Value: How to Accrue It to Tokens | Joseph Schiarizzi - Open Dollar

[Music] awesome so thank you so much everybody who came out uh on this you know Friday evening we're just getting started with the eth Denver and we're gonna have such a great week here um today uh is this gonna yeah here we go awesome so today my talk is on tokens accruing value and I'm Joseph shizzy the founder of open dollar So today we're going to talk about uh RuneScape uh we're going to talk about digital economies um we're going to talk about party hats and digital gold uh and really fun stuff as it relates to tokenomics and tokens and things that we're designing here at eth Denver during the hackathon and in general through crypto um and our goal for the day is to inspire more creativity with token value acral systems and general tokenomics uh uh in in general as as you're working on that so uh just really fast hands up uh who's ever played RuneScape okay a lot of people great not everybody that's okay I won't hold it against you either way whether you have or you haven't I won't hold it against you so just before we get into that just a quick introduction of uh about me I'm CA Joseph uh I've been a solidity developer for like seven years now which is crazy to say I'm the founder of open dollar a new decentralized stable coin on arbitrum and uh I have previously contributed to openc um consensus gitcoin some Dows like public nouns and metac cartel uh and raid Guild and a lot of other Dows uh and you can find me on Twitter or farcaster or telegram or wherever you want at Cupa Joseph uh and yeah so I've contributed to a lot of uh Dows that have launched tokens or uh projects that are exchanges like open c for other tokens and I feel like I spent a lot of time um analyzing the floor prices of nfts and and watching different Market cycles and and how value has been acred so that's what I wanted to talk about today so here's a an audience poll question um we've got a uh our RuneScape character our old school RuneScape character up here and he's got a green party hat which is one of the rarest items in the completely centralized MMO RuneScape that's been around for a long time what do you think the dollar value in US Dollars of a green party hat in old school RuneScape is any guesses raise your hand yes $50,000 no way not quite way actually it used used to be 50,000 in 2015 but it's a bit less than that now any other guess okay the actual value is whatever someone is willing to pay right and so right now that's actually slightly more than $5,000 today and just like people are tracking token prices and stock prices and the bond prices for any digital asset that there is a market for there is a market price and even though it's illegal to or not illegal but against the rules of RuneScape to trade in-game items for real currency for real US Dollars even though that can ban your account there's still a market for it and there's still a market price because it's an asset that has value because people think it's cool and it gives you clout because it's very rare there is nothing in RuneScape that Acres value through Revenue through any kind of staking any kind of you know uh uh economic connection to green party hats yet even though it's on this centralized server and even just trading it can get your account banned it's still worth over 5,000 us to buy one that's how much it costs and and they're actually getting flipped every day there's actually quite a lot of volume compare that to most nfts that were launched in 200 uh 21 right in in 2021 most of them are at zero now right or how many ERC 20s or you know Meme coins that that were launched in 2020 or food tokens you know that had very complex tokenomics and Val value crew and and all this stuff that people have published over the years and they're at zero they're worth zero dollars and our green party hat that does nothing but look really cool has a lot of value because the network that it's a part of RuneScape has a lot of value because it has active players and being part of that has uh uh transitioned some of that value to the clout of having a green party hat I think it's very interesting and there's a lot of lessons to learn as we're building products in crypto if we want them to be valuable let's look at other digital assets that aren't crypto and learn uh and instead of repeating the same mistakes and and and not learning from things that are actually working so here's some examples of things that are valuable we haven't gotten to tokens yet we're still on RuneScape gold uh DDS which is a a dragon dagger that's poisoned very good great great for uh PVP in RuneScape um rare Keys armor potions that boost your stats there's a market for all of these things and even though no one is trying to buy any of these potions with actual dollars you can buy RuneScape gold with actual dollars and the price of it is fluctuating every day right now one mill in RuneScape is about 17 and a half cents but there's no Revenue there's no buyback there's no uh you know dividends to stockholders there's none of the things that we generally assume a digital asset needs to be valuable but this stack of money you know would cost $200 so what's going on with that we've got this term tokenomics right and I'm not going to assume everybody has heard it before but in crypto we use this term tokenomics it means token economics pretty simple and it's a design system for acre value to the tokens that we launch because everybody wants to make money on their businesses their startups or create Dows that can be funded sustainably and so we say okay what are the tokenomics what are the ways that that token is acing value and uh just listing some of the more popular ways that people have done that there's a buy and burn um which Ry maker a lot of stable coins use this CDP systems lending protocols like a you know fees from a protocol or fees from a game go to buying a token and burning it and it's similar to in stocks when you're doing a stock buyback right the company is buying some of your stock and theoretically that makes it go up in value for people uh is that always true well we can look at the we can look at the graph for different um different governance tokens that have this structure for different D5 protocols that have gone straight down in the last three years and and say this is not always the case it doesn't always ACR value how we want it to and then there's Revenue acral like you can lock Sushi tokens into Sushi protocol and earn some of the fees you can lock looks into looks rare and there's lots of different variations of this where the token holders are getting a share of the fees getting a share of the revenue from deposits or from a protocol or Dow that's operating and that's also kind of the same in and stocks very similar to a dividend right you hold on to a stock in a company they have some earnings they give that to the stockholders in Revenue in uh in a dividend again so not not super unique right and these tokens a lot of them have also gone you know straight down over the years despite there being Revenue in the protocols and then and then there's the ones that I care lot less about which are grade in manipulation tactics um on on Meme coins uh that uh you know create create ways for certain people to make money um but I don't think our our really reasonable or or sustainable Revenue paths are things that we should focus on on in crypto and then there's this this fourth this fourth version which is governance right and everyone's gotten a governance airdrop of valueless valueless governance tokens right um you know ARB token Spork potentially you know the spork token for eth Denver could be considered this you know a commodity of sorts where they're we're governing some resource but that resource doesn't necessarily have Revenue that's going to the Token holders right ARB token from arbitrum I think arbitrum is an incredibly valuable defi ecosystem uh and the block space that they're selling is a commodity so ARB token governing that should have value even if the revenue from the network is not going to ARB token holders maybe it will in the future and that will change things but I still think that the the token uh you know the tokenomics of that are very interesting and and unique so we we've got the the biome burn is probably most popular um I just screencapped this um like 15 minutes ago from Joseph dong who was the CTO at Sushi and is working on a lending protocol and and some other things um and a diagram of of the maker buy and burn model which takes fees from minting d and from the CDP and buys the maker governance token and burns it um is that is that really sustainable way to drive value and and do people care uh I would say yeah some people care a lot because we're used to this notion from stocks from companies from traditional finance that for a company to have value it has to make money and is that really true anymore ARB token is worth billions of dollars and zero fees from the network go to ARB token holders and there are lots of stable coin protocols like Vesta finance that have shut down that we're doing this buy and burn uh designed after maker that you know even though it resembles this thing that we expect from traditional Finance you know the the stock buyback uh it hasn't acur value as people expect and so in in practice is this really working out probably not I think we need to to be more creative and lean into the things that only crypto can do if you start a protocol that's not a company if you start a dow that is not a company you don't have to design the value acral for that Dow or that protocol's tokens after traditional Financial things like buy and burn stock BuyBacks or dividends we can do something new so block space um block space is something that's new block space did not exist uh until you know Bitcoin kind of I would say block space as a commodity did not exist until ethereum where there's only a certain number of blocks on the ethereum blockchain every day and there's a lot of transactions that want to get into it and so the fees for that are really high and ethereum is essentially selling block space right every time you pay gas on a transaction you're buying some block space then arbitrum as a rollup gets to resell that block space rollups are essentially buying block space as a commodity wholesale and selling it at retail prices right so arbitrum as a layer two as a rollup is doing the same thing as Costco you know buying onions wholesale from a farmer and then selling them at retail prices right because they get to batch things together and they get to sell this commodity except that in the United States actually trading onion Commodities is illegal who's ever heard that trading onion Commodities is illegal in America yeah some people have heard of that yeah because one time a guy tried to get monopolized onions right and that is a that is a quality of meat space of IRL trading right if we're trading a commodity like wood like onions like corn whatever oil you know whatever else is on Commodities markets There's an actual physical resource of that there's an actual like physical there's onions they need to be transported there was a guy he got a lot of onions into a warehouse and so that and it was it was chaos right so go go look into why onions are are illegal to trade on Commodities markets right but block space can be traded the arbitrum block space is governed by the ARB token for example and because in digital world in this digital world in in crypto online our Commodities don't have the same properties as onions they don't have the same properties as physical objects that need to be stored somewhere that have you know shelf life uh and we can design new value acral methods around this idea of treating block space as Commodities as treating the governance of Commodities as something valuable so my uh my plea and what I hope that you get away from take away from uh this talk today is please be creative um as you're working on tokenomics for your projects as you're deciding what to what to buy in crypto or what to participate in and as you're working on your hackathon projects at eth Denver this week uh try to do things that can't be done in RuneScape that can't be done in the IRL world that can't be done in traditional Finance let's try to do things that are new that are unique to crypto and show the world that there are real valuable use cases that there are things that you can do in crypto that you can't do outside of it um smart contracts make that possible you know treating Commodities as digital things makes that possible and uh I'm sure that you know many of you today you know will come up with even more from there about what are the unique things that you can do in crypto to ACR value to uh to govern Commodities and and how can we take that even further to create new Financial experiences for people um thank you so much for coming everybody that's my talk uh I I hope that it was at least a little bit interesting and um yeah thanks for coming