Ahead of the Bright Token Sale, Head of Blockchain Jaime van Oers shares more information on our exciting dual-token model.
Bright is building financial services on the blockchain to solve the problem faced by many small businesses in accessing credit. We have spent the last 18 months building Bright Network, the technology that underpins our ability to perform small business lending and credit analysis on the blockchain. Bright is built on a decentralised, open protocol, and as a result we are using token economics (henceforth called tokenomics) to create a robust, healthy marketplace and system of incentives to promote the adoption and growth of the network. By analysing the incentives of the network’s participants and investors, we have created Bright Network and its tokens in a way that provides a clear value proposition to token holders and creates the foundation on which we believe a sustainable business can be built.
I won’t sugar coat it, the ICO landscape has received a damaged reputation over the past year as a result of various exit scams, vaporware projects, tokens with no intrinsic value or absurd valuations. However, at Bright we feel strongly that by careful consideration of the interests of project stakeholders and a thoughtful and scientific application of tokenomics, it is possible to produce an ecosystem that is beneficial for projects, investors and users alike.
The Bright team has spent a considerable amount of time over the last year constructing an alternative vision and tokenomics model that more fairly treats investors and users of the network, and more effectively captures what are often disparate sets of values. The Bright token sale represents an alternative to the traditional single-token-ICO. Through a dual-issuance of both a utility and a security token we firmly believe Bright can meet the requirements of all stakeholders by strategically crafting and capturing the network’s value propositions.
In this article, I will explore how we are using our two tokens in combination to make investment and usage values segregated and transparent to token purchasers. I will also touch upon how we have crafted token utility and valuation for Bright Network.
The broad categories of token stakeholders in Bright Network are investors, users and Bright. Investors benefit from upwards pressure on token value and want a return on their investment that justifies the risk taken when funding a project. Users benefit from the increasing utility of tokens, and necessitate liquid on/off ramps to the currency. Bright wants a sustainable business with flexibility in funding structures to allow for ongoing development. Finding a way to balance these incentives in our token structure was vital, as often they directly contradict each other.
By careful consideration of these incentives and the regulatory environment we are in, we have decided that isolating pure security-like investment activities from any network utility provides a variation in risk profile for investors and broadens the funding options available to Bright. This starts by asserting that Bright Network is revenue generating, as it charges fees at the protocol layer for cost-inducing transactions and operations on the Network. As part of the protocol, these fee revenues are distributed amongst holders of BRTX, a fully digital security, similar to how dividends might be paid out amongst shareholders. BRTX captures the value of fee cash flows in Bright Network in perpetuity, and frees the utility of the network from the constraints of securities regulation and explicit revenue generation.
The utility of the network is thus left to be captured independently by Bright’s second token, BRT. However, this statement alone yields new problems. There is plenty of literature about how medium of exchange tokens which only capture their service’s utility by providing a gated entrance have high velocity, and as a result have downwards-trending intrinsic value that cannot support a sustainable valuation. In other words, tokenized services whose tokens are only used to pay for things, or which mandate a fixed buy-in or stake of tokens to use the service, will struggle to capture the value of the service in the token. Instead, we look to effective tokenomics for creation of price stability and growth by encapsulating the core value proposition of Bright Network within the token.
Bright Network’s strength lies in the technology that underpins its Data Vaults, and by extension, the ability to analyse and trust unknown or independently attributed data. This layer of data and trust is the foundation upon which our lending marketplace is built, where financial service providers are able to offer services to small businesses. It is at this level that BRT is used by the network to match the supply and demand of small business data access for financial services through staking. This mechanism has been constructed to offer the most applicable services and interest rates to customers, incentivise sustainable network participation due to service providers having “skin in the game”, and offer providers the flexibility to choose their appetite of exposure on the platform according to the customer segment they wish to target.
As the network can in real-time calculate customer segments, as well as the stake amounts of a service provider relative to all others, there is competition amongst providers to target their preferred segment through dynamic staking, thus creating a price stability mechanism which is connected directly to the value proposition of the network.
In addition to this core value proposition, BRT will have auxiliary uses, including promotion in the marketplace, network governance (as network development matures) and incentivising actions which are beneficial to the growth and operation of the network, whilst de-incentivising detrimental, malicious or fraudulent actions.
An ERC-20 compliant Security Token on the Ethereum Mainnet. It is restricted to accredited investors and will require additional legal scrutiny for its ownership and usage.
BRT is an ERC-20 compliant Utility Token on the Ethereum Mainnet.
BRT and BRTX tokens will be distributed in a sale structure that is uniquely configured to account for the separation in investor and user profiles, and maximises price fairness, inclusivity, benefits of early adoption and flexibility to demand.
We will be issuing full details on the sale shortly. Be the first to know by registering your interest in the Bright Token Presale today! For more news, tech developments and community announcements, join our Telegram.
*Disclaimer: Nothing in this post constitutes an offer to sell, or a solicitation of an offer to buy securities in any jurisdiction in which such offer or solicitation is unlawful. BRT and BRTX tokens will not be registered under the United States Securities and Exchange Commission nor under the applicable securities laws of any states of the United States of America or foreign regulatory authority. Certain statements in this post constitute forward-looking statements. In particular, the words "expect", "anticipate", "estimate", "may", "should", "plans", "intends", "will", "believe" and similar expressions (or in each case their negative and other variations or comparable terminology) can be used to identify forward-looking statements. No representation or warranty is made as to future performance or such forward-looking statements. All forward-looking statements in this post speak only as of the date hereof. *