Consulting and Portfolio Company Support
We determine how to best use (OR NOT USE) a token to achieve the stated goals of a business.
Through due diligence of hundreds of networks, we have come to appreciate the importance of beginning with a robust tokenomic design which can then serve as a foundation for a successful network. After assisting portfolio companies and assets in their tokenomic design process, we began to notice demand from others needing similar help. It became clear that the available options for tokenomic advisory were inadequate.
In response, we have since started offering tokenomic advisory as a standalone service to assets currently outside of our portfolio. By improving projects in this manner, we are now able to do more than merely sift through, and ultimately reject, the many promising projects with fundamentally flawed token designs and instead create more distributed marketplaces that we are enthusiastic to invest in ourselves.
Unbounded Capital leverages its expertise investing and growing blockchain businesses to help customers identify, incubate, develop and sustainably execute on blockchain opportunities in their respective industries. We support customers of all shapes and sizes, ranging from the start-ups building distributed marketplaces to upend existing industries to large incumbents building innovative solutions aimed at growing market share while protecting against new entrants. We also support customers across the various phases of ideation and incubation:
1) Landscape Assessment to Identify Blockchain Opportunities
A key tenant of our investment strategy is to identify opportunities within industries in which a blockchain solution or distributed marketplace holds a significant advantage over the status quo, centralized incumbents. We leverage our knowledge base to help customers new to blockchain identify the most prominent areas for innovation within their industry / areas of interest. The ultimate goal is to identify a range of options, pressure test them through expert input and financial modeling and narrow down to the top few where extensive due diligence is merited.
2) Tokenomic Design
Tokenomic assessment is a vital part of our due diligence on companies we seek to invest in. Likewise, it is a fundamental component of our advisory services and an area we seek to add significant value within our consulting arrangements. Offered as a standalone service or as a follow-on to landscape assessment, Unbounded Capital advises customers with various levels of breadth and depth, ranging from a light touch tokenomic assessment, whitepaper redesign, audits using proprietary quantitative modeling, and full-scale tokenomic build outs. The full build out is recommended prior to any pilot or implementation steps in order to inform key decisions, such as network design and incentives, that determine the success of a blockchain solution.
3) Implementation Support
Leveraging our network of experienced technical, financial and operational blockchain experts, we offer support across the many facets of implementation once a decision is made on a blockchain solution to pursue. This can range from the critical technical and operational questions, such as which existing blockchain solutions to build your marketplace on, to the financial considerations such as the metrics to keep track of and the ongoing network design changes to optimize tokenomic value.
To learn more about our services and see examples of our past work and project-specific proposals, please contact firstname.lastname@example.org.
Want to learn more or book Managing Partner Zach Resnick to speak at your next conference or event? Feel free to reach out to Zach directly at email@example.com. Past example: Node Unbounded Capital Series on How Will Enterprises Integrate Blockchain?
What is Tokenomics?
Tokenomics is the study of how tokens and network design affect the economic decisions of participants in the marketplace, how tokens flow within their economies, and how market forces affect the qualities of tokens with price being the primary quality of interest. Applied tokenomics generally seeks to understand how the design of a specific token will affect economic behavior on the associated network and to understand how that will in turn affect the price of that specific token at various stages of network development. The primary challenge facing tokenomic designers is aligning the interests of network users, developers, upkeepers, and investors. In particular, tokenomists looking to design a token that can reward investors must ensure that as the users of a token accrue economic value, the token appreciates in price.
The main analytical tool of the tokenomist in the current blockchain landscape is the praxeological method developed by the Austrian school of economics. The praxeological method, which relies heavily on induction and logic, is imperative given the lack of data on how platforms function at scale. While Unbounded Capital does believe that quantitative modeling and data analysis both play a role in tokenomic best practices, induction, logic, and the tenets of human action still play an incredibly crucial role in our tokenomic thinking and design. For more information on tokenomics and its relation to the Austrian school, see this recent article from team member Jackson Laskey.
Why is Tokenomics Important?
Token economies need to be structured correctly so that as their network grows, the token becomes more valuable. For many networks, only a fractional amount of the value generated is captured by the token. Further, smart tokenomic design can help to align the incentives of disparate network participants. This alignment facilitates network activity and value creation. When combined with a token that effectively captures value generated by the network, these two goals of tokenomic design lead to an extremely valuable token and network. For a more in depth discussion of the velocity problem, the most common problem when designing a network token that appreciates in value with network growth, see More on Token Velocity from team member Jackson Laskey.
Our Guiding Principles
Through actively monitoring, advising, building, and investing in projects with unique tokenomic designs, we have been able to test and refine these exciting theories to improve their usefulness in practical application. The following includes a number of these key areas of exploration:
Aligning incentives for all stakeholders in the ecosystem - including founders, workers, and investors
Ensuring the token effectively captures network value
Pragmatically balancing the trade offs between decentralization and centralization, with a focus on competitive advantage throughout the life cycle of the project.
Consideration for which existing blockchain (if any) will best serve a project’s use case
Ensuring functionality of the token - i.e. could bitcoin be easily substituted?
Understanding that most actors aren’t always economically rational and that a deep understanding of practical realities, possibly modeled with behavioral economics, is essential for building and analyzing any incentive structure
While the areas of need will differ for each specific protocol and platform, the above guidelines serve tokenomic thinking in general. For an example of this methodology when applied to the decentralized protocol IOTA read our tokenomic analysis from team member Dave Mullen-Muhr.
Competitive Edge in Tokenomics Consulting
All team members are partners at Unbounded Capital that prioritize the token model in its due diligence.
Core team members Zach Resnick, Dave Mullen-Muhr, and Jackson Laskey, have combined experience in both professional ventures (airline miles/points arbitrage business + poker playing, staking, and coaching), their formal education (degrees in Economics and Computer Science), and personal interests in risk management, complexity theory, Austrian economics, and disruptive technologies.
Network of Expert Advisors:
Unreasonable Group - Aligned with Unbounded Capital, Unreasonable operates immersive accelerator programs for growth-stage entrepreneurs offering solutions to seemingly intractable challenges. Unreasonable has forged unlikely partnerships with some of the world’s largest institutions and most admired brands including Barclays and Nike.
Jane Lippencott of CoinFi and Zencash - Landscape Analysis & Lead Generation
Garrett MacDonald of Token Group and Energy Web Foundation - Blockchain Programming & Mining
Michael Goodman of Boston Consulting Group - Quantitative Modeling & Market Research
Ben Rutkevitz of Alleon Capital Partners - Financial Operations
Unbounded Capital is first and foremost an impact investment fund. Only after observing the incredibly low quality of tokenomic thinking in distributed marketplaces upon launch did we decide to actively design and implement our own tokenomic thinking.
Through consulting, implementation/execution support and direct investing, Unbounded Capital seeks to align itself fully toward the success of the companies it partners with. In short, we only succeed if our partners succeed. This core philosophy is reflected not only in who we partner with, but also how we partner.
We only invest and consult where we add robust value.
We only work with clients we’ve invested in or could see a path to investment.
We view our advisory work as a funnel to high quality investments.
As it pertains to tokenomic consulting arrangements, Unbounded Capital emphasizes a deep and collaborative partnership model whereby we collaborate on our understanding of the problems and solutions at hand and align together on the best path forward. This ensures mutual understanding, execution on recommendations made and ultimately a high real-word value-add toward the organizations we work with.
Throughout any engagement, Unbounded Capital will proactively seek and appreciate open and honest feedback from all members of the team on all subject matter, ranging from work product to ways of working, cultural norms, etc. This philosophy is reflected internally across the Unbounded Capital team and network and is something we mutually value from our partners.
Well-Designed Tokens: Unbounded Capital Portfolio Assets
Examples of well-designed tokens include our portfolio assets MetaCert, Reserve, Pngme, and WorkCoin, of which MetaCert has been receiving our services for over six months.
WorkCoin: A peer-to-peer solution for the gig economy. Through its innovative tokenomics of only making money on ads and features, they’re able to disrupt the opaque process that is the status quo of incumbents like odesk and upwork and connect freelancers directly with employers, with no middlemen involved. By having all contact info be public and encouraging communication outside the platform, they are facilitating the growth of the distributed economy in a way not possible before blockchain.
MetaCert: MetaCert Protocol is decentralizing cybersecurity for the Internet, by building the world’s biggest registry of URL ownership and classification information about domain names, applications, bots, crypto wallet addresses, social media accounts and APIs. By building a protocol for what MetaCert is already the world leader in, they can exponentially grow their reach through a distributed workforce and and have a greater impact in preventing all types of scams and nefarious actors on the Internet today.
Reserve The stable cryptocurrency that is economically and legally robust at any scale. Decentralized, 100% asset backed, and funded by top Silicon Valley investors. In addition to the stable cryptocurrency, it has a fluctuating protocol token that plays a role in stabilizing RSV and confers the cryptographic right to purchase excess Reserve tokens as the network grows.
Pngme: Borderless mobile finance with payments, savings, and a free universal credit score. With a discount utility token and well structured token economics, Pngme will lift individuals economically and break down financial borders, creating a global economy that is equitable and accessible to all.
To learn more about our services, please contact firstname.lastname@example.org.