CZ’s FAQ 4 – One Coin to Rule Them All? Or Millions of Coins?

(*4*)Spoiler, I consider the latter. Here is why.

(*4*)Benefits of Issuing Coins

(*4*)There are many advantages of issuing a coin. Some are apparent, some are usually not.

(*4*)Many folks know you could situation a brand new coin and get some cash from the preliminary sale, when you’ve got some credibility. It might be an ICO, IEO, IDO, and so on. I’d say that is in all probability lower than 0.1% of the full worth you get from issuing a coin. If you have a look at BNB, it raised $15m USD equal in bitcoin on the ICO, whereas that could be a implausible increase for a venture at such an early stage, at present, the full market cap of BNB is $90 billion USD, about 3000x.

(*4*)The second small profit is the coins the venture workforce retains. In the case of BNB, the workforce allocation was about 40% of the coins, which is now value $45 billion USD. While this feels like an actual sum, I’d dare say it’s nonetheless only a small portion of the worth you get from issuing a coin.  

(*4*)Note, the workforce allocation of BNB was and can by no means be distributed to any members on the workforce. The workforce has dedicated to burning all of them, which makes BNB a good launch coin, i.e. the workforce didn’t maintain any tokens for themselves. All the BNB our workforce will get shall be earned via offering our providers.

(*4*)The actual profit of issuing a coin is it creates a complete new ecosystem, from consumer interactions to consumer retention, and improvement of the ecosystem. This is one thing that can’t be completed utilizing firm fairness (securities) or fiat currencies, and even utilizing bitcoin. You have to create your individual coin for it to work.

(*4*)First, let’s have a look at how corporations work. You have your customers, who pay, then you may have the corporate who builds the merchandise and pays its colleagues, then provides the earnings to their shareholders. In this mannequin, cash flows a technique solely. From customers to firm to shareholders.

(*4*)It’s totally different with a token, you do an preliminary sale (ICO or IEO), and assuming the token affords some utility or advantages in your platform or ecosystem, the folks shopping for and holding your token are sometimes your customers.

(*4*)When the price goes up, the token holders, your customers, profit. Thus, they’re incentivized to use your platform extra and get extra mates onto your platform. They turn into your greatest salespeople. (Your customers sometimes have extra mates in your typical demographic.) And they get rewarded via token economics. It creates a constructive virtuous cycle, a really sticky ecosystem. 

(*4*)You can’t do the above with fiat currencies. It simply doesn’t work. You can’t do that even with bitcoin. You have to create a brand new token to your platform or ecosystem, in any other case, you’ll be able to’t create a symbiotic development surroundings along with your customers.

(*4*)What about equities? You may develop along with your shareholders. True, however they’re sometimes small in quantity (particularly for early stage corporations), they usually is probably not your customers. More importantly, you’ll be able to’t use fairness to pay to your providers. You can’t do airdrops or different consumer incentives with equities. 

(*4*)For the above causes, I consider folks will proceed to create new tokens for his or her initiatives. And there shall be thousands and thousands of tokens. Like begin ups, most will fail. But those that succeed will succeed tremendously and create quite a bit of worth for the world.

(*4*)So, go create your individual token?

On Creating Tokens.

(*4*)I counsel you to not create a token till you may have product-market-fit. Tokens ought to be an acceleration mechanism, AFTER you may have constructed a product that individuals need. Once you situation a token, it turns into more durable to pivot your small business. You have to get consent out of your neighborhood.  So, it isn’t very best for trials, MVPs (minimal viable product), or the experimental phases. There are many issues on issuing a coin. I wrote an article a number of years in the past about it. It’s a little bit dated. Maybe I’ll write that as a separate article sooner or later.

(*4*)When you’re prepared to create a token, I counsel you to speak to Binance Labs earlier than you finalize your plan. If your venture is engaging, Binance Labs workforce can overview your token design. Most crypto initiatives need to record on Binance (the “when Binance?” query), and we’ll care about your token economics, similar to how a lot is allotted to the neighborhood vs founders, their unlocking schedule, and so on. It is healthier to speak to us earlier than you even situation your token. Having mentioned that, our Labs workforce does get overwhelmed with requests. There isn’t any assure they are going to be ready to reply to your requests.

(*4*)There you go. Create your token and alter the world.


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