Applicature and the Chicago Blockchain project hosted a CryptoEconomics event in Chicago on July 19, 2018. Due to the fact that cryptocurrency economics and decentralized token governance are critical symbiotic conditions for new and upcoming blockchain projects, it is crucial to understand the main working principles. The Cryptoeconomics event highlighted aspects for consideration according to the prescribed course for successful funding, distribution, and adoption.
Who Were the Speakers?
Wulf Kaal is a leading expert on blockchain applications in various industries. He has vast experience working with initial coin offerings, smart contracts, and private investment funds. As a leading proponent of dynamic regulatory solutions for innovation, Kaal assists and guides:
- crypto companies
- crypto startups
- venture capital funds
- international policymakers
Wulf Kaal started the discussion by explaining the notion of cryptoeconomics. He illustrated it as a technical science focusing on the design and characteristic features of crypto protocols being connected with cryptography, behavioral economics, and computer science.
Kaal continued by explaining the influence of micro- and macroeconomics on the cryptoeconomic system. He emphasized that cryptoeconomics is an evolving, experimental industry, and therefore, various methods and models are being tested out and compared nowadays.
Matt Leidlein has 18 years of execution experience in cash and derivative markets. Besides a sterling track record of liquidity provision in volatile assets and derivatives, Matt has a uniquely comprehensive background, having led teams in the pits of the CBOE, Europe’s call-around options market, via IM in OTC markets, and electronically across equity, energy, interest-rate, metals and foreign currency products.
Matthew pointed out the core aspects of distributing crypto-asset value between holders and users. He discussed the notion of security tokens and their issuance within STOs, token economic model peculiarities, and use cases.
Danny is one of the most knowledgeable people in the blockchain sector in Chicago. He created Pinkcoin 2014, which is a blockchain-based donation platform for social impact.
Holding an MBA in Business, Management, Marketing, and Related Support Services, Johnson is now on the Chicago Blockchain Project team. He serves as advisor to multiple crypto funds, and coach to reputable blockchain projects.
Johnson discussed the current state of cryptocurrency exchanges and outlined the options for selling security tokens. He stressed that investment in securities can be considered reasonable as long as all token characteristics are evaluated and users are offered beneficial conditions with future revenues.
Yankun Guo is a principal attorney at Yankun Guo Law. Yankun has been a beacon in the Chicago blockchain community. She formerly worked as:
- regulatory counsel at Opportunity Financial, LLC
- legal and compliance consultant at CME Group.
Yankun dwelled on issues of the cryptocurrency market, token governance, and utility from a financial point of view. As for security tokens and their relation to cryptoeconomics, she stated that it is important to understand whether securities are really treated as such, and whether there is a certain value behind the product or service the company offers.
Mykyta Safronenko (Moderator)
Mykyta is an active member of the Silicon Valley Blockchain Community. As Business Development Director at Applicature, he works with many crypto hedge funds, ICO projects, and blockchain startups from all over the world. Mykyta graduated from San Francisco State University with a marketing degree and has worked at Google and Facebook.
As event moderator, he presented speakers to the audience and encouraged discussion on the topics of cryptoeconomics, token governance, exchange markets, and STO futures.
What Did We Learn?
Reaching consensus between users is the key point of the blockchain system, which runs in a decentralized manner, and is therefore incorruptible, independent, and reliable.
The panelists, Kaal, Johnson, Leidlein and Guo, outlined the opportunities and dangers of the cryptocurrency capital market.
Token use cases were noted, along with relevant business plans, issues of price volatility, and common token economic models.
Is was stated that STOs (security token offerings) can be treated as financial securities, as they are similar to common company shares. Considering that STOs are pretty new to the community, the question of security token trade arose. The panelists clarified that there won’t be any problem with token listing, and it will be quite similar to common cryptocurrency exchange. This would be easier to perform outside the United States, however, due to the current policy.
“There are two possible ways of trading security tokens in the U.S: true utility token trade, and listed security token with an ATS (alternative trading system) license,” states Wulf. “But neither model is moving forward as of now.”
The panelists proceeded to discuss the current state of exchange markets and whether there are any chances for security tokens to be listed and further traded on initial stock exchanges.
To sum up, it is clear that any token or asset’s core goal is to deliver final value to customers. As cryptoeconomics is an experimental field right now, various methods and strategies are being applied to see how it works and find the best solutions.