We’ve made decisions regarding our ERC-20 token that some may view as unconventional, so I’ll try to outline the reasoning for these decisions in this post.
Before exploring the decisions made about the implementation of our token, I think it’s important to establish the actual purpose of the token. Anyone who was in the crypto space during the glory days of ERC-20 scams/rugs will remember that asking a question as simple as “is a token even necessary for this usecase?” was usually enough to weed out the vast majority of scam coins.
The purpose of our ERC-20 token is not to provide “passive income”, we’re not a ponzi. It’s also not intended as a way of providing the founders with “stock” in the project.
The primary purpose of our ERC-20 token is to provide value and utility for the holders of the Magic Folk NFT. It should be viewed as a tool to facilitate the exclusivity of features and products for our holders, nothing more.
This is why we say our ecosystem is “powered by GEMZ”. Without the token, it’d be difficult to ensure our ecosystem provides value to our holders.
Because the token is only meant to reward holders, it makes very little sense to have an initial supply that’s higher than zero; only people who hold our NFT should be holding our token.
Where should tokens go once they’ve been spent within our ecosystem? Should they go to the devs? Should they go to a community pool?
A community pool might make sense, but if the purpose of the pool is to act as a supply for holders why not just mint directly to holders instead?
Our token can only be minted by claiming from one of our (staked) NFTs. There’s no pre-mint, no dev-mint and no paid-mint. The only things that give one person an advantage over others are the quantity and the quality (power level) of their staked NFTs.
At this point it should be obvious where the tokens go after they’ve been spent, 100% of them are burned.
You’d be right to ask how an ERC-20 token can facilitate exclusive access to an ecosystem if holders can just transfer, and therefore sell, the token to others.
By default, our ERC-20 token will not be transferable. It can be minted and burned, but not transferred, so the only way to obtain it is by staking a Magic Folk NFT.
This is fairly simple to implement:
You’ve probably noticed the _transferLock boolean variable.
The token isn’t transferable by default, but we decided to implement a mechanism that will allow our DAO, The Magic Council (see below for more details) to override this behaviour with a majority vote.
Only the DAO can override this mechanism:
The DAO can also re-disable transfers after enabling them.
I’m of the opinion that keeping transfers disabled is the best way to maintain a sustainable ecosystem and a valuable NFT, but the community will decide whether or not I’m correct.
You may be wondering why we’ve bothered implementing a system with customizable NFTs and equipment that increases your rate of earning GEMZ if GEMZ are only meant to provide exclusive access to our ecosystem.
The answer is simple: fun.
We plan on making many different products available to our holders, and the token earnings from one base NFT won’t be enough to access to everything, but we don’t want to force people to buy multiple NFTs if they really need access to all of our products and services because that’s not exactly fun or rewarding for holders.
Instead we’ve decided to introduce a gamified mechanism that allows holders to customise their NFT while also increasing their potential to earn GEMZ without needing to buy multiple NFTs.
Supply for the more powerful items will also be quite limited, so earning GEMZ faster than others could be beneficial. Everyone likes a bit of friendly competition.
Development costs time, and time is a valuable resource.
A common way to pay for this resource is by offering a token allocation as “stock”, which acts as an incentive for developers to put more time into the project.
But even if we did plan on giving ourselves a pre-mint allocation of tokens, it wouldn’t be transferable anyway.
Most NFT projects allocate the post-mint royalties in the same way they allocate the funds raise on mint. We’ll be allocating a much higher percentage of our royalties to developers; the aim is to incentivise further development by tying the value of the NFT itself (rather than to the value of the ERC-20 token) to the post-mint payout.
By doing it in this way, team members aren’t incentivised to just dump their tokens and rug at the next ATH. They are instead incentivised to continuously develop a product that actually provides enough value to make people want to purchase the NFT itself.
Mr. PBH