting point is 00:02:42 And so when people are designing these incentive mechanisms and tokens, what types of factors are they considering, whether it's things like fairness or liquidity or security or the developer ecosystem or I'm sure there's plenty of other considerations? But what do you find that people are thinking about and tend to value for some of the different choices? Like maybe you could give some examples of how that either affects the community or affects the value of the token? I think one of the most important things is for protocol teams or communities to first figure out what it is that they're trying to accomplish and what their token specifically will be used for. And so in a lot of work token models, for example, such as live peer or keep a new cipher or the graph, the token is used to provide a service.

Starting point is 00:03:30 It's serving as a taxi medallion. And so there's an element of security there, but there's also an element of I am following the rules of protocol and providing a service to specific specifications. And I want to be able to do that in a consistent way, but also punish folks that are breaking the rules of their protocol or not providing that service in a consistent way. And so that's going to be one of the first things that you think about is like, how does the token actually accomplish the goals of providing this useful work to an ecosystem of participants? And then all the other things get factored in afterwards, such as governance.

Starting point is 00:04:02 How do we, like, what are we actually making decisions on and who are the right people to make that decision? And how do you incentivize the right people to actually participate in a protocol in a way that scales beyond the protocol team, but it encompasses everybody else that should be part of it. I'll pause here because I think Yan has done so much incredible work with protocol and token design that I'd love for him to chime in. No, no. And again, yeah, really largely agree with everything you can. describing. It's yeah, it's really figuring out. So what is really trying to, what are you trying to realistically accomplish? And how do you accomplish this? And then you kind of, you basically start at the primitive of, you know, what is the goal? How do you get there? And so you start

Starting point is 00:04:45 incentivizing, you know, certain elements of behavior around getting, achieving this goal. And then afterwards, it becomes kind of this very iterative process of, of understanding, all right, you know, you can accomplish a goal this way. But, with crypto, everyone is, or in crypto, there's a lot of very savvy actors. And so there's always going to be kind of exploits. And so the whole idea is, okay, yes, it's very, it's fairly easy to get someone to do something, but it's fairly, it's the difficult part is how to prevent all the other kind of potential, uh, negative actors or, or kind of value extractive actors where, you know, just because you reward somebody for doing something and, and you get them to do something that doesn't

Starting point is 00:05:22 necessarily mean that this is a sustainable model or one that that's kind of foolproof. So, It's figuring out what you want them to do and then kind of figuring out how to prevent everyone else from extracting value in a way that that doesn't necessarily go in line with what you're doing. And at the same time, you know, there's a lot of importance with the community and the stickiness component is. So with crypto unlike in other places, forks are very prevalent. And so if your protocol and we see it mostly in defy and that's part of the issue is there's a lot of kind of mercenary capital. and mercenary behavior that can exist. And so, you know, you take a step back and think, all right, not only do I need to figure out how to incentivize them to do something and prevent someone else from doing it, but how do I

Starting point is 00:06:06 create some kind of stickiness, longevity, community, how do I create actual incentives for them to stick around other than kind of, you know, pure tribalism, which it happens to work in certain communities, but it's often a byproduct of, you know, being very early where individuals have made kind of life-changing money and a protocol. And so now they're kind of, they're tribalistically with it. But realistically, you have to assume most are going to be mercenary-esque to some extent. Obviously, there's a spectrum there. But it's realizing, all right, on top of that, how do I kind of prevent individuals from, you know,

Starting point is 00:06:39 accomplishing what I want them to accomplish, but then not kind of redoing that cycle elsewhere because it's so easy to kind of fork what's been designed. And so I think that that's been a fun learning process and just observational process with Defi in particular, especially over the past two years or so. Yeah, in a way it actually reminds me of kind of like a really basic thing that maybe parents sometimes deal with where they're like, oh, should I try to incentivize my children to do, you know, whatever, like chores or get good grades or, you know, eat healthy or whatever by either paying them or, you know, rewarding them with like sweets or, you know, whatever it might be. But then it's like, well, what's

Starting point is 00:07:22 better is that you want them to intrinsically want to do those things rather than, you know, trying to gain the system in order to get the reward. So it'd be like, what you're describing just reminds me of that. But so both of you have helped design or redesign various tokens. And I thought it might be fun for each of you to just pick one example that you would like to describe of a team that you helped. You know, maybe it was like they had a particular problem they were trying to solve and like, just walk us through why, you know, you all made the choices that, you know, you all made the choices that, that you made. And either one of you can go first. Maybe, I don't know if Yon, you want to, because I know Delphi is sort of known for this. So, yeah, I'd say like a popular one's Axi,

Starting point is 00:08:04 but I think just because that one's been, you know, really overly discussed now, it would be more interesting to kind of talk about, so Astroport is a project that we're incubating heavily through Delphi Labs. And so it's a decentralized exchange that's on the lunar ecosystem. And So, you know, we've worked a lot of various DFI protocols and both in terms of like a consulting capacity and just done plenty of research on them. And it's interesting. You see a decent amount of iteration. So there's kind of multiple innovation layers with Dex's, whether it's just the actual, you know, AMMs, the automated market maker type like a uniswap where, you know, it started with this simple XYK model. And over time, those have evolved.

Starting point is 00:08:48 But there hasn't necessarily been as much evolution. on the token design front. And so, you know, we saw the first instances of the value of a token when the sushi vampire attack happened, right? Where Uniswap was a dominant decentralized exchange. And then sushi basically, you know, it was a fork of Uniswap. And then they were able to incentivize a token on top. And the whole idea is, you know, come to our exchange and use it and will give you tokens and

Starting point is 00:09:15 reward for providing liquidity. And the idea is if you provide the liquidity there, you kind of start the virtuous cycle of liquidity gets volume, which generates fees, which creates more liquidity. And so, you know, that exists. But sushi's had its own issues where the disconnect there was, and this is where the introduction of kind of like very mercenary as capital happened, where there was a disconnect between the users of the platform and the token itself. So as a token holder, you, you benefit from the fees on the platform where basically by staking

Starting point is 00:09:46 sushi, you take a six of the fees that are generated on the platform. The issue there was you kind of have this dichotomy where the users of the platform, you have the traders and or the liquidity providers. There's no real reason for them to hold the token. And then you have the people that own the token and they're just pure speculators that can benefit from upside there. And the loose agreement to some extent was basically, you know, as sushi price appreciated, the value in terms of the rewards that they can use to incentivize behavior that would be value accretive to the platform increases. right if i if i can give away one sushi if it's worth you know one dollar versus ten dollars there's it goes a long a longer way with being at ten dollars so there was like this kind of that was the dynamic but once you know it's very reflexible on the way up but it's also can be very reflexive on the way down

Starting point is 00:10:35 whereas price goes down the way your your ability incentivized behavior you know diminishes and and so um then you know volume is lesser or rather liquidity kind of disappeared and so on and so So the gap there is you had this disconnect between the users that are participating on the network or using the platform and those that are holding the token. And so with Astrofor, we're kind of trying to tackle that. And we're taking some tips. So Curve has an interesting model where you can use the token and lock it up to basically vote on rewards towards your pool. And so you also, and you're kind of seeing this with like token Mac as well where owning the token can you can stake the token and direct. rewards to a pool. And so we're kind of combining a lot of elements there where basically the design

Starting point is 00:11:21 here is you have similar components where with sushi, you take sushi, you stake it into a pool. You get ex sushi, which is a claim on that pool. And the idea is overtime, the fees from the platform are used to buy back sushi, deposit it into the pool. And your ex sushi over time is worth more sushi. So, you know, you deposit one sushi. You have one ex sushi. And then over time, you can withdraw that, you can kind of redeem that ex-sushi for more than one. And so that's how like the value accrual exists. Whereas so we kind of take it a step further and basically allow you to take that ex-sushi and deposit it into, which is X-Astro, deposit it into a voting contract.

Starting point is 00:12:02 And, you know, the amount you, your vote is a function of how much you stake and how long you stake it for. And the idea there is, okay, what are you actually voting on? So with the fee structure. there's usually like a 30 bibs like fee capture. And what we're basically doing is rather than users pay 30 basis points, typically 25 would go to the liquidity providers and five goes to the protocol. So we're kind of lowering that a bit and doing 20 basis points to liquidity providers.

Starting point is 00:12:31 So five base and then 10 goes to the protocol. Five goes to that similar ex-sushi X-extro equivalent. And then kind of combining the curve thought process, basically you can then stake your X-Astro and you get this locked voting share. So the benefit there is as a community, if you're providing, you know, if you're a fan of a certain token and you have liquidity on Astro,

Starting point is 00:12:59 the benefit now is the community holders want to be token holders because they can vote basically to direct a certain level of rewards to their individual pools. So basically, if you're a liquidity provider on Astro, it's in your best interest to also be an Astro token holder because you can direct a certain amount of vote towards your pool. And then like kind of taking that a step further, you know, if you have, let's say 15 pools, there's obviously going to be a lot more,

Starting point is 00:13:29 but let's say you have 15 pools that want to participate in order of like of voting rank. If you're number nine versus number 10, you're, you know, incremental value of voting from 10 to nine. And so the idea is, you know, your share of rewards is a function of your share of the vote. if you're a ninth place or 10th place, there's no real incentive to participate. There's no additional incentive to participate. It's just like a very micro level vote. And so we've introduced kind of like a list that gradually expands. And so if you don't make the cut, you're effectively, you're missing out on the rewards.

Starting point is 00:14:04 But if you're in this top eight list, so basically you're always going to have a lot of competition at the high end because there's going to be a lot of kind of, you know, the very popular pools are always going to be, they're going to have large. communities, but it's the smaller communities that are often forgotten. But here, you're kind of creating a lot of incentive for them to participate because, you know, coming in eighth means you're actually going to get, so eighth in a scenario where all 15 participate, you're getting a lot less, eight in a scenario where only top eight participate. You're getting a lot more. And also going from eight to nine is a massive drop off because you don't actually participate in any of the kind of the rewards. And then there's a lot of kind of additional attack vectors that, exist with kind of like convex and kind of like hijacking of governance. And so I don't want to

Starting point is 00:14:48 kind of hog up the entire conversation. But that's one area where, you know, what we like to do is basically, you know, observe what works, read about it, figure out why it doesn't work, and then try and kind of iterate and combine different facets and potentially introduce them of our own. And that's kind of like the thought process behind a lot of the token design that we work on. It sounds super interesting. And wait, when is this going to launch? And we can talk about it here as well, but the launch mechanism is one we're really excited about as well because it kind of addresses some of the issues with distribution. And yeah, I can take a pause before going into that. But so that's going to launch the first part.

Starting point is 00:15:26 It's a three stage process, but it'll start on December 6th. Okay. Yeah. We'll circle back to that about the launch. But one other thing that actually I meant to say a while back was earlier when you just described Uniswap as XYK for people who maybe are new or don't understand. That's just like the equation that is used to, you know, kind of maintain the price in each liquidity pool. So, you know, the price of each token should always equal this constant K or when you multiply the two of them. All right. So it was super interesting. And yeah, I think there's like

Starting point is 00:15:59 plenty we can unpack from there. But Victor, why don't you pick one token design that you want to walk us through? I had the pleasure of actually working on the first decentralized protocol merge between new cipher and keep networks. At Bicentrales, we are essentially just a blockchain infrastructure provider, and we support both of those protocols. And they both provide cryptographic services for folks that are interacting with them. And the fascinating thing there is that they started off with different use cases, and that new cyphers started off with proxy re-encription and Keep network started off with

Starting point is 00:16:33 random beacon, which is essentially a random number generator and some other services as well. And what we saw is that they were increasingly going to go and compete against one another in specific use cases. And so because I was very close to both of the teams and we were able to start having conversations on what could potential merger look like. And I ended up being one of the leads of the proposals that actually went through governance and was voted on and accepted for how to merge the two protocols and the two communities into a single community and a single protocol. And one of the interesting things there is that it's, one, there's no playbook or roadmap. It is incredibly, incredibly hard to do a merger of equals because of all of the, you know, different places that each protocol is in, different token distributions and different incentives designs that they have and different, you know, considerations around, you know,

Starting point is 00:17:30 inflation and whatnot. And so one of the things that was a big, a big priority for me is actually, Well, two bits. The first bit was around how do you design for what the network will look like in its ultimate state? And that was crucial because when we talked about earlier about work token models is that they're providing services. And the nice thing about cryptographic services is that you can provide them in a modular fashion. Now you say, okay, here's the building block and what this does is proxy encryption. Here and this does some zero knowledge stuff or here this does some homomorphic encryption and so on.

Starting point is 00:18:05 And so what you can do is you can actually opt into. to these services and you can provide some or all of them, depending on what your preferences are, as a node operator. And so one of the important things of the incentive model is you want to be able to direct incentives to encourage node operators to provide certain services that you think it's important for the network to do. And so as a really specific example, soon the new network is going to be called threshold. It's actually launching, I believe, sometime next month, which is going to be really exciting.

Starting point is 00:18:36 and on it is going to launch something called TBTC, which is the version two of it. And you obviously want this TBTC, which is decentralized Bitcoin. You want people to adopt it. You want people to support it and provide that service. And so that's going to be probably one of the things that the community is going to vote to incentivize. And so you have a bunch of these notes like, hey, guys, we need a lot of notes to make this successful. We need it to be super decentralized. We need for there to be a lot of support for it.

Starting point is 00:19:01 And therefore, we're going to direct more of the rewards towards that use case, rather than other ones, for example, that are less of a priority for the ecosystem. So that's like the first thing around how do you make sure that the actual work itself gets done and is incentivized. The second part, and this is quite challenging, is that when you have these two token amounts and two communities and two, whatever, how do you actually get them to use a single token? Like, what is a fair way to do it? Is it based off the value of these token?

Starting point is 00:19:31 It's based on the quantities and whatnot. And if you say, okay, the new cyber team will get 60% because our market cap is larger than the keep side and they only get 40%. They're not going to be happy, right? The keep token holders are going to hold a grudge. That's what we were very fortunate that the market caps were fairly close together. The stages of the life cycle were fairly close together. And therefore, we could have done it and we did do it as a merger of equals where each token holder base got exactly half of the token distribution. And then you can map that using token factors essentially to convert.

Starting point is 00:20:04 go from one to the other. But for the future, when there's going to be token mergers, I think a lot of them are going to look like acquisitions more than mergers, and that there's going to be greater disparities between the teams, and it's going to be less a merger of equals and more of a one team subsuming the other. One of the nice things about threshold is that now, it sets it up so that new teams can actually join the network, and that Ethereum is the only protocol out there that has like multiple clients that are, you know, inactive development. And threshold is going to be one of the only work talking models. It's also going to have multiple client teams and the ability to add more client teams as other folks want to come and,

Starting point is 00:20:45 you know, add modular cryptographic services and then petition the community to say, hey, like, you should adopt this and you should fund it and you should direct, uh, it's rewards to go towards the service that we're providing. So note operators adopted and provided to the community. So it was really cool to work on it. And I'm excited to see more mergers in your future amongst other protocols. Yeah. Yeah. I think that will become a bigger thing. And obviously, we did see in terms of one involving, you know, two protocols that were maybe less equal was obviously the Polygon and Hermes or I don't know how to pronounce it deal. But actually, let's now talk about a big change in tokenomics that

Starting point is 00:21:27 happened for Ethereum, which obviously is one of the biggest. just, it's the second biggest protocol, which I'm sure everybody knows. So in April, you know, they adopted EIP-1559, which started burning the base fee. And obviously, we've seen that this has now led to ETH being deflationary at times, sometimes like for, you know, kind of a decent amount of time, which is fascinating. Just, you know, and that's, that's being driven by things like NFTs and stuff like that. But I was curious for your opinion on kind of those. changes and how well you think that design has played out and will continue to play out for Ethereum, especially as it transitions to the final merge for Ethereum 2.0? Yeah. So I actually,

Starting point is 00:22:13 I took a look at this yesterday, so I have some really, really fresh metrics on it. So thus far, the IP-1559 has reduced the net Ethereum issuance by about two-thirds, which is a really significant cut. And while Ethereum still is inflationary from that perspective, if you're a very, it's a Ethereum were to switch over to the merge today, it would actually be fairly significantly deflationary. And I think that it has actually a couple of really, really interesting impact, some of them that are shorter term and some of them that are longer term. In the shorter term, EIP-1559 is like capnip to institutional investors because Ethereum makes a lot of sense of them and that they say, okay, this is a thing that you can build on and it has use cases

Starting point is 00:22:57 and applications and yada, yada, yada. And also, you know, before, people say, well, how is ETH going to capture any of this upside? It has no mechanism. And, you know, folks that have been around in the industry for a long time realize that if something is useful, it's going to be valuable, right? And that's what happened with Ethereum. But as new folks and especially institutions enter the space and now they can say, okay, well, we can actually model the cash flows and the impact of these activities and what this does to the supply of it and how that could potentially impact price, that becomes like a really attractive narrative. for them to latch onto. And this is combined at the same time with the merge occurring with the ability to stake Ethereum.

Starting point is 00:23:37 And so now you have ETH that is this, you know, revenue generating, quote-unquote, asset that you're able to provide security with earn rewards on and you're able to see how the supply of it will change over time and you can like model all that against

Starting point is 00:23:53 your income as a validator. And so I think from that perspective in the short term, that is why I think a lot of enterprises and institutions and, you know, funds are extremely excited about Ethereum or we've seen such inflows into the ecosystem from that perspective. In the long term, though, I'm a little bit, maybe a little bit concerned in that I think the nice thing about Ethereum is that you want people to spend it. You want

Starting point is 00:24:17 people to use it. I don't think it's meant to be something that you just sit on and wait for it to appreciate. And when you have something as deflationary, one of the core characteristics of it is that you're expecting for it to go up in value. But if you're expecting for something to go up in value, you have less desire to spend it. And while that may be great for currencies like Bitcoin, I don't think that's the right framework for something that is meant to be used and is meant to pay for gas and is meant to fuel this economy, which is each role. And so from that perspective, I think I'm super bullish on EIP-1559 in terms of its impact on Ethereum. But I think long-term, one of the things we're going to come to is to figure out where that, you know, inflationary versus

Starting point is 00:24:57 depletionary kind of like direction has to end up in order for us to accomplish our goals of making something that's really useful for people. John, do you want to add anything? Yeah. Yeah, no, I think those are all really good points. Crypto is probably one of the most, like, reflexive thing I've really ever come across. And I think so if you look at, you know, the net issuance or the kind of net inflation relative to, you know, the change, it's not.

Starting point is 00:25:27 that seismic, right? If you think about it on like, you know, in terms of the, the amount that's being burned relative to the size of the entire kind of, the entire protocol. But, but the narrative is, is very, very strong. And, and like Victor mentioned, you know, it's very, it's very, it's very digestible for, you know, people who are used to seeing buybacks. And it's like, oh, I can, you know, think of it akin to this. And so it becomes, you know, very digestible and familiar. And so that's very massive. And then the other thing is, you know, if you go to this like kind of net deflationary narrative, then it goes from, all right, this just becomes something that I can kind of use as, as a random currency that I'm not really looking to sit on to. All right, I'm happy using this as a form

Starting point is 00:26:14 of collateral to borrow against or kind of holding this as some form of store of value. And so I think what ends up happening is that in the similar way that Bitcoin's finite supply is what really is part of what strengthens its store value narrative. I think this deflationary kind of component also strengthens the store value narrative for Ethereum. And so I get the apprehension for, you know, I think that's a super fair point where, you know, eventually it could come back to bite you a bit where, you know, part of it is meant to be spent. But I think realistically, you know, Ethereum pre being deflationary still could have been easily considered a store value because, you know, the incremental difference in that issuance or burn isn't that massive. It's only

Starting point is 00:26:55 really seen over the course of many, many years. But this net deflationary kind of component, that's where the reflexivity comes in. It's like, okay, this is net deflationary. We think there's going to be more adoption. So we think this will only be increasingly more net deflationary. So I'm very comfortable using this as store value. Oh, man, others are using this as store value. So I will as well.

Starting point is 00:27:16 And so it's like this small shift that just kind of loops and loops and it reverberates through the communities holders and investor mindset. And so I do think that like, you know, obviously the concern of people not wanting to spend something like, you know, the idea of, and that's why I don't think Bitcoin will ever be this, you know, global like currency. It's just that's not what it is. Or at least, you know, from my opinion. But the interesting thing with ETH is that, like, I think the net spend on gas for most people is negligible. So, you know, if you're spending it and so it's like what else are you really spending it on? If you're, no one's really going out and buying cars with Eith, you're buying other things in. in the crypto community with ETH, whether that be NFTs or, I mean, NFTs being a big thing. And then FD is obviously like a massive subsector, whether it's in games or just art. But most of those things end up being priced in ETH as well. And so to that respect, most people are, I think, are being comfortable spending it because you're still kind of exposed to it. But like, yeah, the gas component is obviously an interesting one in terms of spend.

Starting point is 00:28:18 But, you know, in bull markets, people are clearly comfortable spending just obnoxious amounts on it as evidenced by the, the burn. that we see during these NFT minutes and things along those lines. Okay. Yeah, I mean, it's going to be a really fascinating thing to see play out. I mean, I think your point that against the total supply, the burn is small, may be what will offset that desire to huddle rather than spend. But, you know, I think we won't really know until it happens. Yeah, I guess the one thing that I like about EIP-1559 is it does, you know,

Starting point is 00:28:54 just tie together so much more close. usage and demand with the price, which just seems like intuitively how it should be, right? You know, if something is being widely used, it should be valuable. And then therefore, that should cause the price to go up. But you're right, then it kind of has these other knock-on effects. So it'll, yeah, well, we'll just have to see how that plays out. You can to that, it kind of like shifts the value from value flowing to minors to, you know, value flowing a bit more to the protocol as a whole.

Starting point is 00:29:20 Whereas before it was pocketed by them and now it kind of just reduces the supply, which is more kind of socializing the benefit. Yeah, yeah, it widens that. I love that, actually. That totally makes sense. Okay, so in a moment, we're going to talk about all kinds of other issues and problems that come up due to token design. But first, a quick word from the sponsors who make this show possible.

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Starting point is 00:31:03 Link in the description. Back to my conversation with Jan and Victor. So we did see a couple of issues recently with a couple of popular airdrops. one was ENS, the Ethereum Name Service AirDrop. And people, which I mean, I think this happens all the time, but again, people were gaming the system. So do you want to kind of describe what happened there, what the problem was and then how you guys think maybe it could have been resolved differently or better? Yeah. So one of the challenges there was that somebody had either leaked or figured out or somehow optimized their.

Starting point is 00:31:44 are bought to spin up a whole bunch of new Ethereum addresses, put some ETH into them, register ENS names, and make sure that they set all the parameters correctly. And either through inside knowledge or some sort of locker determination, they managed to secure themselves. So it would have been a very sizable air drop amount of ENS tokens because they met all the eligibility criteria in order to maximize that. And it's one of those things where the community spotted it early and they gave feedback to the team that these addresses were engaging in as behavior. The team reviewed the behavior of those accounts and also other accounts as part of the list of accounts that were going to be receiving theirdrop and banned,

Starting point is 00:32:27 I actually don't remember the exact number, maybe about 1,500 addresses from the list. So they blocked list of them. And so those addresses did not receive any token air drops. And, you know, some folks have different opinions about it. But I think that what it kind of boils down to is, and I think a lot of things actually tie indirectly back to whether or not you think code is long and whether or not you're supposed to apply it, you know, equally to absolutely everybody regardless of whether or not they're a good actor or a bad actor. And I fundamentally disagree with that.

Starting point is 00:33:02 I, you know, in circumstances like this, nobody's entitled to anirdrop. Nobody's entitled to receive, you know, not only free money, but also. a say in how the network is going to govern itself and spend its funds and otherwise incentivize adoption and so on. And so I think it's actually, it's not only optional. I think it's the responsibility of every protocol team, considering during an air drop, to be thoughtful about who they're dropping the tokens to and to intentionally comb through the list of, you know, the list of accounts and see are these real users, are these people that are going to be contributing, or are of these people that are malicious or that are vultures or that are value extractive.

Starting point is 00:33:43 Because when we think about it, you don't start a company or a family or a school based off of whoever's around, right? Like you don't do it through this random chance of like whoever shows up. It's like, all right, guess we're doing this together. You're intentional about it. Why? Because if you're bringing in people that are bad actors, not only does it like unfairly benefit them, but it also hurts the good actors.

Starting point is 00:34:05 And they see that people that are bad actors are. getting money and they're getting benefits. And they're doing that in a way that is making people that are good actors and do try to like play by the rules, like feel really negatively about it. So I'm, you know, 100% in support of what the E&S team did. And I look forward to other teams doing that and also much more to make sure that, you know, their air dropping tokens in a way that's very targeted and very intentional and truly accomplishes the goals that they set out to do. Yeah. And actually, before Yonwe said it, I mean, like something kind of similar happened with paro swap. And I just wondered in general, because

Starting point is 00:34:41 what E&S did to resolve it was a retroactive solution. But I wondered also if you guys had ideas on how air drops could be designed ahead of time to not fall victim to these bots that are trying to farm the air drop. Because with Paraswap, their estimate was that some people were deploying literally tens of thousands of bots, which is, that's a lot. So I don't know if you have thoughts on that. Yeah. I mean, I have a quick thought and then I'd love to pass it over to Jan. I think one of the things, and this may be like important to comment on is that just like we were talking about with Towing Design earlier, with Air Drop Design, you have to have a specific goal in mind of what you're trying to do. And there's a couple of like high level of goals that

Starting point is 00:35:24 people should try to accomplish or probably are trying to accomplish. And one of them is going to be, you know, give folks skin in the game. Or like the people that you actually want to, to continue to stay part of the ecosystem that have been providing value and being. active. The other bit is you want to obviously incentivize early users and people that have helped you get to where you are. And the third thing is that you want to think about how do you treat this as a customer acquisition cost, not only to acquire your existing customers, but also to continue acquiring customers long into the future. So you're not turning people off by saying, okay, only a small subsection of people get it and other people want. And so I think that with folks like

Starting point is 00:36:01 Paraswap, they did, I think, a generally good job. generally a good job on their air drop in that they were super targeted. They knew exactly who they wanted to get in there and they got those people in. But the mistake that they made was that it wouldn't have cost them a lot to get all the other users that aren't bots and just give them a little bit of skin in the game and give them a quick thank you. You don't have to make those people very rich, but you should acknowledge that they help you get to where you are in a way that doesn't then make them salty about not having received

Starting point is 00:36:32 anything at all. And so I think that was one of the mistakes that they made. And so when you think about like what ultimately drives a good, uh, air drop design, I think more and more of what is going to come to is identity. And that identity can be done in like a super reputation based way and your activities and whatever. But honestly, I think identity is going to be done the identity way of saying, okay, how do we tied back like real world identifiers to whether it's ENS or one of these other things?

Starting point is 00:36:58 Because what you want ultimately is you want a proof of uniqueness, a proof of a proof of identity or proof of humanness. And then when you have that, in some variation, you're able to be much more intentional about, okay, you know, this is a person that's super active and they do all this governance and all this activity and therefore we want them to be participating in governance activity on our protocol as well. And like, boom, you can do that. Or this person is a whale, but they're like a long-term whale versus a short-term whale. And so you start being able to be like really granular by getting the right people in the door. So I think we're getting there. There's decentralized efforts, obviously.

Starting point is 00:37:33 But I think centralized ones will also get us like part of the way there. So we'll just see which one of those takes off first and actually gets adoption by enough users to make it worthwhile to use it to target. John? Yeah, yeah, I couldn't agree more with basically everything Victor said. Yeah, the issue is obviously the parasitic participants, it's a double whammy, right? Where they're not only are they extracting value, but they're making the value that you gave to everyone. else also worse and just kind of you know they're taking kind of hitting you on both ends where they shouldn't be getting it and now those that got it are worse off than if the people that

Starting point is 00:38:11 shouldn't be getting it even got it in the first place and and so yeah it's certainly a problem and yeah so I very much agree that um this identity kind of situation is certainly going to be one that's going to be more on the forefront where we're very bullish on the idea of on chain identity And so in that you can, you know, provably verify what an individual's participation has been over the past X amount of time. And you can pretty, you know, easily, not easily, but quickly kind of get a rough quantifiable idea of how much value they can really provide to your protocol as well. And so you can be a lot more kind of targeted in particular with your airdrops. And so like one of the things we're actually working on is this kind of NFC primitive where, you'll be able to effectively kind of customize your NFTs based on rewards you've gotten.

Starting point is 00:39:06 And those rewards are a function of your participation in various protocols. And so you'll have these kind of like you can basically combine a shell with different, whether it's, you know, different details. So you can be like, you know, imagine like a PFP that you, that iterates and evolves over time based on what you've accomplished. And so it's a way, you know, there's a public side. where you can obviously show off like, oh, man, this guy was a massive whale here, and he was one of the first LPs here. And so that's super valuable both in terms of just elevating the kind of the status of your PFP

Starting point is 00:39:41 that wasn't just a function of you spending a bunch or getting lucky with a mint. It's actually work you've done. And at the same time, it's potentially a way to also identify valuable participants in ecosystem. And then you can do this across chains, right? If this exists, you can monitor these valuable participants. systems across chains and now with bridging and kind of how easy it is to to move across them, you can bring liquidity, bring users, bring these power users or, you know, really get target with these airdrops because, you know, otherwise it can be a massive waste in terms of

Starting point is 00:40:12 customer acquisition costs. And then, you know, a poor air drop just really sets you on, on poor footing to begin with where, you know, it just shouldn't be a disadvantage you really need to deal with. There's a lot of obviously other things that you need to target. And so part of, Part of a good air drop is also having good token design going forward where, all right, yes, you rewarded a certain user, but then is there a reason for them to actually hold it beyond just being a fan and thinking number go up? Or, you know, is there a way for them to use it to actually interact the protocol and whether that's through governance, through monetary benefits, you know, it really depends on kind of what what the protocol does. But yeah, it all really starts with quality airdrop and then quality kind of integrations afterwards. Yeah. And actually, just to go back to this identity issue, because I also, as I was even just writing the questions for this, I was like, oh gosh, I feel like until we have blockchain-based identities, then this is going to be a problem.

Starting point is 00:41:10 But I came across a blog post that Anil, what's his last name? Anil Lila. Lula. Lula. Okay. Lula. At Delphi, he wrote about how one resolution would be to link repudiation. to yield. And is that what you're talking about? Just like seeing, oh, certain addresses

Starting point is 00:41:27 participated in these various protocols in different ways. Is that how he's defining reputation? To some extent, I think you can have more objective metrics where, you know, is black and white, did you participate? And to what extent? And you can, you know, quantify that without any real subjectivity. The reputation component is a really interesting one because it's, when you're thinking about like token design, it's, all right, how do I really keep someone incentive? through participation or like how do I create some level of stickiness? And in the early days, it was always financial. And that's tough because that's often zero sum in the sense that if I'm giving you extra financial benefits, it usually comes at the expense of someone else or the

Starting point is 00:42:09 protocol or something like that. Whereas with reputation, that can be its own community-based kind of element in the sense that reputation can be granted by others to others within the community. And so you have this like natural filter of the people who know the most are actually able to distribute the most reputation. But obviously there's ways to gamify that. And so you constantly have to kind of think through these loops and really ensure that there aren't really these attack factors because, you know, as good as design can be, if there's a way to exploit it and it breaks, it really diminishes all the value that's been built up previously. And so, yeah, we're very bullish on the idea of kind of reputation within Dow's within ecosystems to allow those who are actually, you know, knowledge. are really contributing a lot to kind of rise to the top. And then that becomes healthier for all participants where, you know,

Starting point is 00:42:59 I think with Dow, especially as they get really large, you're going to have this free rider problem. And that can be very parasitic. But to be able to really incentivize and reward the people that are actually delivering the most value ends up being, you know, very useful for everyone involved. Yeah. And if I can chime in just one other thing there is that, you know,

Starting point is 00:43:19 one of the thing, going back to your point earlier, about kids having extrinsic and intrinsic motivation. I think one of the conclusions that we're going to have to come to as an industry is right now, we're trying very hard to make things as extrinsic as possible, and that everything's happening on chain and it's on chain reputation, on chain contributions, and you look at your activity. But I think the reality is that especially as like these dows and organizations need to scale, you're going to have a lot of soft reputation.

Starting point is 00:43:46 You're going to have a lot of intrinsic motivations. You're going to have like a lot of the stuff that happens off chain, you're ultimately dealing with humans coordinating with other humans. And so it seems like right now one of the things that we're doing is we're saying, okay, how far can we push it in the direction of everything on chain, everything extrinsic? And then from there, you kind of walk it back and you say, okay, you can't have everything be on-chain and extrinsic, which parts we need to have the off-chain and intrinsic and a little bit softer. Okay. Yeah, I think probably in a way there's, I mean, already we're seeing there's going to be like

Starting point is 00:44:21 a big mix of designs. But that also now takes me, because we've been talking about these airdrops where the protocol has already launched, but they're kind of like retroactively rewarding users. And I wanted to ask about like launching coins, as I'm sure you're well aware, there's this tension between the fair launch coins and the VC coins.

Starting point is 00:44:41 And that goes back to this, you know, question that has been, you know, for forever in crypto, even like before I started covering this six years ago, which is the issue of like, you know, pre-mine or no pre-mine. And of course, no, that also raises questions from like vesting and lockups. And I'm wondering if you guys have an opinion on all that, like, if you think it's always better to just try to do the fair launch thing or, you know, whether you think a pre-mine ever could make sense.

Starting point is 00:45:08 And if so, how that should be designed. So, thinking about doing, I guess, like, Fair Launch versus, you know, VC investors as as to someone who is a VC investor, like, naturally, I guess there would be some inherent bias, but, you know, realistically, we're always trying to think of what's the best approach here. And I think the biggest issue is that thinking that it has to be binary, you know, having VCs that are actually builders and helping contribute to what you're designing can be very useful versus, I think what we sometimes see is just, you know, in the same way you have mercenary capital in these launch strategies.

Starting point is 00:45:46 you also have mercenary kind of VCs that are just investing in a bunch of places and don't really have the capacity to add value besides just the capital they provide. And so I do think to some extent having the right investors is more valuable than not. But I get the idea from those that aren't investing from their perspective that it isn't fair in terms of what's being delivered. So ideally the idea is that bringing these investors on board actually ends up being more value of creedive than not. And so, you know, you're owning a smaller slice of a larger pie is kind of the idea.

Starting point is 00:46:19 And so you always want it to be fair. And it's like, what is the definition of fair? You know, to some, I think it started with a bit with Wi-Fi. And the idea is fair is it has to start with zero and everyone kind of minds. But, you know, at the same time, is it fair that the people that found out about it in the first 24 or 48 hours are going to just out like farm you by a larger extent? And like, then does it really become fair? And so I think you've seen the definition of fare kind of gradually evolve.

Starting point is 00:46:47 And I think fair ends up being, you know, a very public pre-announced distribution plan where you explain each component why everyone has the ability to participate. And their participation actually adds value to what you're trying to build or what mechanism you're trying to design. And so I think, you know, fair has shifted where previously was just zero investors, first people in are starting to get it to, all right, it's fair. in the sense that you're not going to have people who can code in solidity, snipe, or like, you know, you're not going to have people who can code, snipe out the initial drop. And fair is now what's the most equitable way to distribute where certain people aren't disadvantaged because they're not as technically savvy or they didn't hear about it

Starting point is 00:47:31 in a small chat first. And so I think the definition of fair has really evolved. And ideally, that's kind of where we sit in terms of that kind of conversation. Yeah. So it's interesting. if I can actually maybe push back in the question a little bit in that I actually think that's the wrong question to ask in that like we've seen super decentralized token launches that are from zero like in urine is a good example or grin for example in the layer one space

Starting point is 00:47:59 and we've seen super centralized token launches right where a ton of the supply is held by insiders and I think one of the things that we're coming to a conclusion is that like they obviously impact how successful a protocol is going to be but it is not necessarily resulting in a more or less successful protocol just from that. And what we found is it's kind of random, right? How successful the protocol will be, whether or it launched, you know, fairly or unfairly, you know, quote unquote. I think the better question, and this is something that nobody's been able to answer so

Starting point is 00:48:29 far, is how do you continue distributing a token over its lifetime in a way that is fair? And that I think is a hard part. Like right now, the closest thing that we have is like, okay, you're going to do liquidity mining, And then if you're a liquidity provider, you will continue getting, you know, getting some tokens. And that's kind of like the V1 of it. But, you know, the other question is, how do you continue to incentivize, you know, people that participate in governance and people that add value and people that are thoughtful and, you know, companies that are, you know, adopting it or building partnerships for or tooling for it or

Starting point is 00:49:03 whatever. And so those are the questions that we really need to answer. And right now it's done in a little bit of a crude way. And now you have a one-off governance proposal to let's give this person. on a grant or let's fund this marketing effort or whatever. But these are oftentimes like one, not utilized enough and two, they're kind of crude. And really what you want is you want to find a way to continue deploying a treasury, continue to deploying inflation and continue to incentivize people to do value added of things

Starting point is 00:49:29 that distribute the token more and more widely over time to the right people doing the right things. That's the part that nobody's really been able to answer and is also in a lot of ways independent of whether or not the token was like fairly launched or unfairly launched. And I think, you know, one of the things we've seen is that you can have, like, a pretty small, pretty small token launch. But then you have, you know, quote unquote, a theoretically unlimited amount of time that these things will be live for, right? They can go on forever. And so based off what you start and then what you do, it really starts to compound. And that's the area that we need to be focused on.

Starting point is 00:50:01 Yeah, well, so talk about that. Like, what do you think is the optimal way to, you know, structure a liquidity mining program? because as you guys have talked about throughout the episode, you don't want to attract this mercenary capital that is just going to leave you once the rewards, you know, taper off or whatever it is. So, you know, what are your thoughts? It's really about rewarding the users that are, it's a combination of rewarding users that are, you know,

Starting point is 00:50:28 going to be interacting with your protocol and then also having a way for them to do so, right? So, and not to pick up. on sushi here, but just like, we were already on the topic. But so like they're, they had an awesome, you know, initial kind of distribution situation. And, you know, it's a very successful vampire attack. The idea was for the rewards that you got, one third you'd get up front and then two thirds would vest over time.

Starting point is 00:50:59 And so that worked in, in two ways where, you know, initially it was very reflexive on the way up, very reflexive on the way down where, you know, I'm providing liquidity. I'm getting this yield and I can only sell one third of it. So I'm seeing a large number come in and I can only really liquidate a smaller portion of it. And then so what happens is, you know, a lot of liquidity because now number continues to go up. And so, you know, it gets very reflexive. But then the kind of the subsequent headwind is that after this mercenary capital has realistically left, you know, they farmed it and there's potentially another farm.

Starting point is 00:51:38 And that's kind of the issue with Defi in general, where if it can be very mercenary, where, okay, I'll fork it. And now how do I compete on a natural level when somebody else can just fork and then create a new wave of incentives? And so that, like, that kind of happened. And then you started to see the unlocks come in. And the unlocks were now given to people who are probably no longer providing liquidity. So now, you know, they're not really adding much value, but they're contributing to a decent amount of kind of selling. And so, yeah, it ends up being very bold.

Starting point is 00:52:08 way up, but very, you know, negative on the way down. So the idea is you have to kind of understand, you know, you want to introduce enough supply in the market where it's enough to reward people, not enough where you're basically overpaying because, you know, like Victor mentioned, all of this is effectively customer acquisition costs. And so if you're overpaying, it can be, it can considerably, you know, way down the protocol as a whole where if you're overrewarding certain activities that aren't necessarily as valuable as the rewards you're giving, it's, you know, net negative. And so that's kind of one thing to keep in mind. And then the other is understanding, all right, these are users who, you know, once they receive the token, they,

Starting point is 00:52:48 in that situation, they can either sell it or stake it and, you know, with the expectation of number going up, but there aren't really additional benefits outside of that. But when you kind of start to introduce ways for them to continuously benefit from the ownership of the token, it's when it's basically you want your customers to also be your token holders, rather than distinguishing the two. And so when you distinguish the two, you have to kind of provide separate incentives to some extent. But if you can overlap them, I think the incentives themselves become much more effective because it's not purely just cash. It's actually a valuable asset that they're getting that they can leverage to, you know, receive further benefits. And so it's really just all

Starting point is 00:53:27 kind of boils down to this game of incentive alignment. So I don't know if this is a little bit of a hot take. I'll let you guys be the judge of that. But I think we should assume that liquidity providers are always going to be mercenary capital. Like, when we think about who has the most liquidity in the world, it's always going to be investors and institutions and money managers, like large institutional players. And what are those people care about? They care about yield. And from that perspective, I think it makes sense to like, think of them as always just optimizing for yield. then, you know, there will be a component of, oh, I think this network will grow and I think,

Starting point is 00:54:08 you know, all this stuff, but treat them all as mercenaries. And so then what does that mean? Well, what it means is that what we currently think of liquidity mining program in terms of, let's give money to liquidity providers, I think it should be flipped on its head. And that really would you want to optimize for his usage, because if you have a lot of usage, right, the fees that are being generated by the protocol will be high, which will be the incentive for liquidity providers to come and say, hey, right now it's paying out 20 percent. I'm willing to accept a rate of as low.

Starting point is 00:54:34 with 10%. And so I'm going to put a ton of liquidity into here until, you know, the rate hits what I'm, what I'm willing to accept. And so from that perspective, I think that nobody's really figured out how to do that yet because one way, what crude way that we've seen is you say, okay, I'm going to incentivize the borrowing or I'm going to incentivize the trading. But you can just gain that, right? That's the whole point. And especially as fees drop on things like layer twos or roll-ups or whatnot, it's going to be easier and easier to game it. So the question is, how do you incentivize the kind of like ungameable actual adoption and usage of this protocol? And nobody knows yet.

Starting point is 00:55:12 And nobody knows how to do that in a decentralized and trustless way. You know, one of the shortcuts to it is you say, okay, you know, maybe we form a partnership with Dharma or with Argent and we're like, hey, route all your stuff in here and we'll give you, you know, a kickback or it'll be a subscription or it'll be something. That's obviously an centralized way. And so it's not a perfect way in a perfect world we'd like to find. a decentralized way to do it. And I think that's going to be, like, whichever protocol figures out how to do that,

Starting point is 00:55:38 how to incentivize the actual, like, usage and partnerships and collaborations, is going to do really well. And then the liquidity will follow that. So we're running out of time. And I literally have ditched so many questions because, like, we can just go so deep on any one of these topics. But I did want to ask about NFTs. And maybe what I'll do is actually just quickly sneak in this last question that kind of

Starting point is 00:56:01 is a take off what you just said. but like I wonder if more of this will be about kind of like identity and community as time goes on as we're kind of seeing in the NFT world. And the reason that I say that was I'm pretty sure that I heard this on an episode of Frank Chaparro's The Scoop podcast where he was interviewing. So I don't remember who it was. But I think it was like somebody from Jump Capital. And they were talking about how like, you know, which in the traditional financial world is like all about keeping things close to your vest. But then they were saying that now, for their crypto activities, they are trying to get involved in governance and in the community and being more transparent. You know, the way that he was describing it, it just sort of seemed like it was almost like becoming, they were like creating this identity for themselves in this space, right?

Starting point is 00:56:49 And, you know, when you're watching things like what's happening with the NFT world with BoardApe Yacht Club where, you know, they gave the board ape owners, you know, the rights to make derivative works and things like that. And then now we're seeing like all these new projects coming out of out of that. So I'm wondering if like that is how you kind of make it more organic. But I'm curious for your thoughts. And any other thoughts you want to say about designing NFTs because, you know, to incentivize kind of like the value there. Yeah. Well, you know, I think that what it boils down to it.

Starting point is 00:57:24 So at Bison Trails, I'm part of maybe like 40 or 50 different protocol communities at this point. And so we've seen all the different iterations of going from a test net to intensify test site to main net and how all these different ecosystems come up. And the thing that keeps sticking out in the protocol space, whether I'm looking at layer one or layer two or interop or defy or NFT, is that community is a killer feature. It's that simple. And people try to complicate it, but it's not complicated. Community is a color feature. And so when we think about design and when we think about community, you know, math,

Starting point is 00:58:01 management, the driving force behind it should be how do you create a community of leaders that act as owners that have the agency and ability to go and do like what they want to do in order to add value. And there's a degree of trust there, right? Because if you're empowering people so much, you're saying, hey, we're trusting you to do the right thing with this power that you have. And a lot of brands are very afraid of that. But what we're seeing in the, you know, boarded yacht club community is that these are folks that are extremely excited to be part of this cohesive community and they want to do things that not only make the brand better, but they also have a lot of fun doing together. And so from that perspective, I think it's, you know, they've done like a

Starting point is 00:58:44 truly incredible job. I'm not, and I'm a board a NFC owner myself as well, just I guess, to give that disclosure. But I also think, having said that, that that is the V1 in that we haven't seen and go poorly yet. You know, at some point, somebody's going to, you know, take their ability to do this and do something pretty nefarious with it, right? Or they're going to do something that's, you know, very not safe for work or whatever it is. And so it'll be up to the community to figure out, like, where are those guardrails and what are we willing to tolerate both at the, like, intrinsic level of like what you're allowed to do or not allowed to do based on, you know, the agreements you have, but also the intrinsic level of, are you a good community member? What are we,

Starting point is 00:59:20 you know, welcoming as part of community and what are we not? And so I think the NFT space is probably going to be pushing the defy space forward quite a bit in terms of that culture and in terms that community in terms of that intrinsic stuff. And I think ultimately what we're going to see is that a lot of the defy folks have NFTs and a lot of the NFT folks have defy. And so I think these designs are going to really build upon each other to make what is going to be really powerful communities that can withstand shocks and withstand black swans and withstand a lot of stuff and and really thrive with powerful community members. Yeah.

Starting point is 00:59:57 Yeah. No, no, no, I largely agree that those two are massively overlapping now in terms of just like an ownership basis, but that the functionality still hasn't really seen as much of an overlap as it certainly will in the coming months and years. And so that's kind of part of the thought process behind the kind of the NTC standard that we're helping design. But also, I think one thing you're going to do. actually starting to see is the value of a governance token within these NFT communities where,

Starting point is 01:00:30 you know, part of sometimes you're starting to see it as like basically, you know, NFT communities are air dropping a token. Sometimes for weaker failing ones, it's just like a cash grab thing, which, you know, it's inevitable. Like it's just a kind of like function of the space. But in the healthy and thriving ones, it's just another kind of way to coordinate and organize the community where, you know, you can also leverage reputation on top of that as well, which, which would be more merit-based than an air drop, which is just purely based on, you know, how many you own or some kind of derivative of that. And so I think what we'll start to see is basically some kind of meta-layer of governance that's orchestrated around a token or

Starting point is 01:01:11 reputation that is used to really organize these because, you know, I really agree that the community is the hardest thing to build. You know, it can't be manufactured. It can't be really incentivized purely. It has to be organic. There has to be some reason why people want to spend their time there. It's not something like I'm here in, you know, I'm not idly farming this. I'm actually contributing my own time and going out of my way. And so, you know, community is definitely the hardest thing to really build.

Starting point is 01:01:37 And so it's going to be natural that as these communities grow and in order to really maintain some level of organization, there needs to be something that they can use between them whether it's token or reputation to organize it all. Yeah. And maybe, and sorry for chiming it again, but just the last point there is that board API Club did announce they're going to do a token. And they, you know, probably will be airdropped or I don't know if a party will be sold. Doesn't matter. But I think one of the interesting things there is that you have a culture that's constantly doing things. That's organizing parties and, you know, and getting celebrities to do stuff or getting partnerships

Starting point is 01:02:15 or sponsor, whatever, right? And the interesting thing is that once you have, have a token, is it going to be a finite amount of it? Or will there be some inflationary component? And if there is an inflationary component, how do you as a community figure out what you want to incentivize, not only the types of activities, but also the specific individuals? And there's a lot there to unpack is that you don't want it to be a popularity contest, but also, like, people that are going to be doing good work are going to be well known. And so how do you do that in a way that people feel is fair and that people are bought into the process? And now you're starting to get into this really, like, interesting polysci,

Starting point is 01:02:45 democracy like characteristics where you really have to unpack it and almost like in some ways relearn all the lessons that we've learned over designing like the U.S. democracy, for example, but then figure out like where does the crypto component sit there and how is how is the game going to be, you know, 90% the same, but like the 10% is that it's different, how is it going to be different? How are we going to leverage that successfully? Yeah. Yeah. One other thing that I was thinking about while you guys were discussing this also was like the Friends with Benefits token, which I just like I was asked to comment on this uh well I won't say who it was for in case they don't want me to reveal but um but it was like you know what do you think the future of money is or

Starting point is 01:03:25 whatever and I was like oh I think it's going to get a lot weirder and it's going to be a lot more tied to your identity and interests um because you know if I look at things like yeah the board api yacht club or friends with benefits like it just feels like oh yeah it's like you just have this kind of um like group that you hang out with and then you all have this identity is represented by this token. And in a way, it does end up sort of being like a popularity contest, I think. But anyway, oh my God, you guys, I had so many questions we did not even get to. There's just like so much we could discuss on this. So we should totally redo this at some point later next year because the rest of my calendar for 2021 is filled out. But this is so fun. Where can people learn

Starting point is 01:04:05 more about each of you and your work? And, you know, if you have any recommendations on resources for tokenomics, let us know. Well, for me, you can just go to the Bison Charles website on our blog. We publish a lot of stuff there. Or just follow me on Twitter. Just my first name, last name, V-A-K-T-O-R-V-U-N-I-N-I-N-I-N-I-N-I-N-N-I-N-I-N-E-N-U-N-N-E-N-N-E-N-U-N-N-R-E-N-R-E-N-E-N-R-E-N-R-E-N-R-E-N-R-E-N-R-LAT. Is an incredible resource that really lays down the foundation upon which so many of the things that Jan and I talked about are laid.

Starting point is 01:04:42 I recommend giving that a read. Yeah, you can find out more about Delphi at our website, Delphi Digital.io. We, you know, subscribe. We send out a lot of free content as well. And so feel free to join there. And then you can follow me on Twitter. Also, first name, last name is my handle. Perfect.

Starting point is 01:05:00 Well, thank you both so much for coming on Unchained. Yeah, thanks so much for having us. Thank you. Thanks so much for joining us today. To learn more about Yon, Victor, and Tokonomics. Check out the show notes for this episode. Unchained. It's produced by me, Laura.

Starting point is 01:05:12 with help from Anthony Yoon, Daniel Ness, and Mark Murdoch. Thanks for listening.

Unchained - The Tokenomics Episode: Why ‘EIP 1559 Is Like Catnip for Investors’ - Ep.292

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