Original author: Asher, Co-founder of Pure.cash Labs
Current mainstream token economics is on the wrong track
In the endless token unlocking, this market stage has unfortunately become the “worst bull market ever”: the price of Bitcoin has returned to its previous high, but most tokens are continuing to fall. In my opinion, the continued downturn of the entire cryptocurrency, especially the decline of DeFi, is rooted in the fact that the current development model of the project has clearly deviated from the core spirit of the blockchain. At present, most infrastructure projects in the industry are on the wrong path.
Venture capitalists see Web3 as a market for making huge profits, resulting in a massive influx of capital. However, in addition to the endless unlocking of tokens, have they really brought revolutionary innovations to the industry? Although Bitcoin and Ethereum were developed without the participation of venture capital, they have made pioneering contributions to the blockchain industry and continue to dominate most of the value of the crypto market.
Even if we take a step back and think about whether VC can really endorse a project, the answer is still disappointing. The last bear market witnessed two major failures: LUNA and FTX. Both projects were supported by many top VCs, but ultimately failed, dealing a heavy blow to the industry.
Since Bitcoin pioneered the industry, fewer and fewer people have adhered to the principle of “don’t trust, verify”. The industry has gradually fallen into the dominance of capital, and the core spirit of decentralization has been forgotten. The cost of this forgetfulness is huge, because the mission of decentralization – to create a new financial system and perhaps even a new world – supports the value of the entire industry. This also explains why Bitcoin still accounts for more than half of the cryptocurrency market value without venture capital support and anonymous founders. This also highlights the failure of thousands of projects established by capital.
Another key reason why the industry is currently struggling is the lack of real innovation. Due to the lack of innovation, venture capital support is not only valuable, but also crucial, because there are few other criteria to evaluate these projects. In addition, with venture capital support, projects can quickly attract market hype and cash out, causing many founders to become impatient and resort to practices such as collusion and exaggerated funding requirements. This environment makes it difficult for true innovators to gain support or attention. When the entire crypto industry lacks innovation, the situation described at the beginning of this article will be inevitable. This is like a self-reinforcing “death spiral” that drags the crypto industry to an irreversible point.
When project owners and VCs can easily make huge profits by just selling tokens, no one has the patience to pursue real innovation – until this premise gradually becomes untenable. Now the industry has reached this stage, and users have also realized this. Everyone is playing an open card, and the only thing missing is the arrival of a real revolution.
The problem is not the capital itself, but the way it enters
Bitcoin has created a truly decentralized network that is open and fair to everyone, allowing equal participation. Since its inception, it has attracted a huge influx of talent and capital. So, how have venture capital firms participated in the growth of Bitcoin? The answer is simple: by investing in industries related to its token economics and ecology, such as mining equipment, operations, trading platforms, payment platforms, etc. Now, imagine if Satoshi Nakamoto pre-allocated 20% of Bitcoin to himself, 20% to the foundation, and another 20% to venture capital firms – would Bitcoin still attract such a diverse range of talent and capital? Would it have grown to the scale we see today?
By briefly reviewing the development of Bitcoin, I have summarized the following core points:
Founding teams of infrastructure projects should design token economics that are open and fair to everyone;
VCs should leverage their research capabilities to invest early in areas related to the token economics or ecosystem applications of these infrastructure projects;
VCs should directly sponsor promising infrastructure projects, thereby demonstrating their responsibility for industry development and gaining more market information and opportunities in the process.
As more of these projects come to market, VCs that adapt to this new mindset early on will benefit from the next wave of industry growth. In contrast, VCs that continue to invest heavily in infrastructure projects using outdated methods will find it increasingly difficult to break even.
Pure.cash revolutionizes token economics
Bitcoin’s mining mechanism allows everyone to participate fairly, wins widespread trust, and continuously fosters a thriving ecosystem. In today’s crypto projects, airdrops have become a more common method to attract early users. However, most of these projects only distribute a small portion of the airdrop to the community, which seriously deviates from the core spirit of blockchain and is one of the main reasons for the current plight of the industry.
Pure.cash is an innovative protocol that provides a fully decentralized, delta-neutral stablecoin with integrated long-only perpetual futures, built on Ethereum. By introducing a new token economics model where 100% of tokens are airdropped to the community at once, while tokens are burned continuously, it aims to be a turning point in returning the crypto industry to its original mission. To learn more about the principles behind Pure.cash, visitThe Path to the Holy Grail: Solving the Stablecoin Trilemma。
PURE tokens will be distributed to the community through the Genesis Airdrop, and no share will be reserved for the founding team or venture capital firms. The protocol developer Pure.cash Labs will receive 20% of the platform’s fee income, ensuring that all community users can participate fairly while providing sustainable development incentives for the protocol. The remaining 80% of the fees will be allocated to LPs, the PURE destruction pool, and $PUSD application scenarios.
Reverse Release Model
The Reverse Issuance Model (RIM) is an innovative deflationary model introduced by Pure.cash. The main feature of this model is that the maximum supply is reached at the Token Generation Event (TGE), after which tokens are continuously destroyed and new tokens cannot be minted. This ensures that the circulating supply of tokens issued under this model can only decrease over time.
Fixed price destruction mechanism
Fixed Price Burning (FPB) is a breakthrough solution launched by Pure.cash to address the challenge of token empowerment in current DeFi projects. Pure.cash sets a fixed burn price (adjustable through DAO) and continuously injects protocol revenue (35% of total transaction fees) into the burn pool. This mechanism allows anyone to burn $PURE and receive assets from the pool at a fixed burn price.
FPB is implemented entirely through on-chain smart contracts. It is worth noting that the special feature of this mechanism is that it not only continuously reduces the token supply through destruction, but also acts as a floor price buffer.
in conclusion
In summary, Pure.cash proposes a revolutionary approach to token economics by embracing the core principles of fairness and decentralization. By ensuring that 100% of tokens are airdropped to the community and introducing innovative mechanisms such as reverse issuance and fixed price destruction, Pure.cash not only addresses the shortcomings of current crypto projects, but also sets a new standard for the industry. This model may well become the catalyst for the long-awaited revolution in the crypto space, shifting the focus back to real innovation and sustainable growth.
This article is from a contribution and does not represent the views of BlockBeats
