POA Token economics

#1

I am looking for further information on POA token economics, I understand so far that it is basically like eth, but would like to understand further the plans to increase utility of the token (staking?), I
is there any material on this? Logically, one of the strenght of POA are its side chains, if POA sidechains are heavily used will POA itself benefit from it in any way (only the validators?). Would appreciate insights into this.

#2

Hi @RichardHakluyt

please refer to the whitepaper at https://github.com/poanetwork/wiki/wiki/POA-Network-Whitepaper

Economy, also take a look at some of the use cases, if you need additional information let us know.

#3

Thank you for your reply.

I scanned the economy section and the use case section of the white paper, is there something I am missing?

"Crowdsale will take place before the launch of the main network. Purchased coins will be included in the genesis block and will create initial liquidity for the network.

Validators will start to create blocks and generate a reward for the network security. For each generated block, a validator who created it will get one coin and all fees for transactions. Each validator has equal rights to create a block."

I still have a hard time understanding how POA will appreciate in value? Seems to be neat if you are a validator, but majority of people aren’t. The use case section is very short and does it really spell out use cases or rather POA network advantages (inexpensive network, validators with know identity etc.), are you referring as well to the dapp section?

#4

Seems to be neat if you are a validator, but majority of people aren’t.

Validators’ reward is the price for the security of the network. It’s 1 POA token to validator who created the block per block. Emission for the security of the network is ~ 2.5% a year.

The use case section is very short and does it really spell out use cases or rather POA network advantages (inexpensive network, validators with know identity etc.), are you referring as well to the dapp section?

POA tokens usage now:

  • some dapps deployed on POA are using POA tokens as medium of exchange. E.g. price of in-game items in DopeRaider denominated in POA tokens. Here is the price list for in-game items

    Because the game is on POA the game is using POA tokens.
    E.g. a game on Tron will use TRX tokens, a game on Ethereum will use Eth tokens
  • dapps are using POA tokens to pay gas fees. E.g. Geon Dapp selected POA Core as a platform because of the low gas fees
  • POA token can be bridged to POA20 and used as collateral for loans onEthLend platform
  • speculators are using POA token for speculation. From Wikipedia: Speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable in the near future
  • arbitrage between exchanges, especially with native POA and bridged POA20 form of the same token. The incentive can be observed with the different price of the same token on different exchanges on Coinmarketcap https://coinmarketcap.com/currencies/poa-network/#markets
  • Vendors and merchants are able to accept POA20 as a form of payment through Coinpayments. If you are a merchant you can find out how to start accepting POA20 here.

Future usage of POA tokens:

  • the POA token could be used for converting to staking token on parallel chains launched with the support of POA team. There are no such staking networks yet but there is a plan to upgrade xDai. xDai Chain will be one of the first network with the new staking algorithm POSDAO.
  • If xDai validators decide to upgrade the protocol of xDai from PoA to staking the xDai network will use POSDAO.

The native tokens of sidechains with bridged native tokens (xDai, xEth) are bridged from other networks (Ethereum in a form of Dai, Ether) and they can’t be diluted on sidechains side. Thus there is no reward for delegators from inflation of native tokens on such networks at the moment. Delegators and validators might share revenue from:

  • new staking token
  • usage fee on the sidechain
  • entrance/exit fee from the sidechain to mainnet
  • rehypothecation, which is revenue from loaning of locked tokens on mainnet to third-party services with guaranteed withdrawal
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#5

I appreciate that you took the time to reply.

To some extend, I was familiar with DopeRaider and their usage of the token, whether this might make the token appreciate in value is probably rather doubtful and remains to be seen (probably only if dapps on POA have very strong “ingame” economics which then transfer over to POA token economics/demand). But of course that is a fair point regarding utility and as you state common for other networks as well.

I think the scenario regarding the token being part of some sort of staking economy is quite interesting and I will be watching that closely. Of course it will remain to be seen how the conversion rate could be, a strong conversion rate of course could immediately impact the demand for the token.

I know that you have a very strong engineering focus in the project and I don’t wanted to make the dicussion sound too much resolving around short term “token speculation/Price” but rather the utility side (which of course is somewhat related to that…)

Alas I hope that the POA token in the future will be able to share in the success of its sidechains…

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