Blockchains and the Token Economy: Theory and Practice

Acknowledgments
Contents
Notes on Contributors
List of Figures
List of Tables
Introduction to the Token Economy
	Overview of the Chapters
	Conclusion
	References
1: Implications of the Token Economy: A Taxonomy and Research Agenda
	Introduction
	Literature Review
		Tokens in the Blockchain Economy
		The Token Landscape
	Methodology
	Results
		Economic Purpose
		Stakeholders
		Perspective
			Business Model Aspects
			Technical Aspects
			Legal Aspects
		Challenges and Solutions
	Conclusion, Implications, and Further Research
	Appendix
		Business Aspects
		Technical Aspects
		Regulatory Aspects
	References
2: Working Title: Recovering from Blockchain Missteps and Myths with Coopetition
	Introduction
	The Early FedEx Journey
	Myths About Blockchain
	Dispelling Myths About Blockchain
	Psst…Whether or Not You Know It Yet, the Rules Have Changed
	Conclusion
3: Finding the Right Balance: Technical and Political Decentralization in the Token Economy
	The Token Economy and the Need for Cross-Ledger Interoperability
		Decentralization of Token Economy Instances
		Decentralized Token Economy Instances That Are Based on Distributed Ledger Technology
	Technical Decentralization in Token Economy Instances That Comprise Different Distributed Ledger Technology Systems
		Cross-Ledger Interoperability Patterns and Their Degrees of Technical Decentralization
			Manual Asset Exchange Pattern
			Notary Pattern
			Sidechain Pattern
		Dependencies Between Technical Decentralization and Security and Performance Characteristics
	Political Decentralization in Token Economy Instances That Comprise Different Distributed Ledger Technology Systems
		Governance in Token Economy Instances That Are Based on Distributed Ledger Technology
		Political Decentralization of Token Economy Instances and Cross-Ledger Interoperability
	Drawing Conclusions from the Technical and Political Perspectives on Centralization and Decentralization of CLI Systems
	References
4: Cryptoeconomics: Designing Effective Incentives and Governance Models for Blockchain Networks Using Insights from Economics
	Introduction
		Blockchain and the Paradox of Choice
		Why (Crypto)economics Can Help
	Framework for Economic Design
		Pioneers of Economic Design: The FCC Spectrum Auction
		The Phases of Practical Economic Design
			Phase 1: Value Proposition and Strategy
			Phase 2: System Architecture
			Phase 3: Economic and Governance Design
			Phase 4: Value Verification
	Prysm Group 3Cs of Economic Benefits of Blockchain
		Coordination
		Commitment
		Control
	Prysm Group House Economics Framework
		Overview of the Components of the House Framework
		The Incentive Layer
		The Token Layer
	Prysm Group Wheel Governance Framework
	Implementation Challenges
		Disclosures
	References
5: Verifiable Credentials in the Token Economy
	Overview of Credentials
	Principles for Self-Sovereign Identity (SSI) and Verifiable Credentials
		Concepts and Technologies for Verifiable Credentials
	Minimal Viable Products
		SmartResume
		Digital Health Passes
	Conclusion
	References
6: NFTs and the Metaverse Revolution: Research Perspectives and Open Challenges
	Introduction
		Setting the Scene
	Virtual Worlds Toward a Blockchain-Based Metaverse
		Blockchain-Based Metaverse
		Artifacts Inferred from Blockchain-Based Metaverses
		Features of a Blockchain-Based Metaverse
	Token Standards
		Ethereum Blockchain
		Efinity Blockchain
		Near Blockchain
		Flow Blockchain
		Hedera Hashgraph
		Bitcoin Cash
		Binance Smart Chain
		Other Chains
	Research Perspectives and Open Challenges
		Creation of the Metaverse
		Innovative Products and Services
	Monetization Opportunities
	Challenges on Governance, Generation, and Minting Processes
	Concluding Remarks
	References
7: Asset Tokenization of Real Estate in Europe
	Introduction
	Blockchain Technology and the Theoretical Foundation
		Blockchain-Based Smart Contracts
		Real Estate and Commercial Real Estate
		Current Methods of Investing in Real Estate
		Securitization
		Tokenization of Assets/Rights
	Interview Results
		Topic 1: Tokenization of Assets
		Topic 2: Structure of the Real Estate Offering
		Topic 3: Risk and Benefits of Tokenized Real Estate
		Topic 4: Legal Challenges
	Real Estate Tokenization Use Cases in Europe
		Real Estate Tokenization Companies in Europe
		Real Estate Single Asset/Entity Tokenization Projects in Europe
	Discussion
		Research Question 1: What Are the Conditions Under Which Real Estate Asset Tokenization Makes Sense?
		Research Question 2: What Do the Current Tokenized Real Estate Offerings Look Like?
		Research Question 3: What Are the Main Benefits and How Do They Differentiate Themselves from the Existing Methods of Real Estate Financing/Investing? What Are the Risks Associated with This Technology and This Sort of Offering?
		Research Question 4: How Do Real Estate Tokenization Companies Currently Utilize Jurisdictions Within the European Union and Why Did They Choose Their Respective Country of Operation?
	Conclusion
	References
8: Tokenization and Regulatory Compliance for Art and Collectibles Markets: From Regulators’ Demands for Transparency to Investors’ Demands for Privacy
	Introduction
	Tokenization for Fractional Ownership, Collateral, and Sponsorship
	Tokenized Claims for Custodied and Non-custodied Assets
	Art Markets, AML/KYC Regulation, and Identification
	Digital Wallets for Tokenized Claims and Off-Chain Identity Information
	Zero-Knowledge Proofs for Selective Disclosure
	Proposed Technology Stack
	Outlook
	References
9: Token-Based Insurance Solutions on Blockchain
	Introduction
	Preliminaries of Token-Based Insurance Solutions
		Roles
			Insureds
			Insurer
			Underwriters
			Reinsurers
			Claim Assessors
			Decentralized Autonomous Organization
		Assets and Tokens
			Payment Token
			Insurance Token
			Governance Token
		Processes and Operations
			Cover Purchase
			Pricing
			Payout
			Capital Management
			Governance
	Comparison of Existing Decentralized Insurance Protocols
		Nexus Mutual
		Etherisc
		inSure
	Other Insurance-Related Solutions on Blockchain
		fidentiaX
		Opyn
		Backd
	Discussion
		Benefits
			Efficient Risk Transfer
			Transparency
			Security
			Customization and Agility
		Challenges
			Lack of Contingency Plan for Insolvency
			Low Competition and Participation
			Fragile Incentive and Penalty Mechanism
			Centralization
	Conclusion and Outlook
	References
10: Revisiting Blockchain Token Sales: How Crypto Companies Raise(D) Money
	Introduction
	From Blockchain Technology to Token Sales
	The Token Sale Ecosystem
	Stages of a Token Sale
		Pre-TS Activities
		Activities During a TS
		Post-TS Activities
	Trust—A Problem in Token Sales?
	Overcoming the Trust Frontier in Token Sales
	New Forms of Token Sales and Alternative Funding Vehicles
	Summary
	References
11: Ensuring Safety and Security in Blockchains: A Private Capital Markets Example
	The Digital Ecosystem
		Characteristics of Digital Ecosystems
			The Business Drivers of Digital Ecosystems
			The Technology Drivers of Digital Ecosystems
		Implications for Ecosystem Blockchains
		Challenges for Safety and Security
			Decentralization Versus Distributedness
	Safety and Security
		Safety and Security: An Expanded Perspective
		Components of Safety and Security for Blockchain
			Specific Requirements for Participants
			Functional Requirements
				Authenticity
				Identity
				Risk Management
				Governance
				Transactional Integrity
				Process Validation
				Finality
				Privacy
	Enhancing the Safety and Security of Ecosystem Blockchains
	Technical Safety and Security
		Functional Safety and Security
			Authenticity
			Identity
			Governance
			Privacy
		Process Safety and Security with Smart Contracts
		What Happens When Things Go Wrong
			Prevention
			Detection
			Recovery
	Conclusion
	References
12: Utilizing Non-fungible Tokens for an Event Ticketing System
	Introduction
	Background
		Blockchain and Non-fungible Tokens (NFT)
		Event Ticketing Systems
	Research Method
	Prototype Design and Development
		Problem Statement and Derivation of Design Objectives
		Fundamental Design Decisions
		Resulting Prototype
	Evaluation and Discussion
		Testing and Experimental Evaluation
		Expert Evaluation
		Design Objectives Evaluation Results and Discussion
		Discussion of General Benefits and Challenges
	Conclusion
	References
13: Saving the Oceans with NFTs
	House of Cards
	Nobody Sees the Oceans’ Tears
	What Is the Salacia Project?
	Riding the Third Wave of Blockchain Innovation
	Resources Provided by the Salacia Project
	Salacia Project Roadmap
	Conclusion
Appendix: Overview of Blockchain Technologies
Conclusion
References
Index