Economics Design

Handshake (HNS) is a decentralised, permissionless naming protocol in which peers authenticate and are responsible for managing the root DNS naming zone to create an alternative to Existing naming systems and certification bodies.  

Handshake is a domain name system which is support Web3. Web3 is about rearranging existing Internet products and services so that they benefit people rather than entities.   

The data will still be used to drive decision-making but will not be used against consumers. Data rights will be protected instead of being trampled for profit. Incentive and marketable mechanisms will help ensure that information is reliable and verifiable.  

If Web3 is successful, it will positively affect projects solving related issues, including  Handshake.  

Join our discord to chat with us and the ED community:  https://discord.gg/gZGEZfu74X

$EDBK, that means Economics Design Book. A very innovative name, I know.  

The general idea is to:  

Limit publishing rights of physical books to specific geographical regions  

Price publishing rights in accordance to the perceived risks  

Use the token to account for distribution of additional income  

The main fear by publishing houses is to know the market demand for the book. Thus, $EDBK signals the demand to decrease information asymmetry. Since $EDBK is an NFT that represents the right to resell and publish the book, the only difference is in the details. For example, how long they have the rights for, the geographical area and quantity of books.  

The price of the $EDBK is determined by a bonding curve. The earlier a publisher purchases the token, the cheaper it is. That means, they take on the risk to be the first mover and in return, pay a cheaper fee as a publishing house. As market demand for the book increases, this encourages other publishers to get the rights. Now, the publishers are certain about the market demand of the book and there is less risk to publish this book. Thus, they pay a higher fee to buy the rights to publish the same book.  

The publisher pays royalties to the author, me, and keeps the mark up. Part of the royalties will be added to the pool and distributed to the $EDBK holders proportionally, including any other sales by the self-publisher (me). These rules and agreements will all be embedded into the bonding curve, via a smart contract.  

Call out box: So, if you are a book distributor keen on participating in this experiment, please reach out to [email protected]! Or if you are keen on distributing the books, let me know too  

book.economicsdesign.com

In this episode we talk about rug pull with Emma Jane and Anna Vladi. Emma comes from an options trading background and now working on digital NFT, fashion, gaming and esports and Anna is building a new autonomous hedge fund in DeFi that is interoperable between chains and aggregates yield.   

Rug pull is a big a risk in crypto. The general category of risk is Tech risk, Economic Risk and Price volatility risk and Rug pull exists in all these risks.   

Rug pull also exists within NFTs especially when it's built on top of web2 systems with web3 architecture or rug pull by artists on Opensea and metadata on centralised servers.  

How to prevent rug pull from team's perspective:  

1. Use Multi sig wallet initially 

2. Audit 

3. Release dev in stages 

4. Reuse existing contracts that's trialed and tested instead of building from scratch  

How to prevent rug pull from investor's perspective:  

1. Risk management. Think about tail risk. Think about black swan event. the asymmetric convexity of risks.  

2. Careful where you put your money. anon vs non-anon teams 

3. Get legal opinions of projects

In this episode, we chat with Zia Word (Co-Founder of Matter Block) and Anna Vladi (Co-Founder at Metl) and talk about Women in DeFi.

NFT is not just about digital art and tokenising assets. There are so many more things we can do with NFTs, like embedding property rights, more efficient mechanism design of property rights allocation and balancing between the various types of tradeoffs.

Today, we have with us Anthony Lee Zhang, assistant professor of Finance at UChicago Booth. He co-authored a paper with Glen Weyl on depreciating licenses (DL). Licenses are basically property rights, and NFT is about tokenising these property rights. (A chapter in the book)

In Depreciating Licenses, Anthony and Glen came up with a simple game theory model of asset ownership. Basically you own a fixed percentage of the property and the remaining percentage is auctioned off or being sold each time period. In this way, it mixes both a full ownership model and full rental model.

This is absolutely fascinating because in property rights allocation, we typically experience the trade off between investment incentive (owning the asset 100%) VS asset allocation (allocating to the best person who values the item the highest right now). With depreciating licenses model, this mixes both and balances the trade off.

Join our NFT discussion channel on discord to ask questions and to learn more: https://discord.gg/6zKyFEyJ

Also check out the Art is Always On Sale model with Simon de la Rouviere: [https://youtu.be/5WitN5bwfr8](https://youtu.be/5WitN5bwfr8)

DL paper by Anthony Lee Zhang and E Glen Weyl: [anthonyleezhang.github.io/pdfs/dl.pdf](http://anthonyleezhang.github.io/pdfs/dl.pdf)

Reach out to Anthony on Twitter: [https://twitter.com/AnthonyLeeZhang](https://twitter.com/AnthonyLeeZhang)

This month is on NFT. We chatted about the economics of NFT, and the economics of NFT flipping last week. A few days ago, an art piece was sold at $69 million by Beeple (https://onlineonly.christies.com/s/first-open-beeple/beeple-b-1981-1/112924)! Of which, $9m is in fees. My mistake, that $9m is to Christie and not the network's transaction.

In any case, transaction fees are still a problem. Not only is it expensive to buy an NFT (we mentioned this 2 weeks ago), but also expensive to MINT NFT. That might be causing the huge inflation in prices, since the fixed cost to mint the NFT is already high.

Hence, I want to talk about Polygon ($Matic) today. Up to now, when the bottlenecks of the Ethereum network have not been fully resolved, Layer 2 solutions are showing their remarkable advantages. Formerly #Matic Network, #Polygon has great ambitions to deploy all Layer 2 solutions on themselves.

NFTs are moving to Polygon because it is cheaper and faster. Also, the level of security on Layer 1 of Ethereum is good but not a necessary function. In this episode, we look at the 4 layers of Polygon and understand the quick dive into the token design!

Donate here: https://gitcoin.co/grants/2054/economics-design-education

This month is on #NFT. The hottest thing in NFT is how one can flip the NFT for insane profits. So today, we have Kiefer Zang, founder of NFT Flipping. Instead of talking about NFT flipping, we will focus on the economics of NFT flipping, the supply, demand and economics of why this is making sense.

Enjoy!   

Get the book at book.economicsdesign.com 

Kiefer Zang from  www.nftflipping.com

NFT is the hype recently, powered by "non-crypto" influential individuals like Mark Cuban, Chamath Palihapitiya and Gary Vaynerchuk talking about it.   

You might be thinking, "uhhhh virtual assets and digital assets exist. Why should I care about NFT?". Well, with the advent of blockchain (new technology), we take the existing assets (digital and virtual assets) and improve upon them!   

NFT is one of the key foundations of the new digital economy, powered by blockchain. NFT has been tested in areas such as gaming, digital identity, licensing, certification and fine arts. Users can even split and proportionally own items of high value.  

Today, we dive into what NFTs are, the economics of NFTs and how NFTs can be combined with DeFi.    

Not all NFTs are created equal but refine the foundations and protocols that deliver true value to make the right "money-down" decisions.

Get the book at book.economicsdesign.com

Opyn is an open decentralised insurance platform built on Ethereum that allows users to protect themselves from certain risks they face in DeFi. Opyn is built with the Convexity Protocol, a protocol that allows DeFi users to create call and put options. Anyone can buy options ($oTokens) to protect themselves against DeFi risk. Users can also deposit collateral into a vault to mint and sell $oTokens, receiving a premium from protecting others.  

Opyn's value is in creating an environment with many opportunities for value creation. One does not need to own the underlying asset and can simply trade the options contract in the secondary market.   

$oToken is tradable in Opyn platform, Uniswap (V1) and 0x (V2). One of its specialities is the ability to combine option contract on one wallet address which will appeal to users.

Opyn is an open decentralised insurance platform built on Ethereum that allows users to protect themselves from certain risks they face in DeFi. Opyn is built with the Convexity Protocol, a protocol that allows DeFi users to create call and put options. Anyone can buy options ($oTokens) to protect themselves against DeFi risk. Users can also deposit collateral into a vault to mint and sell $oTokens, receiving a premium from protecting others.  

Opyn's value is in creating an environment with many opportunities for value creation. One does not need to own the underlying asset and can simply trade the options contract in the secondary market.   

$oToken is tradable in Opyn platform, Uniswap (V1) and 0x (V2). One of its specialities is the ability to combine option contract on one wallet address which will appeal to users.