Token Economics and the Lucid Partnership

May 2020

As we are launching the second release of VETRI’s market survey functionalities and the integration of the Lucid platform, the topic of tokenecomics, particularly context of the partnership with Lucid, is now taking centre stage.

Written by: Yves Petitjean May 8, 2020

Indeed, if one is to assess the merits as well as the risks of this real life application of the VLD tokens – both from a business perspective but also as stakeholder – one must first understand how they are used and how they flow.

Background

Lucid’s business model

Lucid’s dominance in its market is a direct consequence of its ability to provide sizeable, relevant and verified target audiences, globally, and for a vast array of surveys and clients. The company achieved this namely by applying user onboarding and targeting  strategies often borrowed from companies active in social networks and search algorithms and more specifically from their advertising business models. Important to note that Lucid does not claim to have any users, or followers. Instead, it relies on a multitude of partners with significant reach to broadcast and promote its surveys, as weblinks or otherwise, on behalf of Lucid’s fee paying clients. Partners are incentivised to cooperate thanks to cash remuneration, but have full discretion over how much they keep and how much they pass on to the respondents in their network. It is not uncommon for partners to retain the lions share of revenue, thereby making VETRI, with its minimum payout to respondents of 80%, by far the most competitive and most rewarding  player in the market.

Rationale for the Lucid partnership – a reminder

Initiated and driven first and foremost by Lucid and its management,  it was clear,  from the onset, that the company was eager to provide solutions to a number issues that was beginning to plague its business, namely:

  • Lack of payment alternatives for the “unbanked” respondents or for those unwilling to share online banking details.
  • Existing payment solutions that remain very costly and inefficient for micro transactions.
  • Too many of Lucid’s partners are still unable to integrate Lucid’s API and payment gateways (thus making remuneration for data owners / respondents impossible). These will increasingly be instructed to have their respondents use VETRI instead.
  • Unsatisfactory level of verification of respondent’s identity attributes 

A template for integrating the cost and revenue models of VETRI and the likes of Lucid.

With the introduction of VETRI and the VLD tokens into the system, things are looking far more complex. While on the one hand the sheer number of moving parts can seem daunting, on the other hand the “levers” at our disposal for token price appreciation / depreciation (by influencing the demand,  supply and velocity) are numerous and the various degrees of magnitude with which interventions can take place generate infinite scenarios. The common denominator to all these scenarios, however, is their outcome, computed into the one metric that matters above all else’s, the VLD spot market price – and its anticipated future fluctuations. Consequently,  tokeneconomic strategy and ensuing corporate decisions and market actions must be superseded  by a set of agreed upon, over-arching set of principles and  objectives that dictate our  decision-making and any action expected to impact price. This also implies, given our lack of said historical data, that there will be trials and errors made as we will have to gauge and learn the efficacy of each one of these “levers”.

How it works with Lucid

Token Flow in the Market Research Use Case through Lucid API Integration

What constitutes a good “monetary policy” for VLD

Among the many attributes that constitute a “good” currency, whether we are referring to fiat currency or crypto currencies, are stability and consistency. In other words, a stable currency is one that doesn’t fluctuate substantially over time. Clearly this is a relative and loose concept when speaking about cryptocurrencies which are notoriously volatile. But it doesn’t mean that one should give up on trying, particularly if one is provided with some means to smooth out volatility, which is certainly the case for VETRI.

It goes without saying that “stable” does not mean “constant” and that the primary objective of our tokeneconomics strategy is organic price appreciation through adoption. The second priority is to devise a system, derived primarily from historical data, that allows us to effectively and economically smooth out the peaks and the throughs of short term price movements. This will ensure that, ultimately, the currency can serve both as a reliable reference metric but also retain sufficient usability as a means of payment.

Last but not least about the Lucid partnership

For the next 2 to 3 months, 99% of VLD earnings for users will come from Lucid. In other words, and in the short-term, our tokens economics is dictated by the partnership and the business model it imposes. Important to note that we do not have an exclusivity agreement with Lucid and that provided satisfying test results and a sufficiently happy user base, we will be integrating other partners. Quite possibly, we will also be prioritizing partner candidates with the will and the ability to manage the cryptocurrency aspect of the business independently and not centrally by VETRI as in Lucid’s case.

Finally, I would like to conclude with a few non-negligible pointers. Last year Lucid distributed over USD 100 million as remuneration to their network for completed surveys. Lucid expects to double that number for 2020, Covid19 notwithstanding, and to double it again the year after.  You get it, growth expectations for the market and the company are off the charts! As one of Lucid’s three strategic partners for innovation, selected specifically for our competitive and efficient remuneration / payment system and the integrity it is built on, we very much expect that an increasingly significant share of these fiat denominated funds transferring through Lucid to ultimately convert into VLD. And on that note, we welcome any compelling price modeling experiments that you are willing to share and discuss. Thank you for your patience and support, always.

Get in touch.
VETRI Foundation
Poststrasse 5
8001 Zürich, Switzerland