DappGoose Labs LLC
1 Mockenstrabe
Berlin, Cryptovoxels
(650)-667-7743
Foreword
With the parabolic rise of NFTs and the concept of the Metaverse into mainstream attention, it’s important to consider that other Web 3.0 primitives will also gain mainstream awareness, and likely much sooner than anyone would find realistic to consider. One such primitive is the concept of ‘social tokens’ [ ERC-20 or other fungible blockchain assets given by creators, influencers, or communities to their audience in a manner similar to loyalty rewards points ] Once major influencers with millions of social media followers begin to adopt the framework for building their own self-sovereign economies, it will bring about a fevered wave of crypto adoption. The problem with which lies in the fact that many ‘social token’ issuers are inexperienced in token economics design, DAO governance, or liquidity and distribution management. Due to this lack of experience, very few social tokens are able to gain enough traction to be of a real benefit to the hodl’ers, or to the creators and communities the token is meant to service. $DOWN is an experiment in supporting a social token with intrinsic value which isn’t reliant on the creator’s career or the community’s growth.
Goals
Establish verifiable value for a social token: With very few exceptions, social tokens issued by creators are very speculative, with their value offering generated by the perceived success, or expected success of the issuing creator.
Build provable market demand: For social tokens to truly take hold, there will need to be a proven track-record of these tokens having demand or value outside of their native economy rooted in a specific creator or community.
Specifications
While case-studies do exist currently of social tokens which derive their value from the value of an underlying collection of NFT assets, these examples are lacking any tangible or enforceable connection to the assets which are said to support their value. Tokens in this format that have seen significant growth or adoption are nearly universally managed or conceptualized by whales who have the ability to inflate or otherwise manipulate the market, or use their financial position and social influence to change the narrative. This isn’t to say that these factors are the sole reason, or a definite happening, in the success of these tokens, but it is a distinct possibility, in addition to these token issuers not hindered by numerous obstacles faced by emerging creators, influencers and community builders that are established, but not technically inclined; or are still establishing their validity.
Terminology
$DOWN
Throughout this whitepaper; ‘$DOWN’ (also referred to as ‘the token’ ‘fractions’ or ‘shards’ refers to the ERC-20 compliant cryptographic token deployed under the smart-contract with the registered name ‘$DOWN Vault Token’
$DOWN Vault
Herein mentions of the ‘$DOWN Vault’, ‘the NFT collection’, or ‘the vault’ are in reference to an ERC-721 compliant non-fungible token on the Ethereum network, which secures the private key for a multi-asset wallet and associated public/private key pairings.
Value
Within this paper, any mention of an ‘inherent value’ or ‘price point’ or any similar nomenclature used to reference a monetary or other form of stated value, the proposed value is solely hypothetical and has not undergone any professional audit or appraisal. Additionally, these hypothetical values are based on a highly volatile market due to the value being calculated (or estimated) in units of cryptocurrency.
Overview (Technical)
$DOWN has been deployed via Fractional.art as a representation of proportional ownership over the fungible and nonfungible assets held within an Emblem Vault NFT. Leveraging the Emblem Finance vault protocol has facilitated the creation of public/private key pairings which are valid and capable of receiving assets which originate on numerous blockchain networks. This NFT has been transferred into smart-contract custody, in order to issue 10mm ERC-20 tokens which represent divisible ownership of the vault and all of its contents. By utilizing an Emblem Vault, as opposed to simply depositing the contained NFTs into smart-contract custody, the custodial contract now secures a still-functional multi-coin wallet, meaning that the underlying vault from which $DOWN derives its value can continue to, without need for approval or verification, receive deposits of $BTC, $BCH, Ether, ERC-20s, and NFTs from the following networks:
Bitcoin
Bitcoin Cash
Ethereum Mainnet
Counterparty
Tezos
and most EVM-compatible chains.
To acquire the vault, and the assets it contains, a reserve bid (currently set to 500 $ETH) must be place, at which point a 24 hour auction begins; with the highest bidder able to retrieve the NFT from the custodial contract upon completion. If sold, all hodl’ers are able to claim a proportional share of the sale price, based on the quantity of $DOWN tokens they hold. In the event that wallets holding a collective 80% of the total supply of $DOWN signal agreement in the matter, the reserve bid required to initiate a buyout auction can be modified.
- Overview (Atechnical)
$DOWN is a ‘fractional ownership’ token, representing proportional and divisible ownership over a ‘basket’ of various assets contained in an Emblem Vault which is currently held in escrow by a Fractional.Art smart-contract. Anyone is able to add assets to the underlying asset-basket, but nothing can be removed from its inventory, nor can any of the contained NFTs or tokens be removed, sold, or modified. The vault itself can only be transferred to a new owner by successfully initiating and completing a buyout auction; started by placing a bid that meets or exceeds a pre-determined value, currently set at 500 $ETH (or ~1.5 million US dollars at the time of writing). In the event that a successful buyout takes place, all hodl’ers of $DOWN will be able to claim ETH relative to the amount of $DOWN they held at the time of the auctions close.
Navigation:
- Proposition of ‘Value’
1a. Provable ‘Value’
1b. Decentralized Value Growth - $DOWN as a Creator’s Social Token
- Self-Perpetuating
- Collective Purchasing Power
- Cross-chain Economics
- Sustainable Tokenomics6a. Recycled Supply
- Standalone Viability
Proposition of Value
$DOWN is a uniquely formatted ‘social token’, drawing inspiration from the well-executed strategies of existing ‘asset backed’ token models, with improvements and modifications intended to provide a blueprint for a new iteration of personal and community tokens. Whereas some established tokens are stated to have their value rooted in the value of an NFT collection; $DOWN is intrinsically linked to the collection of assets from which it’s primary value proposition is derived. Another important distinction lies in the ability of the $DOWN vault to hold NFTs as well as fungible assets; which can originate from various blockchain networks [see technical overview above]. Prior to the issuance of $DOWN, the $DOWN Vault was supplied with several historic NFTs, a variety of 1st and single edition original works by BruceTheGoose (the token’s issuer), and assorted fungible tokens. Post-deployment, additional assets have been transferred to the Emblem Vault’s public addresses, verifying the vault’s ability to continue to receive deposits without any barriers. While the vault and it’s contents can continue to increase in quantity, and therefore in hypothetical value, the token has a fixed inflation of 1% per year; creating limitless potential for the derived tokens to increase in value in a verifiable and transparent manner.
1a. Provable Value
All of the assets contained within the $DOWN Vault are verifiable on their associated block explorers, as can their current or most recent market value as determined by ‘floor prices’ and most recent sale values. Without considering the ‘social token’ aspect of $DOWN’s perceived value; a proven value can be determined for each token with the following formula
(X = the sum of the provable values of the vaults contents NFTs. Y = the current market value of the contained fungible tokens. Z = provable value)
[[ (X + Y) / (total token supply - burned tokens) = Z ]]
therefore Z = verifiable backing per 1 token.
Decentralized Value Growth
Due to the permissionless nature of public blockchain networks, as well as the transparency of public keys; there is no need for permission or approval, and no method of restricted access in relation to transferring assets into the vault which underpins the value of the $DOWN token. This enables any trader, hodl’er, or third-party patron to deposit additional assets to the $DOWN Vault, which hypothetically increases the overall collections value. The ability for anyone to deposit a wide variety of assets to the vault is likely to make the token more appealing to investors that are more long-term focused or those that don’t actively trade. Contributing an NFT, an established token, or even other fractional ownership tokens or ‘asset-baskets’ offers a way to increase the value of everyone’s held $DOWN, with complete awareness of the resulting ‘loss’ (as opposed to providing liquidity in a volatile market and assuming the risk of impertinent loss). Additionally, ownership of $DOWN provides the holder with governance rights within the $DAOwn (the $DOWN DAO); enabling $DOWN hodl’ers to propose and execute on proposals relating to use of the $DAOwn treasury funds to invest in NFTs or tokens that will then be added to the $DOWN Vault or the DAO treasury, further increasing the token’s perceived and provable value.
$DOWN, as a Creator’s Social Token
The stated sources of valuationonly represent the provable value determination for $DOWN; as a ‘social token’ $DOWN also has it’s value supported by the professional and creative growth of BruceTheGoose; an early adopter and enthusiastic collector of cryptoart and other NFTs. ( More information about Bruce can be found at https://brucethegoose.art ) In an attempt to provide value to $DOWN in perpetuity, most, if not all, future NFT creations by BruceTheGoose will have split royalties assigned, configured so that a portion of all resale royalties of Bruce’s creations will automatically be deposited to the vault, forever. Additionally, Bruce will continue to self-curate and deposit 1st and single editions of their original art NFTs, as well as acquiring and depositing hand-selected NFTs and tokens.
Self-Perpetuating
Based on internal research, $DOWN is the first-ever attempt at creating a token model in which the performance of the token itself directly and perpetually adds to the token’s value. To achieve this goal, upon issuance, 10% of the $DOWN supply (1,000,000 tokens) was immediately deposited to the vault which underpins it’s value. This means, theoretically, that every time the token’s market value increases, the value of the underlying assets increases in response. Hypothetically, this leads to a self-perpetuating value increase, based on the following format: If the combined value of the vault’s contents, and therefore the derived tokens ($DOWN) backing ncrease in value by $100, the vault’s total value increases by $10 in response, due to the vault holding 10% of all $DOWN. Increasing the vault’s value by an additional $10 then effectively increases the vault’s value by an additional $1 (10% of the previous value increase), then $0.10, then $0.01, and so on. While the market won’t automatically adjust to reflect this self-perpetuating value, the community sentiment is likely to respond, potentially motivating additional deposits, which will effectively accelerate the self-perpetuation.
Collective Purchasing Power
While $DOWN is primarily a ‘social token’ associated with a specific individual; the goal is to establish a blueprint for future social tokens to follow; in which the token having value is not primarily reliant on the original issuer. In pursuit of that goal, the public launch of $DOWN will be accompanied by the deployment of the $DAOwn, for which the treasury will be seeded with 15% of the total token supply, as well as a (to be determined) percentage of the funds generated by the token’s public offerings. The $DAOwn treasury will be controlled by $DOWN holders, enabling, with required consensus for any of the treasury funds to be used to invest in additional assets to be added to the vault, spent to create marketing campaigns, traded for potentially high-performing tokens, or utilized in various DeFi strategies. This also provides the ability for the $DAOwn to increase the vault’s allocation of $DOWN, or to deploy new strategies through which to gain additional assets, establish new provable value avenues, distribute airdrops, etc.
Cross-Chain Economics
Due to the high cost of transaction fees on Ethereum Mainnet, many lucrative DeFi strategies are inaccessible or far less effective for most would-be degens. To alleviate this hindrance; $DOWN will be available on a multi–chain basis; which will provide a number of benefits such as increased market visibility, additional liquidity sources, frictionless DeFi, and exposure to additional yield strategies and NFT ecosystems. As a method of proving it’s viability, 1 $DOWN was bridged to $FUSE via the Chainport bridge, the success of which verified that Chainport enables permissionless transfer of assets between blockchains, without requiring the token to be previously mapped. In essence, this means that $DOWN can be seamlessly migrated to and from any EVM compatible blockchain; taking advantage of the different benefits offered by various chains, without diluting the token’s supply by issuing proxy tokens on numerous networks.
Sustainable Tokenomics
To avoid large sell-offs, and to provide peace-of-mind to hodl’ers and patrons of $DOWN, up to 65% of the token supply will be released and distributed over a period of 2 years (The token distribution model is outlined below for transparency). Additionally, $DOWN will be highly utilitarian to encourage a continual flow of the token through it’s ecosystem. Some initial use cases include $DAOwn governance, payment for services offered by BruceTheGoose and DappGoose Labs, discounted prices on digital and physical merch, exclusive access to token-gated content and alpha, yield farming, single-token staking, and the ability to spend $DOWN to acquire otherwise unavailable NFTs in the upcoming marketplace, $DOWN The Block. As another method of preserving the sustainability of $DOWN, the best reward rates from staking will come in the form of redeemable NFTs or tokens other than $DOWN. More specifically, a staking system will be established in which $DOWN hodl’ers will be able to stake $DOWN or LP tokens for select pairings to accumulate points (in place of earning tokens); with exclusive NFTs made available by redeeming points.
Recycling Supply
On the basis that one of the core utilities of $DOWN is payment, or reduced rates to hodl’ers, for services, merch and NFTs offered by BruceTheGoose; revenue generated in this way will directly support the market health of $DOWN. This will be accomplished by providing 25% of all generated $DOWN revenue to the community initiatives reward pools, effectively increasing the initial rewards allocation, as well as extending the release schedule.
TOKEN DISTRIBUTION MODEL (Subject to Modification prior to IDO/INO)
Initial Supply: 10,000,000 $DOWN
*Curator’s Fee: 1% per year
Artist’s Reserve - 15% (2yr. linear vesting) -
1.500.000
IDO/ITO - 15% *(Dates TBA) -
1.500.000
DAOwn Treasury 15% ($DOWN HODL’ers DAO) -
1.500.000
Community Rewards - 30% - (2yr. distribution) -
3.000.000
Vault Holdings - 10% (Held in the underlying NFT) -
1.000.000
Marketing / Expenses - 5% (DAO Approval required to unlock) -
500.000
Airdrops - 5% (Details Below) -
500.000
INO - 5% (Initial NFT Offering; via Charged Particles) -
500,000
Curation Fee - Fractional implements a ‘curation fee’ on tokenized NFTs; which functionally increases the token supply by X% per year, issued to the creator of the token. In this case, 1% per year, to BruceTheGoose. The inflation rate can be modified; enabling the $DAOwn to propose/enact halvings, or to disable new issuance entirely.
IDO/ITO -* Tokens remaining in the sale contract after the IDO closes will be locked int the contract permanently.
***Airdrops -**3% of the total supply (300,000 $DOWN) will be distributed to previous collectors of Bruce’s artworks, supportive community members, and holders of $FTHR and of the OG ₲oose ₲ang membership NFTs in 3 distribution waves, happening 4 months apart from one another.2% (200.000 $DOWN) will be used for marketing via airdrops on various platforms.
Standalone Viability
By establishing that $DOWN is underpinned by provable value, as well as its presence on multiple networks, and continuing to add assets to the underlying vault, $DOWN will have an established value and presence that is not reliant on its association to BruceTheGoose; making it one of the most universally relevant social tokens on the market. Even if the issuer were to cease their ongoing contributions to the vault, or their directly associated token utilities, they would not have the ability to remove the vault from the smart-contract’s custody, or to remove any of the vaults contents unless they trigger and then win a buyout auction, or by controlling 51% or more of the token supply, allowing them to modify the reserve price (in which case they would still need to win the auction).
Additional Information:
UTILITIES:
Exclusive NFTs available via $DOWN The Block> Governance of the $DAOwn> Payment for services offered by BruceTheGoose> Token-Gated Access to content and alpha, plus early access to projects/new features> ₲oose ₲ang [TBA]> Entry fees to gaming competitions> Yield / NFT Farming> Merch> Third-party integrationsFind out more in the Mirror announcement of $DOWN. (Edition sales will be used to purchase $DOWN; to be added to the $DAOwn treasury).
Third-Party Integrations:
As $DOWN stabilizes and market demand grows, Bruce will leverage his extensive networking history within the NFT space to pitch $DOWN integration to various projects and protocols. Through these integrations, $DOWN will gain further provenance, as well as providing HODL’ers of $DOWN with exposure to additional assets and benefits. As a hypothetical example, $DOWN could be used to acquire exclusive items created in collaboration with a play-to-earn game, or to unlock access to content or channels on a partnered projects website or discord. The long term goal is to establish $DOWN as a top-tier ‘social token’ as well as to create provenance that the tokenomics outline is far superior to previous social token formats; which will greatly benefit creators who are interested in issuing a social token, or who have issued a social token but are struggling to create value or market demand for the token as a viable asset.
Disclaimer
$DOWN is a first-of-its-kind token economics model, and is intended to serve as an experiment and a study on the current and future state of the social token sector. The token relies on third-party protocols and smart-contracts which have not been internally audited; but have been individually audited by established authorities on smart-contract programming and cybersecurity. Nothing contained in this report should be taken as legal, financial, or investment advice. The prior and following statements are provided solely for your general information; any action taken based on the contents of this report are solely at your own risk and discretion. Nothing contained herein is meant as a solicitation, offering , or promise of financial gain. Interacting with smart-contracts, decentralized applications, and cryptocurrencies carries inherent risk. Any use of such technologies should only be done after sufficient research and risk assessment. If your blockchain-based funds or accounts are compromised, it's incredibly unlikely that they can be recovered.