📈Tokenomics of IBF Net Cryptos
In this part, let us dive deeper into the IBF tokens, seeking to understand the factors that govern its value. Well, the value of IBFN like any other token is made up of its intrinsic or real or fundamental value and speculative value.
The speculative value is what the token gains from speculative traders who expect its price to fluctuate in the near future. In conventional crypto space the speculative value is usually under focus. In fact, speculation and the fear-of-missing-out (FOMO) are major reasons behind why people buy and sell utility tokens. Although one cannot redeem a utility token for goods or services, a holder usually goes onto crypto exchanges to buy and sell utility tokens. A person purchases a utility token hoping that there will be positive sentiment towards the underlying project, which will entice someone else to want to pay a higher price for the same token. Another person sees how the utility token has been increasing in price, and fears that if he or she does not buy now, he or she will miss out on buying the utility token cheap enough (FOMO), and thus buys the utility token at the higher price. The price or value given to the utility token is derived mostly from speculation, and the merry-go-round of price appreciation continues as long as there is a third party willing to buy the utility token at a higher price.
While the presence of some speculative investors may improve the liquidity of the token, it is hazardous for it to be priced purely on its speculative value. Overall, it is grossly un-Islamic, though it may not be possible to label a specific transaction as prohibited, since intentions behind transactions are largely unobserved. In the Islamic framework the intrinsic value or the value that the token gains from the credibility and utility of IBF Net as a project is what governs the economics of tokenization.
Prices are an outcome of interplay of the twin forces of demand and supply. In an Islamic framework, the forces of demand and supply should be allowed a free play without any human intervention on either side. Price manipulation takes various forms in crypto markets and is rightly frowned upon by Shariah scholars, as well as regulators. However, in the absence of effective curbs, the crypto market is characterised by large-scale manipulation. Even in the case of some so-called Shariah-compliant cryptos, the usual strategy is to control the supply of tokens via vesting, generation of artificial volumes via bot-trading or wash-sales and to peg the prices artificially at desired levels to create "windows of opportunity” for promoter-investor groups.
How does the strategy for IBF tokens differ from that of others?
IBF tokens follow a completely different strategy focused on the demand side of the equation where demand is expected to rise steadily as the intrinsic value of the tokens increase. The intrinsic value is a function of volumes, which in turn, is dependent on the number of users/members in the network. Till listing, the IBF token performed as a stable coin linked to USD. Only when the size of the network crossed a threshold, with the key project-related milestones completed within the stipulated time-frame, the network took steps to move from buy-back-facility to listing on a crypto exchange. With a robust intrinsic value in place, the tokens should be less susceptible to speculative attacks and should hold on their own and bring additional value to the token-holders due to improved liquidity.
How does the IBFN token generate its intrinsic value?
Rights (bootstrapping engagement): By taking possession of IBFN, the holder gets a certain number of rights within the ecosystem, e.g., partial access to e-library resources, right to undertake a survey, voting rights on membership privileges etc.
Value Exchange (economy creation): IBFN aims to create an internal economic system within the confines of the IBF Net project itself. This helps the buyers and sellers to trade value within the ecosystem. This creation and maintenance of individual, internal economies are one of the most critical tasks of tokens.
Toll: It can also act as a toll gateway for one to use certain functionalities of a particular system, e.g., you need to use IBFN to gain access full e-library access and a few other premium services, preservation of documents on blockchain, free transfer of money within network.
Function (enriching user experience): IBFN can also enable the holders to enrich the user experience inside the confines of the particular environment, e.g. holders of IBFN will get the rights to enrich the customer experience by adding advertisements or other attention-based services on the IBF platform.
Currency (friction-less exchange and store of value): IBFN can be used as a medium of intra-network exchange transactions and as a store of value inside the IBF ecosystem.
There is a strong relationship between the size of the IBF network, the number of transactions on the network and the value of that network itself. Since a large chunk of the initial members of IBF Network would largely come from the community of students, researchers and academia, the demand and supply for IBFN will reflect these factors. Some of the factors contributing to demand-supply for IBFN in Phase I are discussed below.
What are the factors that govern the demand for IBF tokens?
As discussed before, IBF tokens are primarily of two types – IBFN for market-based or commercial transactions and IBFS for non-market benevolent action. The following discussion is relevant for market-based IBF tokens.
Members can earn IBF tokens by (i) sharing of (priced) articles, books, reports (ii) reviewing submitted resources (iii) designing and offering courses (iv) providing research guidance (v) mentoring and coaching (vi) providing editorial assistance (vii) providing translation services (viii) developing a new design/ promotional banner/ video (ix) selling listed halal goods and services (x) selling NFTs (xi) selling/ leasing out land parcels and buildings inside Netverse.
Members can earn IBF tokens also by contributing to strengthening of the Network in various forms, e.g. (i) bringing a new member (ii) contributing an unpublished document/ article to E-Library (iii) posting a blog (iv) responding to forum discussions meaningfully and (v) responding to surveys etc.
At the discretion of the Network Admin and Peer Review, each of these services (that traditionally are viewed as intellectual pursuits and are offered at zero or minimal charge), will carry an award of certain IBF tokens.
Members can spend IBF tokens for the following products and services offered by the Network
Enrol for courses offered
Buy articles, books, reports
Gain access to resources
Place adverts and promotional material
Conducting voting among members
Conducting surveys involving members
Avail other membership privileges
Buy NFTs (digital art and collectibles)
Buy/ take on lease parcels of land and buildings inside Netverse
Other than the transactions demand for IBF tokens, there may be a speculative demand for them, if they prove to be good stores of value in the face of steadily appreciating IBF values vis-à-vis fiat money. It would however, be in the interest of the Network to bring this about through influencing other fundamental determinants of intrinsic value, and not through encouraging speculation as this may induce volatility in rates. This would be a source of risk and contrary to the spirit of Shariah norms at the same time.
Let us now turn to the supply side of IBF Tokens.
As indicated before, the quantum of supply of IBFtokens was initially fixed at 10 million. The supply was considered adequate to meet the transaction or testing demands within the Network. However, with the launching of several platforms/ use cases and Netverse and the impending listing of the token in Exchange(s), the supply was considered relatively small. Therefore, the supply of IBF cryptos is increased to 1 billion through the IBFN-IBFX swapping mechanism discussed earlier, ensuring a fair deal for existing token holders.
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