Driving Real Change Through Value Creation - TOKEN2049 Singapore 2023

all right um hi everyone my name is John Cho I am the vice president of marketing at Clayton Foundation if you're not familiar with Clayton we're a layer 1 blockchain that was originally founded back in 2019 by the cacao Corporation and if you're not familiar with the cacao Corporation the cacao Corporation is the entity responsible for the cacao talk super app um basically I think we have like a 95 share of the messenger Market in South Korea also a significant share of the messenger Market in uh southeast Asia as well um today I just wanted to uh speak to you not necessarily about like a specific product or a new feature we're releasing I just wanted to speak on something a little bit more pragmatic a little bit more practical and um so instead of discussing the latest project I just wanted to maybe share you know a few experiences that we have insights or even a you know a case study if you will that we have in relation to this topic uh achieving sustainability through value creation so a couple of months back we announced our mid to long term strategy focused on real world assets digital ownership with a focus on web3 gaming and aggressive expansion on the ground expansion in the Asian regions specifically Southeast Asia so this has been a tremendous uh pivot I guess in terms of you know mid to long term strategy for us because this is I think we feel is representative of the current trends and upcoming Trends both from a macro perspective and from an industry perspective as well so I won't be talking about rwas or anything today again because I'm sure today and tomorrow other people will be doing that for me but again just wanted to speak about something a little bit more practical because sustainability is something that we're all concerned about right and there are a lot of attempts in terms of achieving sustainability uh be it you know tokenomics be it BuyBacks be it you know creating uh you know a new feature that you know the community has been asking for But ultimately and this is um a uh you know I'm not gonna use specifically the p word the dirty word price but I think we've we're at a point in time where we understand that value accrual for your native token is a key performance indicator token value has become a I guess if you will an indicator of a healthy ecosystem but there are a lot of bottlenecks um from a foundation and from a project perspective to actually directly uh address that be it like regulatory uh you know risks uh be it narrative risks is back in 2017 2018 I think everyone had that mentality where if you build it they will come but we're definitely not there anymore I think uh the landscape has changed and evolved a lot and uh a key aspect again to bringing in new users new Builders to your ecosystem is going to be that tangible value creation aspect so I just wanted to put the kind of key message up first and forth foremost at the beginning of the presentation which is that it doesn't one entity cannot create or you know establish value of cruel aspects to an ecosystem it has to be a holistic collaborative uh approach so what we announced back in career during career blockchain week and announcing again today is that the Clinton foundation will work together with ecosystem contributors and participants to facilitate value creation for specifically our utility token and how we're going to do this well um so I think again going back to my earlier point I think we're all in agreement you know we create the latest and great best features um but the thing is no matter like you know no matter the real world developments no matter the amount of growth it's you know because the crypto industry itself um besides the traditional Financial Legacy I don't think there's any other uh end user-oriented industry where we're so highly affected by external market conditions right so again besides all the building we're doing because the market influences maintaining that achieving that sustainability is really difficult now this is your typical quote-unquote web free virtual cycle this is pretty much representative of every token economy out there be it a layer one layer two or a project so you have your participaters you have your contributors and then making all that drive and move and work is your incentives but the thing is with incentives and we saw this in p2e games right we saw this in I don't want to name any specific projects or protocols but we saw how that p2e aspect wasn't sustainable because ultimately that value a cruel aspect for the specific p2e token was not maintainable was not sustainable so value accruing incentives are vital for this to work but then how do you again maintain value accrual how do you facilitate value crawl now taking a step back in looking at your typical kind of token economy uh so this is you know your typical kind of utility token uh you know uh overview so you have your demand side for the utility token which is normally the gas fee and then you have Supply which is the incentive mechanism so for your validators for your contributors and so on now what does a sustainable uh you know uh tokenomic token economy look like and this is probably a model that everybody agrees to it's kind of like in a standard deflationary approach so from a demand perspective if there's more demand than Supply that's a good thing right and from a scarcity perspective if there's more tokens being burnt and minted that's also a good thing so this is your typical kind of like you know ideal scenario for a token economy but how do you achieve this once scarcity goes up once demand goes up value goes up of course and once that value does go up that becomes the motivation layer for all your ecosystem participants this is the case regardless whether a project has its own token or not ultimately as long as that if the native layer 1 or layer 2 utility token does not continue accruing value that affects the entire ecosystem so creating value for the native token becomes that motivation layer for participants be it you know the governor's uh Governors uh players dapps infrastructure Builders and so on and so forth so like I said this value cruel this was up until no like I guess like uh you know providing you some context on how why you know on how we approached this issue um but yeah I mean at the end of the day this isn't something a single entity can achieve we we're the foundation for the clean uh layer one blockchain but the value creation isn't something that we could do ourselves so it's a holistic challenge but this is a quick kind of like snapshot of where we are in terms of the clay tokens so approximately there are around 550 new clay 550 000 new clay tokens being minted by block rewards and also 276 000 clay uh tokens uh being uh entering the ecosystem as intense incentives for uh validators in terms of gas usage only around five thousand seven hundred uh clay tokens are being burnt through gas uses and it's not because we don't have the transactions on average we're uh on average I think we're um around at around 5 400 to 500 transactions a day which makes us a really competitive and active blockchain but despite that regardless the gas fees being burnt are still only one percent of the new daily block Rewards so how do we achieve deflationary a deflationary token economy in this kind of environment in this kind of landscape I mean there's so much you can do you can reduce reduce block rewards but what happens when you reduce block rewards that affects uh the incentives that validators have because it's expensive running you know a node right um and it also affects the API for stakers so there is this is there's a limitation as to you know what you can do from a protocol level to achieve deflationary token economics so this is your kind of typical uh web 3 economy you have uh you know your core team and in most cases your core team will be using your token treasury as resources to maintain the chain to develop to build and so on and so forth and then you have your protocols and projects been building on top of your layer and normally that's actually funded by the ecosystem Grant so all of this is based on a token economy right so and then you know hopefully your businesses will continue uh the the businesses the protocols the projects on the Chain will continue growing and with that growth they will you know see revenue streams and as they see more revenue streams that means more users are being on boarded with more users being on Border that's more transactions and that is contributing to the Daily bone of clay via gas fees but at the end of the day what does this actually do for the native token in terms of value accrual to be honest not much not much but you can see all these project teams that are seeing success because of your chain and because of your native token holders and because of the end users that were onboarded because of that layer one or Layer Two so ultimately what we would like to see is uh an evolution of that typical web through virtual cycle where protocols and projects uh you know not only just build on top of your layer one layer two but they actually contribute to the value creation around the native token by sharing their revenue streams so recently we've seen you know chains like Phantom and other chains exploring uh the distribution of gas to project uh project teams as a form of uh uh as a as an incentive but this is actually the opposite right so instead of sharing and distributing a portion of the gas fees as an incentives to project teams what we're asking project teams to do is to actually leverage a portion of the revenue to contribute to the burning of our native token and why do this well we need an interest alignment we need an alignment around incentives in order to motivate our projects to actually contribute and participate in this so there are various ways that clay uh the token our native token can be used as utility so from a D5 perspective you have your staking uh from you know rwa tokenization initiatives you have your transaction fees and so on and so forth um but again going back the reason why we want our projects to kind of contribute to this uh uh you know uh initiative it's there's so much you can do at a protocol level sure we could you know introduce a hardcat maximum Supply I have a periodic halving mechanism and built-in and so on but again there's there's a limit to this so the reason why we're asking clean projects to participate by uh you know using a portion of the revenues to contribute to the value accrual of the clay token is in order for the clean ecosystem to really Thrive and to be to achieve sustainability we need to be able to secure that value accrual for the native token and this is this is something that not many people like discussing and it's very rare you'll see a foundation or a core team discuss token value But ultimately I think we're in a position where we understand going back to my earlier point that token value has now become a key performance indicator of a healthy ecosystem so we've been able to speak with a lot of projects on claim and I can tell you we've launched back in 2019 and we've seen a lot of projects that have found great success a lot of success thanks to the clean chain and its economy and so we actually went around and spoke to a lot of these projects so well so this is some of the conversations that we've had with uh some of our products for example we have the Oracle Network which is a native or an oracle protocol on Clayton and what they've agreed to do is to burn 50 of their fees that are earned via the Oracle protocol and these fees are of course uh via the clay token and Clay swap which has been consistently one of the top defy protocols in this space overall so consistently in the top 10 according to defilemma in terms of our on-chain trading volume also tvl they will they have agreed to use a portion of the transaction fees to actually burn help burn clay and super walk um so one of probably the most uh Premier like prominent uh m2e protocols out there uh they have a combined user base of over a hundred thousand users they will be using also a portion of the revenues to help burn clay and to find that to achieve that value crew model for the clay native token and of course we have a naming service where domain service they'll be using a portion of their fees to also burn clay as well so why are they doing this again well first and foremost uh you know it's good PR it's a great narrative for the Clayton holders the holders of the clay token and so on so what we're going to be doing is uh we'll be working to actually create a public dashboard that displays the projects that have contributed most to the value accrual of the clay token and the thing is of course you know there's a lot of things that um uh that needs to be done in terms of aligning incentives for projects so besides you know this kind of public dashboard where you know Clay token holders will be able to kind of identify projects that really help contribute to the ecosystem we'll also be making sure that we work with the top contributors to provide what they really need so I I'm I'm assuming you guys understand a lot of projects these days aren't necessarily you know asking for more grants they're not necessarily asking for uh uh you know uh I guess you know tweet supports what they are asking for is the user acquisition support so what we're really good at because we do have we do come from a web Legacy web too background what we're really good at is acquiring users for projects that's our bread and butter so that's how we're going to be helping projects who contribute to our ecosystem we'll be helping them acquire users and more practical stuff so for example during token and career blockchain week we were able to help our projects secure I think it was 50 meteor interviews that's the kind of pragmatic support that project teams are after I mean sure you could give them like a hundred thousand dollar Grand but then you know how are they going to start you know acquiring users because a lot of the time they're Limited in terms of like you know their understanding of growth initiatives and activities so I'm going to wrap up my presentation here uh I've gone a little overtime but again the key takeaway is that you know value accrual uh initiatives and activations for your native token is important it has become a key performance indicator and but that's something that can't be done alone you can't rely on a single entity or a foundation to uh you know create a landscape web facilitation around value creation it's happening it has to be a collaborative effort and we're really happy to announce that Clayton partners and Clayton projects have agreed to uh participate in this initiative so I think I'll end up my talk there if you have any questions come find me at our booth um and otherwise thank you for listening