In the blockchain industry tokenomics refers to the design decisions used to create a digital token’s distribution, utility, value, and economic model.
A token refers to a privately issued crypto asset. Blockchain and smart contracts have enabled the creation of new types of business entities that raise capital through the issuance of tokens. Native tokens allow these businesses to set terms and rules around operations and transactions creating self-contained mini-economies. Tokenomics can be described as the study of these token economies.
The BNC Pro portfolio solution
On November 4th Brave New Coin will launch the BNC Token via an IEO on the Liquid exchange. The price of 1 BNC token is US$1 in the IEO.
The BNC Token’s utility comes from its use as a payment mechanism in BNC Pro - a best-in-class portfolio management solution that integrates a user’s portfolio and trading data with Brave New Coin’s suite of institutional-grade data, analysis, and research tools.
BNC Pro has been built with a unique set of transaction and operation rules designed to incentivize product usage and utilize the advantages of blockchain-based token payments. These include microtransactions, smartdrops, and programmability so that new utility can be built into the token as the BNC Pro platform evolves.
BNC Pro reporting view
BNC Pro operates on a freemium model. Anyone can sign up to the platform and a range of portfolio features are free to use at launch.
Access to premium features is unlocked using the BNC Token. The token acts as a Digital-Software-License that enables pay-as-you-go micro-transactions so the user only pays for what they use.
BNC Tokenomics
BNC tokens are built as ERC-20 smart contracts that are powered by the Ethereum blockchain. BNC tokens can be thought of as layer 2 tokens, with the Ethereum blockchain’s native token, Ether, being a layer 1 token.
While the Ethereum network has had historical issues with network congestion, it remains the ecosystem’s flagship platform blockchain. It has a large, vibrant developer community and has strong network effects i.e. growing infrastructure, hardware wallet support for ERC-20 tokens, and an aggressive roadmap.
Author of The Business Blockchain, William Mougayar has written extensively on the subject of tokenomics and provides a framework to assess the functionality and value proposition for newly created mini-economy tokens.
The BNC token fulfills a number of these roles:
- The BNC Token bestows a right to holders that materializes in product usage - The BNC Token can be redeemed for premium features such as the Newsfeed and advanced charting tools.
- The BNC Token works as a value exchange between the product and early users. BNC Pro has utilized a smartdrop campaign. Early users are incentivized to interact with, test and learn more about BNC Pro to access future token drop events.
- The BNC Token is the BNC Pro ecosystem currency. Each BNC Pro account operates as a unique Ethereum address. Users can track their individual transactions (when purchasing premium features, for example) under the billing and usage tab of their BNC Pro account.
Designing a token is not a straightforward task. Logical decisions need to be made as to how the token will drive usage, derive utility, and create value within its product ecosystem.
For example, the BNC Token is a transferable Digital-Software-License that enables pay-as-you-go micro-transactions - so users only pay for what they use. This model gives the token direct utility within an existing product set as BNC Pro is currently in Beta mode with a public launch planned for mid-November.
Utility guarantees value
The BNC Token is unique compared to other utility tokens in that it will always deliver BNC Pro services at either its market value or US$1 - whichever is the greater.
For example, if the current market value of the BNC Token is US$1.50, then it will deliver access to US$1.50 worth of services on BNC Pro. However, If the market value of the BNC token falls to US$0.50, it will still deliver US$1.00 worth of services on BNC Pro. This means the utility of the BNC token on BNC Pro will never fall below one dollar - no matter if it is trading at less than that on exchanges.
Once tokens are purchased as part of the Liquid IEO, the holders of the newly acquired tokens can freely exchange the license between counterparties and then deposit tokens onto the platform, if they so choose to, and activate premium features within it.
This model creates liquidity for token holders. A user may choose to use a premium feature (this is treated as a software license) and use the BNC Token to activate this. If they feel they no longer wish to use the premium features, they can simply withdraw the tokens out of BNC Pro and sell them on a secondary market such as an exchange.
If the user wishes to renew a subscription for a BNC Pro service they can simply repurchase tokens from the exchange or buy them within the BNC Pro platform.
Token distribution
Following the completion of the BNC Token IEO - BNC Pro ‘Digital-Software-Licenses’ become tradeable and liquid, giving the product and token utility and value.
The proceeds of the token sale will be allocated as follows:
Source: BNC Token whitepaper
What will likely be of most interest to prospective BNC Token users is the 49% allocation towards research and development. BNC Pro launches as the flagship application of Brave New Coin. Brave New Coin, is a New Zealand based data and research company focused on the blockchain and cryptographic assets industry, established in 2014.
Brave New Coin has spent five years building the most comprehensive, robust, compliant and scalable “Crypto Data Engine™”. This engine provides customized indices, global price discovery (reference rates, spot prices), aggregated market data, news, sentiment analysis, and token analytics to some of the world’s largest financial institutions and brands including NASDAQ, TP ICAP, Refinitiv (Thomson Reuters), Amazon Alexa, Dow Jones Factiva, BarChart, Empiricus and TradingView.
BNC Pro has many new products set to launch in 2020 that leverage Brave New Coin’s data and research including an asset screener tool that utilizes the BNC Digital Asset Taxonomy, a blockchain analytics product designed to let traders make investment decisions based on fundamental on-chain insights, and a tradeable basket index solution.
To participate in the BNC Token IEO sign up for an account at Liquid.
To register your interest in BNC Pro join the wait-list.
More information on the BNC Token is available in the whitepaper.