Tokenomics

A blindfolded monkey can throw darts at a pinboard to choose a random number and call it a day. That can pass by as elaborate tokenomics and enable the token to thrive under the right circumstances. An easier way would be to copy what has worked for other tokens. That sounds tempting and is a rather good proposition for the unaware. But that’s not optimal. Choosing the right tokenomics is detrimental to the success of any token. The team needs to understand and be vigilant about the characteristics of their token and how specific mechanics are defined. The allocation of token supply is a second aspect of the intricate design process.

Bad Tokenomics

You might be wondering how tokenomics can be bad. Subjectively, people might dislike the allocation of token supply, the taxes imposed by the smart contract, being inflationary instead of deflationary, and so on. But objectively, that’s not what makes some mechanics good while others are bad; the voice of popular demand is important, but facts supersede opinion, especially regarding such key aspects. Each mechanic exists because it serves a purpose. Even inflationary tokens can become valuable. Fiat is all around us, and Dogecoin is a pretty good example. Even ETH was inflationary when it started. Users relate deflationary mechanics to higher prices, and while that might be true following the simple logic of demand and supply, it is not always the case. The key aspect is balancing demand and supply. Manipulating supply consistently means you’re not certain you have what it takes to generate demand, or you could be doing it while the demand drops and achieve absolutely nothing.

Others might churn about taxes, complaining that they are some form of theft, similar to inflationary systems. Others would prefer that the taxes be collected and redistributed directly to the holders, a mechanism known as reflection. But even reflationary tokens have their haters, as the taxes tend to be high to make the mechanism functional. Who says what makes a rate high or low? Well, pretty much anyone. The key take is that anything can be framed as bad tokenomics if someone doesn’t like it, and if you don’t like it, don’t invest in it. However, certain mechanics can be useful to maintain a good token with a healthy liquidity pool.

Passive Reflection

From our perspective, good tokenomics represents a structure that reduces volatility and minimizes price impacts. An allocation that would maximize the number of holders rather than concentrate it in the wallets of early snipers and farmers. Another equally important aspect is to have a structure that would enable the project to grow. While it is tempting to use the reflection mechanism to distribute financial rewards directly to early holders, it is irrelevant, as shown by the “Homemade Dividends Policy,” which applies to our case. The theory states that individuals are indifferent between receiving dividends and selling shares for an equivalent amount. Individuals who don’t want dividends and believe in upcoming growth would also reinvest the dividends they receive. This is why an active reflection mechanism, where high taxes are used to distribute rewards to old holders directly, does not make sense. Taxes are meant to enhance the stability of tokenomics and enable the project to grow, so we would rather adopt a passive reflection mechanism.

Passive reflection seeks to distribute rewards to holders by constantly working to increase our market cap. Similar to how real companies manage their stock prices, this is achieved by sustaining growth, stabilizing the token, and maintaining liquidity. Thus enabling anyone to invest or divest freely in the project without compromising the project’s future or the community. A moderate tax is implemented to achieve this, such that the sell tax is higher than the buy tax, with a portion directly going to the liquidity pool. In our case, the tax is 3%/6% (Buy/Sell), which is modifiable since listing on a centralized exchange requires a tax rate equal to zero. It also allows us to adjust the decomposition as needed over time. This is important as 1%/1% is used to directly enhance liquidity by automatically adding token pairs to the liquidity pool, a variation we might find more appropriate to adjust later. It is important to highlight that modifications are capped to a cumulative tax of 10%. Basically, we can change the distribution of the taxes so long it never exceeds 10% (3+6<=10 is True). This was implemented to reassure our community that we won’t wake up one day and raise the tax to 99%.

Aside from being vigilant about the importance of liquidity and the community’s perception, we also paid close attention to the indirect implications of raising taxes. By the design of the smart contract, we ensured that the contract doesn’t result in a high price impact through proper calculations and a simple simulation when tokens are automatically sold, and we allowed the accumulated tokens account with the smart contract to be modifiable, again capped at the initial value. This was done for the simple reason that over time, as the market cap increases and more people hold or burn tokens, the amount of accumulated tokens relative to the amount of tokens in the liquidity pool will increase over time, which can result in substantial price impacts and effectively impose an invisible market cap ceiling on the token. Finally, we decided to make the token burnable but not automatically because, in the long term, that would destabilize the token and jeopardize the project’s ecosystem and community. Anyone can burn tokens, however, and it is a mechanism that we plan to utilize properly. Deciding on these numbers took a while, with repetitive discussions, tests, and iterative tweaking. We believe that our approach will enable us to maintain a liquid and stable token that would allow anyone to invest or exit our project at will.

Although an investment thesis would have made a suitable title for our purposes, it isn’t. While we aim to create real value for our community, tokens, whether fungible or non-fungible, are still highly speculative. Speculation can be profitable, and it often is, but you’re more likely to get rekt, and that’s why it is a high-risk proposition that not everyone can stomach. But this brings us to a critical question: Why do some projects become profitable trades while others get you rekt?

Getting Rekt

Before digging into what pumps your bags, let us look into what dumps them. The primary reason would be scams and malicious teams in all variations, which are too many to list. But a bad team will get you rekt. A team might not be malicious but simply short-sighted or plain stupid. While a lack of coherent and well articulated is apparent, bad teams might lie about their plans, exaggerating their roadmap or failing to execute it. Stupid teams, however, are not malicious. They are incapable of coming up with creative plans or understanding the underpinnings that drive value for competition and would resort to blind copycat tactics without fully understanding why they are doing certain things or what kind of moves are synergetic. We’ve all seen those tactics with supply restrictions, wallet restrictions, buybacks, token burning, shitty merch, influencer pumps, and big promises.

These teams fail to understand the main underpinnings of community-driven value, and more dangerously, they overlook critical risks that will harm the community. Without a proper strategy, instead of creating value for their community, these teams become juicy victims for hungry farmers and snipe bots who will suck the gains out of the community until it’s a dry corpse. Finally, a lack of business acumen ultimately seals the fate of any project. Bad teams assume that just being a crypto project means it’s a greenway to the space shuttle, regardless of their actions. They forget that, at the end of the day, a project is just another business with a unique value proposition to offer its community. It’s certainly nothing like traditional business, but both still follow the fundamental laws of nature, and just like gravity crushes stars under their weight, bad projects collapse due to their incompetence.

So, What Drives Value?

When it comes to any asset, value stems from intrinsic value and subjective value. Intrinsic value can be considered the real non-speculative value of an asset, which is hard to pin down, as even gold prices reflect real and speculative values. Other assets, like fine art, are mainly speculative, stemming from how each person perceives the artwork. Although it might have some intrinsic value due to the materials involved and decorative role, both are minimal and subject to the investor’s subjectivity. When it comes to cryptoassets, whether tokens or NFTs, the same logic is applicable. The team behind each project is responsible for calibrating the presence of features that will drive intrinsic and speculative values. Utility or the functionality of a token or NFT within a project drives intrinsic value. On the other hand, speculative values stem from people’s bets on the future of the project and how much they expect the community or number of holders to grow. Another intrinsic value may stem from the expected cash flow from holding a specific cryptoasset, a simple example would be staking. For NFTs, another value driver would be the artistic aspect combined with the rarity of the features the item possesses.

Lessons Learnt

As a team, we collectively brainstorm and conduct ideation sessions to overcome the hurdles our community might face, while simultaneously thinking of new ways to drive value within the project. Our collective intuition agrees on the notion that the era of simple memecoin projects or art driven projects is over for many reasons. More so, a purely utility-driven project is not captivating enough, nor is it the best direction for a variety of reasons. So, we concluded that the best direction to move forward is to combine the best features of memecoins and NFT projects, which rely on strong communities with embedded utility features that support and drive speculative value through multiple functionalities. We believe that the new meta in crypto will be community tokens, which will drive value through strong community bonds, a coherent and entertaining narrative, good art, entertaining engagement, and fun games. All without forgetting the financial incentive that brings us all to the space, speculative value, the adrenaline rush from big gains, FOMO, big losses, missed opportunities, and big announcements. In a nutshell, our value proposition is having a good time with new friends who will win and lose together, depending on the choices they make. So, if you want to be part of the new narrative of memes where you can make new friends, go on missions, and make magic internet money, then The Agency is for you.

What is Agent P?

As stated in the internal memo, Agent P was recruited to build a network of secret agents who would be the first participants in a larger project.

Agent P is part of a larger ecosystem meticulously prepared in the background. As we previously stated, this project goes beyond the typical meme project. While it’s being built around good memes and fun interactions, at its heart, this project is all about the community.

Our Vision

We want to create a pleasant environment for all of you to be part of an online community of agents with everything that entails. We figured out what’s the best way to keep the community well-knitted, excited, and entertained. Funny memes, sure, but gamification with a solid narrative and embedded financial rewards are what made sense to us.

Crypto is, in part, about being a degen, true, but it is also about being a good community and an innovative creator. One aspect of innovation is utilizing various tools to achieve a specific objective. So, why limit ourselves to a token when we can do much more?

Accordingly, this project will entail mixing NFTs, tokens, art, memes, and gamification mechanics to allow the community to have fun while speculating. We’re also vigilant about the risks in the space, and while we can’t protect you from scams, it is our responsibility to ensure a fair launch that doesn’t give project farmers or snipe bots the upper hand.

To this end, we’ll release a unique collection of NFTs with specific roles within our ecosystem. Think about it as your secret agent ID. Just like any other NFT collection, it will have rare and common visual characteristics, and it will give you access to special events and missions that will be released over time but will have better rewards than the missions open to the public.

As such, each NFT will serve as a collectible artwork, utility in terms of communal benefits and gamification tool, and the monetary value of the tokens tied to each ticket.

Why did we decide to follow this unorthodox approach?

Airdropping tokens ensure that all early holders get in before the snipe bots and that no one farms the project and holds a large supply. It helps us stand out from the competition and build something solid for our community to thrive. It further gives us the flexibility to launch a token with a healthy number of holders and a healthy liquidity pool.

Finally, the gamification mechanisms for various missions and events would not be possible without NFTs. While a quick launch enables you to ape in, just like the thousands of memes launched every day, our slow approach prioritizes the community, and organic growth shows our commitment and long-term thinking.

If you want a random meme to ape in, you may choose to do so later on, but this is probably not for you. If you want to be part of a larger community, have fun with new friends, and speculate on our vision, this is the place for you. We all want to make money, so we might as well have fun and make memories while at it.

Keep your eye on Agent P and upcoming announcements, tell your friends about it, and build an incredible community of secret agents. #BaseChain #PerryOnBase #BuildOnBase