Hey Casey, what's up?

What's up Sophie? How you doing, man?

Not too much just thought.

Gina crowd here a little bit.

Just getting ready for a tear, is it?

Yeah, why not?

Yeah, why not? Let's do it again.

Nice, right on.

Finished up some work, and just sitting down for a bit quicker. How are you doing?

Your coffee. I'm good. I'm kissy. Kissy imagination.

Good evening from yeah.

What's up, buddy?

OK. Good day.

Yeah, I'm good. I'm good. Yeah, winning I what sort of beast? Beast mode. What's up?

When did you finish any finish any books lately?

Yeah, currently I'm actually reading the book right now.

But not not from the books you actually like. I've recommended I have like a job, so I'm reading some books on marketing by set.

I don't know if you're familiar with marketing books.

Uh not at all.

Ohh.

How the Cadillac got its fans best book.

Oh, there's a book called that.

Yep, how the Cadillac got its finance, says thin book of short stories about companies that were failing until they struck gold on marketing.

Hmm OK.

Yeah, the I'm still largely just thumbing through the rainbow and the worm, which is the physics of organisms.

Complicated Umm, especially when it gets into the math. I haven't done in. I don't know a very long time, most of it straightforward, though.

Mostly cell biology, I'm guessing.

Umm.

No, it gets into kind of like the underpinnings of how physics influences why biological things do what they do so it's a little bit deeper than.

It's it's a more of a base layer more so than just like cell biology or something like that.

Are we talking about like how permeable the cell membranes are to their environment or?

Whoa.

No no even even deeper than that, like sort of why for like.

Uh I don't know how like nature has evolved to utilize.

Physics principles in its creation like you know for energy transfer.

For things like dealing with entropy and.

Uh yeah, just how sort of like matter and energy sort of come together to create that living systems is a little bit more.

Yeah.

My my buddy's friend is a evolutionary biologist, and this sounds very familiar.

Yeah, this is a biophysics book that was recommended by Ethan Buckman, the founder of Cosmos or one of the founders of Cosmos and he modeled some of the ideas of the creation of the.

Like the The Tokenomics for Cosmos chains. Um is somewhat modeled in at least mental ideas that come from like what life does.

Uh.

So I thought it would be an interesting thing because that was his sort of degree.

At an undergraduate level and to some extent, these kinds of influences tend to.

Modify or thinking about how stuff works right.

Not to say that, like the blockchains based on.

Specifically, biological things, although I could argue that maybe it should be so that was kind of a little bit of the discussion about today was kind of might be interesting about delving into.

Uh like token design, I've seen a lot of people.

Most recently discussed token design regarding arguments related to the Luna Classic chain, which kind of.

Uh is sort of in flux. People are trying to decide like what they want and what they want to incentivize and.

I think the way to think about um blockchains is that they're designed.

Is meant to achieve some sort of end point for their creator and?

Their design is meant to.

Meet really just certain goals and a lot of the goals tend to be financial incentives of one sort or the other.

So for example, if you build a system like I don't know a global system for example. That's designed to encourage lending and borrowing then of course, you'll get more lending and borrowing and so like you shouldn't be surprised by that on the other hand, if you have like an inflationary versus deflationary economic model.

Uh for like a country or a currency or whatever you're going to have certain outcomes that are related to those.

Features some of which could be good and which could be bad.

So there's like for example, there's arguments against like a fix.

Fixed monetary world supply for example, UM that the rich will tend to become richer there's also some arguments that.

Um, yeah, there's tons of economic theory. I don't want to kind of go into all of those things, but maybe just kind of cover some questions people might have about.

Um, token design. So like I, I posted a few up top.

Uh, just to kind of like maybe discuss some interesting token designs and why they're designed that way?

Um, and you can begin to see, like, OK, this is sort of like the due diligence you need to be able to like navigate ideas about like maybe what crypto you might like or that might fit your mental model of economic philosophy and things like that.

Where where do I, if I'm looking at that, where do I start to get a grip on the basics? Is it inflationary versus deflationary?

Yeah. So there's a, there's a, there's a number of out. Yeah, there's a lot of different elements. Um, I think there's a lot of different things you can incentivize. First of all, do you want people to incentivize?

Holding a coin, do you want to incentivize lots of transactions on a chain?

Uh, like economic activity? Do you want to incentivize a system that?

Um accrues value overtime? Do you want it just to be a transient store of value? Like for example if I just want to send?

Money from one place to the other, but I don't want to hold the token for example. So that's a different type of model. So you have to think about all these things, kind of information systems, what is the cost to store that information and how long do I want to?

Like, own a piece of that network versus simply transact on a network. Yeah, a lot of different reasons why.

Is it is it appropriate if I say store, exchange or use as if I'm categorizing this, can I does that?

Yeah, it's kind of all the above, I think. Store value, medium of exchange, um, you know, the kind of basic currency functions obviously are there and then the additional features of computational networks or utility of various types, right.

Um, so this is true of metals? This is true of metals too? That's great.

And when we say, when we say you, when we say utility, how do you mean utility is in terms of like using blockchain technology for medical records, data keeping versus currency, is that OK, OK.

Yeah, exactly. So either data collecting or for.

Other interesting properties, ultimately, it's all information. It's it's information stored in a computer system is really what we're talking about, whether it's a centralized or decentralized system. And then, yeah, how do you assign value to those things, like for example, your Gmail account, if anyone here remembers like either the beginning of Internet e-mail or whatever. I think the first one of the first major free Internet e-mail services was Hotmail.

And that got bought by Microsoft at one point. Subsequently, Google Gmail had their beginnings and they gave away e-mail for free. Essentially you could, and then eventually even the cloud storage on there is basically free too. You don't have to pay for storing things on there. And they did that, but they gave away the stuff for free to increase the network value of the Gmail network or, you know, increase their number of users. They used to also do it through portals.

Like if you went to yahoo.com, you know, everyone would get their news on Yahoo and they would get other network effects there. They would buy products there. So.

M.

So, so wait, so that's an example of bypassing the immediate gain in lieu of utility to gather future gain.

Yeah. And and just the idea that e-mail itself is kind of a currency in a sense, because you it has value. But interestingly, you don't pay any taxes on your free e-mail services, even though someone's giving you something, which is interesting too. So think about everything as digital value transfer or digital information transfer and all of those components are worth something. They're worth something to people and cryptocurrency.

The outside of Bitcoin, like anything utility related, is the idea of assigning.

The ability to make a monetary transaction.

With that utility. So um.

So notable examples of utility coins, for example, are.

Things like um D VPN which is a VPN provider.

It's a cosmos coin and you can pay for DMVPN which is a VPN service using their coin and.

You know, that just represents an example of something that has utility you like, why would they use their own coin as opposed to like, I don't know, any other coin like a Bitcoin or just cash or something. They're interested in being decentralized enough that even the payments for their coin, they're not even accepting like regular cash.

They. Why else would they do this? There's also the security function, like like what does it mean to be a security? Like think about a stock. A company issues stocks to raise funds to represent some function of the the value of that company. So many cryptos are securities, in fact.

Most are securities honestly and that's why I like the SEC and whatever get involved, right, because they are, they're just securities where where they're different from securities are like take for example, I don't know.

Or groceries.

AD VPN token you, don't you? Yes when you buy the coin the price of the coin goes up in a sense. And that is good for the coin producer like VPN so they can make, they can sort of sell and dump on you or whatever. But the other thing is that that's different from like Apple stock is you don't use your apple stock to pay for, I don't know, your Apple iCloud account for example, right. Or groceries. So you don't, you don't, right? Or really you don't pay anything on the Apple network with Apple st

Between a traditional security and these kind of quasi security projects, that may be fundraisers on one hand, but they're also a token that does something on the other hand. So this is where like the the line gets blurred between what's a commodity, a security and what is a currency. Because in the traditional world, securities were not used as some sort of medium of exchange, at least not directly, right? You didn't trade your apple stock for Google stock. You sold your Apple stock and then yo

Walker and you didn't buy things on the Apple network using Apple stock as an example. So these are like the difference between these different kind of like forms of value storage and then so you get into sort of different like I'll give you some examples of some different tokenomics and like maybe what.

Why they are the way they are and what makes them interesting. So I think the most obvious basic one is Bitcoin.

It's a fixed supply. How many coins does it matter? 21 million? A billion like the the coin count is irrelevant. It's the total market cap is usually the the the number of coins that are out in the marketplace multiplied by the current price of the coin. That gives you the market cap, which is the total valuation. So you could have Bitcoin could be 210 million coins, it could be 21 million coins, it could have 10 digits after it, it could have you know, any number of like divisions. These things

Ultimately, you know, for whatever meme effect or whatever the hell Satoshi Nakamoto picked 21 million, decided that was going to be the number and that was that. There wasn't, there's not anything particular about 21 million that's better than 20 or 200,000,000 or something like that. So the coin count is not really particularly relevant. Obviously it's supply, demand determines price, let's say. So in in Bitcoins example, it's a fixed supply and the miners are incentivized.

How they're incentivized by basically, uh, acquiring Bitcoin for doing the hashing and securing the network. And they're by securing the network, you're simultaneously, you know, providing hash power, which then ultimately gives you a reward of Bitcoin every once in a while. And as a result, miners are incentivized. And the higher the price of the coin goes, the more incentivized they become, especially if the cost.

To the the price of the coin is higher than the cost to mine, which includes things like expenses like mining devices, electricity, and the deprecation of mining devices as they deteriorate. All of that gets into your expenses. And you know, miners want to make money, so they're incentive miners are incentivized to make money. The individuals are incentivized in that it's a fixed supply coin and that the probability of the value going up over time is substantial because there's no inflation and

And on exchanges and such. And then price just starts to climb because there's none left available. So that's kind of the idea behind like a fixed supply thing. It has certain properties. It's a little bit deflationary too, in the sense that some of the coins are lost in maybe some decimal points of coin or left in wallets or maybe, you know, some people just like have a wallet but they forgot a little bit of Bitcoin in it or whatever, right? So there's some of that just, you know, a little bit

Just to Helter Skelter some people probably have Bitcoin that die they just like lost it like they nobody knows what the the the the keys are. So some of that there is a bit of deflation that occurs due to losses and then but and then it's inflation is limited to the the the hashing rewards which I think right now what are we at now like 19 million Bitcoin or plus something like that and there's 21 million total so we're not that far from the total supply but that remaining total supply will pro

Speed is going to do, but let's say 100 years or something like that, you'll have mind most of it.

And then you know people have argued as you get closer to mining more and more of it, you know is it going to be able to reward the miner sufficiently with enough reward to make sure that they can survive. And there's some debates about that and and you know people are still like thinking about it. So Bitcoin just the most simplest example why. So why then do proof of stake networks and by the way proof of work networks which would be anything copied.

Of.

You know on the Bitcoin model like whether it's like hard forks of Bitcoin, like a Litecoin or a Bitcoin Cash, different block sizes and all this other stuff, most of those are fixed supply coins and with certain sorts of you know, like mining speeds in terms of how many coins are coming into the market per year and they vary in this regard, but they're all very similar in terms of their overall.

Difference and capabilities. Whichever ones have the highest network effect, which means that the number of places that bought you can buy and sell those things, and the number of users it tends to drive price up. Also, you'll notice that like hashing power in proof of proof of work networks increases year over year in networks that are typically growing. You have to imagine that, well, miners are more likely to mine if they feel like they have a market for their coin and if if they don't feel l

Miners will show up and then of course less supply shows up and then of course the price can rise again. So you know, most of the the the proof of work networks have not died off like even people. That said, Ohh, Litecoin is bullshit and Bitcoin's awesome or whatever. The hell most of the networks have actually remained and they continue to this day. They haven't died. So it's interesting. So the proof of networks, proof of work networks basically incentivize miners to basically secure the netwo

Proof of stake networks, UM, which emerged, uh, like, I'm not sure who the exact first one was, but one of the first was J Quan with Cosmos when he first proposed the White Paper, I believe is 2014. Of course some other people sort of.

Got your proof of straight state networks as well, like for example the Cardano Foundation, ADA and a few others. Etherium is not proof of stake in most of the crypto space has gone. The proof of stake route and what a proof of stake network has is a series of validators.

Different arguments have been made as far as like how many validators you should have. If you have too many of them, then what happens is you have too much division of power.

And nobody's vote really counts, you know, in a sense, uh, because the the voters at the top will have typically a large amounts of voting power due to the number of people delegating. And then you'll wind up with too much dilution if you have too many validators. If you have too few validators, it's easy to, like, go one by one and shut them down if someone wanted to shut them down. So there are some like magic numbers where you have these validators and they're paid through inflationary reward

Take for example up at the top here. Luna I believe has like a 12% yield at the moment, which means that when you stake with the validator, the validator is making some money you're making which is in the form of some Commission, let's say you know 5 to 10% of the yield and the other like 95 to to.

You know, 99 ninety, 95% of the yield goes to the the delegator which would be you and you're basically getting you know whatever most of that 12% yield that you're staking yield. Now the staking yield is set up in such a way that the validators make money. They don't have to rely day-to-day on specific amounts of demands of the network. So for example transactions or they don't have to be, they're not getting paid like on a purchase transaction basis necessarily.

There they they can get paid just a fixed amount based on inflation. And there are some math that goes into some of these inflation numbers too. And I don't know all the different nuances between how the different systems are designed, but you can put in some different ideas. Like let's say there's not enough stakers on the atom Cosmos hub. Then you can make it so that the inflation rate is higher so that the people that do state can make actually more rewards compared to those that don't. And t

Available.

Uh, staking rewards go down and the reason you do that is to sort of incentivize the security of the network, meaning you incentivize through yield the more people to stake, OK. And so you might ask, well, well, is it bad to have inflation? Not necessarily. You just don't expect necessarily the top end of price to go as high. You're mitigating some of the fact that you're not making as much because the the coin supply is going up, up and up you. That reduces the potential top.

End of the price, but it also reduces your daily risk because you're getting back yield from as opposed to those that don't stake. So people that do stake let's say on Luna are getting 12% yield. Those that don't stake are having their coins diluted, right. That's a very, that's a very specific.

Elements. So is so those that are just speculating on the price of a coin are not getting yield because they're not staked and they want to be able to sell and buy whenever they feel like it. So that's that's perfectly fine, they can do that. And then those that simply want to stake can get their yield and they are getting a greater proportion of the network over time, especially if they are restating and keeping their yield right. So your proportion of the network as a Staker is rising compared

When you consider that when you're selling your staking yields, you're relinquishing a portion of your network, you're actually your size of your ownership of that network is actually going down. If you sell your staking rewards, in many instances, depending on the rate of inflation versus the rate of the yield, the inflation rate might actually be very close to the yield rate. Meaning that like any, if you don't hold your coins, you're actually losing a fraction of the network compared to the t

You're diluting yourself. Well, well, if you the more coins that are merge, if you don't keep your coins, you are actually being diluted by those that are keeping their coins, if that makes sense. So anyway, there's a.

So you're kind of treading water to some extent with yield. You're not necessarily making any money just because you're earning yield. You're technically speaking in many of these networks, simply treading water and keeping your portion of the network. Hopefully that makes some sense. Now if you think of like Kujira, for example, which is another one I posted up top, they have a system where they're like, well, we don't want to have this much inflation. We want to have very limited inflation. I

Their concept as well, look, the value we'll keep the yield only what is earned on the network. So if there's transactional yield like from fees on the network or you know, other functions of that blockchain, then that yield goes to the coin holder as profit or or like think of it as almost like a dividend, like if you owned a stock because this is transactional income that's coming in and you keep that proportion of the transactional income. That's how Kujira designed it, they designed it.

Because that way so that they don't have to face concern like tokenomics concerns about like ever increasing inflation. But on the flip side, it's like, well, a lot of people don't understand the nature of inflation. So they're like hey, I want high yield. And so they might say see Kujira and say wait there, yields only, you know, one or two or three percent. Why is it so low? Why is Adams yield 19%? Why is the stars yield 60%? Like what? What are these numbers? Why would I take the one with the

It would depend like if you presume all else being equal, the price of all of the coins would go up the same, which is not true right then, which is not necessarily true. Then the the yield that you earn. Yeah, if they all went up equally, then of course the one with the higher you'll be better in theory for you. But, but that's not necessarily the case. Very high inflationary yields will tend to create some downward pressure on price over the long run. We're talking about years they don't, but

We don't really have a very strong role in price action in the short run like for example like if I go and buy, I don't know, let's see, let me think. I think the Huawei Chain, which is the meme coin of the cosmos, HUAHUA, it has a very small supply right now. I think like $20 million worth of like market cap if if I were to go by like $10 million worth of Wawa coin tomorrow. And clearly the price is going to spike a lot and even if the yield is 60%.

Inflationary that spike in price is gonna remain until I decide to sell, because I don't. I would own like half the supply, right? So in that context, even if the yield is high, if you happen to buy early, it's still good for you. Even if it's inflationary, it may not matter in the short term. Price can move a lot regardless of what your tokenomics are. And that should be a very, very important rule for everyone to remember just because you make changes to tokenomics, maybe it burns burning of s

Inflationary or deflationary model? This is something that affects token prices over, you know, years and years, except for the fact that, like tokenomics in crypto tends to have a meme effect also. So people might say, oh, we're going to go buy Luna Classic because there's a burn mechanism.

And they did, by the way. We were able to successfully mummify that to the point where like, you know, billions of dollars showed up and pumped the coin price quite high. And that's because the burn effect, while it's a very, very long term effect, like 5 to 10 years to really make a massive impact on price, people don't realize that. They see the price go up and they're like, oh, look, the burn is working, the burn is working and therefore the price is going up right now because the of the mech

The short term is simply acute supply demand changes where this the demand dramatically increases and the you know the the available supply on exchanges is somewhat limited and the price pumps and everything goes up, right. So. So I would say 95% of price action, I don't care if it's Bitcoin or anything else in the short term is purely supply demand. I would probably mathematically attribute to maybe 5% of the total price action to to the actual token.

Like if you were to make a change like you know anyway any token supply change.

Um, really doesn't materially matter over the long run. But it can make a psychological impact in the sense that, like if you create me a coin that makes a lot of sense from a tokenomics perspective, I might be willing to buy more of it and invest more of my money in it, whether it's a Bitcoin or whatever, right? So the probability that people are going to say, hey, I can trust this with my money because the tokenomics doesn't burn my money away as inflation, then you might find more proponents

Coin um. So that would be like the argument that Kujira has made is that, well, we don't want to inflate away the value. We don't wanna you know, have our supply go really high. We want to keep that under control and we want to pay people with the, the, the revenue from the actual network and pay that out. So there's other mechanisms too that are interesting. You've probably heard of stock buybacks. So stock buybacks are where like for example the the Apple Company.

Is has been noted to do this quite a bit the last 10 years. So Apple, what they do is when they make a ton of money on smartphone sales and people that own Apple stock, you know, you might own a certain number of shares and there's a certain number of shares outstanding out in the public. And those shares represent supply that can be sold right or shorted or anything else. So what the company does is they slowly buy back stock with the revenue from the profits from the sale of smartphones and cl

They make they buy back the shares and that's a different way of returning shareholder value back. That's different than paying dividends or the price of the shares going up, right, or or price of the shares going up immediately from some sort of whatever news or something like that. So long term, the less supply of shares there are, the less diluted or more concentrated the shares become the that there's opportunity for price to go up for that reason. Now that doesn't mean that if Apple suddenl

City phones for five years that your stock is still gonna go up, right?

Supply and everything, the presumption is is that the the supply is going down because they're profitable and that for therefore like is adding to a value accrual mechanism because you're taking shares off the market. Similarly that could be said of crypto if you buy back shares in the form of like a token burn mechanism. I think stars is doing that right now. It's one of the reasons I posted that up here. If you buy an FT's and things and you use their system then during the some of the fees in

Network are Burning Stars token. So what does that mean? It's no different than a stock buyback because it's attached to revenue of the network. So profits are being used to buy and then destroy the Stars token to to improve tokenomics that way. So it's a counterbalance to the inflationary mechanism of the Stars token, which is quite high by the way, the Stars token I think was like maybe 120% inflation. I think now it may be something like 60 something, whatever, I could be wrong. By the way, t

Did they decide to create high inflationary system to start with? Well, the reason they do that in the beginning is one they want to make sure that there's a high incentive for early entrants into that network. They want to make sure that early validators are paid so that a lot of validators are interested in showing up.

It is dilutive to new investors to own, to own the token at the beginning, but at the same time the upside is really high for the token in the beginning as well. So it's more probable that people are going to buy a lot of tokens, get a lot of inflation, but also there's a clean mechanism to pay validators and then they have a system where overtime like the interest rate goes from 120 to 80 to 60, whatever it is and and it keeps dropping. So osmosis does this, stars does this, a variety of tokens

And that is better for the, in particular for the people that were there earlier on. So this is an incentive mechanism designed to help people to hold long term. So you have to ask yourself like what are you trying to incentivize? Are you trying to keep the old users?

From leaving, are you trying to attract new users to arrive using different incentive mechanisms? All of these things have an impact on the the token design of any given coin. And there's also sort of like a lot of philosophical concerns too. And we'll get into that, but maybe we can like get some questions in here. Some people popped up, hey, let me get Enola first, because they're waiting. But Enola, what's up?

Any thoughts or questions on the?

So far I don't know if you're listening.

Hmm. Maybe AFK donkey you there? Hey Donkey, how's it been?

Hey Sir, long time no speak. How you doing? Great to see you up here.

That's right, right. Just chatting about token design and stuff. So any thoughts on all that?

Yeah. No, it's good. It's it's super cool. No happen happy to listen to you and this kind of stuff is you know, I just wanted to add a little bit of perspective. What I see often in there, it's like I think you're right in saying it's inflationary supply, but I personally am struggling to call for example stars inflationary because their tokenomics is not inflationary of stars, right. So they have a finite supply as osmosis, as Juno, not as atom at the moment they and also secret both are truly

Yes.

Perspective could you and stars, there's no difference, right, in terms of they're both finite, it's just that they decided to have a different schedule in terms of decentralization and how much tokens hit the market when right so because.

Yeah. And I think so, Don Donkers clarifying. There's a difference between tokens whose maximum supply is fixed, but there's a distribution schedule that favors early investors versus a token that's infinite supply, which would be something like atom right now where the the number of coins just keeps rising to Infinity over time. And yeah, so there's definitely and then changes can happen theoretically too via governance to some of these kind of mechanisms. So that's another issue with.

You might buy some token thinking that you're it's going to do one thing and then years later via governance, people may change it and it may not favor your thesis. Like maybe you need the yield for some reason or something. And people change that it can change sometimes the way holders of those tokens are going to behave. So it's yeah, definitely yeah there's there's there's a lot of nuance to the way you can release these and and there's different reasons too why you would want.

Different forms of inflation. Do you want to favor the early token holders? Do you wanna, you know whole, you know, do you want to eventually create a fixed supply system so that the price eventually has supply shocks and?

Raises but and then like for example danku, I think you have a validated on osmosis, right? Or do you not?

Yes, Sir. Yes, Sir.

So osmosis has a long term, I believe is a fixed supply, correct?

Uh, yes. Well, they are doing certain things every year.

Yeah, exactly. They had. They're 13.

Third things, yeah, so when uh, OK. So the the amount of tokens that are coming out are going to be less and less with each kind of year, is that what but is it is eventually going to go to 0 or is that going to be a permanent?

So it's asymptotic to 0.

Because it's turning. It's never literally 0, but it's tending exactly yeah to 0.

OK. So, so each year like the the inflation decreases and um, so do you think that as that happens the network will be the validators etcetera will be sufficiently incentivized or LP providers etcetera?

Hmm. Yeah, it's a good question because I was uh today talking, I'm, I'm in Lisbon and there was Adam Lisbon today talking to a few people and we had exactly this topic of tokenomics. And for example, talking about the current topics of there is no staking, you're coming out of the kadira side and this is the risk in terms of security already now because the validators are not making any kind of basically income, they're paying to validate the network at the moment we all hope that change that's

To give a validator, because you can basically type it right, I guess the validator on average needs between 250 up to 500 bucks a month in terms of infrastructure costs. What happens if validators earn less in Commission that that threshold? I think on most of the cosmos chains right now, there's at least 1/3 of the validators that are always below the threshold. So they earn less money that they spend on infrastructure and they still stick around because of course they hope that first of all t

All the other pieces that they could just gain more and more traction and more and more stake over time so that they basically make enough money out of that. But we we had exactly this discussion. So it's like what I think could you as an amazing case to witness how long validators are eager to accept that they're running at a loss which right now is doing everybody on chain before it gets into a security issue. Because as you said I think in let's say quote UN quote inflation or I just say it b

A lot of the tokenomics, that is, as you said, to incentivize teachers, right? I don't have a better word for it.

It's kind of the, yeah, it's also the, uh, the sort of distinction between what supply is entering circulating circulation or supply versus the future total supply and and et cetera. So there's like different tranches of coins and different places you can imagine and I think from a price action perspective for people to understand it's like which coins are available to actually you know be in the market circulating to buy and sell available on exchanges to to to trade against and that happened t

The sort of like price action happens, um, where, where supply demand, yeah.

It's a good point, yeah. Because for example on specifically if you compare osmosis to Gojira, it's like both of them are not inflationary, right? They have this finite supply. And then basically why is the use of osmosis so high? Well, because they choose to allocate a big part of those tokenomics to incentives, which I personally like because it helps to decentralize the holders because you can now compare both sets and said who's holding all those tokens because both of them in a certain amou

Knows this because could you I think almost in 12 months has the full is fully diluted who is holding it right and and those are questions and that's why I personally tend to like high incentive staking rewards because it just helps to extremely decentralize the holders of your chain right and incentivize people staking.

Yeah, I I think another another way to analogy to think about this for everybody is OK, would you rather have like 100 people?

Each have $1,000,000 right? And then that's $100 million chain or would you rather have you know a million people each have, you know $10.00 for the same you know you know or or $100 for $100 million change. So the the point is like you want a highly distributed token distribution and a big in order to be decentralized so that any one person or group can't basically make massive changes to the system.

Um, because that's just kind of how these delegated proof of stake networks work. So the the distribution of your token supply is actually important and different systems incentivize decentralization and other types of systems incentivize more centralization even in a token economic model. So that's another feature of all of this. A lot of people think the basics like, well, is price going to go up or not, right? But they don't think about like which mechanism actually will decentralize the most

So, yeah, these are important because long term these are the things that determine the viability of the chain. So I think it's if you're a long term like quote UN quote investor or something like that's a different thinking compared to if you're just trading short term price action where many of these things may not matter in the very, very short term, right.

Yeah, I think that's a good point that you say, and I understand this right. It's like nobody likes to see token prices go down, but in kind of the short time frames, there are so many topics in terms of if we think of years that it probably doesn't matter. I had a very interesting conversation with somebody about the stride token last week where I think it's just live for a few weeks and they said stride has a huge problem because it just dropped. I also think it's always funny because if a tok

Can pump if just a few people go in there, maybe some got an AirDrop, some somebody wants to sell as you say safe, right. Even kind of selling event can be short term also price pump. If somebody also orchestrates that correctly, he can do it and then it just looks like the token went down 80%. Yeah, the token is just it just started on a day, it just spiked. That's not why the token really is down 80%. And then it takes now years to dilute the full tokenomics. So you just anyway need to draw do

Yeah.

At the top. But I think probably if you are long enough in this game, you just understand those mechanics that you always describe very well. And then I think it makes also more sense right? That you need probably a downwards price development for some tokens if you want to achieve certain things like decentralization, which I would even take higher and more important than short term price development. But I know it's a very difficult topic and nobody wants to see prices go down.

It's like if you think of almost every crypto out there in a proof of stake style system.

A vast majority will have a major pump on opening just because the news and excitement most recently was like a DDoS for example. And you know the price goes just vertical straight up.

And you know, there's a significant number of people that will make substantial multiples of gains in that market and they're going to sell and then the price is going to get crushed and it's going to find some bottom and that bottom could be a good solid 95% or more from the top. So massive wreckage usually ensues. So if you're like trying to be serious about your money, you usually don't jump in on those things unless you just intend to play around with a little bit you you don't necessarily g

Changes opening up. I'm gonna put my net worth in this thing because even if the price goes above where you bought it, the probability that from the top you're gonna see oftentimes a, you know, 90% retracement is very likely just because the the price action, the upside is just simply ridiculous. So it's just immediate supply shock and that's all it is. But it doesn't reflect like any kind of realistic sustainable market cap. You saw Internet, computer and a lot of other coins do this kind of no

As far as what's a better fare launching system, people have done lock drops and other weird things to try to like make a more natural price discovery that doesn't wreck so many people. So yeah, that's there's a whole science behind that as well. I was going to mention, like there's also different token distribution ideas, right? So when tokens are released in the beginning, you'll have some that have, you know, a very high proportion of team tokens or, you know, the the original builders of the

That kept a lot of tokens for themselves.

And or they added a pile of tokens for venture capital firms to get in early.

So they may be, you know, buying, you know, most cryptos. If you're a VC firm, you know, you may easily make A5 to 10X just on the initial offering when the thing opens because they got the coins for like comparatively almost for free compared to compared to what you're paying for them. You may be paying 100X more than they did. So obviously some of those are going to sell and dump on you. And then people have had vesting periods too, where like, OK, if you're a venture capital firm or some big

10 years or something like that. 10 years is probably like a better long term, uh, like alignment of incentives. I think Kadena Blockchain is an example where they have like a 10 year or more. Then there's other ones that are much shorter. And I think Solano isn't notable example where like the price got absolutely crushed because so many, so many VC firms who knows who sold in and dumped the thing. So yeah, you have to look at that. An interesting thing, we talked about this before the crash of

Terra Luna, the Terraform Labs wallet, I think was like around 55% or something. I think Guy, what's his name, the the YouTube channel?

Climber, climber.

What's the guy's channel's name? The. Yeah, crime Bureau. Yeah, he did a, he did a nice discussion about that at one point where he sort of was like, you know, posting, you know, portraying the FUD of Luna, which was that, well, you know, his, his negativity towards it was that, well, he didn't buy too much of it because he's concerned that TfL owned too big of a size of the pool. So I think it was like 55% or something high. So why is that a problem? Because that supply, even if the the the tea

There's this looming possibility that they could sell at some point in the future, and if they own half the tokens of the you know, that means that they can dilute a lot and when in in particular the UST Luna mechanism.

Price discovery was largely happening on the coins that were actually in the market, but the the team tokens were the half of the half. The tokens were not actually participating in that supply. So soon as you start to say, well, I'm going to sell some of this, it signals to the market, number one that hey look, if they're starting to sell, only God knows how much they're going to sell. So whether it was project done or whether it was LFG or whatever the hell there is, once you start signaling t

The team is thinking we should use this, these funds. Then the venture capital firms will say wait a minute, like OK, like I'm gonna dump before you do. And so people like Galaxy Digital, Mike Novogratz and a bunch of other firms dumped their Luna. And I think part of it would be because they have to derisk because they know that the team is selling as well. And and so when you have these coins that have not participated in price discovery, they start entering the market. I started getting nervo

Four years, yeah.

Uh, So what they did to combat that was, I remember when they created LFG, which is like a fun to peg UST or whatever. They bought that Bitcoin and such. But they actually sold the Luna, their Luna over the counter to firms like 3 Arrows Capital and a bunch of other people who threw in like I think a billion dollars. And they had to hold their tokens and have them vested over, I don't know how many years. I think it was like three years or I remember what that number was there some four years, O

Period.

You don't even care about.