Shermin Voshmgir. Feb 22, 2024.
In this post I briefly describe the token design tool that I created and the design thinking framework upon which it is based. At the end of this post you will find other useful and complementary token design and simulation tools.
This design thinking framework was developed and adapted over the years, analyzing numerous token systems. As I was trying to wrap my head around the commonalities and the differences between various tokens systems, I realized that any token system — no matter its governance structure — will always require a systematic analysis of its purpose and principals, the functions that need to be fulfilled, the necessary types of tokens, the properties of all tokens types, the stakeholders that will be involved, and last but not least the power structure that arise between the different stakeholders over time.
The framework is described in greater detail the book DAOs & Purpose-Driven Tokens of the Token Economy Series. Many questions that are covered in this tool were already outlined in the book MONEY, NFTs & DeFi in the chapter “How to Design a Token System.”
To make the framework less theoretic and more hands on, I created this google sheets based online tool, which I release into public domain (see licence conditions below).
HOW TO USE
To use it, make a copy of this file to your own google drive and start filling it out. Alternatively, you can download the document to your own device as ODS or XLSX format. In case you have any feedback, please comment here.
ABOUT THE TOOL
It can be applied for modelling or analyzing complex token systems that steer Web3 based online communities. It can also help model simple asset and access right tokens which are managed through more centralized governance structures of a private company — though this defies the principles and possibilities of Web3 and might be counterproductive in the long run.
This qualitative tool is quite comprehensive and is meant to facilitate the first step in the design thinking process from en economic, technical and legal perspective. From an economic perspective, additional quantitative modelling and analysis will have to be carried out on top of this design thinking framework, but that is not the first step in the process. Quantitative modelling and analysis only makes sense once one understands what ones goal is, who the involved stakeholders are, what needs to be measured or simulated, and in which context the data should be interpreted.
There is no one size fits all solution which is why this tool is so comprehensive. Modelling metrics such as number of tokens issued (for fungible tokens) or pricing policies (for NFTs), or analytics metrics such as total value locked, market cap, or gross network value are not significant on their own if they don’t consider the purpose of the token design, the industry in which the token system operates, the stakeholder structure of any type of token system, and other qualitative aspects.
Screenshots from Token Design Tool
Copyleft 2024, Shermin Voshmgir: Creative Commons — CC BY-NC-SA.
- NON-COMMERCIAL RIGHTS This license allows reusers to distribute, remix, adapt, and build upon the material in any medium or format for non-commercial purposes only.
- ATTRIBUTION Non-commercial rights are granted only so long as attribution is given to the creator (Shermin Voshmgir) and the book in which it was published (TOKEN ECONOMY: DAOs & Purpose-Driven Tokens).
- LICENSING If you remix, adapt, or build upon the material, you must license the modified material under identical terms.
- COMMERCIAL RIGHTS For commercial rights contact: firstname.lastname@example.org
OTHER USEFUL TOOLS
Here is a brief overview of complementary tools you can use for the analysis, design & simulation of token systems. If you know others tools or have developed a tools that you think should be listed on this page, please send an email to email@example.com or ping me on twitter or linkedin.
TOKEN SIMULATION TOOLS: Once you used the qualitative tool, and know what the properties of your token(s) will be, you can use following tools to visualised and simulate the behaviour of your tokens over time.
- Machinations Game design platform empowering studios with design-and-play predictions: which can be used for token economics such as in this example.
- CadCAD Python based simulation tool for testing and validating complex systems such as token systems.
- Token Spice EVM agent based token simulator.
- Cenit Paid tool which helps to design and tested token economies.
OTHER DESIGN THINKING TOOLS
- Platform Design Toolkit This design method was designed for Web2 based platforms, but can be adapted for Web3 based communities. The aim is to help build multi-sided, transformative platform strategies to empower ecosystems in creating shared value.
- Token Utility Canvas Outlier Ventures developed this Canvas to identify what they refer to as the utility of ones tokens and argue that a well-designed token needs to provide value through the right incentives to all stakeholders, meaningful integration into the product or protocol, and be effectively distributed. It shares many aspects of what I mention in my toolkit, but lacks other aspects, such as the functions of the system, and accounting for various token types. It is quite practical as the canvas vizualizes the multidimensionality of the questions in one page.
- Tokenomics Design Canvas As I was researching for this blog post, I also found this canvas, which must have been recently published, but I cannot say as it does not come with a date. It shares many aspects of what I mention in my toolkit, and is more detailed in certain aspects, and less in others. For example, the focus seems to be on currency tokens that steer communities, but not on NFTs which represent unique assets.
Special Thanks to Michael Zargham who pointed out the importance of thinking in functions when developing this tool.