Tri-token is new innovative phenomenon in crypto ecosystem. After a token has reached its maximum supply, the corresponding phase will move to the next one. Once the next phase starts, the liquidity pools available will be primarily based on previous farms with a 0% deposit fee to incentivize holders. The token’s utility does not end after the minting has stopped like other farms, the layered eco-system will allow for the tokens to maintain their value and transfer their use from farm to farm.
Trinity is a novel protocol that combines the unique mechanisms of several recently successful DeFi projects:
Auto liquidity generation
Frictionless yield generation
Automated buybacks and token burns
Not only do these mechanisms work synergistically to automatically build liquidity, transactional volume, and yield, they provide the TRI token a real-world use case as a “liquidity bridge” for fledgling DeFi projects.
Case 1
Tri-tokens Brickblock’s token structure
Brickblock’s ecosystem contains three tokens: Brickblock tokens (BBK), Access tokens (ACT), and Proof-of-Asset tokens (PoA). This guide aims to simplify our token structure and will help you understand the role each token plays Brickblock tokens (BBK). BBK are only sold during the ICO.
Only 500 million BBK will be produced. 51% of these will be sold to the public; 35% are on company lockdown; 13% are committed to early backers and private investors; and 1% is distributed to bounty and Airdrop participants. All unsold public BBK are burned. Brickblock tokens (BBK) are utility tokens that can be activated to fulfill their utility on Brickblock’s smart contract platform or deactivated and traded on exchanges.
1. Activated
Activated tokens automatically generate Access tokens (ACT), which are used to pay for all Brickblock transaction fees. When activated, BBK essentially function as fee credit fountains to provide access to Brickblock’s smart contract platform, comparable to holding a software license.
Both BBK and ACT are ERC20-compatible.
Brickblock tokens can be activated or deactivated with just one click. Activated BBK continue to generate ACT until they are deactivated (they are not burned). Deactivated tokens will not generate ACT, but can be traded.
2. Deactivated — Tradable
Like all ERC-20 tokens, BBK can be traded on exchanges. BBK is currently listed on gate.io, IDEX, and BitMart.
Access tokens (ACT)
Brickblock charges a fee for every transaction. This fee is paid in Access Tokens (ACT). 1000 ACT will be equal to the value of 1 ETH.
When fees need to be paid, the asset’s smart contract sends buy orders for ACT, which are generated by activated BBK tokens. BBK holders who have activated their tokens receive the buy order and proportionate number of ACT. They can then can then use their ACT to pay for transaction fees or trade them.
The BBK that generated the ACT continue to generate ACT for future transactions (the BBK are not burned).
Example: A building is fully funded for 20,000 ETH. Approximately 100 ETH worth of ACT are automatically generated by activated BBK tokens to pay for the transaction fee. The token holders whose tokens generated the ACT will receive a buy order from the smart contract. They can now redeem their ACT and choose whether to use it to pay for transactions or trade it to someone who needs to pay for a transactions.
Proof-of-Asset tokens (PoA)
Every asset sold through Brickblock’s smart contract platform issues its own unique Proof-of-Asset (PoA) tokens. PoA tokens are sold during an asset’s funding period and represent all the economic benefits of ownership. That means PoA token holders are legally entitled to the profits of the underlying asset.
Example: A building is sold for 20,000 ETH. The smart contract deploys and issues PoA tokens to investors proportionate to the amount they invested. PoA tokens will produce passive income for whoever holds them, which is periodically paid out in ETH. PoA tokens can be bought/sold/traded.
Case 2
World's 1st Tri-Token Godgame with NFTs
Apeiron is part of a new wave of token-driven, play-and-earn NFT games. Our tri-token system utilizes governance, play-to-earn, and alliance tokens in tandem to create a dynamic economy that mirrors the real world, while our NFTs - in the form of Planets, Stars, and Relics - puts the ownership in the rightful hands of the player.
What you make in the game - the planets you build - they’re yours: keep them, sell them, or use them in the wider NFT metaverse.
Exchange for a better Revolution
All NFTs - Planets, Stars, and Relics - will be sold in public marketplaces. These NFTs are unique, non-fungible tokens(NFT). Planet NFTs are where the main gameplay loop happens - players will need to purchase their first planet on the marketplace, or apply for a starter Seed Planet. Stars are like the “lands” in other NFT games, and will offer powerful passive bonuses for Planets that orbit them, as well as the potential to contain rare celestial items and places. Relics are those game objects - such as Avatars, planetary wonders, or special items - that would otherwise be lost after finishing a planetary cycle, but can be made permanent by converting into a Relic. For the Apeiron faithful, we will Presale 3,894 exclusive Primeval Planets with unique “Primordial” traits, the only ones of their kind. Simultaneously, we will Presale 11,498 Stars around the Axis Mundi, the center of all creation in the Apeiron Universe, which will be made available for purchase via Stella Tabula Chests.
Celestial Conjunction
Players will start the game with one Planet. But by acquiring more - such as through the marketplace - they will be able to perform a holy ritual known as Celestial Conjunction. The ritual takes the spiritual essence from both Planets and combines them to produce a new Planet. The new Planet will inherit traits from the parent Planets, as well as have a chance to have new and exciting traits of its own. Through repeated Celestial Conjunctions, Players will have the chance to create their own perfect worlds, worlds of primal elements where the surface is nothing but a roaring inferno, or an ocean planet where leviathans swim the deeps.
A Godiverse
The Apeiron universe is made up of many Constellations, which contain Stars, which themselves are orbited by Planets. Players will start in the Axis Mundi - the center of creation. Later, they will be able to explore and purchase Stars in constellations based on mythological stories from around the world. As they explore, they will encounter the Taint of Chaos, an infection that threatens the very fabric of reality. Players must overcome Corrupted Old Gods, Boods (Tainted Doods) and Chaos Avatars to seize the final victory in the ultimate struggle between Cosmos and Chaos!
What is Apeiron?
Inspired by classic God-games such as Populous and Black & White, as well as modern Roguelike action-adventure games, Apeiron will offer integrated gameplay where you can shape the world from on high before getting down to earth as a controllable Avatar to unlock the universe’s mysteries. Grow your planet until it can’t grow anymore, then reset the planetary cycle, opening the door to persistent progression ultimately leading to exciting Alliance level PvE and PvP gameplay. The universe awaits!
God-simulation
Each planet comes with its own Doods - cute and chubby little guys who get themselves into trouble more often than not. As a Wandering God, it’s your divine duty to help the Doods build their society. Call down rain so that the Doods can grow their own food, or shatter a mountain so they can expand their settlements. Or, if some of them are causing trouble, toss a fireball to keep them in line. Good or evil, the planet will slowly change to reflect your alignment!
Action RPG
So you’ve been building up a steady supply of Dood followers: now you summon your Avatar. With an Avatar under your control, you can explore nearby worlds and celestial objects by diving into dangerous dungeons and fighting challenging monsters in a skill-based, real-time combat system. Gather Dood Apostles and hunt for epic Relics of power and never fear - you can return to EDEN and continue to grow your planet whenever you wish.
Roguelike
Now you’ve gone through all the dungeons, and the Doods have covered the world with their buildings. Hit the reset button by calling down an Armageddon - your followers and buildings will be consumed, but the Soul Gems you get in return can be used to permanently upgrade your Spirit Core, giving persistent progression. And so the cycle starts anew: keep it up, and you’ll be able to participate in high-level Alliance PvP and PvE gameplay.
Tri-Token Innovation
While many NFT games rely on just two tokens, Apeiron brings three currencies to the table. First, Apeiros, the game’s governance tokens, allow players to stake their claim in the universe. Second, Anima, the play-to-earn tokens, rewards dedicated play with a highly liquid currency. And finally, Ringularity - a novel premium alliance currency - promotes social gameplay and gives players something to work towards in the late game.
Tokenomics
Under Apeiron’s Tri-Token System, not only will the developers have better control over the game economy than under a dual-currency system, but players will also benefit from having more to earn, and more meaningful choices to make.
Apeiros serves as Apeiron’s governance tokens, and will give holders the privilege to propose and initiate voting processes that will affect the future development trajectory of the entire game.
Anima are Apeiron’s play-to-earn tokens. Players win tokens when accomplishing certain tasks in game, then exchange their tokens on the marketplace, fully realizing the value of their play.
Apeiros and Anima are used to perform Celestial Conjunctions. They can also transform items that would otherwise be lost into Relics, which are permanent, tradeable tokens.
Ringularity acts as Apeiron’s premium Alliance token, earned through hard-fought victories in late-game GvG and GvE content, used to claim exclusive rewards.
Token Metrics
Token Distribution Plan
The total amount of Apeiros in the Apeiron metaverse shall not exceed 1,000,000,000. We will carefully regulate the amount of Apeiros available at any given time.
210,000,000
Investment Round (21%)
Investments from Pre-seed, Seed and Private Round
40,000,000
Community Round (4%)
Community and Public Round - Initial Token Generation Event
140,000,000
Play and earn (14%)
Gameplay Achievements, Events, PvP Tournaments, Esports Events and Ecosystem management.
60,000,000
Community Airdrop & Marketing (6%)
Community building and promotional rewards
50,000,000
Advisors (5%)
Allocated to non-founding members who contribute to the growth of Aperion
200,000,000
Development Team(20%)
Maintenance of game development and operations
300,000,000
Yield & Liquidity(30%)
Staking rewards, listings and liquidity pool resources
ROADMAP
Decentralized Governance
In contrast to other open world NFTs games, Apeiron will give players decision-making power over the flow of the greater narrative, in a fashion similar to that of Dungeons and Dragons. Voting takes place through our decentralized autonomous organization (DAO), where token and NFT owners can vote on Galaxy Progression, use of revenue from token issue, game operations, game asset allocation and token buy-back schemes. In principle, every Apeiron asset holder can become a DAO member and vote on proposals, although membership is optional. DAO implementation is handled by an external third party.
Case 3
MANA, LAND, and Estate Tokens
Summary
Decentraland is a user-owned, Ethereum-based virtual world where you can play, explore, and interact with games and activities. You can also purchase parcels of land on which to build your own environments, marketplaces, and applications. Decentraland’s three native tokens — MANA, LAND, and Estate — all play a unique role in furnishing the Decentraland economy. The platform is governed by its users through the Decentraland DAO, a decentralized autonomous organization.
Opened to the public in January 2020, Decentraland is an Ethereum-based virtual world, or metaverse, that is owned by its users and governed through a decentralized autonomous organization (DAO). It has three native tokens: LAND, an ERC-721 token that represents parcels of digital land; Estate, an ERC-721 token that represents merged parcels of digital land; and MANA, an ERC-20 token that serves as Decentraland's currency.
As with most other virtual worlds, you experience Decentraland’s metaverse through an avatar, with whom you can explore its ever-developing map of digital destinations. Activities like buying digital art at the Crypto Valley Art Gallery, trading with fellow metaverse regulars in Bartertown, and learning at Decentraland University can only be accessed with digital tokens. But unlike the gold coins found in Mario or World of Warcraft, Decentraland’s tokens are programmed to facilitate worth and transferability as assets in the real world. Ethereum connects Decentraland’s economy, technology, and ethos, making the digital world an experiment in a digital, decentralized utopia as much as it is a game created for entertainment.
MANA, LAND, and Estate Tokens
Before exploring how Decentraland’s tokens fuel its digital economy, let’s review the differences between ERC-20 and ERC-721 tokens. ERC-20 tokens like MANA are also known as fungible tokens, which means that they are interchangeable with other ERC-20 tokens. Likewise, each MANA token is identical and lacks unique properties. These qualities help make MANA an ideal in-world currency for Decentraland.
ERC-721 tokens like LAND and Estate, however, have characteristics that make each token unique. As a result, they’re not interchangeable and are referred to as non-fungible tokens (NFTs). This means that they cannot act as currencies, but are instead useful for creating one-of-a-kind in-world items like avatars, wearables, and unique parcels of land.
The characteristics of MANA, LAND, and Estate are defined by three smart contracts: the MANAtoken contract, the LANDregistry contract, and the EstateRegistry contract. All virtual space in Decentraland is composed of individual parcels of LAND that you may purchase with MANA in Decentraland’s Marketplace. You can also buy wearables for your avatar at the Marketplace, including clothing, shoes, and accessories. Each transaction is recorded on the Ethereum blockchain, effectively making it a registry for all of the digital property you acquire in Decentraland.
If you own LAND, you are free to create digital environments and applications on it, such as games and themed communities, which can also be monetized. Parcels of LAND that are directly adjacent to each other can be merged into Estates. Some crypto companies, such as Rarible, MakerDAO, SuperRare, and many others, have even created virtual offices and art galleries in Decentraland. Decentraland has also played host to a variety of virtual conferences.
Decentraland’s Governance
Unlike other virtual worlds, Decentraland is not controlled by a centralized entity. Instead, Decentraland is governed by MANA, LAND, and Estate holders through the Decentraland DAO, which was created using technology from Aragon. To vote on proposed changes to the protocol, you must hold wrapped MANA (wMANA), LAND, and Estate tokens. Each wMANA provides you with one unit of voting power, while every parcel of LAND and every Estate provides 2000 units of voting power each. In Decentraland, “wrapping” MANA refers to locking it up in the DAO. When you wrap your MANA, you can no longer spend it or transfer it. (To spend or transfer it, you must unwrap it.) To use LAND and Estate tokens for voting, you must register them to the DAO, but this does not lock them up — you can still use them normally when registered. MANA can be purchased on crypto exchanges like Gemini and Coinbase, but LAND must be purchased in the Decentraland Marketplace. Estate tokens are created only after parcels of LAND have been merged.
In addition to the DAO, Decentraland has a Security Advisory Board (SAB) that oversees the security of the platform’s smart contracts, reviews governance proposals, and responds to bug reports. The SAB is made up of five members who are voted in by the Decentraland community. The board has the ability to delay or reject governance proposals that might negatively affect Decentraland.
With its decentralized design, Decentraland has paved the way for an entirely new kind of metaverse. For the first time, you can own the value that you create in the virtual worlds you inhabit, and that value can be transferred directly to the tangible world. Whether you’re exploring medieval dungeon puzzles, racing cars, or just working on becoming a pixelated landlord, Decentraland is an attempt at building a world in the image of decentralization — and is far more than just another video game.
To learn more, be sure to check out what else you can do with NFTs and how Gaming and NFTs go hand in hand.
Case 4
MiCAR three tokens platform
MiCAR standardises three different types of tokens and, depending on their classification, sometimes attaches highly extensive legal consequences
for the issuer to them. The token types covered by MiCAR are asset-referenced tokens (‘ARTs’), e-money tokens (‘EMTs’) and utility tokens (‘UTs’). ARTs and EMTs are tokens that refer to a stable value, known as ‘stablecoins’. ARTs relate to commodities, goods or other crypto values (e.g. gold, oil), whereas EMTs are always based on a currency in the sense of legal tender (e.g. EUR). Utility tokens, which provide the token holder with a good or service when they are redeemed, must be distinguished from these stablecoins, representing a type of voucher token.
These three token types share the common requirement that the MiCAR issuers of a public offering are each obliged to publish a white paper. This white paper includes general information about the issuer, the project, the rights and obligations associated with the tokens, the underlying technology and the risks associated with an investment in the tokens in question. By extension, a white paper serves to protect both investors and consumers, while also potentially justifying the issuer’s liability vis-à-vis the investor at hand, thereby fulfilling a similar purpose to a capital market prospectus.
If the issuer is obliged to publish one of these white papers, it must first be approved by the local supervisory authority, the FMA in Austria. As a result, the supervisory authority can also deny the issuer approval and thereby prevent the issue from taking place altogether. If an ART or EMT has particular EU-wide relevance (measured against defined threshold values), it is to be classified as ‘significant’. When this classification is awarded, this shifts responsibility for the ongoing supervision of the issuer from the local supervisory authority to the European Banking Authority (‘EBA’). Consequently, MiCAR creates uniform supervision at EU level for these significant crypto assets.
In addition to these obligations incumbent upon issuers, MiCAR also standardises a licensing requirement, as well as special requirements and due diligence obligations for the professional and commercial offering of services in connection with crypto assets.
Offering crypto services is understood to mean, for example, the safekeeping and administration of crypto assets, the operation of a trading platform for crypto assets or the exchange of crypto assets with fiat money or other crypto assets. This regulation is also intended to create and guarantee legal certainty and a minimum level of protection for investors and consumers alike.
Security tokens, on the other hand, are not covered by MiCAR. As a result, the existing capital market law regime continues to apply to these security-like tokens, although this regime was not designed for tokens. A tailor-made set of rules for this type of token would be desirable and should take their unique aspects into account in an appropriate manner, as a result regulating them in a nuanced fashion.
In summary, the draft MiCAR appears to be suitable for use as a unified legal regulation to counteract the prevailing possibilities of abuse that arise in the absence of specific regulations and to create framework conditions for a competitive market shaped by legal certainty and consumer protection.
Case 5
We will issue three types of tokens: the Capital DAO Starter Token (Ticker:CDS), the Capital DAO Token (Ticker:CPDT), and the Capital DAO Profit Token (Ticker:CPDP), which will allow users to enjoy the benefits of the project.
The Capital DAO Starter provides not only a simple IDO participation right, but also a mechanism to LaunchPool.
Description of Token Utility
Tri-token structure
To support this decentralized reserve stablecoin, a tri-token structure is ideal:
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Asset Token — representing ownership, enabling crypto transactions, and constantly auditing the physical asset
Equity Token — to capitalize and govern the commodity and token ecosystem, and receive dividends
Utility Token — ecosystem currency, accounting for costs and value creation
The proposed system uses a tri-token structure: an asset token that can be moved between blockchains, an equity token to fund, govern, and earn dividends from the asset ecosystem, and a currency token used inside the ecosystem.
An Elegant Relationship (DAI, ETH, MKR)
There is a very interesting insight in the Ethereum system that nicely ties together a lot of the major concepts in crypto. Specifically, what ‘role’ do the ETH, DAI, and MKR tokens play? If DAI is money, then what is ETH? How does MKR fit in? How can we make sense of this tri-token system? Let’s explore these 3 assets independently, and then examine their relationships.
ETH as digital gold
Understanding ETH’s value proposition is an endeavor, to put it lightly. Although best left for another post, it must be accepted (at least, for the purpose of this article) that ETH is competing to be a store of value / digital gold, just like Bitcoin is. While many claim that ETH is used merely to pay for gas fees, I’m going to push back on this narrative. Ether is a digital commodity that exhibits many of the desirable qualities of an ideal money, and thus stands to gain a monetary premium. We already see evidence of this in DEXes (where ETH is the primary base currency), Maker (where CDP creators consider ETH valuable, thus allowing them to use it for collateral), and Augur (where ETH is the only betting currency).
It’s important to note that ETH isn’t money today, but rather competing to be money in the future. Unfortunately, as ETH undergoes its monetization process, it will necessarily experience high volatility. This is simply unavoidable due to the waxing and waning of investor confidence. As the probability of achieving ‘money’ status rises and falls, the price will follow accordingly. (Side note: for those who do not believe ETH can ever be money, just replace ETH with BTC for the rest of this article. The conclusions are the same.)
DAI as payments
The crypto community, however, recognizes that there is a need for censorship-resistant payments today. While ETH has enjoyed marginal success as a medium of exchange (and, in rare instances, a unit of account), it is far too volatile to serve as money today. DAI, on the other hand, fits in nicely here. Despite not being a digital gold, nor being as censorship-resistant as ETH, DAI has carved out a niche for itself and continues to grow (currently at ~$75 million circulating supply). The ingenuity of DAI is that it completely skips over the monetization process that ETH has to go through, and piggybacks off of the ‘money’ properties of USD. DAI serves well as a store of value, medium of exchange, and unit of account, at least to the extent that traditional USD satisfies these properties. Of course the trade off here is DAI’s underlying stability, which leads us to our next token.
MKR as insurance
Unlike DAI, fiat-backed stablecoins such as USDC have a very simple and centralized model for their stability. The issuer holds USD in its bank account, and redeems the stablecoin for $1 upon request. If USDC crashes to $0.10, there’s no problem. One can just hand in the USDC to CENTRE, the parent organization behind USDC, and they will redeem it for 1 USD. This process is known as recourse or convertibility, and is guaranteed by CENTRE (and its associated banks).
Case 6
The HOPR Token
HOPR is a multifaceted project developing bleeding-edge technology for digital privacy, layer-zero data transfer, and decentralized governance.
This is an enormous scope, and everything is tied together by the HOPR token, an ERC-20 token on the Ethereum blockchain.
There’s a lot to talk about here, but this post will cover the basics of the HOPR token: what it does, how to earn it, and broader tokenomic information including overall token supply and our token release schedule.
Token Functions
The HOPR token has three main functions: pay, stake, and vote.
Pay
The primary utility of the HOPR token is to pay for sending data privately through the HOPR network. Let’s say Alejandro’s company sends data privately to a user Zoe in three hops, relayed via Betty, Chāo, and Dmytro. Alejandro’s node will pay HOPR for each packet sent, with each relayer claiming a share of Alejandro’s payment.
Relayers are only paid once they’ve received payment key halves from the previous and following nodes along the route. This is the fundamental mechanism behind HOPR’s proof-of-relay system, which incentivizes everyone and ensures honest behavior.
Stake
Node runners earn tokens via HOPR’s staking mechanism.
The more HOPR tokens you lock up in your node as your stake, the more data you can relay and the more HOPR you can earn. These earnings will come partly through relaying user data (through the pay function, explained above), but also from relaying cover traffic, which accounts for 25% of the total supply (250 million HOPR, distributed over the first two years of the network).
Cover traffic is a crucial part of a decentralized mixnet, providing anonymity and unlinkability even at times when organic network usage is lower. By combining cover traffic with staking, HOPR takes two often arbitrary functions of decentralized networks and builds an incentive system where users are rewarded for holding HOPR tokens while also doing useful data relaying work for the network.
As a result HOPR staking is less passive than other staking programs. It’s not enough to just hold HOPR tokens: you have to run a node and contribute to the network to earn. This is better for overall network health and helps mitigate the problem of disinterested “whales”.
Vote
We believe digital infrastructure is a public good that should be in the control of users, not companies. To facilitate this vision, HOPR is designed to be a fully decentralized network under complete user control. We could dedicate thousands of words to HOPR’s governance system (and we plan to!), but for this post, we’ll focus on what the HOPR token lets you do.
Anyone who holds HOPR tokens will be able to vote on proposals that affect the HOPR network, including HOPR fees and other technical parameters. But that’s not all: anyone who holds HOPR tokens will also be able to apply for membership of the HOPR Association, a Swiss not-for-profit legal entity that allows HOPR to interact with the real world without exposing token holders to legal liability. It’s this crucial factor that separates HOPR from previous attempts at building a DAO.
Association members can vote using their tokens on association-specific things such as how the association spends its money and who gets to be on the board of directors. HOPR is taking a cautious but active approach to tokenized decentralized governance: it’s clear from previous experiments in this space that it’s inadequate, unhelpful, and perhaps even unfair to just abruptly transition to community control.
Different parts of a decentralized community have very different levels of token holding and engagement, and many parts of a project engaged in active development are not compatible with the very basic “proposal / mass community vote” model we see across the crypto space.
HOPR is taking decentralized governance to the next level, but the HOPR token will underpin every part of it.
Token Supply and Release Schedule
HOPR has a total supply of 1 billion tokens, broken down into the following categories:
One billion HOPR may seem like a lot of tokens, but the circulating supply will be much lower.
First, the stake function (explained above) provides strong incentives for HOPR to be locked.
Second, many of the token allocation categories are set to release gradually over a period of four years, as shown in the chart below.
At launch, the actual circulating supply will be 130m HOPR, and we expect much of that to be locked through staking.
Cover Traffic
Of all the categories in the allocation chart, the most important to understand is cover traffic, which accounts for 25% of the total supply (250 million HOPR). Cover traffic is arbitrary data that is sent through the mixnet to provide ‘cover’ for users in off-peak times. The more data being sent through a mixnet, the more anonymous it is, and cover traffic is a way of ensuring there is no way to link data and metadata to particular users. Like organic user data sent through HOPR (as described above in the pay function), cover traffic earns HOPR for node relayers.
The difference is that cover traffic will be directed by our protocol to relay through nodes based on their stake, providing predictable relaying work for nodes with locked HOPR. With 250 million HOPR to issue, this stake function is the primary source of incentives for node runners within the HOPR network, especially at the beginning of our lifecycle.
The precise rates at which cover traffic will be transmitted will partly be governed by network conditions, but will also be eligible for adjustment via the vote function (described above).
Treasury
A further 25.5% of the token supply (255 million HOPR) is allocated to the token treasury. Tokens in the treasury are earmarked for spending on future development and promotion of HOPR technology, usually through the provision of grants.
The precise way HOPR tokens are allocated will be under the control of members of the HOPR Association, of which HOPR token holders will be eligible to apply for membership.
When / Where Can I Get HOPR?
These are the questions that bombard our Telegram channel, and I’m delighted that we will soon be able to answer them. But not quite yet!
This is what I can say for now: After mainnet launch, HOPR can be earned by anyone who runs a node and stakes HOPR. As you relay data, your node will accrue tickets that can be claimed for HOPR via our smart contract on the Ethereum blockchain.
We will have more information about mainnet launch and how to acquire your first HOPR VERY soon. For now, all I’ll say is that it’s definitely worth participating in our final testnet, HOPR Titlis, which will start on Thursday January 14th. Visit our Telegram channel to learn more.
This whistle-stop tour of the HOPR token just scratches the surface, but I hope it’s given you a good first overview of our token utility and broader tokenomics. Look out for more blog posts in the very near future, and please check our documentation and social media channels for more information.
Legal Commentary and Interpretation
Three Type of Token
Token can have different economic functions: providing a classification is not only fundamental to understand their potential, but also helpful for regulation and fiscal purposes. An official three-side classification emerged among researchers and regulators in the first half of 2018:
Payment Tokens: they do not confer rights towards the issuer, but they are accepted as means of payment or transfer of value. This is the case of many cryptocurrencies like Stellar and Ripple;
Utility Tokens: they allow the utilization of products and services developed by the issuer or grant exclusive advantages and incentives;
Security Tokens: they represent assets, being them a claim against the issuer (bonds), equity investments (share) or promises of future capital flows (derivatives or other financial instruments).
Categories can overlap and one token can belong to more than one class or shift from one classification to another one over time. As concerns token models adoption, market trends suggest the following considerations:
Payment tokens are characterized by a high velocity and are less interesting as they usually don’t give particular advantages to holders;
Utility tokens are very intriguing as they allow to design sophisticated models of functioning and create a wide range of possibilities giving rise to the new and promising “Token Economy”. More and more projects attempt to let their token fall into this category, as it require less effort in legal and compliance aspects. On the other hand, it is more risky as the borders delimiting categories are not always clear to be interpreted;
The use of tokens as securities is an emerging trend and probably the future standard for the financial market. It is comparable to traditional financial model except for its decentralized nature and the possibility to add special functionalities, such as predefined and immutable rules for the assets and automation. Traditional financial players are beginning to embrace this technology, in fact stock exchanges from Malta, Switzerland and Singapore expressed the intention to develop security token exchanges.
A. How Crypto Token Function and Transferability Could Impact Classification as a Security
Much uncertainty exists throughout the world on the legality and legal classification of crypto tokens. In the United States, Ripple was sued recently for allegedly selling unregistered tokens (XRP) in a violation of U.S. securities laws. The US SEC and CFTC have held hearings and are assessing whether to classify certain tokens as securities and/or commodities. Both agencies have issued guidance on this (see, for example SEC and CFTC), but many issues remain.
Some industry experts have commented on the classification of three of the biggest tokens- bitcoin, ether and ripple. Many believe bitcoin and ether are not a security. However, debates exist as to whether ether or ripple are. Over 1500 crypto tokens exist, each with a different set of characteristics, function and purpose. The SEC has said most tokens are likely securities under the Howey Test.
So what are the differences between crypto tokens and how should this impact their classification? The industry hope for guidance from the SEC and CFTC sometime soon. It is hard to predict exactly where this will come out. However, it is useful to consider what has been done in Switzerland.
Earlier this year, the Swiss Financial Market Supervisory Authority (FINMA) issued guidelines which explained how it intends to address Initial Coin Offerings (ICOs). It distinguished between certain types of tokens and certain types of ICOs, but the core principles focus on the function and transferability of tokens. In the Guidelines, FINMA stated:
In assessing ICOs, FINMA will focus on the economic function and purpose of the tokens (i.e. the blockchain-based units) issued by the ICO organiser. The key factors are the underlying purpose of the tokens and whether they are already tradeable or transferable. At present, there is no generally recognised terminology for the classification of tokens either in Switzerland or internationally. FINMA categorises tokens into three types, but hybrid forms are possible. It identified three types of tokens.
Payment tokens which are synonymous with cryptocurrencies are tokens which are intended to be used, now or in the future, as a means of payment for acquiring goods or services or as a means of money or value transfer. Cryptocurrencies give rise to no claims on their issuer and have no further functions or links to other development projects. Tokens may in some cases only develop the necessary functionality and become accepted as a means of payment over a period of time.
Utility tokens are tokens which are intended to provide digital access to an application or service by means of a blockchain-based infrastructure.
Asset tokens represent assets such as participations in real physical underlying companies, or earnings streams, or an entitlement to dividends or interest payments. In terms of their economic function, the tokens are analogous to equities, bonds or derivatives. Tokens which enable physical assets to be traded on the blockchain also fall into this category.
Based on these criteria, (function and transferability), FINMA indicated that it will handle ICO enquiries as follows:
Payment ICOs: For ICOs where the token is intended to function as a means of payment and can already be transferred, FINMA will require compliance with anti-money laundering regulations. FINMA will not, however, treat such tokens as securities. Given that payment tokens are designed to act as a means of payment and are not analogous in their function to traditional securities, FINMA will not treat payment tokens as securities. This is consistent with FINMA’s current practice (e.g. in relation to Bitcoin and Ether).
Utility ICOs: These tokens do not qualify as securities only if their sole purpose is to confer digital access rights to an application or service and if the utility token can already be used in this way at the point of issue. If a utility token functions solely or partially as an investment in economic terms, FINMA will treat such tokens as securities (i.e. in the same way as asset tokens). Utility tokens will not be treated as securities if their sole purpose is to confer digital access rights to an application or service and if the utility token can actually be used in this way at the point of issue. In these cases, the underlying function is to grant the access rights and the connection with capital markets, which is a typical feature of securities, is missing. If a utility token additionally or only has an investment purpose at the point of issue, FINMA will treat such tokens as securities (i.e. in the same way as asset tokens).
Asset ICOs: FINMA regards asset tokens as securities. Asset tokens constitute securities if they represent an uncertificated security and the tokens are standardised and suitable for mass standardised trading. An asset token also qualifies as a security if it represents a derivative (i.e. the value of the conferred claim depends on an underlying asset) and the token is standardised and suitable for mass standardised trading. In the case of the pre-financing and pre-sale phases of an ICO which confer claims to acquire tokens in the future, these claims will also be treated as securities (i.e. in the same way as asset tokens) if they are standardised and suitable for mass standardised trading.
FINMA stressed that individual token classifications are not mutually exclusive. Asset and utility tokens can also be classified as payment tokens (referred to as hybrid tokens). In these cases, the requirements are cumulative; in other words, the tokens are deemed to be both securities and means of payment. There is some logic to these classifications, but it remains to be seen whether the US adopts a similar approach.
B. The Three Token – Regulations, global review
The Regulation shall apply to crypto-assets except for crypto-assets which are considered as:
financial instruments under MiFID II
e-money under EMD
deposited funds under DGSD
structured deposits under MiFID II
securitisation under the STS Regulation
Crypto-assets generally cover a digital representation of value or rights that can be transferred and stored electronically via DLT or similar technology (blockchain). This broad definition considers all types of crypto-assets that are not currently covered by EU financial services legislation so that legislation can keep up with innovation and technological developments.
There are many different kinds of crypto assets, and more are to be expected over time. Each crypto-asset must be assessed independently to clarify its regulatory status. In particular, it is necessary to assess whether the crypto asset is subject to the existing financial regulation, including whether the crypto-asset constitutes a financial instrument.
The broad definition also makes it necessary to distinguish between specific subcategories of crypto-assets that should be subject to specific requirements.
In this context, the proposal distinguishes between 1) "utility tokens", 2) "asset-referenced tokens", 3) "e-money tokens", and 4) other crypto assets. Each type of crypto asset is subject to special rules.
UTILITY TOKENS
Utility tokens are intended to provide digital access to goods or services available in connection with DLT and acceptable only to the issuer of that token. Such tokens have non-financial purposes connected with, for example, the operation of a digital platform or service and should be considered a specific type of crypto-assets. Their value is not linked to other underlying assets or instruments and cannot be re-deemed anywhere other than with the issuer. Such tokens are usually used to pay fees on the crypto-asset service.
ASSET-REFERENCED TOKENS
Asset-referenced tokens purport to maintain a stable value by referring to several (fiat) currencies that are legal tender, one or several commodities, or one or more crypto-assets or a combination of such un-derlying assets. By stabilising their value, they can be used by the holders as a means of payment to pur-chase goods and services and as a means of store of value. Under the proposal for Markets in Crypto as-sets (MiCAD), issuers of asset-based tokens shall either be a credit institution or have a special authorisation to offer asset-based tokens to the public and to apply for admission to trading on a trading platform for crypto assets.
E-MONEY TOKENS
E-money tokens, as the name suggests, are primarily intended as a means of payment and aim to stabilise their value by referring only to one fiat currency. These crypto-assets are very comparable to e-money and constitute surrogates for coins and notes that can be used for payments. Under the proposal, issuers of e-money tokens must be authorised as a credit institution or e-bank to offer electronic tokens to the public and to be used for trading on a trading platform for crypto-assets.
OTHER CRYPTO ASSETS
Other crypto assets are the catch-all provision covering all crypto assets other than those mentioned and those specifically exempted from the Regulation. The Regulation divides them into a separate section entitled " Crypto-Assets, other than asset-referenced tokens or e-money tokens ". Under the Regulation, no crypto-asset issuer may offer them to the public or request the admission of such crypto-assets to trading on a trading platform for crypto-assets, unless the issuer meets a number of criteria.
CHANGES IN MIFID II
The Regulation is accompanied by a proposal for an amending directive, which clarifies that the current definition of "financial instruments" also includes financial instruments based on DLT. Thus, the amending directive will lead to changes in MiFID II, where the definition of "financial instruments" in point (15) of Article 4(1) will be changed to: "those instruments specified in Section C of Annex I, including such instru-ments issued by means of distributed ledger technology".
This ensures that financial regulation can keep up with technological developments. However, this does not mean that all the classic crypto-assets are considered financial instruments. Crypto-assets should be regulated separately, as proposed in the Regulation.
The change in MiFID II merely encourages a technology-neutral definition of financial instruments so that an instrument based on DLT falls within the scope of the designation if it relates in this case to securities, money market instruments, options, futures, swaps, future interest rate agreements, and any other de-rivatives agreement relating to securities, etc. e.g., is generating profit or can generate interest returns, etc.
In other words, the change in MiFID serves to clarify that it is not the actual form of issuance, but the pur-pose of the issuance, that determines whether an issue is a financial instrument or not – like issuing a security or a dematerialised fund asset with an ISIN through a securities exchange (in Denmark via VP-Securities). The answer to the question of whether the digital asset in question, based on DLT, is a finan-cial instrument is based on the rich practice and the criteria established, whether the issuance (i) has a financial purpose, (ii) is standardised, (iii) negotiable, and (iv) negotiable. In other words, the classification is based on the contractual substance and not the legal form.