We propose a novel payment mechanism for use by victims of large-scale conflict or natural disasters to conduct critical economic transactions and rebuild damaged infrastructure in the absence of both cash and traditional electronic payment mechanisms linked to bank accounts, such as debit cards or wire transfers. Claimants shall receive electronic tokens that can be used to pay registered businesses, such as purveyors of food and other basic goods, providers of essential services, and contractors to carry out construction tasks. The system shall be based upon the scalable architecture for retail payments described in our earlier work, which provides both strong privacy for consumers and strong compliance enforcement for recipients of funds. The system shall be designed to achieve three main objectives. First, tokens issued to claimants would be held directly by the claimants themselves, not via intermediaries, to avoid the risk of failure or subversion of asset custodians. Second, transactions shall not be traceable to the identity of the claimants, thus mitigating the risk that claimants can be pressured by service providers or other parties to reveal information that can be used to exploit them. Third, businesses and service providers that receive tokens shall be subject to rigorous compliance procedures upon redemption for cash or bank deposits, thus ensuring that only legitimate businesses or service providers can receive value from tokens, that token transfers will embed the identities of any recipients beyond the initial claimant, and that tax obligations shall be met at the time of redemption.
Citation
G Goodell. "Emergency Financing Tokens." Working paper, December 2023.
This paper presents a pioneering approach for simulation of economic activity, policy implementation, and pricing of goods in token economies. The paper proposes a formal analysis framework for wealth distribution analysis and simulation of interactions between economic participants in an economy. Using this framework, we define a mechanism for identifying prices that achieve the desired wealth distribution according to some metric, and stability of economic dynamics. The motivation to study tokenomics theory is the increasing use of tokenization, specifically in financial infrastructures, where designing token economies is in the forefront. Tokenomics theory establishes a quantitative framework for wealth distribution amongst economic participants and implements the algorithmic regulatory controls mechanism that reacts to changes in economic conditions. In our framework, we introduce a concept of tokenomic taxonomy where agents in the economy are categorized into agent types and interactions between them. This novel approach is motivated by having a generalized model of the macroeconomy with controls being implemented through interactions and policies. The existence of such controls allows us to measure and readjust the wealth dynamics in the economy to suit the desired objectives.
Citation
R Sadykhov, G Goodell, D De Montigny, M Schoernig, and P Treleaven. "Decentralized Token Economy Theory (DeTEcT)." Frontiers in Blockchain, Volume 6, 24 November 2023
This paper presents a theoretical extension of the DeTEcT framework proposed by Sadykhov et al., where a formal analysis framework was introduced for modelling wealth distribution in token economies. DeTEcT is a framework for analysing economic activity, simulating macroeconomic scenarios, and algorithmically setting policies in token economies. This paper proposes four ways of parametrizing the framework, where dynamic vs static parametrization is considered along with the probabilistic vs non-probabilistic. Using these parametrization techniques, we demonstrate that by adding restrictions to the framework it is possible to derive the existing wealth distribution models from DeTEcT. In addition to exploring parametrization techniques, this paper studies how money supply in DeTEcT framework can be transformed to become dynamic, and how this change will affect the dynamics of wealth distribution. The motivation for studying dynamic money supply is that it enables DeTEcT to be applied to modelling token economies without maximum supply (i.e., Ethereum), and it adds constraints to the framework in the form of symmetries.
Citation
R Sadykhov, G Goodell, and P Treleaven. "DeTEcT: Dynamic and Probabilistic Parameters Extension." Working paper, May 2024.