A word on churn coins

Let me start off by saying that I rarely ever want to simply discount any idea, or “cast shade on someone’s graft” as the saying goes. I love the experimentation in the Defi space.

So with the disclaimer out the way, I would like to caution against “churn coins” or “curve coins”.

What is a “churn coin”?
Thanks to the innovations possible on the Ethereum blockchain, all manner of innovative token economics is currently being attempted. Some notable features have been:

  • FoT “fee on transfer” - a fee is charged every time the token is transferred. Typically the fee is burned as in the case of Statera $STA
  • Rebase - the balances of various addresses are adjusted from a function that might target some price or disburse some reward. Examples are $BASED and $AMPL that target the value of a present day USD and the USD’s purchase price as at 2010.
  • Liquidity locking - some method is used to ensure liquidity and leverage features of AMMs to establish a floor price. $CORE is a good example.

All of these features probably have merit and some coins, like our friends over at $RFI actually combine some of these features.

Where the problem will eventually come in for all these projects is that unless they provide real value for someone real somewhere, outside of their pure speculative value, they will eventually grind to a halt. The reason for this is that if their only purpose is to move value from one group to another, the group providing the value will eventually wise up to the fact that they are the givers and not the receivers of value and they participation will end.

So while I am supportive of experimentation, I do want to caution that we remain focused on producing the valuable projects of uncensorable trade and uncensorable speech, which will, sooner or later, be highly valued by the market.