Token Economics in Real-Life: Cryptocurrency and Incentives Design for Insolar’s Blockchain Network

Kim, H. M., Laskowski, M., Zargham, M., Barlin, M., Kabanov, D., & Turesson, H. (2020). Token Economics in Real-Life: Cryptocurrency and Incentives Design for Insolar’s Blockchain Network. IEEE Computer. July.

7 Pages Posted: 16 Oct 2019 Last revised: 23 Nov 2020

See all articles by Henry M. Kim

Henry M. Kim

York University - Schulich School of Business

Marek Laskowski

York University; University of Guelph

Michael Zargham

BlockScience

Hjalmar Turesson

York University - Schulich School of Business

Matt Barlin

BlockScience

Danil Kabanov

Insolar

Date Written: May 8, 2020

Abstract

The study of how to set up cryptocurrency incentive mechanisms and to operationalize governance is token economics. Given the $250 billion market cap for cryptocurrencies, there is compelling need to investigate this topic. In this paper, we present facets of the token engineering process for a real-life 80-person Swiss blockchain startup, Insolar. We show how Insolar used systems modeling and simulation combined with cryptocurrency expertise to design a mechanism to incentivize enterprises and individual users to use their new MainNet public blockchain network. This study shows that subsidy pools that incentivize application developers to develop on the network does indeed have the desired positive effect on MainNet adoption. For a startup like Insolar whose success hinges upon how well their model incentivizes various stakeholders to participate on their MainNet network versus that of numerous alternatives, this token economics simulation analysis provides invaluable insights.

Keywords: Token economics, token engineering, cryptocurrency, blockchain, agent-based modelling and simulation

Suggested Citation

Kim, Henry M. and Laskowski, Marek and Zargham, Michael and Turesson, Hjalmar and Barlin, Matt and Kabanov, Danil, Token Economics in Real-Life: Cryptocurrency and Incentives Design for Insolar’s Blockchain Network (May 8, 2020). Kim, H. M., Laskowski, M., Zargham, M., Barlin, M., Kabanov, D., & Turesson, H. (2020). Token Economics in Real-Life: Cryptocurrency and Incentives Design for Insolar’s Blockchain Network. IEEE Computer. July. , Available at SSRN: https://ssrn.com/abstract=3465085 or http://dx.doi.org/10.2139/ssrn.3465085

Henry M. Kim (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Marek Laskowski

York University ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

University of Guelph ( email )

Guelph, Ontario
Canada

Michael Zargham

BlockScience

Oakland, CA
United States

Hjalmar Turesson

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Matt Barlin

BlockScience

Oakland, CA
United States

Danil Kabanov

Insolar ( email )

Gartenstrasse 6
Zug, 6300
Switzerland

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