WHY THE TOKEN ECOSYSTEM IS SO HOT!
There’s no arguing that the blockchain technology is helping drive efficiency, insights and transparency in various industries. Blockchain has the ability to allow transaction of currency tokens like bitcoin and ether and provide a comprehensive and transparent record of all transactions among its users; this essentially cuts out middlemen from transactions.
Satoshi Nakamoto, in his original Bitcoin white paper, defined an electronic coin-the Bitcoin- as “a chain of digital signatures” known as the ‘blockchain’. The blockchain enables each coin owner to transfer an amount of currency directly to any other party connected to the same network without the need for a financial institution to mediate the exchange and this has seen the technology hit the mainstream.
Blockchain technology has given rise to various buzzwords which include decentralized applications, Ethereum, smart contracts, ICOs, digital tokens, etc. and all these are set to reinvent business models across all industries especially with traditional financial institutions and governments also making efforts in using the technology. In fact, according to data provided by DMR, 90 percent of major North American and European banks are exploring the blockchain technology.
ENTER DIGITAL TOKENS
By utilizing the blockchain technology, digital tokens are set to revolutionize the way we transfer real-world assets. A digital token is similar to issuing a check in a digital form and the holder of the token has the right to claim the underlying asset. Any transferrable asset such as coffee, a house, a computer, a car, or intangible assets such as property rights and licences, can be represented through digital tokens. Transaction of digital tokens is recorded on a blockchain, and this provides full transparency about the ownership and security without needing a central authority.
There are various types of digital tokens with different names being currently used and these include:
Ø Asset tokens- these tokens represent ownership of an asset, for instance, a company, a venture capital fund, a piece of art, etc.
Ø Usage tokens- these are also known as ‘Use’, ‘Protocol’, ‘Intrinsic’, or ‘Native’ tokens. They are normally used as transaction fees to write to a blockchain. Bitcoin is the most common example in this category.
Ø Work tokens- these tokens enable owners to contribute, govern, and/or ‘do work’ on a blockchain. An example is Maker (MKR), which gives owners the ability to govern an organization that manages the stability of an underlying coin (DAI).
Ø Hybrid tokens- these tokens have properties of two or more of the above. Filecoin, for instance, can serve both as a usage token (you need it to use the system), and a work token (you need to own some so as to provide file storage).
Here are some more terms that are common in the digital tokens space:
Ø ERC20 tokens- this can be any token (mostly Ethereum based) that adheres to the ERC20 token standard of how to access information, transfer assets, and fire off events. This makes it easier for developers to create applications such as wallets that work with a variety of tokens.
Ø App coin- this refers to a token that is used to fund a project.
Ø Alt coin- this refers to an app coin that powers its own blockchain. Any coin that does so besides Bitcoin (e.g. Ethereum) is, by definition, an altcoin.
Ø Meta coin- this refers to a token that is built on top of a blockchain that already has an underlying coin.
Ø Cryptocurrency- this refers to any token that is recorded on a blockchain and that is traded on a market as money.
Ø A token sale- this refers to a token generation event and its primary goal is normally to create, build out, and strengthen an ecosystem.
There are many blockchain platforms that allow users/brands to launch their own tokens on the blockchain without any need for technical skills and one such platform is dApp Builder. dApp Builder enables users to tokenize their product(s) and benefit from having aspects of their business on the blockchain with the help of DAP token’s protocol.
BREAKING DOWN THE DAP TOKEN ECOSYSTEM
DAP, and its token distribution, will be created around smart contracts built on Ethereum. The number of DAP token issued will depend on the amount of contribution received by DAP smart contract. Tokens issued by dApp Builder (DAP) will be used for the access, creation, and deployment of dApps on smart contracts. These tokens are used to manage the fees required to use the DAP Platform, contract library, smart contract testing, monitoring, and management of the entire smart contract process.
DAP Platform customers will need to buy the DAP tokens in order to create their own dApps and issue their own tokens. These customer tokens are called custom tokens. The custom tokens cannot be placed on any exchange and will be used during the internal transactions of their dApps.
The DAP token will be issued as a smart token, or in other words a programmable token. It will use the Bancor protocol that holds one or more other tokens, in its reserve. And DAP token can manage this reserve in a way that it sets a price and sells itself in exchange for the reserve currency or vice versa. It can buy its own units and payout in the reserve currency in exchange for that. So users can buy the smart token from the smart token itself/ smart contract and they can sell the smart token to the smart token itself through the smart contract. And whenever DAP token is purchased the price goes up and whenever it’s sold the price goes down.
The DAP Platform will create custom (utility) tokens for the businesses/users building dApp applications on top of DAP Platform to tokenize their interactions with the user base. By using tokens in dApps, the company’s users can earn and spend tokens that have redeemable external value, increasing the appeal of the application to new and existing users. The custom tokens can easily be exchanged with DAP tokens (super tokens) based on the supply/demand ratio. When dApp developers (businesses) create their dApps they will have to set out a monetary policy for their custom (utility) token in the smart contract. The custom tokens, that belong to their corresponding dApps, can be exchanged in a secondary market and their liquidity will be obtained through the DAP token. When businesses sign up their users in dApps, they will be provided with an embedded wallet.
Constant Reserve Ratio and DAP Token Supply
The Constant Reserve Ratio is set by the DAP Platform as the creator of the DAP token, and is used in the price calculation, along with the smart token’s current supply and reserve balance. This calculation ensures that a constant ratio is kept between the reserve token balance and the DAP token’s market cap, which is its supply multiplied by its price. When DAP tokens are purchased, the payment for the purchase is added to the reserve balance, and based on the calculated price, new DAP tokens are issued to the buyer. Additionally, when DAP tokens are destroyed, they are removed from the supply, and based on the current price, reserve tokens are transferred to the liquidator. DAP tokens hold one or more other tokens in reserve, i.e. decentralized baskets (all tokens powered by DAP Platform can be held in reserve). Consider this example: If we have a Constant Reserve Ratio of 2% and the price goes by 100%, the DAP token supply goes up by 1.5% automatically (nobody should have the right to manually issue tokens). The DAP token supply shrinks as well if the price goes down.
A Network Effect
What dApp Builder will do with DAP, is that it is going to issue DAP tokens that will be used as a network token. The DAP token, essentially will be creating the network effect, and hence a demand for the token. If the DAP token goes up in value, it affects all the tokens that hold it in its baskets. With the DAP token as a smart token, we essentially create a “basket” of currencies (custom tokens created for the dApps by businesses). A currency basket is a portfolio of selected currencies with different weightings. A currency basket will commonly be used to minimize the risk of currency fluctuations. 185M of DAP tokens will be created for token sale.
Token Sale
The token PRE Sale will start on February 15, 2018. The DAP utility network token (‘DAP’) will be distributed to participants in 3 contribution events.
Ø Hard cap: 30,000 ETH
Ø Token supply 185M DAP
Ø Token main sale price — 1ETH = 16,677.7851 DAP
Ø Market CAP $180M USD *,
Ø Public Pre-Sale- 50% discount
Ø Token Pre-Sale Price — 1 ETH = 33,355.5702 DAP
Ø Pre-Sale — February 15
Ø Community Exclusive Sale — March 1
Ø Main Sale — March 25
dApp Builder will be managing the contract execution. DAP token will be distributed among the contributors within 15 days after the end of the Token Sale.
BOTTOM LINE
Blockchain-based tokens provide an ingenious way to fuse practicality and buy-in; they have the ability to incentivize development and test adoption, with limited risk and without violating any securities laws. The bottom line is that dApp Builder wants you to focus on your own customers and your core technology while leaving the implementation of the blockchain infrastructure to them. It will give brands the tools needed to easily design, create, and manage their token economy.
