Value Accrual - Tokenomics Design Course (Part 5)
Value Accrual in Tokenomics Design
Introduction to Value Accrual
- The video discusses value accrual as the second step in a seven-step tokenomics design process, emphasizing that the content is for educational purposes only and not legal or financial advice.
- Each video in the playlist covers one of these steps, encouraging viewers to watch previous videos for context.
Importance of Fee Structure
- Small differences in fee structures can significantly impact user behavior; for instance, charging fees to sellers versus buyers can lead to different marketplace dynamics.
- If sellers are charged fees, they may seek alternative marketplaces with no fees, reducing supply and affecting buyer demand negatively.
Key Concepts: Value Creation, Capture, and Accrual
- Three distinct concepts are crucial:
- Value Creation: The benefits users receive from a product (e.g., Uber's convenience).
- Value Capture: The protocol's ability to take a portion of created value as fees.
- Value Accrual: How this captured value benefits the token itself; without all three elements, tokens remain speculative.
Example Case Study: Curve Finance
- Using Curve Finance as an example:
- Liquidity providers earn yields from trading fees generated by traders using the platform.
- Part of these trading fees goes directly to the protocol as revenue.
Trade-offs in Value Capture
- Capturing value through fees has trade-offs; directing more fees to the protocol can reduce yields for liquidity providers. It's essential to consider these downsides when designing fee structures.
Value Accrual in Ecosystems
Understanding Value Capture
- The discussion focuses on identifying where value is captured within an ecosystem, emphasizing the concept of value accrual.
- It is highlighted that understanding value capture is crucial for analyzing the effectiveness and sustainability of a token or asset within its ecosystem.
Token Life Cycle Patterns
- A reminder is given about the normalcy of revisiting and modifying previous steps in the token life cycle process.