Sustainable growth and token economy design: The case of Steemit

Abstract

Cryptocurrency blockchain technology is attracting worldwide attention, and the number of initial coin offerings (ICOs) is increasing rapidly. This new economic trend, called cryptoeconomics, can program human behavior through incentive design. A cryptocurrency-based incentive system is not only transparent, but also allows businesses to substitute initial investment costs with cryptocurrency tokens until they are on a sustainable growth trajectory in terms of network effects. This study aims to propose a process for building a desirable model of a token economy, based on the case of Steemit-a blogging and social networking website that is creating high values due to its efficient token economy model. We suggest the following design process of a token economy model: (1) Determine token-business fit, (2) determine the chance of success, (3) determine the properties of token, (4) give tokens intrinsic value, (5) establish strategies to raise token value, (6) establish operational strategies of token economy system, (7) establish strategies for token liquidation, and (8) continue modifying the operational base. Considering cryptoeconomics is still at an early stage, it is expected that the guidelines on the token economy model suggested in this paper will lay a significant foundation for the development of cryptoeconomics research.