You may have guessed from the title that creating a successful token ecosystem is hardly like baking a cake. There isn’t a step-by-step recipe to follow, after which point your ecosystem is golden brown and ready to take out of the oven. A tokenized ecosystem has to be built over time, and in order to be successful, it requires the continued and growing participation of its community.
Tokenization is, in fact, the main aspect of blockchain technology that enables the transfer of value over cyberspace. Tokens create the liquidity and fluidity needed to connect products and services over geographies while breaking barriers of compatibility. Yuri Lobyntsev, Co-founder and CTO at Cindicator – a fintech company using Hybrid Intelligence to provide predictive analytics and insights to businesses – is something of an expert in this area.
Yuri describes himself as “passionate about revolutionary ideas, deep psychology, and explorations beyond rational limits,” and his company aims to actively expand on the scientific community around their infrastructure. Cindicator provides others with access to their work and technologies so that community members can act together to solve important and relevant problems. Here’s what he had to say:
What Makes Up an Economy?
When asked what it takes to create a successful token ecosystem, Yuri says:
First of all, it’s important to do a detailed analysis of the elements that make up the economy.
There are several key parts:
- The community and its segments
- Their problems and values
- Solutions, products, and technologies
Meanwhile, the most fundamental processes in any economy are:
- Creating products and technologies
- Distributing products
- Using products to fulfill needs
A token economy decentralizes every process by adding circular value mechanisms that keep the value within the economy. Every decentralized system evolves from its centralized core. At first, you need to work with every key process as if it was a part of a highly stable centralized system, and gradually introduce different mechanisms for circulating value within the community.
The Circulation of Value
In a successful tokenized ecosystem, the community needs to be active and growing. Incentives or tokens are key in this regard. “A utility token should incentivize the community, which is already decentralized, to get involved in key processes,” Yuri explains. “The decentralization of the fundamental processes increases as the community becomes more and more involved in these processes.”
At its core, the simplest action within the economy is product distribution, and it’s the most common element that most network organizations share.
“For example,” Yuri explains, “CND tokens provide access to Cindicator’s products. Token holders’ wealth is directly tied to the value of tokens and the success of the community’s mission. They have skin in the game, to use Nassim Taleb’s terms. This means that they will take actions to support the community (spreading good news, for example), whether they do it consciously or subconsciously.”
Decentralization One Step Further
Yuri’s faith in the tokenized ecosystem expands beyond the interaction of products and services, and the circulation of value within the economy. He says, “The process of creating products could also be decentralized. The idea is to get the community involved in making the product. For example, in the Cindicator’s ecosystem, thousands of independent analysts around the world and dozens of machine learning models together create predictive analytics. Analysts are already incentivized directly (getting rewards for correct predictions) and indirectly (increasing the reward pool by creating successful products).”
And in which direction will the tokenized ecosystem grow? “Eventually, the community should use the same utility token to use the products and benefit from value that it generates. This completes the circle of value within the economy.” And that’s when you get to take your cake out of the oven.