Y2.0 Explained Through GoldBux
Hello readers! It’s been a while since I’ve done a Medium article, and so much has changed in my life and the space since I’ve last greeted you all.
I’ve moved from becoming a professional trader to a professional builder on the blockchain, utilising my economic expertise to innovate the entire tokenomics space.
Trading will always be my craft, and a mountain that I will never stop climbing, as there really is no trader that has truly cracked the code. But my main focus currently is tokenomics, I’ve never felt more passionate about my work than I do right now.
I’m so excited to discuss the revolutionary new thesis that I’ve introduced to the yielding space, and explain what this means for future yielding projects.
Without further ado I present to you…
1 — Inflationary supply
All yielding projects currently have an issue with their design, they are all inflationary projects. This means that their supply is uncapped, and forever expanding.
Why is this an issue? Because it leads to an endless tug of war between supply and demand to retain a stable price, I’ll let this diagram explain.
So if a tokens supply increases, its price will fall.
In order to counteract this, demand must also rise, to bring price back up.
Although the economic community will get mad at me for this, I’ll use a technically incorrect formula to help explain
Price = Demand/Supply
To get a high price, you want as much demand as possible, and as low supply as possible.
The visualisation of Demand combatting high supply can be seen below, where P1 (Y axis of price) moves back up to the new point P2 due to the increased demand.
However the issue that these yielding projects have is that their supply starts at 0 and forever expands, this is what an uncapped supply is.
In order for their project to yield 100 poo coin a day, the contract creates 100 poo coin and increases the supply every day.
This means that the supply starts at 0, and is forever expanding, all demand can do is try its best to slow the never-ending onslaught of supply.
Meaning that the price of the token (due to the token being inflationary) should be in theory getting cheaper and cheaper every day, due to the supply infinitely expanding.
I’ve drawn up a chart to try and display this to you guys visually, where S starts at 0 supply and is forever expanding. “S4000000” is a theoretical supply to show how bad this tokenomics thesis can end up if managed incorrectly.
Essentially this is an economic nightmare, I never watched Game Of Thrones personally. However; I know there is a scene where they are “holding the door” from the massive onslaught of zombies or goblins or whatever that are trying to push through.
You can imagine an inflationary token’s supply as that horde, and demand as the door that’s trying to hold them back.
2 — How do projects combat this issue?
Inflationary supply is not all doom and gloom. If a project has a very strong burning mechanism, they can combat this issue.
Burning is just taking 1000 tokens and sending them to a 0 address, which removes them from the world, doomed to forever loop in an endless transaction…
This is one way to combat inflating supply, and although you can never get below 0 supply, if you are able to burn the tokens at a similar rate that you create the tokens, then you essentially slow down the inevitable onslaught of increasing supply.
Projects like Creepz allow users to mint next gen collections with $LOOMI, which is great, until there’s no more collections to mint, and the inflationary supply nightmare takes over, then this happens.
I was on-boarded onto The Habibiz to help find a solution to this issue, one of the innovative ways we discovered was launching a WL marketplace, which allows users to burn their $OIL tokens to buy WLs.
There are a number of innovative ways to burn tokens, and I could sit here all day talking about them, but at the end of the day all you are doing is delaying the process.
I thought to myself, rather than delay the process, why not skip all this malarkey and introduce a deflationary supply token.
It didn’t take me long to figure out how it was possible, and there are huge benefits that come with this Y2.0 mechanism.
Now let’s get to the juicy stuff…
Yielding 2.0 allows projects to launch a deflationary supply token. This is possible through the multi token thesis.
The thesis goes as follows:
We launch a token with a capped supply.
GoldBux — Supply 2.5 million.
We allow users to yield this token until the supply cap is reached, as once 2.5million tokens are yielded, we can yield no longer.
Let’s use some images to make things clearer…
Before the supply cap is reached, the Eggheads ecosystem contains the NFT, and the GoldBux token. Holders of the NFT yield daily GoldBux tokens.
At this point GoldBux is our yielding token, and is INSIDE our ecosystem.
Once the yielding cap is reached (2.5 million) GoldBux can no longer be yielded, so it is shunted out of the ecosystem and ran as its own seperate capped supply coin.
At the same time a new coin is introduced, this time with a larger supply (10 million) to allow users to continue yielding.
3 — Why is this revolutionary?
Firstly, this allows the yielding project to yield a DEFLATIONARY token. Which means the token can actually be run alike a memecoin, the project can take taxes from the token and holders can enjoy rewards due to the token being able to do some real pumpage ( if ran correctly).
We know that people love to degen on coins, especially utility coins, if the coin is able to actually have strong tokenomics behind it along with the project hype, it’s a recipe for a very successful token…
BrokenSea & The Biggest Innovation
We all know how much we hate BrokenSea… Aside from the website giving us issues, the regulations we must follow are foolish.
It is necessary for a project to have the community set up its liquidity pool, however this means that the community member can drain the liquidity pool, kill the token, and take everyone’s money.
There’s also the classic problem that if the team starts the LP the token can be viewed as a security.
If GoldBux is shunted OUT of the ecosystem, and no longer yielded from the NFT, it can be span off as its own coin.
Meaning when the day comes that GoldBux must no longer be yielded, all the vices of an NFT yielding token are lifted.
DeFi 3.0 protocols, supply side shocks, reflections, staking, launching a bloody EXCELLENT liqudity pools.
The team that uses Y2.0 can speak about these things PUBLICLY, as their token will not be tied into their ecosystem.
Never before have projects been able to launch liquidity pools without being extremely sneaky and skirting the regulations, anyone that has launched a project will know what I’m talking about…
Eggheads are the first project that don’t have to worry about these restrictions, as long as GoldBux follows regulations while inside the ecosystem.
This is the main reason that Y2.0 is so exciting, I will explain this further in our AMA, where I can get heated and passionate about why this is so incredible for the future of yielding projects.
But for now, I thank you for reading, and hope you enjoyed this coup d’œil into the Y2.0 thesis.
I hope this clears things up as to why this new yielding mechanism is so innovative in the space.
There is much more too this mechanism than outlined in this article, I am currently writing a huge thesis paper regarding not just Y2.0, but a whole breed of new tokenomics theses.
My economic talents are best spent where I am un-restricted and in the blockchain I can build economies beyond my wildest imaginations.
Stick with me through this journey into the tokenomics space, and watch as yielding projects bloom into something incredible.
Again, thank you so much for reading, and hopefully I didn’t nerd you guys to sleep.
Lots of love, and I’m brimming with excitement for the future.