Over the previous weeks we have been releasing chapters from the SelfKey R&D Team’s update for 2020. If you missed the introductions to online identity management and KYC for businesses make sure to check them out.
This week, we’re going to be talking about tokenomics and the fundamental concepts that sustain the vision of SelfKey’s token economy. The role of KEY as the systems native utility token is pivotal in this discussion and is likely of great interest to you - our community.
The following sections address the fundamental concepts and principles that sustain the vision of SelfKey token economy, and the purpose of KEY as the fuel that ignites and keeps the decentralized identity platform functional and robust through proper incentive mechanisms and economic interaction dynamics.
Some specific questions answered regarding the KEY token include:
Tokenomics (i.e. Token economics in the context of cryptocurrency) is the study of decentralized ecosystems from an economic perspective, in which crypto-assets play a fundamental role in providing token holders access to a set of services and features in the system, as well as incentive structures that support the community of participants in order to sustain the overall functioning and growth of the network.
SelfKey is working on designing and implementing a token economy model where all the incentives are aligned to ensure a network that provides value to all involved parties along with the foundations for its growth and future evolution.
The KEY token works as the substance that connects, empowers and rewards all involved actors in a decentralized identity ecosystem, providing verifiable means for trust, while also protecting identity owners with the control of their data and granting relying parties and certifiers access to an open marketplace as a growing source of revenue.
The KEY token was created and initially distributed following the ‘public sale’ (which lasted just 11 minutes) in January 2018 generating $21.7 million USD in crypto. Since then it has been adopted by several leading cryptocurrency exchanges.
The main purpose of KEY token is to reward the community for sustaining and even improving the SelfKey network, making it the first decentralized network to bring together all the necessary participants in self-sovereign identity: identity owners, certifiers and relying parties.
SelfKey may develop into an economy that is long-standing, self-sustaining, and adapts and grows unrestrictedly into the future. To this end, we are engaging in different areas of token engineering and mechanism design, by elaborating and testing different mathematical models as input in network simulations to assist in finding the optimal parameters that ensure the overall health and growth of the SelfKey economy.
KEY is currently listed on several major cryptocurrency exchanges including Binance, HitBTC, DCoin, IDEX, TDEX, RightBTC, Probit, Whiterabbit, P2PB2B, IDCM and others.
KEY is deployed as an ERC20 token running on top of the Ethereum network. We find Ethereum to suit our needs nicely as a smart contract platform, but remain open to alternatives including deploying our own blockchain - but only if the business case is suitable.
KEY is currently being used to complete payments for services in the SelfKey Marketplace and members of the SelfKey community currently maintain ownership of KEY utility tokens as a way to secure future access to the SelfKey Identity Network and all the benefits participation in the network provides. The KEY token is essential in the SelfKey network as many components could not function without its existence.