Tribes are an incredibly powerful tool for building community, but they haven't reached their full potential. It's time for us to focus on leveling up Tribes and putting more utility in the hands of Tribes.

In order for currencies to function they need a faucet where tokens are released and sinks/use cases where they are removed from circulation. The faucet is the first problem to solve, but it's not the critical problem. The central question of tokenomics is "what value do these tokens have?"

The best tool in the toolbox for giving utility to fungible tokens is allowing them to purchase NFTs. Most people are only focused on the ownership ability of tokens, but the real magic is combining ownership with authority. If you own this NFT then you can XXXX. It'll be up to NFT creators to figure out all of what's possible with the NFTs they create, but I'm convinced that the ultimate power of tokens will be in the authority of NFTs.

Fortunately, removing fungible tokens from supply by minting NFTs is a great way to drive scarcity of the fungible token and send your token to the moon. That should also attract new people too it in a virtuous cycle.

So, Tribes 2.0 is going to have a heavy focus on NFTs. But before we get there let's do a quick Tokenomics 101.

The Faucet

When you first create a token you have to figure out the initial distribution. Here are some common buckets where people will place their initial supply.

Founders
Team Members
Reserves
Token Sales
Marketing
Bounties
Operational Expenses
Airdrops/Claimdrops

After you have distributed the initial supply which can happen by manual or automated transfer you have to consider ongoing distribution. To do this you setup a token inflation pool and then have to figure out where the rest of that will go.

Liquidity rewards
Marketing
Slush Funds
Proof of Brain
Proof of Stake
Team Members
Mining Rewards
Decentralized Funds
Witness/Role Rewards
Operational
Ongoing Airdrops and Claimdrops

There's more options that exist, but in general, you have to set a token inflation and then figure out which buckets that inflation is going to go.

I've listed many of the the main components of token inflation. There are bad plans at the extremes like "as the founder I'm keeping 99% of the supply," but in the middle there really aren't right or wrong answers of how to distribute ongoing inflation. The question of how to distribute tokens is more like "What do we value, and what's our best way to grow?" There's a lot of healthy answers possible and it'll take experimentation to find out what works best at a given time. I expect what works best will change over time so just cause you have a plan today doesn't mean that's the best way to do it a year from today.

So, the good news is that distributing tokens via Hive-Engine is fairly straight forward. There's some improvements coming, but generally it's working.

Future Improvements Include
Smart Contract Smart Media Tokens (March)
User (non-developer) facing Airdrop and Claim Drop smart contract forms (March/April)

Now that we've gotten token distribution working pretty well we now have to focus on Token Sinks and Use Cases. From a token creators perspective on how to design a good economy attention should be paid to having good sinks and use cases. Sinks and use cases are 90% of the tokenomics problem to solve.

What counts as a Sink? Burning tokens

True sinks are irreversible. The only way to remove a token permanently from circulation is to burn it. So, as we're all thinking about the next level of token design it's critical to get token burning into them.

When do tokens get burned?

When the token issuer provides a good or service this is an excellent time to burn tokens. For example if your website has ads then it's great for the whole ecosystem if you're burning tokens for payments rather than simply accepting them as payment. This is ultimately always the choice of the token creator or others in the ecosystem, but where there's flexibility to provide automated services it's usually great to build in token burning.

This is in contrast to selling something like a framed piece of art. That art and frame have costs associated with them and if you're burning tokens for that service you'll likely be eating away at your working cash.

It's better to leave token burning as a fee for providing automated services. I tend to think it's better to do infrequent larger burns for enterprise level customers than frequent little burns for regular users.

One time to consider little burns is when the burn is optional. This can happen with NFTs and I'll explain that shortly.

Another place to consider the token burning mechanism is when impacting governance. If you're allowing any variables to change within the system then requiring a burn fee be paid is a good place to sneak in a burn.

Use Cases: reversible absorption of tokens from the liquid supply or trading

When we're thinking about Use Cases the first thing that pops into our head should be staking. The second is transacting. Staking can happen in a few ways. It can power proof of brain. It can enable Diesel Pools or liquidity pools. Staking can enable voting on decentralized funding. It could be used to calculate discount percentages on fees for services. There's many ways to bake in staking into the utility of your token.

One thing to note though is that if you're staking then you can likely unstake. That's what makes staking reversible and why it's a use case rather than a sink.

Another thing to consider for use cases is trading. If people are transacting with your currency then they may be leaving some liquid in order to buy/sell/trade goods and services. Having tokens tied up in commerce is a pretty good use case too.

What's the best tool in our toolbox for sinks and use cases? NFTS!!!

So, here's the thing. You can inflate the token supply and then when you're trying to figure out how to reduce the token supply we need to place to put all those tokens. NFTs are great. You could mint the NFTs and require fungible tokens be put into the NFTs. You could burn fungible tokens when purchasing NFTs. NFTs can power services or allow new ways to earn or interact. These things are powerful!

Tribe 2.0

We're in the process of making an upgrade to Tribe websites. The new one will be NFT enabled. You'll have a page to list "official" tribe NFTs, a page where community members can issue NFTs, and a marketplace where community NFTs can be traded.

Fees on the backend for NFT creation will require BEE, but Tribes can allow users to issue NFTs in exchange for their Tribe token. Hive-Engine requires 0.001 BEE/NFT if it has 3 or fewer properties. If there are more properties then there's an additional 0.001 BEE/NFT cost for each additional property. That said, the Tribe could charge whatever they want for the minting service. Presumably it's enough to cover the cost of the BEE and a little bit more for a profit on the NFT creation.

Every tribe becomes it's own specialty market!

You have a cat tribe. You issue sacred cat NFTs. You allow the community to use your cat token to make cat related NFTs in addition to the official ones. People get to trade cat poetry, art, music, moments, videos, recipes, services, and whatever else they want for Cat tokens.

Over time those Cat tokens and Cat NFTs can develop special powers like giving you status, getting you more rewards, getting you special access content, or reduce the cost for the goods and services you love.

What's the timeline?

Well, I'm hoping that we'll have a lot of this done by the end of March so that we can launch a Tribes 2.0 alpha. Other features include better sign up, blogging, Tribe Dex, and more.

What's the cost?

For new Tribes I'm planning on Tribes 2.0 to cost 5000 BEE. Tribes 1.0 will still be an option, so if users don't want the NFT enabled site they can start or be ok with the Tribe 1.0. If existing tribe owners want to upgrade I'll consider discounting the 5000 BEE between 1000 and 2500 BEE.

I expect there's an ongoing cost associated with this too in the form of minimal BEE costs added to NFT creation to cover ongoing server costs associated with hosting the server. I plan ultimately (though maybe not initially) to allow tribes to self host, which would negate the ongoing BEE fee.

Ok, look this was long... what the shit did you just say?

Tribe 2.0. 1-2 months away. Use your tribe token to mint and sell NFTs officially and/or by the community. It's more expensive, but a lot more powerful (also optional to upgrade).

Aggroed you're a selfish bastard. You should just pay all the costs for tribes and give them out for free.

I have developers and server costs galore. I'm not in a position to just give out free stuff. If you think there's a cheaper website out there that can use your custom token to mint your custom NFTs and have that happen quickly then by all means use that. These are my terms.

I continue to think the services that we provide which are growing every week provide substantial benefit well in excess of the BEE we charge.

Support our work

If you're not interested in creating a tribe just yet then please consider:

Buying BEE, WORKERBEE, FARM FARMER, and MYTHICAL FARM tokens
Building a diesel poool
creating a token
Promoting websites
Trading Tokens
Voting witnesses of the various people involved

Helping to shill the whole thing.

Thanks for your help and support and I look forward to bringing NFT enabled Tribes in a a Version 2 soon(TM).