Our new marketplace to issue and trade Star Tokens will be part of an ecosystem which is founded on economic principles (aka as token economics or tokenomics). A sound incentive system is one of the most important conditions for the long-term success of a token ecosystem. The following aspects explain the Star Token economic framework.
Token Classification and Trading
In order to finance the development and operation of the Fyooz marketplace, the company behind Fyooz (Urknall AG) will issue its own payment token called Fyooz Coin (FYZ). The Fyooz Coins (FYZ) can be classified as follows:
According to the FINMA Guidelines (2018) payment tokens are intended to be used as means of payment for goods or services or as means of money transfer. According to this definition, FYZ can be classified as payment tokens as they are used to pay for newly issued Star Tokens on the Fyooz marketplace. Star Tokens can only be traded against FYZ. Hence, FYZ represent a transaction currency or lubricant for the Fyooz marketplace. New FYZ can only be created and issued by Urknall AG using an innovative and unique scarcity model. The classification of Fyooz Coins as payment tokens together with the connection to VQF, a Self-Regulatory Organisation (SRO) in Switzerland has the great advantage that when listing new Star Tokens, it is not required to go through the extensive approval process of the Swiss Financial Market Authority (FINMA) every time. This is also because only utility tokens are issued on the Fyooz marketplace.
As Fyooz Coins are deployed on the ERC20 standard of the Ethereum blockchain, they are also classified as application tokens. One advantage of ERC20 tokens is, among other things, that they are compatible with the established and proven infrastructure of the Ethereum network (e.g. FYZ can be held in Ethereum wallets).
To sum up, the Fyooz Coin is a payment token which serves as a transaction currency to participate in the issuance and trading of Star Tokens on the Fyooz marketplace. The Fyooz Coin is exclusively created and issued by the company behind Fyooz (Urknall AG) based on an innovative and unique scarcity model to favour a potential long-term price increase. On the other hand, Star Tokens are issued by the stars on the Fyooz marketplace as a separate initial marketplace offering (IMO).
Star Tokens can be classified as follows:
According to the FINMA Guidelines (2018) utility tokens are intended to provide digital access to an application or service by means of a blockchain-based infrastructure. They do not have to meet the same strict regulatory requirements as security tokens. Star Tokens are classified as utility tokens as they give the holders access to special benefits or contents determined by the respective stars.
As Star Tokens are deployed on the ERC20 standard of the Ethereum blockchain, they are also classified as application tokens and could be held in Ethereum wallets.
To sum up, Star Tokens are considered utility tokens which are issued by the stars on the Fyooz marketplace. Star Tokens can only be issued (primary market) and traded (secondary market) against Fyooz Coins on the Fyooz marketplace. As all Star Tokens are listed and traded against Fyooz Coins. This shall lead to a high liquidity in the secondary market of Star Tokens.
The following lists show the differences between the Fyooz Coins and the Star Tokens:
- Payment Token
- Issuer: Urknall AG
- Trading Place: Crypto Exchanges
- Transaction and payment currency for the trading and issuance of Star Tokens on the Fyooz marketplace.
- Utility Token
- Stars (countless parties)
- Fyooz marketplace
- Exclusive membership rights and access to special contents offered by the respective Stars.
To simplify the execution and management of Star Token IMOs (initial marketplace offerings) third party companies may act in the capacity of an agency. The advertising for Star Tokens can be done by the stars themselves or by the affiliated agency. Star Tokens can be promoted on existing channels like websites or by using a white label microsite delivered by Urknall AG, that can easily be customised. In any case, a buy button is placed on the respective channel to support and fasten trade. For that reason, buyers only have to press the buy button to purchase Star Tokens. This is how they get to a «TOKOMAT», a widget embedded in the website or app of the respective star. The tokomat guides purchasers through the buying process. At the same time, a Fyooz wallet (Ethereum wallet) is generated and installed on the device of the buyer (including private and public keys). It is important to notice that Urknall AG has no access to the private keys of the buyers or the Fyooz Coins and Star Tokens that are stored in the wallets or on the blockchain. Hence, Urknall AG does not provide any custody services to the buyers. However, Urknall AG offers a solution that makes it possible to restore the keys.
Fans, followers, supporters or buyers can purchase Star Tokens by credit card (using fiat money, such as CHF, EUR or USD) or cryptocurrencies (BTC or ETH). The money then flows to a legal entity yet to be established which buys Fyooz Coins from Urknall AG and sends them to the wallet of the respective stars. This simplifies the fund raising for the stars and facilitates the KYC process at Urknall AG as it only needs to be performed for the legal entity and not for all investors of Star Tokens.
Stars who want to sell their raised Fyooz Coins against fiat money could sell them on public crypto exchanges, on which Fyooz Coins are listed. Fans, followers and supporters who want to sell their Star Tokens could use the Fyooz marketplace to buy and sell Star Tokens. No trading fees are charged for the trading of Star Tokens on the Fyooz marketplace, if the amount of trades does not exceed 1 trade per hour. If the user makes more than one trade per hour, he will be charged fixed fees from $ 1.00 to 4.00.
Thus, the Fyooz marketplace will not only serve as a platform for the issuance of Star Tokens but also as a decentralised exchange for the trading of Star Tokens under Swiss law. The decentralised exchange (Fyooz marketplace) will be built on the 0x protocol and operated by Urknall AG. From a regulatory point of view, decentralised exchanges for utility tokens do not have to comply with the same extensive regulatory requirements as traditional securities exchanges or trading platforms for security tokens.
Token Issuance and Distribution
Urknall AG is the only institution allowed to create and issue Fyooz Coins. Urknall is responsible for the implementation of a sound monetary policy and a stability-oriented money supply. In order to favour a long-term rise in the Fyooz Coin price, an innovative and unique scarcity model is applied for the issuance of new Fyooz Coins. The scarcity model is based on a non-linear function with a flattening slope (see also next chapter). According to this logarithmic function new Fyooz Coins will only be created and issued if more stars execute their IMOs on the Fyooz marketplace. This way, the issuance of new Fyooz Coins strictly depends on the substance on the Fyooz marketplace (i.e. market capitalisation of Star Token IMOs). The continuously decreasing amount of additionally issued Fyooz Coins will lead to a price increase over time and thus create incentives for early stage investors. Moreover, it is a key differentiator from other token creation mechanisms in the crypto space.
The first 50 million Fyooz Coins are created in a private sale phase, during which the price is fixed at CHF 0.2 per FYZ. The distribution of Fyooz Coins after private sale phase is estimated as follows:
- Fix: 20%: Founders of Urknall AG (only one-off)
- 10%: Investors (direct investments in FYZ)
- 10%: Staff and advisors
- 10%: Accelerators and financial incentives
- 50%: Reserves (pool to ensure market liquidity)
For every issuance of Fyooz Coins after the private sale phase an additional reserve is built up and Fyooz Coins will no longer be directly allocated to shareholders of Urknall AG. The reserve aids to maintain market liquidity and to avoid exaggerations in the price development of Fyooz Coins. Moreover, a listing of Fyooz Coins on different crypto exchanges is planned. From that point on, the price development of Fyooz Coins will depend on supply and demand at the crypto exchanges. The decision to issue Star Tokens on the Fyooz platform and the definition of the associated usage rights of Start Tokens (e.g. participation in a prize draw or preferential access to live shows) will be made by the stars. Urknall AG does not charge any fees for the issuance of Star Tokens but could require a certain stake in the Star Token IMOs.
FYZ Coin Supply
Fyooz is built on a unique model of limited coin supply. Thanks to our one-of-a-kind logarithmic coin offering model we are able to mathematical scarce supply and generate a sophisticated “stock-to-flow” ratio. With the formula, the Fyooz Coin supply itself is recalculated after adding new Tokens in multiple token generating events.
Value until Private Sale:
Afterwards, the logarithm base is continuously reevaluated and varies according to current supply and demand.
Given by the scarcity derived from the logarithmic coin offering model, no artificial Fyooz Coin hard cap is needed. With every addition of new Star Tokens in multiple token generating events, the Fyooz Coin supply is recalculated. The issue of new platform tokens correlates with the issuance of new Star Tokens and their market cap. In consequence the first Star Tokens lead to the highest supply of Fyooz Coins. After that, the issuance becomes scarcer according to a logarithmic calculation. The recalculation results in non-linear value added and fair risk compensation for early stage investors without disadvantages for early stage investors.
The success of the Fyooz marketplace strongly depends on whether the stars use the platform to issue their Star Tokens and the fans, followers, supporters, and buyers are willing to purchase Star Tokens. The more stars use the marketplace to issue Star Tokens, the more attractive it becomes. This network effect and the associated increase in demand for Fyooz Coins favour a potential increase in value.
A further driver for the long-term increase of value of Fyooz Coins is the mentioned scarcity model or logarithmic function which is applied to the issuance of new Fyooz Coins. With every new Star Token on the marketplace, new Fyooz Coins are created and issued, but with a decreasing growth rate (scarcity model or logarithmic function). Since new Star Tokens can only be issued against Fyooz Coins, the demand for Fyooz Coins increases in parallel with the growing number of Star Token IMOs. As the supply of new Fyooz Coins is restricted based on the scarcity model, the higher demand should lead to an increase in the value of Fyooz Coins over time. This argumentation points in the same direction as the famous stock-to-flow ratio, which compares a current inventory of a good (stock) to the production growth rate (flow). The lower the production growth rate of a good (e.g. Fyooz Coin issuance), the higher the stock-to-flow ratio, which shall explain the expected increase in the value of the respective asset.
With the resolution of the Fyooz Coin Issuance formula to X, we calculate the potential new Fyooz coin market cap (X) after adding Star Tokens (I) and determine the number of new Fyooz coins to be created (N). Means of Derivation: Price per new coin equals new market cap divided by coin supply. In contrast to the Fyooz Coins, which primarily serve as means of payment or transaction currency, the Star Tokens are classified as utility tokens. Hence, the price development of Star Tokens depends on both its usage value as well as supply and demand on the Fyooz marketplace.
The incentive system is key to a token economy and a central prerequisite for the emergence of network effects as well as potential mass adoption of an application or marketplace. The Fyooz ecosystem is designed to ensure that the incentives of investors, stars, fans, platform provider, and contributors are deliberately aligned.
The following stakeholders are part of the Fyooz ecosystem:
Early-stage investors of Fyooz Coins benefit from an attractive entry-level price (discount) and the associated potential for capital gains. The scarcity model applied for the issuance of new Fyooz Coins should favor a price increase over time if the demand for Star Tokens and thus Fyooz Coins rises. In addition, FYZ investors get exclusive access to new Star Token IMOs, as new Star Tokens will only be issued against Fyooz Coins. As soon as the Fyooz Coins are listed at crypto exchanges, the price of the Fyooz Coins is determined by supply and demand at the crypto exchanges.
With the issuance of Star Tokens, the stars can generate attention, raise money, measure and increase their market value by providing access to all sorts of utilities as well as bind their fans, followers and supporters closer to them and let them be part of their journey. The stars can decide for themselves whether they want to issue all Star Tokens in the primary market or retain a certain amount to sell them later on the Fyooz marketplace (secondary market) at potentially higher prices. If the stars want to sell their raised Fyooz Coins against fiat currency, they can use crypto exchanges where Urknall AG would intervene in case of an illiquid market.
Since Star Tokens are classified as utility tokens, fans, followers and supporters primarily want to benefit from the associated exclusive membership rights or the rights to access special contents offered by the stars (e.g. participation in a prize draw or preferential access to live shows). The price development of the Star Tokens will be determined by supply and demand on the Fyooz marketplace, where Star Tokens are traded against Fyooz Coins. As a result, some buyers of Star Tokens could speculate on a potential price increase of Star Tokens, even though Star Tokens do not represent tokenised securities, nor do they involve any financial stake in the revenues or assets of the stars.
As Urknall AG does not charge any transaction or trading fees, the revenues are generated by creating and issuing Fyooz Coins, holding a possible stake in every IMO of Star Tokens and generating potential capital gains on the Fyooz Coin reserves. The Urknall AG has a vested interest in a sound and stable monetary policy system. If necessary, Urknall AG intervenes as buyer of Fyooz Coins to prevent a potential price collapse. In addition, Urknall AG would appear on the crypto exchange as a buyer of Fyooz Coins if the stars wanted to sell their Fyooz Coins against Fiat currency and trading on the crypto exchange was not liquid enough. However, a sale of Fyooz Coins via the crypto exchanges can only take place as soon as Fyooz Coins are listed.
In order to increase the awareness of the Fyooz marketplace, it is planned to give away a certain number of Fyooz Coins to supporters for free (airdrops). Additionally, other services such as referrals are also compensated financially in Fyooz Coins.
Besides the above-mentioned incentives, the Fyooz ecosystem offers a great opportunity for all participants to become part of an innovative and exciting development of a marketplace in the attention economy where stars and emotions are tokenized and traded.