Tokenomic stability

Applying the “Gini Coefficient” as a barometer of tokenonic stability

The Gini Coefficient is an economic indicator that measures the distribution of wealth in society, on a scale from 0 to 1.[3] The more equal the society, in terms of income inequality, the closer they are to a “0”. The more unequal, the closer to “1”. In the abstract, imagine a society with 100 people, and total assets of $100. In the perfectly equal version, each individual holds $1 of assets- perfectly equal. In the extreme alternative, 1 individual holds $100, and 99 hold $0. Thus the Gini Coefficient becomes a method to measure the relative differences in wealth concentration across societies:

A similar methodology presents an opportunity to measure the health of a “tokenized ecosystem.” Highly concentrated ownership of tokens leads to volatility, and mistrust of the token’s utility. Highly distributed token ownership signals lower volatility, and utility, as there must be a reason for many smaller independent actors to make the choice to hold tokens.

One challenge related to distributing token ownership is to create incentives for many small players to acquire and hold tokens, as opposed to speculators. In this context, Halo provides a potentially highly valuable utility in building “more equal” tokenized ecosystems, which in turn reflect a healthy circular economy with lower volatility.

In the case of the Ready Games ecosystem, Halo is paired with the $RDYX utility token to unlock deeper player, developer, and creator value for all participating stakeholders. The Ready distributed gaming ecosystem (see whitepaper on $aura’s design, source) requires the infusion of $RDYX into smart contracts governing game objects. Players acquiring these collectible in-game items are, indirectly, holding $aura through the game object.

When that $RDYX-backed object can be “fused” with some quantity of Halo to unlock additional value- say a unique “power up”- the Halo becomes a democratizing element in the token economy: it gives incentives for players to acquire $RDYX backed game objects, fuse them with a Halo based achievement reward earned through merit, to forge a new in-game or cross-game benefit.

The more players generate Halo achievements, the more opportunities to fuse $RDYX-backed NFTs with Halo to mint new combined NFTs that unlock special player benefits. The same mechanisms could apply to non-player entities, such as guilds, creator teams, and dev teams.

Fused items combine the tokenomics of a fixed-issuance governance token ($RDYX) with the unlimited and un-tradable asset of the “social token” - the Halo - earned by ecosystem participants through useful actions. This integration of utility tokens with “social tokens” generates a powerful macro-economic unlock: It tames the power of “whales” - the equivalent of plutocrats in a tokenized economy- by diminishing the leverage gained from token acquisition alone. The combined power of utility tokens+social tokens is designed to reward active participants with more rights, and rewards, than pure financial entities alone.

Taking the Gini Coefficient, and applying it to the distribution of $RDYX, becomes a proxy for measuring whether, over time, the ecosystem is trending to a truly distributed, peer-to-peer circular economy, where participants have reasons endemic to the “experience” to acquire and hold tokens. Over time, the economy’s maturation trends from high concentration to low concentration. Macro-economic design strives to accelerate the path from 1 to 0. The overall GDP of the token ecosystem then correlates to a) the number of people holding tokens and b) the degree to which they are evenly distributed.

In turn, this distribution generates a significant “DAO unlock” - where DAOs become more representative of the community they govern, ideally making smarter, fairer, adaptive decisions required to keep an ecosystem thriving in the long term. Which serves to bring in new participants, in a positive feedback loop, making the ecosystem more balanced and stable over time.