Demand - Value Engineering

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(Under development. Please, come back later. Just published to share the progress)

1. Introduction

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The nature, behaviour and price of a cryptocurrency is determined by the interaction between a demand and a supply coordinated by a monetary policy. Depending on the policy we will have different types of tokens.

In this post we will examine the demand and leave supply and monetary policy for other posts.

2. Tokenizable Assets

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In order to allow value capture, we must focus in fungible assets. From the table of assets, only natural resources and commodities have the fungiblity feature.

type	item	fungibility
Natural Resources	Water	yes
Natural Resources	Energy	yes
Physical Assets	Commodities	yes
Physical Assets	Real Estate	no
Physical Assets	Art	no
Physical Assets	Industrial Assets	no
Physical Assets	Collectibles	no
Digital Assets	Digital Art	no
Digital Assets	Digital Collectibles	no
Digital Assets	Music	no
Digital Assets	Gaming	no
Digital Assets	Corporate Branding	no
Financial Assets	Currencies	no
Financial Assets	Bonds	no
Financial Assets	Equities	no
Financial Assets	Investment Funds	no
Financial Assets	Loans	no
Certifications	Entry Tickets	no
Certifications	Proof of Participation	no
Certifications	Diplomas and Certificates	no
Certifications	Web Domains	no
Certifications	Proof of Maintenance	no
Certifications	Vouchers	no
Certifications	Loyalty Points	no
Certifications	Awards	no

3. Token Utility

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3.1. Token Ecosystem

3.2. Token Utilities

Actor	Utility
Investors	Swap CYGAS
Exchanges	Swap CYGAS
Filling Plants	Pay for raw LPG
Retailers	Pay for LPG cylinders
Independent Retailers	Pay for LPG cylinders
Consumers	Pay for LPG orders
Institutional Consumers	Pay for LPG orders

4. Token Extended Utility

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4.1. Token Extended Ecosystem

4.2. Typical Token Utilities

type	name
Identification	Access
Identification	Governance
Financial Services	Liquidity Provision
Financial Services	Profit-Sharing
Financial Services	Mining
Financial Services	Staking
Financial Services	Launchpad
Currency Functions	Medium of Exchange
Currency Functions	Unit of Account
Currency Functions	Reserve of Value
Currency Services	Payments
Currency Services	Discounts
Currency Services	Cards
Currency Services	Transfers
Currency Services	Lending

5. Token Intrinsic Value

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5.1. Definition of Value

Economic value differs according to the different Schools of Economic Thought. This is relevant because, when we design a token, we can adhere to the Economic School of our choice. Below there is simplified list of economic values:

theory	author	type	fundamentals
Land Theory of Value	Physiocrats	Objective
Objective/Intrinsic Theory of Value	Adam Smith	Objective	Value that something has “in itself”
Labor Theory of Value	Ricardo	Objective	Correlation between the value of a good and the labor required to produce the good
Use Value / Exchange Value Theory	Marx	Objective	Exchange-value is the quantitative aspect of value, as opposed to “use-value” which is the qualitative aspect of value, and constitutes the substratum of the price of a commodity.
Commodity’s costs of production	John Stuart Mill	Objective
Subjective Theory of Value	Menger	Subjective	The subjective theory of value believes that a good's value depends on the consumers wants and needs
Marginal Utility Theory of Value	Jevons	Subjective	Marginal utility
Monetary theory of value	Keynes	Objective	Monetary theory posits that a change in money supply is a key driver of economic activity. MV = PQ.
Power Theory of Value	Jonathan Nitzan Shimshon Bichler	Objective	The power theory of value approaches the question of valuation from the top down, by which the dominant owners of the bulk of societal wealth, determine the value of their assets.

All these theories of economic value can be classified in 2:

• objective value theories. The objective, or intrinsic, theories of value hold that the value of an object, or a good, or service, is intrinsic, meaning that it can be estimated using objective measures. Most such theories look to the process of producing an item, and the costs involved in that process, as a measure of the item's intrinsic value.

• subjective value theories. The subjective theory of value, instead, states that prices of goods and services in a market are determined by the subjective preferences of consumers.

5.2. Tokens by Value Definition

According to the nature of the value and the way that the value is captured, we have different types of cryptocurrencies:

type	value	consensus	interaction	distribution	sample
Unbacked Tokens
Asset Backed Tokens	Subjective	PoO	>>> Captured >>>	No Minted	tokens
Utility Coin	Any	Any	≠≠≠ Independent ≠≠≠	PoS / PoW	coins
Objective Utility Token	Objective	PoPW / XToEarn	<<< Created <<<	Minted On Supply	tokens
Subjective Utility Tokens	Subjective	PoO	>>> Captured >>>	Minted On Demand	tokens

Once the value is captured, we need to provide additional utilities to the token to retain and, maybe, grow, this value to maintain velocity of circulation under controlled margins.

5.3. Subjective Token Value

Intrinsic value is the value that the token gains from the credibility and utility of its project.

6. Token Speculative Value

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Speculative value is the value that the token gains from speculations traders make on a token's price.

7. Estimating the Demand

The demand for your token will be motivated because your users apreciate one or more of the utilities of the asset, or assets, that are bound to the token. The demand is related to the physical world on how good is your business offer. If your offer is good, your users will be eager to acquire, or enjoy, the utilities that you are offering and the demand of your token will increase.

In the next sections we will expose how to undertand the demand of your token, what can the bound assets and utilities be and how can it be quantified.

uantying the demand will help later on to estimate the supply