Original author: a16zProtocol Specialist Porter Smith

Compilation of the original text: The Way of DeFi

Compilation of the original text: The Way of DeFi

Typically, token models include a single-purpose token design, i.e. a governance token that conveys voting rights.

Will this change?

Future token designs may choose to blend economics, governance, and utility rights, opening up a new design space. How can this be done?

For many tokens, specific economic rights are embedded from the outset. But not all tokens have this feature (and neither do many NFTs). Going forward, token holders may wish to receive their share of economic benefits directly.

There are different ways to do this. One is to create a secondary insurance pool that supports the protocol behind a primary insurance pool denominated in a stablecoin.

The primary insurance pool is based on stablecoins, and the secondary insurance pool is based on native tokens.

Users can stake their tokens into the secondary pool and receive stablecoin yields in return. In the event of any shortfall, these tokens will be used to recapitalize the protocol beyond what is not covered by the main insurance pool.

You can also add protocol-specific utility functions. There are infinite ways of expression possible here, the only practical limit is the creativity of the community and the practicality of the use cases.

An example of DeFi might be the use of native tokens to align incentives in debt auctions, where participants who hold native tokens receive a discount on their winning bid.

A second example involves integrating aspects of NFT rights into traditional fungible tokens: considering prioritization of access to new community initiatives, providing better economic incentives for certain actions, etc.@BoredApeYCThe NFT community is already doing the opposite. by

Take the APE airdrop as an example, which gives new rights to NFT holders. Can't this also happen in reverse? NFT airdrop -> token holders.

A different design approach is to have vesting pools for active voters and delegates. We often forget that ordinary token holders and delegates are two new classes of stakeholders who should be financially incentivized to contribute just like other contributors.

Alternatively, token holders may expect dynamic governance rights that also give them financial rewards. In addition to voting on each proposal through a referendum, token holders can also delegate and earn vested tokens based on the protocol’s 24-month financial performance.

Special thanks to

Special thanks to@milesjenningsand@sriramkHelp on this thread. So, do you have a new token design idea?

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