4. Protocol Sustainability

After figuring out incentives to bootstrap the protocol, it is important to plan for a future where incentives are no longer there and ideally no longer needed.
After figuring out incentives to bootstrap the protocol, it is important to plan for a future where incentives are no longer there and ideally no longer needed.
What does the future of your network look like? Can it be sustainable 20 years from now?
What does the future of your network look like? Can it be sustainable 20 years from now?
As mentioned, your network’s Token Design is an ongoing process and goes far beyond mainnet. It should also always be monitored to keep up with the market condition and other external changes and factors. For your long term vision and your networks sustainability, there are a few questions you need to take into account:
  1. What happens once your network is fully diluted and there are no more ecosystem incentives to attract or keep users? When is this expected to happen?
  1. Will users be incentivized through a different mechanism / model?
  1. Are there mechanisms in place to potentially change your Token Design accordingly in the future? If so, what are these mechanisms?
These questions essentially boil down to:
How will token demand from protocol revenue outpace supply from emissions in the long run?
How will token demand from protocol revenue outpace supply from emissions in the long run?
Only if this is the case, the protocol can be sustainable in the long run. This is also where a fixed supply can help as opposed to an infinite emission schedule.
After answering these questions, it is advisable to visualize your token mechanism in a diagram to include in your pitch deck.
Examples
Examples

Bitcoin (Fixed Supply)

Cosmos Hub (Infinite Supply)

Ethereum (Infinite Supply, but switch to a more sustainable model)

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