They bring a powerful, yet understated benefit of incentive alignment, facilitating value creation not limited to founders, companies, or creators, but from groups of community members motivated to contribute due to their ownership in the community.

Key to the success of a social token is its tokenomics. With solid token incentive mechanisms, communities encourage strong member participation. Creators, however, are rarely crypto-native enough to design their own tokenomics. The onus is on the issuers.

By diving deep into the two leading issuers, Roll and Rally, this article aims to inform future iterations of social token issuers on:

Roll and Rally use contrasting token designs. While Rally applies token bonding curves (TBCs) to social tokens issued on their platform, Roll opts for simplicity with fixed supply.

The pros and cons of the TBC and fixed supply designs are well-covered in this article by Coinvise, which is summarized below.

Social tokens issued on Roll will have a maximum potential supply of 10 million. 2 million are minted at genesis for the creator such that he/she has sufficient “skin in the game”, while the remaining 8 million tokens are distributed across 3 years.

Rally has had two versions of their token bonding curves since their inception. Both versions featured a Genesis period, which allocates 24% of potential maximum supply to the creator.

In Version 1, creators used an S-curve, while a linear curve is now used in Version 2.

The change came as a result of two issues as communities entered Phase C of their V1 TBC (when more than 150,000 social tokens are minted):

The linear bonding curve of Rally V2 aims to make Rally a more appealing platform for larger communities:

With the linear curve, Rally’s V2 TBC mitigates volatility as communities scale. It also rewards early adopters through its pre-sale period (between 5 to 7 million tokens minted) before the TBC dynamics take place. Note that Rally’s social tokens are priced against RLY rather than USD to mitigate volatility, pool liquidity, and capture value (more on this later).

Social tokens issued on Rally today use the linear TBC by default, but communities have the option to use the S-curve.

Most importantly for adoption, simplicity resonates with creators, who often find a fixed, simply divisible 10 million token supply more digestible than TBC dynamics. As Coopahtroopa explains,

“99% of creators have no clue (and likely don’t care) what curve they are using.”

However, because Rally tokens are minted on a TBC, liquidity is guaranteed for traders. Roll’s social tokens, in contrast, require users to bootstrap liquidity. This makes their tokens more volatile than Rally’s and incurs high slippage on trades in their early stages.

Nonetheless, one can argue that social tokens need not have liquidity when communities begin to grow. Communities can start by distributing to existing, committed, long-term-oriented members before facilitating price discovery (attracting fewer speculators). Once a larger community is formed, members can bootstrap liquidity with DEX pools.

Due to the diversity of communities, no token design is one-size-fits-all. As we recommended to Grape Protocol during our accelerator program, future iterations of social token issuers should prioritize flexibility and customization.

Most creators, brands, and communities will migrate from Web 2, so opting for the easily- divisible, fixed supply model should be the default over the complexity of TBCs. It will be important, however, for existing crypto-native creators and communities to be able to choose TBCs for guaranteed liquidity.

From then on, customization can be implemented for both the fixed supply model and TBCs. Coinvise has allowed their creators and communities to customize their fixed supply cap, while meTokens allows creators to choose their own TBC. In the future, the distribution schedule for the fixed supply model and the pre-sale period for TBCs can be customized as well.

On Roll and Rally, social tokens are often distributed to users who purchase or engage with creators. You can, for instance, buy certain amounts of $CALVIN tokens issued by Roll for him to promote or provide feedback on your crypto project. On Rally, you can earn $KLD (by NFT music artist Kloud) by creating proposals or participating in contests, programs, and events.

The core theme is that social tokens act frictionlessly facilitate value exchange between creators, core contributors, and community members.

While the Rally token captures value by backing all social tokens’ liquidity, the potential Roll token should capture value through ownership of its social tokens issued.

Roll owns 1% of every creator’s maximum token supply. In other words, its token could capture 1% of the market cap of social tokens issued.

Importantly, the social tokens issued on Roll are issued directly on Ethereum rather than a private sidechain like Rally.

Rally captures the market cap of all social tokens issued on their platform by backing their social tokens’ liquidity using their native token $RLY.

On the frontend, users seem to be able to purchase social tokens on the Rally platform through crypto or fiat seamlessly, but in the backend, users are essentially purchasing $RLY to receive social tokens issued by the Rally platform.

The process is as follows:

Hence, the Rally token captures value from locking its circulating supply, capturing the market cap of all social tokens issued.

Comparing the mechanisms of value capture, it is likely that Rally’s mechanism will capture more value from its set of creators. While Roll owns just 1% of their social tokens’ genesis supply, the $RLY token captures the market cap of all social tokens on their platform.

However, social tokens issued on Roll are composable as they are issued on Ethereum rather than a private sidechain. They can consequently plug into DeFi protocols, tapping into opportunities ranging from creating money markets on Rari Capital (so fans can lend and borrow tokens to unlock tiered perks and memberships temporarily) to having creators own their own liquidity through Olympus Pro. These potential integrations with the money legos of DeFi could attract more Web 3-native creators.

In essence, the choice of an issuer’s value accrual model depends on the priorities. To capture high value, adopt the Rally model of a native token backing social tokens’ liquidity. To attract Web 3-native creators and leverage the composable money legos of crypto, adopt the Roll model of a small percentage of social tokens owned by the Roll treasury.

Today, anybody looking for passive social token exposure lacks the indexes to do so. On Set Protocol, only SuperGroup has created a social token index, with a lack of investors and a >90% weightage towards Friends with Benefits ($FWB).

There are opportunities for Rally and Roll to issue passive social token indexes containing social tokens issued on their respective platforms.

Roll, for instance, could tokenize the portion of its treasury that holds the 1% ownership of all social tokens issued on their platform, and issue it as a passive social token index. As a result, the future Roll token can capture fees from the management of the TokenSet fund. (As a private sidechain, however, Rally would not be able to leverage the tools created by Set Protocol, but can build the TokenSet themselves to capture further value.)

The risk is that anyone else can create a more comprehensive TokenSet across all social tokens, unrestricted to those issued only on Rally or Roll.

The issuers, however, are in unique positions to offer perks to owners of their TokenSets. The 1% ownership of the social tokens currently held by Roll, for example, can be decentralized to a future Roll DAO. Members of the Roll DAO and owners of the TokenSet could unlock the benefits associated with the social tokens that the index is composed of.

For instance, if you purchase some TokenSet tokens and more than 75 $FWB is “contained” within it, you can access the FWB Discord server (subject to your FWB application). Consequently, the user not only benefits from passive social token exposure, but the perks associated with holding the tokens within the index.

The opportunity for value capture through passive provision of index funds is substantial. In traditional finance, asset management holds more than $100 trillion in value. Set Protocol currently holds around $400m in TVL, which has grown by more than 14 times since January 2021. When you imagine the potential of how any person, brand, or community can create their own social tokens, capturing even 1% of indexed exposure to these assets is an opportunity that cannot be ignored.

In summary, future iterations of social token issuers can consider two token designs for their creators, brands, and communities:

With the Rally model, issuers can enhance flexibility by allowing creators to choose their own TBC and pre-sale periods. The Roll model can be further customized such that creators can choose their own supply cap and distribution schedule.

There are two ways for issuers to capture value with their native token:

To capture further value, consider capturing fees from managing an index of social tokens issued. The future members of issuers’ DAOs can also benefit from the perks of the social tokens held in the issuer’s treasury.

More broadly, we look forward to more experimentation around social token economics. In contrast to one-sided interaction, social tokens incentivize any community member to contribute to the creators they follow or the causes they believe in. In return, they offer opportunities for anyone to earn ownership, usually limited to employees with stock options in Web 2.

Issuers themselves may even incentivize their creators to contribute proposals to tokenomics that align with their needs. In that vein, Web 3 creators would stand in stark contrast to their Web 2 counterparts by truly owning the platforms they create value for.

This research was a product of our collaboration with Grape Protocol on their potential social token issuer design for creator coins. For more content like this, follow us on Twitter.

If you would like to collaborate, please reach out @0xEmerson.

Learn more about social tokens in our Social Token Podcast Mini-Series on YouTube or other podcast platforms.

LongHash Ventures is a Web 3 investment fund and accelerator collaborating with founders to build their Web 3 model and tap into the vast potential of Asia. In January 2021, we launched a DeFi-focused fund and invested in projects such as Balancer, Acala, Instadapp, and Zapper. We collaborated with their founders to develop their tokenomics, governance, and communities through Asia DeFi Network.

With our LongHashX Accelerator, we have partnered with Polkadot and Filecoin to build more than 40 global Web 3 projects which have raised more than $100m in the past 3 years. Through such investments and active collaboration, we are committed to realising our mission of catalyzing growth for the next generation of the Web.

Disclaimer: LongHash Ventures may hold positions in some of the assets mentioned in this article.

Ok. I realize that right now I’m probably communicating with a giant army of people (LINK marines) who, for the most part, proudly self-identify as belonging on the far-left end of the IQ bell curve.

Because of that, I’ll need to be extremely pedagogical.

I already realize I lost most of you with the term “pedagogical”, but please stay with me, I’ll explain.

It means I’ll try to explain things in an as thoughtful, intuitive and simple manner as possible. If you feel at times as if I’m speaking to you as if you were a young child, or perhaps a golden retriever, this is exactly my intention.

The reason I need to be “pedagogical” is because the Chainlink 2.0 whitepaper is written by a rather impressive lineup of members of academia.

Ari Juels, in particular, is a Professor at Cornell Tech and was previously the Chief Scientist of RSA.

It is perhaps not surprising then that he is worshipped among LINK marines as some kind of deity of superhuman intellect.

How can I then claim the authority to go against the word of this man? What of my merits could I possibly demonstrate to make anyone trust my word over his?

The answer is I simply cannot. I do not have 40,000 citations. I have 4.

I think.

If I explain the problems of the paper in extremely simple language that even a golden retriever can understand, we might just escape the appeal to authority fallacy and take this argument into an arena of clear reason where anyone can follow along as to what is being said and what is being debunked, no matter where you belong on the IQ bell curve.

If I can achieve that, well, we might just be on our way. So let’s begin.

Let’s start by simply explaining the problem “explicit staking” is meant to solve.

So, one of the key functions of Chainlink is to leverage a mix of nodes to read and forward information about the outside world (“external data”) and feed it into the blockchain.

One such example of outside information is the BTC/USD exchange rate. Below, you’ll see the current mix of nodes that are responsible for fetching this data.

After the data has been fetched from a minimum of (in this case 21) nodes, the Chainlink smart contract system uses a quickselect selection algorithm to find the median value to be used as the “trusted answer”. In golden retriever-speak, it means “the answer in the middle”.

For their servitude, the nodes are paid in a token called LINK by the requesters of this information.

Up until this day, this simple routine has been the core of Chainlink nodes’ business —they provide trusted, aggregated feeds of information which they’re paid for in the LINK utility coin.

As of today, there’s billions of dollars in DeFi applications that rely on these trusted data feeds to secure their smart contracts.

If it isn’t painfully obvious to you yet, trusted data feeds have nothing to do with “cryptoeconomics”.

Now, LINK marines as well as the Chainlink team has come up with a cringeworthy term called “implicit staking” which tries to argue basically the following:

“Hey, nodes actually do have something at stake! Their future LINK payments!”

It is easy to see why this argument is “silly” (I will try very hard to not use the term retarded in this piece even though the core of my being wants to intensely) because if we allowed that argument to be valid, then every centralized exchange (i.e. Binance, Bitstamp, Coinbase), traditional bank, even your hairdresser, would be “cryptoeconomically secure”.

Binance earns fees when you trade there. If they would steal everyone’s money, they lose their future revenues on trading fees! Oh no! CrYptOeCoNoMiCaL sEcUrIty.

Your bank makes money on (among other things) loans. If they would run away with everyone’s money, they couldn’t lend out any money anymore! Oh no! CrYptOeCoNoMiCaL sEcUrIty.

Your hairdresser makes money cutting your hair. If he/she would skim your card at the card reader and leave the country on a motorcycle the next day because they wanted to move to Argentina with their girl/boyfriend, they couldn’t make any more money cutting your hair! Oh no! CrYptOeCoNoMiCaL sEcUrItyYyyyyyYYYyYy.

Yet, in the real world, exit scams actually do happen. All the time. Everywhere. Anybody in the world, no matter how long they’ve spent building a reputation, and no matter how much potential revenue they can make by just continuing to do what they’re doing with that reputation, can have an incentive, a change of heart, a desire to do something else and decide to make as much money from their present customer base as possible and chase after new adventures/other, more lucrative/pleasurable opportunities in life.

Especially if their “present customer base” happens to be billions of dollars worth of DeFi applications, and the asset they’d steal is one of the most censorship-resistant and easy-to-smuggle get-away assets on the planet. Lol.

Future LINK revenues are also hard to model with certainty. No one knows what the future holds. The DeFi landscape is rapidly evolving and there is no guarantee that Chainlink cannot be dethroned as a dominant oracle system by a competitor in the future, or suffer some kind of error/scandal that makes people opt for other solutions.

If you don’t understand this, you do not only not understand cryptoeconomics, you also don’t understand anything about how the world works.

For something to be cryptoeconomically secure, you must have a guarantee that the particular entity you rely on loses something of concrete value that they currently already own that is worth more than what they make from defrauding you.

Yet, LINK marines still run around spreading the misinformation that Chainlink is “cryptoeconomically secure” based on this half-assed argument of security that has nothing to do with cryptoeconomics whatsoever.

Now, to be fair, LINK marines probably already know this. If you didn’t, you wouldn’t bring up the mythical, soon-to-be-developed “explicit staking” mechanism that is supposed to save Chainlink from these ails. You would simply say “implicit staking secures the protocol and that’s that”.

So I assume that we already agree with each other than there is a crucial, cryptoeconomic component that has been missing in Chainlink that everyone agrees needs to developed, and that is exactly why the Chainlink 2.0 whitepaper purports to have unveiled such a mechanism.

I have been waiting for this for nearly 2 years, and the core of my historic Chainlink criticisms has revolved around the lack of such a mechanism. Needless to say, I’ve been waiting with quite some anticipation.

This is where we get to the explicit staking part. This part of the paper, to put it bluntly, is retarded. This section assumes that Chainlink nodes are staking LINK and the innovation here is that this stake can be stolen from them by second group of trusted LINK oracles at will! (And sent to the node in the first group who alerted them of the error).

The “IQ through the roof/beast mode of intellect” part of this design is that the second oracle group is assumed to be much more reliable… because… (and no kidding, I quote the paper):

Note how they don’t mention that the tier 2 group should have any amounts of LINK at stake — guess why? Because if these nodes collude there is no one to slash them!

You, a LINK marine: “but as long as there’s one honest node in the first tier, he can simply escalate the error and get quadratic rewar — “ NO. THAT ONLY WORKS IF YOU TRUST THE SECOND TIER TO BE HONEST. THAT’S NOT CRYPTOECONOMIC SECURITY.

The first reason why this paper is extremely frustrating to read is because the paper explicitly states that the design is supposed to be secure under the assumption that nodes are economically rational rather than honest.

In fact if the paper actually analyzed the system’s threat model under the assumption that oracles (all oracles, not just “tier 1”) were economically rational instead of ”honest” (and not just pretending to do so) it’d be clear as day that the economically rational move by the tier 2 is to act maliciously to extract as much capital as possible, because there aren’t even any punishments when they do so, since they have final say and fundamentally can’t be punished!

The paper goes on to pretend that because the node that escalates an erroneous answer in the first tier will receive all the deposits of everyone else in the tier if the answer truly is erroneous, the scheme reaches super-linear (a.k.a “quadratic”) security against a bribing attacker.

This is completely bonkers because it assumes a completely non-cryptoeconomical adjucation layer (the second tier) to resolve disputes in the first tier. As such deviates from the entire security assumption premise of the whole chapter. Sigh.

As I’ve just explained, there isn’t even anything at stake for any oracle as long as you get the tier 2 oracles to participate in the collusion — the tier which has exactly nothing cryptoeconomical at stake by definition.

No, you don’t have to bribe the oracles with the amount of every tier 1 staker in aggregate to make an attack economically rational. Under a cryptoeconomic rational assumption, you can bribe all the oracles of Chainlink with a broken umbrella and a crayon it would still be the economically correct decision for the colluding tier 2 oracles to refuse to acknowledge any tier 1 wrongdoing when they’re called in to a dispute, and then there will be no punishments for anyone in the entire system*.

*Except for any defiant tier 1 node who tries to do the right thing (because he loses all his stake in this case). Lol.

This part is just incredible. Despite this smoke and mirror 0-security bullshit mechanism (trusted nodes backstopped by trusted nodes) the authors still have the audacity to imply that the the Chainlink staking mechanism provides a higher degree of robustness than Layer 1 PoW/PoS systems.

I just can’t, people.

I seriously hope that anyone with half a brain that has read this far understands that if a trusted tier of nodes is backstopped by another trusted tier of nodes that don’t even have any stake that can be slashed, the whole model degrades back to a trusted system without any cryptoeconomic assurances.

This was a tough one, I know. Don’t feel sorry if you didn’t see through this BS right away, LINK has mooned so much (thanks to you) they had cash enough to hire half a university of people to confuse you.

If you feel disgruntled and disappointed by this result, don’t despair. This problem can easily be resolved by you buying even more LINK so they can hire another half of a university to confuse you back to normal again.

$link to the moon!

As stated on the Dsdaq website, the exchange aims to bridge the gap between the conventional financial world and the cryptocurrency environment by offering institutional grade liquidity. The platform can achieve lighting fast trade speeds and deep liquidity through its partnerships with world-class financial institutions such as Morgan Stanley, Citadel, ANZ, J.P

If you register from a referral link you will receive a $ 20 bonus and 50% of the deposit if you want.

https://dsdaq.com/join/?NVFH0N

Dsdaq provides an advanced cryptocurrency trading app to buy, trade and sell over 300 financial products. Dsdaq offers the following features to its users:

The fee on Dsdaq spot exchange is a flat 0.1% per trade. The trading fee is competitive with leading cryptocurrency exchanges such as Binance and KuCoin. There is a minimum trade amount of $5 USD traders should be aware of.

The trading fee structure for margin trading and crypto settled contracts varies slighting and uses a maker and taker model, as follows:

A flat trading fee of 0.015% applies per trade on traditional markets such as indices, forex (FX), commodities and stocks (CFDs).

You may fret about this deduction. However, you have nothing to worry about. Here’s all you need to know about the kingdom fee and how it benefits the community.

The kingdom fee is a 3% community contribution on every game you play in the battle arena. In a similar manner to how taxes work, this fee is used for the betterment of the community and the platform. The 3% is divided into three major ways.

The first is the 50% Daily Burning. This percentage is equal to 1.5% of the overall wagers players place in TCP. By burning this percentage of the fee, it is removed from the usable token supply.

The second category is the 40% Daily Prize Pool, from which you earn tickets every time you play a wager battle. Every participant stands a chance to win part of the daily 25 prizes. Their total draw tickets will be determined by the multiplier and the size of their wager.

The winnings that players are eligible for in this Draw comes from the 40% extracted from the kingdom fee. Essentially, this fee keeps the Daily Award running and opens doors of opportunities to thousands of players on the platform. The prize pool gets bigger or smaller depending on the number of players and the size of their wagers in any given day.

The third category is the 10% House Fee. The best gaming platforms are strengthened by constant support and development. To constantly play and have access to impressive functionalities, the development team needs to fund platform maintenance. This is where the 10% House Fee goes and it’s how the players invest in making the platform better.

Since 40% of the 3% kingdom fee goes to the Daily Prize Draw, you should be motivated to leverage your skills to earn more. For you to do this efficiently, you will need to understand how the Draw works. Each prophet tier has its unique multiplier. This multiplier determines the quantity of your tickets based on how much you wager. There are six different prophet rarity tiers, each with a different multiplier.

Common: This has the least multiplier at 1:1. This means if you wager 1,000 and you win the battle, you’ll receive 1000 draw tickets.

Uncommon: The multiplier for uncommon is 1:2, which means that a 1,000 wager will give you 2,000 draw tickets.

Rare: Rare has its multiplier at 1:4, making the result of a successful 1,000 wager to be 4,000 draw tickets.

Epic: With its 1:8 multiplier effect, a successful 1,000 wager will give you 8,000 draw tickets.

Legendary: This stands at 1:16, and if you win a 1,000 wager, you get 16,000 draw tickets.

Founders: The highest of all tiers is the Founders, and it multiplies a 1,000 wager by 32 to give you 32,000 draw tickets.

Note that, except for common, when you lose in any of the remaining tiers, you’ll still get 1,000 tickets based on what you wagered.

By now, you know where the 3% kingdom fee goes. Most importantly, you know it funds the Daily Prize Draw, which you can take part in to claim numerous wins. Select your prophet today and become a champion!

We told you a few days ago that the marketplace release was scheduled for January 21, well, you already know us, we love surprises and after a long period of trials we managed to get them fully functional for today! If you are reading this article, it is very likely that the marketplace is almost setup (if not already setup).

What is the marketplace? It is a platform inside Orakler app in which you will be able to buy and sell your wizards, scepters and covens. Moreover, to make the economy sustainable we have added a 10% commission on all the buy and sell actions of the NFTs. WATCHOUT! All this commissions will strictly go into the reward pool, in that way we further develop a more sustainable and healthy economy that will reduce speculation impact on the price of the token.

Our aim with this addition is to incentivize more people to join the game without having to spend high amounts of money in minting prices. In that way they will have an opportunity to start their beautiful covens. We can´t wait to see them!

The community asked for it and we always deliver. Currently we have 2 types of fees charged in BNB. The ones stipulated in the whitepaper that are used to: inject more liquidity, pay the team, servers, and marketing; and the fees that the Binance Smart Chain (BSC) charges for making a transaction in their blockchain.

Until now we were using a poorly optimized algorithm, what the algorithm did was to take out 1 durability out of each NFT. Normally BSC charges around 0.20$ for each transaction but for example: if you had 40 NFTs, we are talking about 8$ that could have been charged in fees from BSC, these fees did not support the economy of the game and were a direct problem that was addressed by our team. Hence, we created a new algorithm that works in the following way (in a very summarized manner):

We have created a database on the blockchain in which we will store the amount of uses for each coven, in that way instead of doing multiple transactions for the durability of each coven we record it on our database. In case of editing, we will run the same mechanic, instead of doing several transactions we will record it in our data base.

These changes will provide the following results:

The new algorithm is 20 times more efficient than the previous one. Please take into account that these estimations, they will vary with each person, coven size and time of the day depending on the congestion of the blockchain.

We believe these changes will make the ROI and the barrier of entry of the game even lower, incentivizing reinvesting and new investments from several players.

We hope you enjoyed the changes and, as always… Stay tuned Wizards!