Cryptocurrency, as a fast moving industry, has its long term viability decided by more than just the technological promise of the project. Hype can be achieved by a good marketing plan and a good idea, however, a strong and well-constructed economic model will provide the next step of sustainability and stability. To the critical investor and an individual builder seeking a venture that has real sustainability, it is important to look past all the hype and examine the pillars upon which it rests: tokenomics and governance.
Boundless Network (ZKC), a company interested in a mission of bringing the fragmented blockchain world closer, has developed a carefully-crafted economic and governance model, which will guarantee its decentralized future. This is a technical study of how the ZKC token works, the way it is distributed, its use, and how the governance is engineered to counter centralization and develop an ecosystem of its own.
The 2021 ZKC Tokenomics: The Sustainability Foundation.
The ZKC token is not just a tradeable commodity; it is the key to building block that drives, safeguards and manages the whole Boundless Network. Its tokenomics will be such that it will form a virtuous cycle in which the security and value of the network directly depend on the activity of the network, and at the same time encourage long-term participation.
Detailed Mechanics of utility and supply.
Network Fees and Deflationary Pressure: Any cross-chain transactions, data transfers, or smart contract calls to Boundless Network cost a small fee to be paid in $ZKC. There are two very important purposes of this fee. To begin with, it pays the validators and relayers of the network to provide their services so that the network is not brought down and remains safe. Second, a part of these transaction fees can be exposed to token burn mechanism, permanently eliminating them. This is an aspect of deflationary supply to the token, which results in a positive feedback loop: the higher the usage of the network, the more tokens will be burned, which can cause scarcity and high value of the rest of the supply.
Proof-of-Stake Security and Rewards: Boundless Network has a security design based on an advanced Proof-of-Stake (PoS) consensus system. Validators have to post a large bond in terms of $ZKC. This stake acts as a security bond and this ensures that they behave in an honest manner. Validators are compensated by a mix of new tokens issued and network transaction fees in exchange of their service of validating and securing cross-chain activities. In order to decentralise the network even further, there is the delegation mechanism where smaller token holders can delegate their ZKC to validators suing to receive a portion of the rewards without bearing the technical cost of operating a node. This system integrates the interests of all the stakeholders, the largest validators and the smallest delegators, and the long-term health and security of the network. Any bad faith, e.g. in having signs duplicated twice, or in occasioning undue delay, will cause their staked tokens to be slashed, which will be a great economical deterrent.
Token Distribution and Vesting: The early token distribution of a project has a significant impact on the long-term health. The model of allocation applied by Boundless Network is designed in a way that it is fair and will avoid a sudden shock in supply. There is the allocation of a portion towards public and private sales to bootstrap the project, another portion towards core team and advisors (with a multi-year vesting schedule to maintain long-term commitment), and a substantial portion towards ecosystem development, treasury and community incentives. The existence of an open transparent vesting schedule is paramount because it can ensure that big early holders will not be able to dump their tokens on the market and will not influence the long-term integrity of the asset and its stable price.
The Politics: The Way to Real Decentralization.
On top of the economic model, the governance structure of a project is the ultimate determinant of project decentralization. It is possible that a project is decentralized, but unless it has a strong, on-chain governance system, a few people have control over it. Boundless Network is constructed as a Decentralized Autonomous Organization (DAO) in which the community has the authority to determine its future.
The On-Chain Governance Process.
Governance Boundless Network is a process based on communities and multi-step governance:
Community Proposals: Every governance initiates with an idea. Individuals within the community have the freedom to start a discussion on the forums or social channels to find out interest.
Formal Proposal Submission: When an idea spreads, it can be formalized into an on-chain proposal. A small sum of money in terms of ZKC has to be placed to avoid spam and frivolity of propositions. It is a form of a deposit that is paid out in the occasion that the proposal attains a specified minimum amount of preliminary support.
On-Chain Voting: When a proposal has been submitted formally, it goes into the voting period. All shareholders of ZKC are entitled to vote. The weakness of every participant is the proportion of the number of shares of ZKC. Although large token holders (so-called whales) can control this system, Boundless Network is designed in such a way that broad participation and delegation become encouraged, which, in the long term, will spread influence more widely.
Proposal Execution: When a proposal has gathered votes in sufficient numbers and it satisfies the quorum and voting requirements, it is automatically executed using the smart contracts by the network. This does not require a trusted third party to carry out the alterations, which makes the network committed to automation and decentralization.
Community Governance Areas.
Boundless Network community will be given the right to vote on important issues which include:
Protocol Upgrades: Adding new functionality, security, and technical.
Parameter Modifications: or the parameters of transaction fees, validator rewards, or slashing.
Treasury Management: Determining how the community funds should be spent on grants, bug bounties or marketing efforts.
Supported Blockchains: Voting on the new blockchains to add to the Boundless Network protocol.
This libertarian form of governance is such that the network is not a fixed object that one person or a group of people control, but a living, developing organism that directly responds to the demands and aspirations of its community.
The Long-term Viability and the Force of Convergence.
Boundless Network is mostly strong in the collaboration between its tokenomics and governance. The utility of the ZKC token motivates the usage of the network, which consequently secures the network by the use of staking, motivates participants and enables the community by governance. This establishes a vicious cycle that strengthens itself. The larger the network is created, the higher the utility and value of the token and more users and staker will be attracted.