Board Coins. A New Way to Participate in Social Media Communities
What Are Board Coins?
Each board (thematic community on the platform) has its own coins that anybody can buy and sell. The price of coins goes up when people buy them and goes down when people sell.
Technically, board coins are BEP-20 tokens. Like all tokens, coins are freely transferable on the Binance Smart Chain network and are stored on users’ personal wallets.
The price of coins is determined by the following formula embedded in their smart contract:
Since board coins are bought and sold for MAIN tokens, below we present the formula for calculating the price of coin in MAIN tokens. To get the price in dollars, you need to multiply the price below by the MAIN exchange rate.
Board_Coin_Price = 10 * Coins_In_Circulation
As you can see from the formula, price of the coin goes up automatically as the number of coins in circulation increases.
Although coins can be issued indefinitely, in fact, they are quite rare. We expect that each board will have between 100 and 2,500 coins on average. This is because each new coin purchased raises the price of the next one by 10 tokens, making it very costly to buy very late coins.
Ultimately, even if you had total supply of MAIN tokens and spent them all to buy one board coin, you still couldn’t buy more than 14,142 coins.
How Board Coins Work
Initially, when someone creates a new board, board has 0 coins and, accordingly, the price of its coins is also 0. If you want to buy coins from the board, then you make a purchase transaction and send MAIN tokens to the board coin contract. In return, the board will mint new coins and send them to you according to the price curve above, making it more and more expensive as more coins are purchased. The MAIN tokens that you used to buy coins are locked to the board and serve as collateral for the buyback of coins.
And the opposite situation. If you want to sell the coins on the board, then you make a sell transaction and send the coins you own back to the board. The board automatically buys these coins from you and sends you in return the amount of MAIN tokens according to the current coin price curve. To buy coins, the board uses MAIN tokens, which it has stored from past purchases.
Thus, buying creates new coins by pushing their price up and locking MAIN tokens to the board, while selling burns coins, pushing their price down and returning MAIN tokens from the board.
This mechanism is often referred to as an automatic market maker (AMM). A similar concept is used in such well-known protocols as Uniswap, Bancor or PancakeSwap.
Coin Price Curve
If we integrate the coin price curve, we get a formula for calculating the number of MAIN tokens locked to the board, which is equal to the “net” amount of tokens that has used to purchase particular board coin. Below is a graph of what the board coin price curve looks like as a function of how many MAIN tokens are locked in a given board.
Also we add a table that shows some values of the number of coins in circulation and the corresponding coin price and the amount of MAIN tokens locked. If you’d like to play with the numbers yourself, you can do so using this sheet (make a copy to edit it).
As you can see from the table above, one of the properties of the coin price curve is that every time someone wants to purchase exactly the same number of coins that have already been circulated (so that their share of the total supply will be 50%), she will have to spend three times more MAIN tokens than was spent on buying existing coins. The price of coins will double.
With each purchase of board coins, a certain percentage of tokens (by default, 10%) are sent to the mothership contract. Part of this amount is returned to the board moderators as a reward, the rest remains with the platform.
This means that if someone wants to buy coins, for example, for 1 000 tokens, then only 900 tokens will be used to buy coins and lock to the board, 100 tokens will be distributed between the moderators and the platform itself.
In addition to the function of rewarding the board moderators, such a mechanic plays another important role: it encourages users to hold coins for a while, making the purchase and instant sale of coins in order to manipulate the market less profitable.
What Are the Board Coins for?
New Asset Class
Board coins represent a new type of asset class that reflects the value of a particular community. Perhaps for the first time in the history of social networks, people will be able not only to own their favorite communities, but also to trade their potential as an asset.
In theory, the more interesting a community becomes, the better it is managed and the more active participants it collects, the more people will want to buy its coins, and the higher their price will be. Thus, if you believe in the potential of a community, then you can buy its coins and make money on it when the community realizes this potential.
The opposite is also true: if the community does not develop, moderators introduce unpopular rules or stop monitoring the quality of the content, then people can start selling coins of such a community, which will push their price down and serve as a good signal for moderators to change their approach to governance. Some may even be able to anticipate such changes and make money on them by buying and selling coins during the ups and downs.
By connecting users’ self-interest to the success of specific communities, board coins can be the next step in user engagement in social media communities. Agree, being subscribed to some community and owning a part of this community is not the same thing? Ownership implies a completely different level of responsibility, involvement and motivation. Imagine if you could easily buy stakes at your favorite bar, football team, or music label, how much closer would you get to interact with them?
While the above reasons in themselves make board coins a very valuable tool, there are many other opportunities that they open up. Here are some of them that we hope will be implemented in the very near future.
While community moderators do serve as governance, the communities themselves do not belong to them. Communities are public goods that are created and used by a wide range of actors. If users do not have tools to control moderators, then this can ultimately lead to dishonest behavior of moderators and hinder the long-term development of communities. For example, moderators may start using communities for their own personal gain, may make unpopular decisions, or simply receive rewards without exercising any governance functions. An effective way to combat this behavior is to create a procedure for competitive selection of moderators. Board coins can be a key element of this future system.
Since coin holders have a personal and financial stake in the development of the communities they own, they will be able to make motivated decisions when choosing community moderators. The moderators, in turn, will be accountable to the coin holders and make some effort to stay in their place. And although this topic deserves a separate article, we will try to briefly describe what such a procedure might look like.
Each board coin holder can initiate elections for a new community administrator. If a certain number of coin holders support such a decision, then the election procedure is launched. After that, each owner of the board’s coins will be able to nominate himself for the post of administrator. As in any election, she can present her program to the community and describe exactly why she should be elected to this position. After all candidates are registered, coin holders vote for candidates close to them. After the end of the voting period, the votes are counted and the candidate who collected the most coin votes in her support becomes an administrator. To reduce the influence of the largest coin holders on the election results, we may use not a “one coin one vote” rule, but the square roots of coins for every holder.
Subsequently, such a procedure can be applied to vote on other, less significant issues, for example, to change the board rules, establish the amount of remuneration for moderators or make decisions on the distribution of the board fund.
As we said above, part of the tokens (by default 5%) from all purchases of the board coins are distributed to the moderators of this board as a management reward. Such a mechanic will ensure the direct interest of moderators in the development of their board, because the more interesting the board is, and the more people buy its coins, the more rewards they will be able to receive.
And although the presence of such a reward already allows the moderators to make money on the growth of their boards, we think that the best way to monetize boards is to buy the board coins immediately upon creation. This works because at the very beginning, the coins on the boards have the lowest price, which quickly increases with subsequent purchases. If the moderator buys his coins at the very beginning, and then leads the board to success, then even selling part of his original coins, he can make significant profit.
Let’s give an example. Suppose, you created a board and bought 10 000 MAIN worth of its coins. The board began to develop and other users purchased its coins for another 100 000 MAIN. In this case, if you decide to sell all your coins right now, you can already earn 46 332 tokens of profit (and this is without taking into account the commission that you received from the purchases of coins by other users). To calculate how much you can earn if you buy coins for a large amount or sell them even later, you can use this calculator.
Distribution of Value
We expect communities to have even more monetization opportunities in the future. In addition to donations and commissions from awards, boards, for example, will be able to offer sponsorships, release their own NFTs, sell ads, run competitions, or sell exclusive rewards and opportunities. To incentivize users to buy and hold coins from such communities, communities can distribute a portion of their revenue among all coin holders. At the same time, the holders themselves will be able to decide what percentage to send to pay remuneration to them, and what, for example, to use to encourage authors or board moderators.
Exclusive Features for Coin Holders
Board coins can be used by boards to provide users with exclusive options. Buying coins can be compared to purchasing a premium card or club membership. Coin owners, for example, can get priority in displaying their posts and comments, receive special badges, or get access to private chats. Moreover, the coins can be used by users to create private communities, which can only be joined by purchasing coins for a certain amount.
What can happen when you allow people to speculate on the growth of specific community? We can’t know for sure, but here are a few mechanics that may well come up.
Buy and make popular. Usually, recommending a channel or community on other social networks gives you nothing in return, even if such recommendations or your activity helped community become popular. On MAIN, you can buy some board’s coins and then recommend it or post there. If the community becomes popular, then you can not only gain from it financially, but also boast that you bought its coins when they “were not worth anything yet.” You will even have proof of this recorded on the blockchain.
Imagine if you already have your own community? For example, you run a group at your university or a video game fan chat. You can create a similar board on MAIN, buy its coins and invite your entire audience to join. If such a board becomes successful, then you can earn not only on referral income from new users, but also on the growth of the price of your board’s coins.
Community Promotion. Companies and brands can use coins as an alternative way to promote themselves. Instead of buying ads, they can simply create a community for their project on the platform and, by buying its coins, promote it in the ranking. They can also use the purchased coins to reward active members of such a community, run airdrops or content competitions. This will allow companies not only to attract the attention of the entire audience, but also to create a community of loyal users.
The most interesting thing about these mechanics is that they were not even initially incorporated into the product itself, but arise only as a consequence of the basic properties of the coins. Who knows, maybe very soon the communities will compete with each other not by the number of participants, but by the price of their coins. Agree, this is a much more honest metric.
What other dynamics could exist that we haven’t yet thought of?
Impact on Tokenomics
We expect that board coins will have a significant impact on the entire tokenomics of the project. Platform users will receive not only an exciting, but also limitless way of using tokens. Ultimately, this can lead to the following effects:
- Increasing demand for tokens. Since board coins can only be purchased with MAIN tokens, the demand for coins may lead to new demand for the tokens themselves. Moreover, each new community created on the platform will automatically create a new asset, for the purchase of which users will again need tokens.
- Decreasing token supply. Since the tokens that are used to buy board coins are locked in these boards, they will not be able to participate in the circulation until users decide to sell their coins. This could lead to a decrease in the number of MAIN tokens available on the market, making them more rare.
- Smoothing the unlock of new tokens. Every day, part of the MAIN tokens is unlocked and used to reward users and fund the work on the project. Usually, the mint of new tokens leads to an increase in their supply and, accordingly, erosion of their value. However, if we assume that most of the new tokens will be used by users to create (purchase) new coins, then the release of new tokens will not only not significantly increase the number of tokens in circulation, but will constantly increase the price of the coins themselves, thereby encouraging early participants.
The Web 3.0
Board coins open doors to the wonderful world of web 3.0. MAIN users can now not only participate in communities of interest to them, but also own and trade them as an asset.
Just think about it! On MAIN, you can buy coins from any community, help it become popular (or watch others do it) and make money on it. All this already works even without additional ways of using coins on the platform.
Thus, community coins operating on the blockchain create a new model of a social network in which users not only create value themselves, but also benefit from it themselves.
Compare this to traditional social media models, where users create value, but the main benefit goes to the platform, which uses its users to sell ads.