Adding Utility To $CTSI Is A Must!

So far the $CTSI token has only been a utility in terms of staking on the noether data chain and governance, which is great.

However in order for the ecosystem to further grow and getting global recognition, we believe adding more utility to the $CTSI token is an absolute must.

Economies thrive when people are incentivised to spend their money.

We’ve seen great adoption for Ethereum and its $ETH token, because it created a lot of utilities. The same for Solana and $SOL and all other Ethereum Virtual Machines (EVM) projects.

This in return attracted more developers and users, thus creating greater adoption.

Vitalik Buterin said that L2’s are going to be their main focus, because they realised the limitations of their own EVM.

Simply put: the adoption was getting too big, while the resources remain limited.

See the rise of Cartesi and it’s Cartesi Virtual Machine (CVM).

Now that ‘mainnet’ is live, I believe it’s time to focus on creating more utility for the $CTSI token in its ecosystem.

Here are 12 ideas:

  1. Integration with dApps: Use the $CTSI token in decentralized applications across various sectors like gaming and finance.
  2. Loyalty Programs: Offer tokens as rewards in loyalty programs for regular users.
  3. Business Partnerships: Partner with businesses to accept the $CTSI token as payment or for exclusive services.
  4. Token Burning: Implement a mechanism to burn a portion of tokens used, reducing supply.
  5. Cross-chain Interoperability: Make the $CTSI token usable across different blockchain networks.
  6. NFT Integration: Use the $CTSI token for transactions involving Non-Fungible Tokens.
  7. Microtransactions and Tipping: Implement the token for small payments or as tips on various platforms.
  8. DeFi Services: Incorporate the token in decentralized finance for lending, borrowing, or as collateral.
  9. Educational Incentives: Reward tokens for completing educational programs or courses.
  10. Charitable Use: Encourage using the token for donations and fundraising.
  11. Supply Chain Use: Apply the token in supply chain management for transparency and efficiency.
  12. Remittances: Promote the token for faster and cheaper cross-border payments.

These methods can significantly broaden a token’s use cases, potentially increasing its adoption and value.

Some methods might not be super relevant given the nature of how the CVM is built. And I want to apologise for that and for any technical mistakes I have made. I’m not a technical person, I’m an economist. That’s why I share my perspective here and plead for adding utility.

In NO WAY the tokenomics should be inflated beyond the max supply of 1,000,000,000 $CTSI tokens. This would create more problems and probably create the opposite effect.

We are at a point now where most of the $CTSI tokens are in circulation. So now is time to think about further utilities.

Let me know your thoughts, and if you have more ideas and/or want to help execute an idea, let us know. I want to gain attention for this topic, because I believe it’s vitally important for the future of the Cartesi ecosystem.

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Hey Marek, thanks for sharing your thoughts here! It’s awesome to see the governance forum being put to good use.

For starters, while I recognize it may be tangential to your post, I would like to note that several discussions have already been floated to increase the governance utility of CTSI, including using the staking system to compensate delegates. There have also been informal discussions on Telegram, which I would like to see mature further, for CTSI voting to play a role in the Vision Council (by, for example, implementing CTSI voting to elect members who serve).

Those ideas for increased governance utility aside, your post brings to mind a few questions that I’d love to know your thoughts on!

(1) There are highly regarded L2 projects like Optimism and Arbitrum with healthy ecosystems whose sole token utility is governance. Governance utility is indeed a well-accepted form of token utility in the space. What differences, if any, do you see between those L2 projects and Cartesi regarding the topic of token utility?

(2) You suggest in your post that under no circumstance should the max supply CTSI tokens be inflated. Do you believe that the staking system should cease to operate once the mining reserve runs out (and, if not, how would staking rewards be sustained in the absence of an inflationary model)?

(3) I think the ideas you propose are super interesting, and I’d love to see many of them implemented! Many of the ideas you propose seem to me to be things that could be implemented on an elective basis without any sort of governance action whatsoever (e.g., any DApp builder could set CTSI as a standard currency for games, DeFi, payments, NFT minting, etc.). I am wondering, though, whether you see a need for widespread governance action to implement these “elective” utilities?

Looking forward to hearing your thoughts!

(Disclaimer: I, too, am not a technical person :slight_smile: )

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Good to see an open and constructive community feedback

Have not seen anyone suggest this, but my idea is for the $CTSI token to be default native token for any dApps launched on the Cartesi platform (and/ or perhaps in the form of min dApp liquidity deposited in escrow)

This added utility for $CTSI is in addition to governance/ voting

Believe this will ensure that so long as developers are building/ launching dApps via Cartesi, the $CTSI remains relevant and grows in importance, not just at the initial voting stage

Thoughts or suggestions?

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Thanks, CG.

I’m not a developer, so perhaps someone with a more technical understanding can provide more insight here. But Cartesi rollups are open-source, permissionless, and app-specific, meaning that each developer is entirely free to use the Cartesi design space to create a DApp as they see fit. While a developer could certainly choose to make CTSI the native token of whatever DApp they’re launching, that is a decision that is entirely up to each developer, and my understanding is that there would be no way to enforce the proposal you’re suggesting.

(Of course, even if there were a way to enforce it, another consideration would be whether such a requirement would hamper adoption by limiting developer flexibility on a crucial DApp parameter.)

Again, I may be missing something here from a technical perspective. But my understanding is that setting CTSI as the native DApp currency would be more of a social contract amongst Cartesi DApp devs than it would be a hardcoded requirement.

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Fair point, Brandon, and thanks

However, was thinking along the lines of having $CTSI as the dApp default token initially, e.g. for the first 1-2 months following official launch, after which the developer can change it to some other token of their choosing. Purely for ensuring the tokenomics of the dApp are working consistently pre vs post launch, and Cartesi can implement diagnostics/ analysis on the tokenomics etc on the dashboard. This way the dApp developer is required to buy $CTSI as initial liquidity deposited and users engage in the $CTSI token, initially, but over time then can use any token of their choosing. Community can use this initial period to more-easily review tokenomics (including on Cartesi’s dashboard), to avoid spreading coding issues not picked up pre-launch to post launch (which can imagine would be much more difficult if no like-for-like basis)

I believe the Pros far outweigh the Cons. Let’s discuss my idea further and appreciate the Cartesi team also weighing in

Pros:

  • community can more easily review tokenomics on a like-for-like basis over this initial period following dApp launch (both for the dApp itself and benchmarking, including on Cartesi dashboard)
  • enhances utility of the $CTSI token (in addition to voting/ governance)
  • further spreads tokens across developers/ new users etc
  • relatively easy from a coding perspective (default token is $CTSI and after x months developer gets a notification they can change if they wish)

Cons:

  • sort of a “centralised” decision having $CTSI as default token for dApps built using Cartesi
    Mitigant:
  • initial period is very short-term (e.g. 1-2 months), and developers can change after
  • for testing/ review purposes including benchmark analysis, and helps avoid potential contagion risks to other project tokens (and if any issues can identity point of failure more easily given a like-for-like basis established)
  • aligns growth of dApps with project value trajectory (as more developers build using Cartesi, there is steady growth in mccap and (say) after x months they switch to another token, the $CTSI price shouldnt really change much given new developers interacting with $CTSI for their dApps, plus speculative demand so id expect a steady price trajectory aligned with actual usage/ activity on the tech

Thoughts?

Thanks, CG. What I was trying to convey is that I am not sure that it is even technically possible to enforce a default currency in DApps across the ecosystem. I might be way off here, but my understanding is that choosing what currency a DApp accepts is solely in the control of the developer, and that even if the consensus were that the pros outweigh the cons, the 1-2 month period you’re suggesting wouldn’t be possible to enforce, since the technology is open-source, and permissionless, and allows any dev to create and validate a DApp exactly as they see fit. But, again, that’s just my layperson’s, non-technical understanding :slight_smile:

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Something is seriously wrong with the $CTSI tokenomics, as it struggled at $200m fdv mccap/ 20 cents being the only layer 2 project not to pump but continue the downtrend

What are we waiting for exactly? Key news did nothing to price, and the beatings continue for early investors/ hodlers

  • mature 5yr project … no
  • genuises onboard … no
  • team focused only on tech … no
  • transparency on discord and X … no
  • massive scaling on eth … no
  • ease for devs on web2 to build web3 dApps … no
  • 1st to pioneer layers/ modularity … no
  • 1st to pioneer alternate to EVM … no
  • 1st to pioneer optimistic rollups … no
  • 1st to pioneer app specific rollups … no
  • sponsored at least 6 hackathons … no
  • showcased various dApp category use cases … no
  • mainnet launched … no
  • integrations with DA layers (Celestia, Syscoin) … no
  • integrations with Dec. Sequencers (Espresso) … no
  • Doom … no
  • WIP dApps (chess, dinder, world arcade, etc) … no
  • BitVM … no
  • EigenLayer … no
  • HoneyPot dApp launched … no
  • no hacks yet … no
  • etc etc

What’s really going on in the background ?
Can someone from the cartesi team comment ?

Hello @Brandon, thanks for your questions and sharing your thoughts.

(1) What differences I see between token utility of Cartesi and projects like Arbitrum and Optimism?
Somehow the projects Arbitrum and Optimism have already processed millions of transactions. With Cartesi it’s only a handful. Arbitrum token holders may also vote on electing members for the Security Council, a 12-member team responsible for managing the treasury wallet of the Arbitrum ecosystem. By participating in these elections, token holders help to shape the composition of the council and ensure the security and integrity of the network. (Something like you mentioned that Cartesi is working on)

Arbitrum uses delegates (instead of staking on a chain that’s not being used): Tally | Arbitrum delegates

From what I understand, both have much more integrations (which has not much to do with token utility):

(2) Should the staking system cease to exist once the mining reserve is depleted?
I think the whole system could transfer into something like a delegates system that Arbitrum uses, which I mentioned above.

If we would inflate the supply beyond the current 1 billion cap, it would only hurt the ecosystem in the long run. All tokens become less valuable. Instead we should think about making the token deflationary, this will benefit the whole ecosystem, making each token more valuable, since there is less supply.

(3) Do I see a need for widespread governance to implement the “elective” utilities that I proposed?
Well, probably not for all of them. Because some, like you say, depend on dApp developers.

Let me ask you this question: how do you think the Cartesi team/project can bring more developers and integrations into the ecosystem, so that the whole ecosystem can flourish?

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Hello @cryptogamblerx. Thank you for sharing your concerns. I understand your worries.

However, let’s keep it positive as well.

Every project has pros and cons. Only talking about what the project did in relation to the price, and then only talking about the downside, is not fair in my opinion.

The Cartesi team is simply not allowed to talk about price (and it’s also not their interest), because their focus is not the token price, but building a great ecosystem. That’s why I brought up this subject, to talk about the utility of the token (and not about price).

I do believe that with building a great ecosystem, the investors will ultimately be rewarderd.

Of course… If you don’t believe in the project and don’t want to be part of it anymore, you can do whatever you want with the tokens you hold.

In my opinion inflating the supply can hurt the ecosystem in the long run.
We should think at a way to deflate the supply aswell. The goal should be having the supply to oscillate around 1B.
Something like the staking/burning mechanism that ETH already uses. The difference is that here we don’t use CTSI as gas so another way to reabsorb excess supply should be found.

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Lowering Block Rewards

Regarding token inflation, I believe that cutting current block rewards in half, from 2,900 to 1,450, can also be beneficial for the token supply and the future of the project. Since the blocks are also not being used for anything anymore, it makes sense to lower the rewards.

It is also beneficial for the long term, as staking rewards can continue on a much longer time horizon, giving the project a longer time frame to operate.

Mining reserve is expected to be fully depleted in January 2026. However by cutting the rewards in half at least once, we can extend this until January 2028. If we cut it in half twice, it can be extended until January 2030. If three times, until January 2032. Four times, until January 2034, and so on.

Should we worry that everybody will unstake their tokens and dump it on the open market, causing the project to stall? I don’t believe so. Here is why:

  • People that already staked their $CTSI tokens are unlikely to unstake it, simply because it’s just too much hassle. And besides they still get a return on their staked tokens.
  • Also if we look at projects like Casper $CSPR, they have a supply inflation of around 10% per year and have their majority staked. When we half the rewards on Cartesi, that would be around the same percentage.
  • Even if we look at $ETH they only get 2.77% per year, and people still stake loads of their tokens.

Lowering block rewards will indefinitely slower the supply curve. And as we all know, things that are scarce tend to be more valuable. In Cartesi’s case it can create more attention to the project, and thus attract new interested parties, such as developers, creators, and many more.

Hi @Blockmain.capital

I would be careful with implementing these changes without modelling their impact. With halving you can have a point where it is not beneficial for the “agents” to participate at all (they would suffer opportunity cost from staking on other platforms + other costs). Also a resource (Token Unlocks) for those interested as well

This will depend on the net yield. If there are previous unstaking trends on downswings/upswings of the price you can use that to predict the "amount " that is expected to be unstaked. The unstaked ammount would then be reduced and net yield should go up for the remaining stakers. It also depends on the liquidity available on the market, and what would a large unstaking event do to the price (an unfortunate feedback loop here is possible).

I am not sure they are comparable, the risk taken on by $CTSI staker is higher and liquidity is lower. The yield needs to be more competitive to make up for the risk.

I propose the above mentioned analysis should be done and if a drastic change is introduced unstaking speed should be managed so the market is liquid enough. If you want to discuss this further I am more than open for it.

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Hi @aleks,

Thank you for responding. Having your feedback and input is very valuable to the community.

I agree that modelling the impact of such decisions is a helpful way of determining the risk and effect of such a decision.

However the downside with modelling is that it is exactly that: creating a model. While it might help in assessing an effect, it shouldn’t be taken as an absolute fact.

However if you do have such a model or know a way how to model it, please share it here with us. I’m always open to change my mind.

When determining the effects of such a decision, I think looking at other projects and the past of Cartesi’s staking rewards, can tell us a lot of the potential effect, as well as looking forward to what will happen when the mining reserve will be depleted.

When staking was just launched…
When noether and staking was just launched APY% rewards were over 100%. This quickly lowered to 50%, and then to 25%, and then to what it is now (as of today it is 14.6%). We haven’t seen any significant outflow, quite the opposite, we’ve seen more and more people staking their tokens on explorer.cartesi.io

In our opinion slowly lowering the staking rewards is much better than abrupt setting the rewards to 0, when the mining reserve is depleted in the end of 2025.

If there’s no solution for that, all of a sudden 300+M $CTSI tokens will be unlocked and for sale on the open market, since there won’t be any incentive anymore to stake the tokens.

While halving the staking rewards might not be the ideal solution, it gives enough time for the Cartesi ecosystem to develop into a mature ecosystem, as well as developing new ways of incentivising people to stake their tokens. Rather than abrupt stopping the staking rewards at the end of 2025.

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I completely agree, however the model results can showcase to the community the impact of the decision.

I agree with this statement as well. The staking rewards are already high. :slight_smile:

If you want to talk more about the modeling of the changes and general approach I propose we talk in the dms or schedule a short intro call as communication via forums is often not efficient.

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@Blockmain.capital I appreciate your detailed posts, but to me the halving can’t be the solution. I’ll give my view on the whole supply problem, let’s examine each scenario and its potential benefits and drawbacks:

Inflation:

  • Pros: Inflation motivates spending and investment rather than hoarding, potentially stimulating growth in the ecosystem. It also helps fund ongoing development and rewards within the network.
  • Cons: However, inflation can reduce the voting power of current holders, potentially leading to over-centralization. It also risks devaluing the token, especially impacting later recipients of the new supply, as their holdings could depreciate over time.

Deflation:

  • Pros: Deflation can enhance the token’s value as scarcity increases, which is beneficial for long-term holders.
  • Cons: On the downside, it encourages holding instead of partecipating, potentially resulting in decreased liquidity and a less vibrant ecosystem. Moreover, the sustainability of this model is questionable as the supply continues to decrease.

Fixed Max Supply:

Asymptotic Approach (like Bitcoin):

  • Pros: The predictability and inherent scarcity can drive initial growth and attract investment.
  • Cons: However, as the supply cap is approached, the incentives for participating in the network may decline, as @aleks pointed out. This could lead to reduced security and network activity.

Oscillating Model: this to me is the model that we should think about.
We already have something proposed here with a staking rights mechanism.

  • Pros: This model, particularly with its staking rights mechanism through auction-based token issuance, introduces dynamic adjustments to the token supply essentially in response to market conditions. It is designed to balance the ecosystem’s needs, promoting real-time responsiveness and encouraging active involvement.
  • Cons:
    The proposed staking rights mechanism, operating through auction-based token issuance, is an example of an oscillating supply. It adjusts token supply, theoretically balancing the needs of the ecosystem.
    The staking rights mechanism, as a form of oscillating supply, requires particular attention. While it introduces a dynamic market element into the ecosystem, encouraging active participation and potentially increasing the overall engagement, it also poses significant risks. The possible creation of a secondary market for staking rights might lead to a scenario where only a few, financially robust participants can afford to stake. This could lead to a concentration of power, moving away from the decentralized ethos we value.
    Moreover, the possible introduction of financial derivatives based on staking rights could further complicate the ecosystem. It might attract speculative behavior, shifting focus from governance participation to financial gains. This shift could detract from the fundamental goal of decentralized governance and community-driven decision-making.
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This thread began by encouraging the increase of CTSI utility within the ecosystem and has since devolved into a thread about token inflation. These two issues are not the same thing. With regard to adding utility to the token, I agree with many of the initial suggestions made. With regard to the tangential discussion on inflation, can we at least wait to see what this year brings regarding adoption and CTSI utilization before we get ahead of ourselves adjusting the supply flow?

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@mhs those are not completely separate issues, three of the twelve ideas proposed for enhancing the $CTSI utility—Loyalty Programs, Buisness Partnerships and Educational Incentives —along with the Noether proposal share a common concern: the reliance on inflation as a payment source.

Additionally, the Token Burning concept directly impacts the token supply by reducing it.

The challenge here is to balance the need for increasing $CTSI’s utility with the imperative of maintaining its economic stability.

On the other hand, I really like those ones:

  • Integration with dApps
  • Cross-chain Interoperability
  • NFT Integration
  • Microtransactions and Tipping
  • DeFi Services
  • Charitable Use
  • Supply Chain Use
  • Remittances

These ideas leverage existing features of the token or aim to create new ones that will remain as permanent upgrades, without relying on future funding.

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Hey all, for visibility I wanted to bring here an announcement that was made today by Sunodo, one of the companies contributing to the Cartesi ecosystem, that touches on the CTSI utility discussion here in a pretty big way!

Sunodo is a company in the ecosystem that has been building a convenience layer for ease of creation and deployment of Cartesi dApps that they are preparing to launch soon. They’re also preparing to provide services as the first professional validator service provider in the Cartesi ecosystem for dApps and users who don’t want to run their own dApp validator nodes.

Sunodo announced this morning that they’re setting CTSI as the payment currency for their dApp validation services. They also announced that they’re planning to propose a Cartesi Validator Marketplace to connect dApps, users, and service providers in the ecosystem, also with CTSI as the marketplace currency.

Sharing below the thread from Sunodo. Super cool stuff, imo.

https://twitter.com/cartesiproject/status/1759579113969349062

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It is great to see such an open discussion on this topic, something I honestly did not expect, only hoped for. :pray:

Initiatives such as the Cartesi Grants Program (CGP) are great accelerators for adding utility to the $CTSI token in my opinion. So kudos to the team @bruno.maia @erick.demoura @felipeargento @hellen @gabrielbarros @bmaia18 and everyone I missed.

Halving/Deflation Token Supply

Thank you for the detailed replies @Paolo. I agree that halving is not the solution. It can only be part of a ‘solution’. Here is my view on deflation/inflation regarding people being incentivised to spend and invest:

I think it doesn’t really matter as long as there is enough utility to a token.

Bitcoin As An Example

Take Bitcoin for example. People have been debating whether it’s a store of value or a medium of exchange for over a decade. It’s becoming more obvious now that it’s being used as a store of value, maybe not what Satoshi intended. Bitcoin has had an inflating supply since its inception (while also having halvings implemented). However now with BRC-20 tokens, Ordinals and Bitcoin NFTs people are ‘spending’ and ‘investing’ their Bitcoins like there is no tomorrow.

The key here is again utility

Ethereum As An Example

Take Ethereum ($ETH) for example. When its ICO was held, people bought into the vision that someday people would use the $ETH token. There was no utlity, no ERC20, NFTs, ERC404 or anything alike at that time. When ERC20 tokens were introduced, as well as NFTs and now ERC404 tokens, the ecosystem exploded. This explosion had barely anything to do with the supply increase or decrease.

Again… utility

Gold As An Example

Take Gold… while it’s supply is very limited, it is still increasing every year (approximately 1-3% per year). It’s being used as a store of value, because its use case, or utility, is very limited. You can’t grow crops with it, you can’t eat it, and you definitely can’t buy groceries with it.

Why People Spend Money?

Because let’s face it, why do you spend your hard earned money? Because you are getting something better for it in return, whether it’s simply food, shelter, water or a fantastic holiday. People invest their money & tokens, because they believe they are getting something greater in return for it.

I think there is a lack of support for halving the token rewards within the $CTSI ecosystem. It is also a fact that the mining reserve has already depleted for more than 50%, so it’s not that important. However I’d like to see more utility for the $CTSI token as I outlayed in my first post. I believe by bringing this awareness to the community, seeing all your guys amazing feedback, and seeing initiatives such as the ones @Brandon mentions, it can definitely help and foster the growth of it.

Letsgo!