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Token Economics of the CEIS
The Token Economic Framework of The Cybernetic Economic Intelligence System
1.1. Defining Tripto’s Utility
2.1. Dynamic Supply Schedule
3.1. Consensus: Distributed Proof of Stake (DPoS) and Block Generation
4.1. Buying Pressure
4.2. Holding Pressure
5.1. First function – Token transfers
5.2. Second function – Token inventory management
5.3. Third function – Internal exchange
6.1. Control 1 – Purchase Events
6.2. Control 2 – Liquidation Events
6.3. Control 3 – Burn Events
The following document “The Token Economic Framework of the Cybernetic Economic Intelligence System” describes the structured model or system that outlines the specific rules, principles, market dynamics, and mechanisms governing the token's utility and economics within a particular project or ecosystem. It provides a comprehensive framework for token issuance, distribution, governance, incentives, and use cases. The token economic framework is designed to establish clear guidelines that ensure the token's stability, functionality, and long-term viability in the decentralized cybernetic marketplace.
Tripto is a utility token that operates as a medium of exchange within the Cybernetic Economic Intelligence System (CEIS). The token's value arises from its functionality in providing access to the unique economic framework of the CEIS, which encourages users to engage in collaborative and autonomous commerce and generate e-commerce revenue. Tripto serves as a compensation mechanism for contributing data to the network's economic, commercial, and financial intelligence. This approach aligns with the growing recognition of the importance of data in driving structural advancements in production technology.
Modern data extraction from the public domain has led to an increasing centralization of capital and an inequitable distribution of financial benefits that is accelerating the wage and wealth gap. Tripto's value, therefore, depends on the correlation between the data and technology used to generate network-wide economic productivity. This intrinsic value is best reflected in the intelligence, economic productivity, and efficiency that Tripto provides to network users.
The CEIS' economic framework ensures that all three values operate in a virtuous cycle, perpetuating the token's demand over time. Tripto enables Smart eBusinesses to engage in peer-to-peer commerce autonomously and without trust while incentivizing users to share their data to improve network intelligence. Tripto's value proposition lies in its ability to facilitate efficient and equitable transactions, promoting economic growth, and personal financial empowerment for all network participants.
In the Cybernetic Economic Intelligence System (CEIS), a variety of transactions take place using the Tripto utility token. These transactions can be categorized into different types based on their purpose and economic impact.
- 1.Access to services - Tripto provides access to Smart eBusiness capabilities and real-time data and market intelligence, allowing network users to access valuable services. This access provides significant economic advantages, as it allows users to make informed decisions and engage in collaborative and autonomous commerce.
- 2.Payments - Tripto can be used as a means of payment within the CEIS's internal marketplace. Network users can conduct product purchases using Tripto, making it a crucial medium of exchange within the network.
- 3.Investments - Tripto can also be used for product investments in the Smart eBusiness. This investment option gives users the ability to leverage their capital and grow their economic productivity within the network.
- 4.Yield payments - Smart eBusinesses receive their ROI in the form of Tripto, making it an essential part of the network's yield payment mechanism. This feature allows businesses to reinvest in the network and further their economic productivity.
- 5.Transaction fees - Transaction fees for product purchases and investments can only be made using Tripto, emphasizing its importance as a medium of exchange within the CEIS.
- 6.Staking - users can stake network operations and receive a fee in Tripto. This feature encourages users to contribute to the network's operations and, in turn, earn a financial reward for their efforts.
- 7.Governance - Tripto provides users access to governance features, allowing them to participate in network decision-making processes. This feature aligns with the network's decentralized nature and incentivizes users to engage in the network's governance structure.
The variety of transaction types utilizing Tripto within the CEIS highlights its essential role as a medium of exchange, investment, and yield payment mechanism within the network.
2.1. Dynamic Supply Schedule
Traditionally, a maximum supply is set for a token to ensure that its value positively correlates with increased demand and productivity, much like other scarce commodities such as precious metals or agricultural products. However, this approach can lead to hoarding and inefficiencies in the medium of exchange. Scarce commodities tend to be hoarded as people see their value as a store of wealth, rather than being exchanged for goods and services. When a token is hoarded, it becomes less available for use in transactions, which slows down the economy's productivity. This is why a fixed token supply can be detrimental to the functioning of a medium of exchange.
On the other hand, fiat-based systems have a flexible money supply that can be increased or decreased by central banks according to their monetary policy objectives. While this flexibility allows for a more responsive system, it can also be arbitrary and even punitive to those who are financially vulnerable. Central banks have been known to decrease the money supply, leading to deflationary pressures, which can harm the economy by increasing unemployment and reducing economic output. Additionally, arbitrary decisions by central banks can lead to economic instability, as people lose faith in the currency and start looking for alternative mediums of exchange.
Therefore, a cybernetic economy like the CEIS can provide a more balanced approach by combining the advantages of both approaches. The CEIS's dynamic token supply schedule helps to alleviate the burden of hoarding and allows for more efficient transactions, while also accounting for token supply and demand imbalances. By using market data to coordinate variances in token supply, the CEIS can support the economy's intertemporal transaction volume requirements and increase token value despite fluctuations in supply. This approach provides a more robust monetary policy that supports transactional efficiency, productivity, and stability.
In a cybernetic economy, a more robust monetary policy can be implemented by synthesizing the advantages of both monetary approaches (intrinsic value vs. exchange flexibility) through a dynamic supply schedule that uses market data to coordinate variances in the circulating supply of tokens. This allows token supply variances to be a pure by-product of transactional efficiency and increases productivity, reduces waste, and stabilizes token value despite fluctuations in the supply. Additionally, the CEIS enforces a monetary policy that accounts for token supply vs. demand imbalances and implements various controls to mitigate negative price volatility, starting with the token’s consensus paradigm. this approach provides a more robust monetary policy that supports transactional efficiency, productivity, and stability.
The CEIS enforces a monetary policy that accounts for token supply vs. demand imbalances and implements controls to mitigate negative price volatility, starting with the token's consensus paradigm.
In the synthetic economy, the relationship between the circulating supply of the token and the system's economic productivity is directly tied to its staking mechanism. Peers on the network validate key transaction points through the Logistics & Assurance Community-Sourced Fund (CSF), which represents one or more transactions along the supply chain. This means that the staking and minting process is correlated to the current and future transaction volume requirements.
Blocks are generated using a Distributed Proof of Staking (DPoS) feature that selects users based on their wallet activity. The rotating delegate among these users validates key transaction points that are integral to the operation of the Community Sourced Fund. This autonomous and trustless operation of the marketplace allows stakers to receive a 5% fee from the total yield value of the CSF transactions they have validated.
Figure 1: Demonstrates the process by which market data impacts token value
3.1. Consensus: Distributed Proof of Stake (DPoS) and Block Generation
The DPoS consensus protocol presents yet another layer of protection against downward price volatility, as the rate of new token minting is intrinsically linked to the rate of tokens being locked up in CSF investments and distributed from the token reserve for yield and data monetization payments. This creates a feedback mechanism that reinforces the correlation between the token's value and its productivity in the cybernetic economy.
Figure 2: The cybernetic marketplace’s Decentralized Proof of Staking Protocol
The Tripto system's transaction protocol, incentive architecture, economic objectives, and autonomous nature generate both buying pressure and holding pressure, leading every user of Smart eBusiness to purchase and hold on to Tripto tokens.
The process of data monetization in the Tripto system is an autonomous exchange/purchase of tokens. When users monetize their data, the system draws tokens from the internal token reserve and distributes them to the user's wallet. This process places constant pressure on the supply of tokens within the internal reserve, stimulating token demand.
Moreover, the demand for Tripto tokens is also influenced by the value of goods and services produced in the synthetic economy, as captured by the demand equation D = f (P, Y, V). As consumers' real income and the value of goods and services produced increase, they demand more tokens at every price level, shifting the demand curve to the right.
The pressures to hold on to Tripto tokens are intrinsically correlated with their utility, starting with their access to investments. After receiving new coins, either from monetizing user data or yielding payments from previous investments, user Smart eBusinesses continue to autonomously reinvest in Community Staking Funds (CSFs). From there, user tokens are held in the fund until they are ready to be fulfilled. The time required to fulfill a CSF creates internal token congestion that places pressure on supply and reinforces demand.
The user is incentivized to repeat this process indefinitely, maintaining at least a portion of their tokens in investments to maintain their revenue capacities. This holding pressure also creates a scarcity of tokens in the market, leading to higher token prices. However, if the user wishes to use a portion of their yield for product consumption, they can simply reinitiate the protocol via the data monetization process and earn more tokens, thereby increasing the circulating transaction volume and optimizing transactional velocity.
The Token Reserve System (TRS) is a crucial aspect of the CEIS' tokenomic activity, serving as a backbone in processing all token activity on the platform. Its implementation of blockchain technology, along with its token, has been thoughtfully crafted to reinforce the core philosophy of the project. The TRS serves three critical purposes in enabling Tripto to function as an effective medium of exchange within the CEIS ecosystem.
The first function of the TRS is token transfers, which involves computing token compensation from the Data Monetization Protocol (DMP) and tokens due for liquidation, while sending transfer instructions to the user wallet. This function ensures that token compensation is accurately calculated based on real-time market value, enabling seamless transfers to the customer's token wallet within the platform.
The second function of the TRS is token inventory management, which entails managing the platform's inventory of tokens held for exchange and user compensation. The system constantly manages the token quantity held to minimize its exposure to token price risk and prevent running out of tokens used to pay for data monetization and yield payments. The TRS algorithm issues an instruction to the wallet to liquidate and/or burn excess tokens if the balance moves above the ceiling, and calls for further purchase of tokens on the exchange if the token quantity falls below the floor.
The third function of the TRS is an internal exchange that balances token liquidation needs against the cash it holds, particularly useful for the Production and Credit of CSFs. The system utilizes its internal exchange to adjust tokens for dollars, converting tokens for fiat payments to suppliers, and vice versa when cash is converted into tokens, enabling investments in products to be sold on the platform.
Finally, to enable the CEIS transaction mechanism, the TRS manages fiat payments to suppliers via a reserve quantity algorithm, ensuring there is always a sufficient supply. Retail payments within the marketplace initially supply this quantity, which is then converted into tokens and distributed to user Smart eBusinesses for investment of CSFs. The execution of these production CSFs calls back the token investment at the new fiat price and distributes it to the supplier Smart eBusinesses.
Figure 3: TRS Transaction Components
The Token Reserve System (TRS) is an essential component of the CEIS's token economy and is instrumental in facilitating all token-related activities within the platform. Through a judicious application of blockchain technology and its accompanying token, the TRS has been custom-designed to bolster the core philosophy of the project and address existing economic imbalances. As an integral part of the CEIS, the TRS serves three critical functions that enable Tripto to function as an effective medium of exchange within the wider CEIS ecosystem.
One of the crucial functions of the TRS is managing the fiat reserve to ensure that sufficient fiat liquidity is available at all times. To achieve this, the TRS employs a variety of measures, including supplementing liquidity requirements via liquidation events, as detailed in Section 4.0 of the platform's documentation. Additionally, the TRS also uses liquidation events to maintain optimal fiat liquidity levels over time, as outlined in Section 4.2.
It is worth noting that the token's price is not directly linked to internal token transfers between the TRS and other systems within the CEIS. Instead, the token's market value is determined by external market forces and reflected on the exchange. Nonetheless, the TRS closely monitors the exchange listing price and utilizes purchase or liquidation events as necessary to mitigate negative price volatility. By doing so, the TRS helps to ensure a stable and predictable token market, promoting healthy economic growth within the platform and the wider CEIS ecosystem.
The Token Reserve System (TRS) seeks to optimize the velocity and demand of tokens relative to their supply, while ensuring sufficient inventory for marketplace transactions. This is achieved through a combination of purchasing, liquidation, and burning of tokens, resulting in a dynamic supply that positively correlates with the system's productive efficiency over time.
To maintain a balanced inventory of tokens, the TRS employs an algorithm that measures the minimum and maximum token quantities required for data compensation and CSF yield payments. Any excess tokens beyond these requirements will be either reallocated or burned to prevent downward price volatility and maintain a homeostatic supply.
The TRS uses three main controls to achieve this homeostatic supply: purchasing, liquidation, and burning of tokens. By monitoring the token quantity requirements and the market value of tokens listed on the exchange, the TRS is able to maintain an optimal balance of token inventory, thereby mitigating negative price fluctuations and promoting sustainable growth in the system.
Control 1, also known as Purchase Events, occurs when there is an insufficient real-time and short-term demand for tokens, resulting in an inadequate supply of tokens to fulfill data monetization and CSF yield payments to Smart eBusinesses. In such circumstances, the Token Reserve System (TRS) triggers a Purchase Event to purchase a number of tokens that satisfy the TRS's expected obligations. The Purchase Event formula is represented as:
PE FRR > n < TFQR, where
PE denotes the Purchase Event,
n represents the number of tokens,
TFQR is the Token Floor Quantity Requirement,
DM stands for Data Monetization,
TYR represents the Total Yield Requirements in tokens (TYR = (CSF(YR)) + DM (YR)),
FRR denotes the Fiat Reserve Requirements, and
CSF represents the Community-Sourced Fund.
By utilizing Purchase Events, the TRS ensures that an adequate inventory of tokens is maintained to meet marketplace demands. This control mechanism helps stabilize token prices and optimize the velocity and demand of tokens relative to their supply, ultimately promoting sustainable growth and stability in the system.
In order to maintain a balance between token supply and demand, the Token Reserve System (TRS) employs Control 2 - Liquidation Events. Excess token supply, which may result from an inflated valuation per unit or a lack of demand, can be problematic for the system. In such a scenario, if the Fiat Reserve Requirements (FRR) are not sufficient to cover anticipated payments to suppliers, the TRS will trigger a Liquidation Event.
During a Liquidation Event (LE), the TRS will liquidate excess tokens proportional to the FRR. The Token Quantity Ceiling Requirement (TQCR) sets the upper limit of the token quantity that can be held by the TRS. If the number of tokens held exceeds the TQCR but falls below the FRR, the TRS may opt to implement other controls, such as burning tokens or re-allocating them to maintain a balanced token inventory. By doing so, the TRS can ensure the sustainable growth of the system while mitigating negative price fluctuations.
Figure 4: TRS Event
The Token Reserve System (TRS) employs a dynamic approach to determine the burn rate and amount, which adjusts based on the marketplace's transaction volume. Therefore, it is not possible to pre-determine the burn rate or amount. However, the factors that trigger a burn are constant and can be expressed as any amount that exceeds the marketplace's requirement for liquidity or a liquidation event. This surplus indicates an excess supply of tokens relative to the real-time and short-term transaction volume requirements.
The TRS burn amount (BE) is thus determined by the excess token supply relative to the marketplace's liquidity requirements. When the token quantity exceeds the Token Quantity Ceiling Requirement (TCQR) and/or the Fiat Reserve Requirements (FRR), a burn event will be triggered. This burn event will reduce the total supply of tokens, thereby mitigating downward price volatility and maintaining a homeostatic supply.
To learn more about Tripto and the tokenomics of the CEIS see “Tokenomics of the Cybernetic Economic Intelligence System”.
Table 2: Tripto’s token allocation based on utility