Tokens are the exchange medium required for trading and business operations on the blockchain platform, either through protocol design or by providing greater convenience than other currencies. In fact, contrary to ordinary belief, most “use tokens” issued through 1CO are not “company vouchers”. They are not used to redeem the products or services of the issuing company, but rather to obtain products or services from other blockchain users. Required payment method.
The benefit of using such tokens is to increase the size of the blockchain user base. As a result, the token price reflects the future growth of the community, and if the expected user base grows stronger, the price will become higher. To take a step back, when platform technology is expected to improve and attract more agents to join the community, the appreciation of the token price is expected to allow the agent to make decisions to join the community and hold the currency.
Therefore, the existence of tokens as a primary currency not only satisfies the technical purpose of the participants, but more importantly, it promotes the growth of the user base through agents' expectations for future technological advances, more users and higher token prices. The feature of model balancing is that the user base is complementary in time – it is expected that more users will drive the growth of more users today.
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Nevertheless, under the condition of the usual continuous time formula, there is still a unique non-degenerate Markov equilibrium. We focus on the first study of Markov equilibrium and the agent's decision to hold tokens. (Blue Fox Note: Markov Perfect Equilibrium does not depend on historical paths, has no memory specificity, and decision-making mainly depends on current relevant state variables. For example, when a company conducts product or service pricing, it does not consider historical price information, only Consider the current price of other competitors and make the best choice. The set of pricing formed by this method can be regarded as Markov perfect equilibrium.)
Token market pricing conditions provide a token price formula, which usually increases the size of the blockchain user base—the larger the ecosystem, the higher the transaction surplus that individual participants can hold for tokens. From the perspective of asset pricing, this model is the first to provide a theoretical basis for the user's valuation base ratio. This approach is typically used in the technology industry, especially for companies based on user network effects.
The token pricing consensus indicates the existence of Markov equilibrium, and blockchain productivity is the only aggregated state variable. Please note that the pooled wealth is not a state variable of convergence, because we do not liquidate the commodity market. This is consistent with many 1CO fixed token supplies.
Please note that agents may cause negative consumption, and for them, they can transfer wealth at any time with storage technology. These assumptions are reasonable because the token market accounts for a relatively small proportion of the economy. Almost anything happening in the cryptocurrency market has little material impact on the total consumption and pricing core (also known as the random discount factor, which is a random variable that satisfies the function used to calculate asset prices.)
The state variables of the Markov equilibrium are described by the choice of the agent and the stochastic process of the token price in the filtering probability space. It describes "process history over time, which is generated by Brownian motion, such that (1) the agent understands and adopts the process of a given token price; (2) the agent prioritizes consumption and savings (investment tokens and stores); 3) Adjust the token price to clear the token market to achieve the equilibrium price; (4) All variables are functions of state variables, which follow the autonomous law of motion. The equilibrium found in the token pricing model is continuous and smooth. The space is unique.
Consider that the token price at time t is positive. In the case where the price path is not restricted, the agent can coordinate the token price equal to 0 at t+dt, after which the agent can re-align the positive token price. Conversely, in the case where the continuous price path is restricted, as long as the initial token price is positive, we have a unique, non-degraded equilibrium with a positive token price, and once the current token price dynamics are given, The size of the community can be determined.
Therefore, the token price is related to the stage of platform adoption. On the logarithmic scale, the price of tokens grows rapidly in the early stages, and then gradually increases as the user base grows. However, when the system accumulates a certain number of users, the price of tokens accelerates and converges to its long-term gradual Nearline. This dynamic is similar in quality to bitcoin and other cryptocurrencies.
In more detail, when blockchain technology is not efficient, the user base that responds to technological advances grows very little. However, as the size of the community expands, the user base grows and self-motivates, and more agents join the ecosystem, and the surplus generated by transactions on the blockchain is higher.
When the number of newcomers is reduced, the user adoption will eventually slow down. In fact, this model does not have the characteristics of population growth. Therefore, when more agents join the ecosystem, when the blockchain productivity increases, fewer new people will be included in the future.
As a result of the above observations, when comparing users who have tokens and items without tokens, it can be found that the former is better than the latter, even if the two eventually converge to one. The introduction of blockchain native tokens can accelerate user adoption, which is the main reason why the first token financing will continue to exist in 2019 and beyond.
Risk Warning : All articles in Blue Fox Notes can not be used as investment suggestions or recommendations . Investment is risky . Investment should consider individual risk tolerance . It is recommended to conduct in-depth inspections of the project and carefully make your own investment decisions.
Editor's Note: The original title is "Token Model: Just Markov Equilibrium"