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Will 2018 Be The Year of The Scalable Blockchain?

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2017 was the year of the ICO. It proved that token sales can be an incredible success as as a fundraising model. Startups were able to raise an astounding $5.6 billion dollars in fundraising — completely jettising the traditional venture capital industry. Now in 2018, equipped with massive war chests, the race is on to see which decentralized applications and blockchain projects will be the ones to come out on top. The first round of fundraising is over, now scaling is the number one priority.

If we examine the venture capital industry’s role in the startup up ecosystem, a fundamental tenet of it is to pump companies with money in order for them to onboard customers and solve the two-way market dynamics problem. We saw it first with Paypal giving every individual user $20 simply as an incentive to create an account on their platform, and we saw it explode with Uber, AirBnB, and Postmates. Now it is so ubiquitous that we demand it from every application vying for our attention.

Blockchain projects are in a similar situation with the value of the network predicated upon the number of nodes (individuals) on the network, as well as the volume of transactional activity being supported. So, how do you adapt the strategy employed by the unicorns and VCs of the past decade with blockchain projects emerging in the next?

OmiseGo, under the guidance of Joseph Poon, was one of the first decentralized projects to begin experimenting with the idea of giving away tokens to people in hopes that they would then be incentivized to support the project. OmiseGo’s strategy was to airdrop free OMG tokens at a fixed OMG:Eth ratio for wallets that contained a minimum amount of Eth by a certain block number. It’s easy to see the clear parallel between what OmiseGo did and what Silicon Valley companies have been doing over the past decade in order to tackle two-sided marketplace dynamics.

In January 2018, Earn.com, previously 21.co, positioned itself as a mechanism for blockchain projects to airdrop their tokens to pre-vetted lists of people maintained by Earn.com. Since then, many major blockchain projects have signed on with Earn.com to help facilitate their own airdrop and begin to aggressively scale. So marks the trend of tackling scalability by airdropping to targeted users and sometimes even unspecific sets of users.

One issue with this approach is that many people weren’t really thinking about scale when initially designing their token economics. Typically, the team sets apart a certain allocation of their total token supply to support and fund any further development they would need to do on the project, but that supply is limited. When the success of adoption may depend on giving away tokens to as large of an audience as possible, what happens when a project runs out of tokens? How does the platform support itself after giving away so much value — but not enough to keep up with competitors?

Enter OPEN Platform. OPEN Platform is the payment gateway that provides a bridge between on-chain payments and off-chain databases. Its developer friendly API is blockchain agnostic, enables users to pay with any cryptocurrency, and does not require the developer to learn blockchain specific scripting language and architectures. OPEN has designed what may be the next generation of token economics to address the problem of scaling directly.

Similar to how credit card processors take a 3{e9b7b6e97581a958d2bc378a46799d644da7fe427050b58be8de8c4fdd2a2020} fee from every transaction in order to generate revenue, OPEN also takes a 3{e9b7b6e97581a958d2bc378a46799d644da7fe427050b58be8de8c4fdd2a2020} fee from every transaction that utilizes its architecture. However, the key difference is that OPEN does not use that fee to pay itself, rather it uses that fee to onboard new developers and applications. The fee is directed to a Developer Growth pool, from which the tokens are distributed to new developers and applications. The end result? An allocation of OPEN tokens that is continuously sustained by network activity and not privy to the same constraints other blockchain projects are that did not design their token economics to be adaptable to scale.

This model is an evolution of the token economy design that provides a sustainable growth pool for blockchain projects to get to scale. In a time when projects need to get to scale in order to provide value back to the users and therefore survive, token economic models like OPEN are becoming increasingly important. We will continue to see the evolution of the token economy, but one thing is for sure — in 2018 scale will be paramount and the only guaranteed winner is the end customer.

For more information about OPEN’s token economics visit their website.

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