Funded for Fund 11 in Project Catalyst
A part of the blockchain ecosystem that doesn’t get the attention it rightly deserves, but is crucial in the sustainability of projects is around Token Engineering. Across all chains in blockchain, the study and development of token engineering are still very nascent and slowly gaining traction in the academic world and having an impact on real projects. Tokens can be seen as having a life, where decisions around how the token is created, used, and distributed to users. All of these decisions and processes have effects that modeling could help steer developers and project owners to incentivize end users to use their project, stay and invest their time and resources on the project, and ultimately grow the project itself. As projects are launching as DAOs and leaving protocol-level decisions to the community, there is a glaring gap with regard to understanding the implications of changes suggested by the DAO community. Building up the skills of the community, developing open-sourced modeling tools, and publishing and sharing results can help protocols and projects make better-informed decisions.
There are a few quality token engineering communities built with a focus on EVM-compatible chains. One key thing that separates Cardano from EVM-compatible chains is that there are very different levers that protocols can pull due to technical design choices that make Cardano unique. Liquid staking alternatives, and eUTXO smart contracts amongst other things are some of the unique items that modeling would differ from EVM-compatible chains and models. This would be like developing a model of a manual transmission car when you’re working with an automatic transmission. They’re both cars, but the inputs, processes, and outputs could vary greatly. This is another reason why a Cardano-specific group around token engineering is needed.
Why This Proposal:
At the current stage of many DAOs and DeFi projects, it’s clear that many projects either do little or no token engineering out in the open and publish those outputs. As design mechanisms for any protocol proposal are changed it only comes along with some written text on why it’s being implemented and then pushed to a vote. Blockchain is designed to have transparency within the protocol and this calls for building skills and creating open-source models for people to understand how the changes affect things. This is paramount to ensure that short-sighted decisions are not being made and ultimately have negative long-term effects on any project. An example would be a project that launches a token. They need to be careful about the initial incentive mechanisms to ensure that they don’t make it impossible for newcomers down the road to be overpowered by OGs who just happened to be earlier. Developing egalitarian methods and processes to incentivize, maintain, and grow protocols is critical for projects to grow and be sustainable over a long period of time.
It’s understood that this proposal may have not been socialized as much as other projects, but the aim is to start to raise awareness, find others with common interests, and ultimately bootstrap this endeavor with Fund10 funds (or future funds). EVM-based chains have very well-put-together projects such as the Token Engineering Academy, Blockscience, and many others that have academic experts working alongside community members to develop resources and research on token engineering topics.
How This Proposal Would Work:
This proposal can be broken into three main sections:
- Development and Curation of Material
- Research and Case Studies of Active Cardano Projects
- Actively seeking partnerships with Cardano ecosystem projects
- Develop a scripted workflow to help pull on-chain data about tokens for modeling
These three sections will be built and continually iterate over time as community members help to steer this project and as projects see the value that it can deliver to help improve decision-making, develop incentivization mechanisms, and contribute to the larger Cardano ecosystem. The idea behind this proposal is at least to raise awareness, find like minds and understand how we can help build Cardano.
The requested funds would is planned to be 20,000 ADA, just above the minimum threshold.
Development and Curation of Startup Material
Currently, there are a lot of dispersed research material, technical content, and case studies on a multitude of blockchain projects, incentivization mechanisms, and protocol design. The duration of the material would be done
Measures of Success on Material:
- Having a curated, targeted list of case studies with increasing complexity
- Develop framework for data curation to be used in token modeling
- Produce targeted research study points for the eUTXO account model for token engineering
- Introduce and build skills for the community on open-source Python libraries used in token engineering such as cadCAD and Machinations. This could lead to building Cardano-specific libraries for modeling such as Token Spice that pulls in Smart Contract metadata for modeling.
Research Case Studies of Active Cardano Projects
An area that is the meat of this proposal is to dive into running projects and help build an understanding of optimal economic models, identify opportunities based on historical decisions from protocols, and understand design patterns that could be leveraged for new projects and avoid reinventing the wheel every time. A part of this section would be working to get sponsorship from active projects to help do detailed dives into governance and design mechanisms for their token and promote good decision-making backed from a modeling perspective.
Measures of Success:
- Produce research and simplified models on common design patterns for DeFi projects
- Attain a partnership with at least one active DeFi or DAO project
- Deliver a whitepaper on governance best practices in the Cardano Space by the end of the year
Actively Seek Partnerships
One of the ways that the Cardano Token Engineering Lab envisions helping projects is to be able to form partnerships and work with teams to help design, optimize, or research areas of interest to help build productive and sustainable token economies. As the material is flushed out through the efforts in this proposal, building out a consulting platform specific to the Cardano ecosystem is the goal.
Measures of Success:
- Actively reach out and discuss with Cardano projects about governance policies and actively participate
- Form a partnership directly with one project to assist the team with token engineering needs
On-Chain Data for Modeling
A realized challenge in the Cardano space is tooling around analytics. There are some tools that are useful to display data, but no easy way to get on-chain metrics and data to push into a data science model. Modeling and simulation is an important aspect of token engineering. There are many facets to how token engineering is done, from analyzing interactions between complex systems (like tokens, users, and protocols), to designing and reviewing incentives, as well as interpreting behaviors and signals that can be expected. Modeling and simulation although doesn't solve any single particular problem can be used to help understand how complex systems work in a stepwise approach to determine systemic inbalances. This can occur when a system is designed, but the model shows behaviors happening that might not have been expected, providing the opportunity for reiteration.
Project Links:
About the Proposer:
A little bit about myself as the proposer is that I have been working as an engineer in the energy industry for over 15 years and have a Master’s degree in Computer Science (focused on data science). Over the past 6years of my career, I’ve primarily been focused on product ownership/management of in-house applications to support field operations and data analytics. I have been a member of the Cardano community for almost 3 years and have served as a PA/vPA in Project Catalyst since Fund 5. With my background and understanding of Cardano, I feel like I have the ability to help build the Cardano network through other means outside of development. The area of token engineering is one that I personally feel doesn’t get the necessary and thorough consideration of projects. This can help projects understand and make better decisions to help sustain themselves. I can be found on Twitter or Discord at my handle @uscmigs so feel free to reach out to chat and/or help grow this area with me.