Reserve Utility Token Model
We just released a game-changing proposal for a new web3 token model (full proposal link at the bottom).
The Reserve Utility Token model unlocks new benefits for gaming (& non-gaming) projects around:
value accrual
legal compliance
web2 user experience
The Reserve Utility Token model involves locking tokens as reserves to back NFTs representing key game utility. This reduces the circulating supply to accrue value to the token. However, requiring a token doesn't mean it has to negatively impact the user experience. To mint an NFT, some of the token needs to be locked as reserves, which can be redeemed later by burning the NFT. This can be abstracted away so users can pay in dollars while a portion of revenue goes towards buying and locking tokens.
An example: a game studio issues a Reserve Utility Token, GAME, and sells cosmetic baseball cap NFTs for $2 each on their storefront. $1 goes to the studio (as revenue) and $1 is used to buy GAME off the market, locking it within that specific baseball cap NFT. As more players buy the $2 baseball caps or other assets, they're locking up tokens, reducing the circulating supply and positively affecting the token market price. The NFTs are not restricted to just items. Anything that players value, be it related to time, status, power, or another desire could be tied to an NFT. Users need the token to access the benefit, but in an abstracted way. It's a pure form of utility token.
8 benefits of Reserve Utility Tokens:
Enable flexible and predictable value accrual split between equity and tokens
New economic lever to manage the token economy
Provide immediate NFT liquidity by allowing instant redemption for liquid tokens
Improve buyer confidence and spending on NFTs by having reserves
Discourage excessive speculation on NFTs that require accessible pricing
Built-in resilience to external market fluctuations
Can use tokens to acquire a NFT and still retain token price exposure
Use tokens without fiat onramp issues by having purchases be for items and the game allocating the reserves on the players' behalf
5 additional mechanics in the proposal to strengthen the model in certain situations:
Evolving NFTs- link NFT usage to tangible or emotional benefits to disincentivize redemptions
NFT price ceiling to disincentivize excessive speculation
Temporary NFTs with expiring reserves to match temporary benefits
Automatic excessive reserve distribution to avoid burning NFTs just to pull out reserves when token price rises
Semi-stable currency to improve monetary policy control
I highly recommend reading the proposal to understand the full idea. Check it out here (blog or nice PDF format w/ glossary): https://economicsdesign.com/reserve-utility-token-model/
For help with implementing a Reserve Utility Token model or any other assistance with creating or auditing a sustainable economy, feel free to reach out to Economics Design or directly to Kiefer Zang.