Nice writeup but ultimately futile due to failure to address core principles:

1) Tokens as companies are irrelevant because there is no legal framework underlying the "token corporation". No legal framework means no objective, or at least consistent, means to address active malfeasance or remedy accidental harm or to accomplish any other goal outside of rug pulls/self enrichment by founders.

2) Tokens as countries is even worse. Countries by definition have sovereign power. If corporation tokens lack an entire governance structure, then it is infinitely worse for tokens as countries.

How many divisions does any given "token as a country" have?

And tokens have nowhere remotely the number of believers as the Pope...

I also wonder at the failure to at least address CBDCs: if the CBDC is the sovereign equivalent of cryptocurrency, it seems likely that the moat expected of non-cryptocurrency tokens - whether corporate or sovereign - is similarly nonexistent.

This in turn brings up the question if there is any point to any tokens of significant, long term value whatsoever. No token is ever going to be able to compete with even a moderately sized sovereign nation and its legislative, law enforcement, financial and military power.

Expand full comment

I disagree with protocol as companies.

I think protocol are defining rulesets / logic blocks where things could be built on top of. It an interface. It can be governed by a company (DAO), but it is not inherently a company. The Internet is a protocol, but it is not a company. Companies are built on top of protocols.

Tokens are too flexible of a product to be put into any product. It can be a voting instrument (DAO), a currency (stablecoin), etc. It's simply too broad and the use case of the token matters (utility, store of value, etc.)

Expand full comment

Thanks 🙏🏻 very comprehensive. A pleasure to read!

Expand full comment

Loved this given most people bought tokens over the few years not knowing why they were supposed to go up in value besides "I'm speculating early on a thing more people will speculate later on". This should help people evaluate ecosystems and tokens more intelligently. I wonder:

Will people need to know/truly care about Tokenomics when they join? Or will it be like software Terms of Service which nobody reads and nobody cares about unless they are directly, visibly, and negatively impacted? Perhaps this manifests more in the user's day to day than in them pre-reading the actual whitepaper - "wait a minute, why can't I do xyz? I'm out of here."

Growing pains vs. irrefutable proof of failure is a good reminder. Terra launched in April of 2019. Failed in May of 2022. Things are just moving quicker and with much more scrutiny than ever. Also means quicker build-succeed-fail cycle will lead to sustainability (if possible) more quickly.

The fact that we're talking about things with monetary value does change the gravity of negative outcomes. What do I lose if people leave my Instagram economy/ecosystem and it fails? The big influencers need to find a new platform to make money, but the 95% that don't make money are fine. They lost a whole lot less than the 95% lost in Terra. Money is arguably the asset that is hardest to rebuild if something fails and you lose all of it, vs reputation that you can hopefully port over. Does that mean you need to constantly be hedging your exposure to your main digital economy?

Expand full comment