Blockchains and the Token Economy: Theory and Practice

Acknowledgments
Contents
Notes on Contributors
List of Figures
List of Tables
Introduction to the Token Economy
Overview of the Chapters
Conclusion
References
1: Implications of the Token Economy: A Taxonomy and Research Agenda
Introduction
Literature Review
Tokens in the Blockchain Economy
The Token Landscape
Methodology
Results
Economic Purpose
Stakeholders
Perspective
Business Model Aspects
Technical Aspects
Legal Aspects
Challenges and Solutions
Conclusion, Implications, and Further Research
Appendix
Business Aspects
Technical Aspects
Regulatory Aspects
References
2: Working Title: Recovering from Blockchain Missteps and Myths with Coopetition
Introduction
The Early FedEx Journey
Myths About Blockchain
Dispelling Myths About Blockchain
Psst…Whether or Not You Know It Yet, the Rules Have Changed
Conclusion
3: Finding the Right Balance: Technical and Political Decentralization in the Token Economy
The Token Economy and the Need for Cross-Ledger Interoperability
Decentralization of Token Economy Instances
Decentralized Token Economy Instances That Are Based on Distributed Ledger Technology
Technical Decentralization in Token Economy Instances That Comprise Different Distributed Ledger Technology Systems
Cross-Ledger Interoperability Patterns and Their Degrees of Technical Decentralization
Manual Asset Exchange Pattern
Notary Pattern
Sidechain Pattern
Dependencies Between Technical Decentralization and Security and Performance Characteristics
Political Decentralization in Token Economy Instances That Comprise Different Distributed Ledger Technology Systems
Governance in Token Economy Instances That Are Based on Distributed Ledger Technology
Political Decentralization of Token Economy Instances and Cross-Ledger Interoperability
Drawing Conclusions from the Technical and Political Perspectives on Centralization and Decentralization of CLI Systems
References
4: Cryptoeconomics: Designing Effective Incentives and Governance Models for Blockchain Networks Using Insights from Economics
Introduction
Blockchain and the Paradox of Choice
Why (Crypto)economics Can Help
Framework for Economic Design
Pioneers of Economic Design: The FCC Spectrum Auction
The Phases of Practical Economic Design
Phase 1: Value Proposition and Strategy
Phase 2: System Architecture
Phase 3: Economic and Governance Design
Phase 4: Value Verification
Prysm Group 3Cs of Economic Benefits of Blockchain
Coordination
Commitment
Control
Prysm Group House Economics Framework
Overview of the Components of the House Framework
The Incentive Layer
The Token Layer
Prysm Group Wheel Governance Framework
Implementation Challenges
Disclosures
References
5: Verifiable Credentials in the Token Economy
Overview of Credentials
Principles for Self-Sovereign Identity (SSI) and Verifiable Credentials
Concepts and Technologies for Verifiable Credentials
Minimal Viable Products
SmartResume
Digital Health Passes
Conclusion
References
6: NFTs and the Metaverse Revolution: Research Perspectives and Open Challenges
Introduction
Setting the Scene
Virtual Worlds Toward a Blockchain-Based Metaverse
Blockchain-Based Metaverse
Artifacts Inferred from Blockchain-Based Metaverses
Features of a Blockchain-Based Metaverse
Token Standards
Ethereum Blockchain
Efinity Blockchain
Near Blockchain
Flow Blockchain
Hedera Hashgraph
Bitcoin Cash
Binance Smart Chain
Other Chains
Research Perspectives and Open Challenges
Creation of the Metaverse
Innovative Products and Services
Monetization Opportunities
Challenges on Governance, Generation, and Minting Processes
Concluding Remarks
References
7: Asset Tokenization of Real Estate in Europe
Introduction
Blockchain Technology and the Theoretical Foundation
Blockchain-Based Smart Contracts
Real Estate and Commercial Real Estate
Current Methods of Investing in Real Estate
Securitization
Tokenization of Assets/Rights
Interview Results
Topic 1: Tokenization of Assets
Topic 2: Structure of the Real Estate Offering
Topic 3: Risk and Benefits of Tokenized Real Estate
Topic 4: Legal Challenges
Real Estate Tokenization Use Cases in Europe
Real Estate Tokenization Companies in Europe
Real Estate Single Asset/Entity Tokenization Projects in Europe
Discussion
Research Question 1: What Are the Conditions Under Which Real Estate Asset Tokenization Makes Sense?
Research Question 2: What Do the Current Tokenized Real Estate Offerings Look Like?
Research Question 3: What Are the Main Benefits and How Do They Differentiate Themselves from the Existing Methods of Real Estate Financing/Investing? What Are the Risks Associated with This Technology and This Sort of Offering?
Research Question 4: How Do Real Estate Tokenization Companies Currently Utilize Jurisdictions Within the European Union and Why Did They Choose Their Respective Country of Operation?
Conclusion
References
8: Tokenization and Regulatory Compliance for Art and Collectibles Markets: From Regulators’ Demands for Transparency to Investors’ Demands for Privacy
Introduction
Tokenization for Fractional Ownership, Collateral, and Sponsorship
Tokenized Claims for Custodied and Non-custodied Assets
Art Markets, AML/KYC Regulation, and Identification
Digital Wallets for Tokenized Claims and Off-Chain Identity Information
Zero-Knowledge Proofs for Selective Disclosure
Proposed Technology Stack
Outlook
References
9: Token-Based Insurance Solutions on Blockchain
Introduction
Preliminaries of Token-Based Insurance Solutions
Roles
Insureds
Insurer
Underwriters
Reinsurers
Claim Assessors
Decentralized Autonomous Organization
Assets and Tokens
Payment Token
Insurance Token
Governance Token
Processes and Operations
Cover Purchase
Pricing
Payout
Capital Management
Governance
Comparison of Existing Decentralized Insurance Protocols
Nexus Mutual
Etherisc
inSure
Other Insurance-Related Solutions on Blockchain
fidentiaX
Opyn
Backd
Discussion
Benefits
Efficient Risk Transfer
Transparency
Security
Customization and Agility
Challenges
Lack of Contingency Plan for Insolvency
Low Competition and Participation
Fragile Incentive and Penalty Mechanism
Centralization
Conclusion and Outlook
References
10: Revisiting Blockchain Token Sales: How Crypto Companies Raise(D) Money
Introduction
From Blockchain Technology to Token Sales
The Token Sale Ecosystem
Stages of a Token Sale
Pre-TS Activities
Activities During a TS
Post-TS Activities
Trust—A Problem in Token Sales?
Overcoming the Trust Frontier in Token Sales
New Forms of Token Sales and Alternative Funding Vehicles
Summary
References
11: Ensuring Safety and Security in Blockchains: A Private Capital Markets Example
The Digital Ecosystem
Characteristics of Digital Ecosystems
The Business Drivers of Digital Ecosystems
The Technology Drivers of Digital Ecosystems
Implications for Ecosystem Blockchains
Challenges for Safety and Security
Decentralization Versus Distributedness
Safety and Security
Safety and Security: An Expanded Perspective
Components of Safety and Security for Blockchain
Specific Requirements for Participants
Functional Requirements
Authenticity
Identity
Risk Management
Governance
Transactional Integrity
Process Validation
Finality
Privacy
Enhancing the Safety and Security of Ecosystem Blockchains
Technical Safety and Security
Functional Safety and Security
Authenticity
Identity
Governance
Privacy
Process Safety and Security with Smart Contracts
What Happens When Things Go Wrong
Prevention
Detection
Recovery
Conclusion
References
12: Utilizing Non-fungible Tokens for an Event Ticketing System
Introduction
Background
Blockchain and Non-fungible Tokens (NFT)
Event Ticketing Systems
Research Method
Prototype Design and Development
Problem Statement and Derivation of Design Objectives
Fundamental Design Decisions
Resulting Prototype
Evaluation and Discussion
Testing and Experimental Evaluation
Expert Evaluation
Design Objectives Evaluation Results and Discussion
Discussion of General Benefits and Challenges
Conclusion
References
13: Saving the Oceans with NFTs
House of Cards
Nobody Sees the Oceans’ Tears
What Is the Salacia Project?
Riding the Third Wave of Blockchain Innovation
Resources Provided by the Salacia Project
Salacia Project Roadmap
Conclusion
Appendix: Overview of Blockchain Technologies
Conclusion
References
Index