7.Economic model design and management

The economic model design of a blockchain system plays a crucial role in the success of the project. We provide the main content of the economic model design in the white paper, including the design of the total amount of tokens, the distribution ratio of various roles, the issuance mechanism, liquidity management, and foundation management functions. If the details cannot be explained in detail, we will try to give the principles that need to be followed.

7.1. Economic model design

The digital token in the email is the application medium in the platform and is used to complete the design of the system involving blockchain technology. We explain the main three parts: email economic model, consideration of other economic models, and value capture.

1. Email economic model

Token name: MiYou

Token abbreviation: MY

Numerical precision: 18 decimal places

Total number of tokens: 100 billion.

Distribution of tokens:

10% for early customers: airdrops for early customers, product usage rewards, and ecological contribution rewards.

Investors 15% (private fund+ public fund): The total amount has been determined, the method is to be determined, and the ban will be gradually lifted according to the progress of the project.

MiYou Lab 15%: As product development and operating expenses, the ban will be gradually lifted in 6 years.

Foundation 60%: As long-term ecological construction and reserve asset management, the ban will be gradually lifted according to the progress of the project. The functions and management methods of the foundation are introduced in Section 7.3. The imperfect design of the initial economic model will be adjusted by the foundation using this project token.

Token distribution start time: Starting from the launch of some products in 2022, some customers have been allocated reward tokens for early product use, and the price in use is temporarily calculated at US$0.003.

The issuance of tokens to investors and technical teams has not yet been carried out and needs to be determined based on the progress of the project.

The overall distribution plan follows the principle of meeting the application needs of the token in the project.

2. Problems with other economic models in ecology.

In the planning of the email ecosystem, in addition to the mailbox chain, there will also be the planning of blockchain systems such as marketing chains and storage chains. When the main ecology of the blockchain mailbox is not perfect, the economic model of other systems will not be designed. In scenarios where tokens are required, use tokens issued by mailbox chains. In the future, a certain field will develop independently, and when it is necessary to launch an independent blockchain system, a new economic model will be designed. The economic model of the mailbox chain will not be adjusted unless necessary. Mail tokens used by other businesses will be returned in proportion to the mail tokens when the economic model is independently designed in the future. Some applied economic models will use points to record user contributions in the early stage, and later will design a separate economic model based on development considerations.

3. Value capture

The value of the email economic model comes from the generation of internal value and the capture of external value, which is the basis for the long-term healthy survival of the entire system.

The generation of internal value comes from the native value generated by the system. This part of the business basically does not exist in the traditional field, or is completely different from the traditional business model. Mainly includes several aspects

(1) The added value income brought by new functions such as data preservation in emails;

(2) Paid revenue from Web3 name services and MMS products;

(3) Revenue from Web3 SaaS services, such as providing NFT casting, SBT and other functions;

(4) Income generated from the market;

(5) Other native income from Web3 products.

For the capture of external value, we define the income generated by solving traditional problems. This part of income exists in traditional fields. We have redistributed the relevant income structure through new technologies and models and obtained benefits from it. It mainly includes several aspects:

(1) Blockchain mailboxes bring new competitive product payment revenue;

(2) The income generated by value redistribution in email marketing;

(3) The added value income generated by bringing Web2 users into the Web3 field;

(4) New income generated through value redistribution in products such as Data encryption box;

(5) Other income generated by transforming and upgrading traditional businesses.

Regarding the income distribution issues arising from the value capture of the email system, we describe it in detail in the section on Equity Financing and Token Financing.

7.2. Equity Financing and Token Financing

In view of the development stage of blockchain technology and the characteristics of the products and services in the project, this project uses both equity financing and token financing in order to give full play to the advantages of both methods and curb their shortcomings.

Equity financing and token financing each have their own advantages and disadvantages, and each has its own adaptation scenarios. In terms of maturity, equity financing has experienced a long development time, and has mature management experience and mature institutional systems. As a financing method after the emergence of digital currency, token financing has distinctive characteristics. Equity financing is a type of proportional financing that can be recycled indefinitely. Token financing is a kind of total allocation financing, which is usually only carried out once or twice in the initial stage. When the token distribution is completed, there will generally be no subsequent token financing.

Compared with the early financing amount, token financing often obtains a large amount of funds. This is an advantage, but it also contains relatively large risks. Some project teams lack corresponding management experience and do not pay attention to rationality and cost-effectiveness in the early stage. They waste too many resources and are prone to serious problems in the use of funds. In addition, because the tokens have been allocated in the early stage, there is no way to remedy it afterwards, which is almost a fatal blow to the blockchain project. Token financing cannot rely on external conditions for allocating funds by setting a stage mission, which lacks the advantages of growth in the equity financing stage, especially the growth environment of non-funding functions.

Because equity financing is divided into multiple stages, it is not only reasonable in terms of fund management, but each stage also completes the phased development requirements of other functions in the project. This gradual growth method is more suitable for the growth laws of general things. It is not easy to make serious mistakes, or projects that have made serious mistakes will be terminated or adjusted midway, and there will generally not be serious consequences. Other functional aspects of the project include: product, sales, operations, team and culture building.

Equity financing and token financing have their own characteristics, and there is no absolute good or bad distinction. The two financing methods can be used together. The functional division of labor and benefit distribution of the two financings need to be handled well. In the early stages of the project, equity financing costs should be used as direct cash payments as much as possible to solve immediate problems, such as direct employee wages, office supplies, office rent, etc. Token financing funds and tokens should be used as much as possible for future and ecological incentive behaviors, such as employee rewards (like equity, there is a maturity period and tokens cannot be released at will), community incentives, incentives in product operations, and product support. Develop helpful external partner incentives, etc. At the same time, the incentives of the pass should be attached with a lock-up period as much as possible, so that the recipients can pay more attention to long-term interests, so that the pass owners are compatible with the long-term development incentives of the project.

For the parallel use of two types of financing, it is necessary to plan the interest boundaries and interest distribution ratios of the two financing groups, otherwise, major conflicts will occur in the later stage. Relatively speaking, equity financing produces shareholders of the project side, while token financing mainly produces users in the project. The interests between these two entities are different.

Which benefits are distributed to shareholders and which benefits are distributed to users (users in the application are the beneficiaries of the token) require certain rules and boundaries. First of all, the design of equity financing rules should be conducive to the long-term development of the project. However, the exit period of equity investment is generally long and the exit methods are limited. The interests of shareholders need to be considered. It is recommended that shareholder investors also participate in token financing to supplement the exit of equity investment. The method is insufficient. Token financing should set a lock-in period to reduce speculation and make it conducive to the long-term development of the project.

Buy each other, forming cross-holding

Equity financing and token financing need to be distinguished. By default, tokens are not allocated after investing in equity. You need to purchase tokens separately or participate in the fund raising of tokens. Having a pass will not share the equity income. A connection can be made between them. Because token financing usually raises a large amount of funds, part of the funds raised by tokens can be used to participate in the equity financing of the project. The specific proportion refers to the equity investment rules of venture capital, and the obtained share rights and interests are handed over to the foundation for joint management. In this way, the token ecosystem can obtain the company's future equity returns and open up the connection between the two. It is also possible to encourage equity investors to invest in tokens while conducting equity financing (this type of token financing usually cannot bring in angel customers for the product).

Benefit distribution order

In the order of interests between token financing and equity financing, priority should be given to the interested parties in token financing, because the quality of token development is directly related to the success or failure of the project. In the event of project failure, the interests of equity financing will also be lost. to guarantee. The interest distribution of equity investment can be distributed within the entire interest space, while the interest distribution of token investment needs to be within the application. Usually, because the token system requires external value capture, this will conflict with equity and may cause the interests belonging to shareholders to be used for tokens. These aspects require some prior agreed rules, or negotiation when conflicts arise. Solution. There is no clear distinction between the interest boundaries between token financing and equity financing, and will vary depending on the specific business. Generally, for businesses where tokens mainly solve problems, the benefits are mainly distributed to the token owners. According to the contribution ratio of the company's participation, the distribution of benefits should also be reflected. For example, the 7:3 distribution principle can be adopted. If it relies on the income promoted by the company, and the token application plays a supporting role, the distribution of benefits is mainly distributed to equity owners, and the token owners participate in the joint distribution based on their contribution.

7.3. The functions and management of the foundation

In blockchain projects, foundations play a more important role and need to complete two important functions: (1) management of project funds and tokens; (2) promoting the direct development of projects and ecological construction. In this section, we explain the foundation’s management of project funds and tokens, and the management and construction of the ecosystem will be explained in detail in the next section.

Token liquidity control and quantity regulation

The demand for tokens in blockchain projects changes during the development process, and economic means are needed to adjust the number of tokens circulating in the project. In the early stages of a project, a larger number of tokens are generally issued for token financing, but the development of the project has not yet started, and the demand for tokens in applications is basically zero or very little. In this case, on the one hand, it is necessary to specify the corresponding locking time and release cycle when setting up the economic model in the early stages of the project; on the other hand, the foundation needs to be used to adjust periodic liquidity. During the project development and maturity stages, the foundation also needs to have this function to adjust the supply and demand for tokens in the market.

Monetary Stability and Reserve Functions of the Foundation

The foundation's currency stabilization functions and foreign exchange reserves can refer to some operating methods of the international monetary system. Because of the borderless nature of blockchain, some rules from these international monetary systems can be learned.

We need to consider the following issues:

(1) Choose which currencies (and tokens) to use as reserves;

(2) The quantity and distribution of reserves;

(3)Usage rules.

Selection of reserve currency: The foundation can focus on Bitcoin and Ethereum, which currently have stable performance and value base, as the focus of foreign exchange reserves. At the same time, legal currency is also one of the foundation's key reserves. For the reserves of legal currency, some stable coins can be selected as preparations for flexible use. At the same time, in order to prevent the risks of current stable coins, the foundation needs to maintain the mainstream legal currencies in the existing international monetary system, such as the US dollar, RMB, Euro, etc.

The quantity and distribution of reserves: The ratio between several reserve currencies is determined based on the characteristics of the foundation and the development of the blockchain project. In the early stage, the foundation generally only owns the token of the project and a small amount of token financing. It will be a long-term process to achieve the ideal situation of using several tokens to complete the currency reserve.

The final reserve model will be designed by economic experts. The initial goal is to select legal currency, Bitcoin, Ethereum, and the project's token as capital reserves, which can be handled using the simplest equal division method, with each currency reserve accounting for one-quarter. If the two currencies of Bitcoin and Ethereum fluctuate too much, a certain proportion can be sold at the new high point of historical prices and converted into legal currency reserves; the reserves of Bitcoin and Ethereum can be increased near the low point of relative prices. This can not only stabilize currency prices, but also reap gains from the rise and fall of other digital currencies.

Other financial functions of the foundation

The financial system in reality has many functions. In the decentralized system of blockchain, there is no way to realize these functions. Especially measures at the macro-control level are difficult to implement in the blockchain system. But when it comes to the financial system, these control strategies and means are needed. Otherwise, the financial field that lacks these means will have more risks, leaving conditions for "bad guys" to do evil. One way is to put this part of the functional considerations within the scope of the fund's responsibilities. From another perspective, we can leave the market functions of the "invisible hand" to the blockchain technology system, and the government functions of the "visible hand" to the foundation.

How the foundation is managed

In the early stage of the project, a relatively traditional foundation management structure was used to manage funds and project development in the ecosystem. In the later stage, some new management methods will be gradually integrated.

The prosperity of Web3.0 in recent years has promoted the demand for on-chain governance and the development of DAO (Decentralized Autonomous Organization). The novelty of DAOs lies precisely in their ability to coordinate large numbers of people while avoiding the cumbersomeness of hierarchical structures. DAO has its own advantages and disadvantages. At the foundation level, the transparency of DAO's fund management, the openness and non-tamperability of rules can help the foundation better complete the two tasks of fund management and ecological support.

In the study of the co-evolution of technology and institutions in economics, we can also see that the development of productivity has been driving changes in production relations, one of which is the change in organizational structure. DAO has the potential to reshape the way we work, make collective decisions, allocate resources, distribute wealth and other larger issues in current society. With development, as the DAO mechanism becomes more complete, more foundation and community management will shift to this decentralized governance method.

7.4. Ecological construction

Promoting the direct development of projects and ecological construction is another important function of the foundation. This is related to the long-term growth and development space of the entire project.

Foundation’s direct support for project development

The foundation's direct support for project development is the most direct purpose of the foundation. Usually there is direct financial support to the project party, financial support to the project community, and some additional direct support.

Direct financial support to the project party means that when the project party has insufficient funds, a certain amount of funds will be withdrawn from the foundation's fund account and transferred to the project party for product development and operational support of the project. The specific amount is related to the project's fund use plan, and it is generally more reasonable to maintain a one-year expense cycle.

Because this project adopts two methods of equity financing and token financing, whether this part of the funds needs to be returned depends on the management structure of the project and the financing and benefit distribution of the project. If the project party has equity financing channels or future income sources, it will be more reasonable to use the loan repayment method because there is no need to adjust the project's benefit distribution. If it does not need to be returned, it can also be considered as the foundation's external investment, and the project party receiving the investment can return a certain amount of equity to the foundation. This approach also applies to project parties in the ecosystem.

There are many reference ways to support the project community, which supplement or strengthen the intrinsic incentive mechanism. For areas that cannot be covered by the inherent incentive mechanism of the blockchain, such as participation in early products and operations, participation in community activities, bug discovery in formal systems, etc., rewards need to be given.

Some additional direct support has a wider scope and is non-project parties, non-community people or groups that have made direct contributions to the development of the project. For example, a certain media held a competition of my top ten favorite Web3 products, and analysis of our projects by professional organizations. With publicity and so on, these behaviors can be given incentives by the foundation. When using them, be careful not to affect the fairness and objectivity of these external participations.

Foundation’s support for project ecological development

The foundation's support for the ecological development of the project is mainly to promote the ecology, or upstream and downstream products that are not part of this project but are related to this project. To support the development of this ecosystem, it is more about learning from the successful practices of outstanding examples in the industry, such as the successful case of the Ethereum Foundation. With the development of Ethereum, related ecological support work has gradually improved, and the support work for ecological development can be described as excellent. The foundation’s ecological support content plan is announced on the website https://esp.miyou.io/. And wherever possible, priority will be given to supporting the ecological partners of the project.

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