New blockchain-based platforms often describe themselves as an “ecosystem,” but what does that really mean? In general terms, an ecosystem is defined as a complex network or interconnected system. When you add a self-sustaining economy on top of that, it can get pretty complicated.
Fortunately, one emerging platform is working hard to figure it out. Verasity describes their platform as a “next-generation video sharing platform designed to liberate creators and benefit viewers.” To do this, they have created new blockchain-based platform that aims to reward all levels of users, from viewers to content creators to advertisers, with its own token.
According to Dr. Christian Jaag, Economics Professor at Cryptecon, “Introducing its own token allows Verasity to organize its video platform as an independent economy, and therefore to use tools from fiscal and monetary policy to stabilize price levels and foster growth.” In basic terms, it means that Verasity’s economy should be successful because all currency will be controlled by Verasity, which operates its own monetary fund within the platform.
Their version of an internal centralized bank, it controls the currency being used across the platform and draws upon tools from both fiscal policy and monetary policy to control their platform’s economy. The goal of the foundation is to stabilize it for all users.
The platform’s token is called VERA, and will be the medium of exchange and reward for video creation, sharing and viewing across the Verasity platform. Through different methods of earning VERA for each type of user – viewers, content creators, advertisers and sponsors – Verasity hopes to further entice people to use the platform and contribute to its economy.
Using blockchain technology, the platform aims to facilitate direct and transparent exchanges of currency between its users. Users of the platform can earn VERA through multiple ways. Any user watching videos can earn VERA currency and if viewers then choose to watch ads or share videos with their network, they earn more VERA. Content creators earn VERA from views, sponsorship and other payment methods. VERA can also be purchased by both Verasity users and investors, which then drives its value further.
Believe it or not, the idea of a blockchain-based rewards platform is not novel. Two well-known examples include Steem, a blockchain-based social media and rewards platform for publishers to monetize content, and Flixxo, a decentralized video distribution network. Both operate using their own token, similar to Verasity’s VERA. So while Verasity’s business model is not completely new, it is the first credible blockchain technology company that has modelled an economy using both monetary and fiscal policies.
But what does that mean?
It means that Verasity’s economic model is based on proven monetary and fiscal policy. In terms of monetary policy tools, Verasity uses an algorithm within the blockchain to automatically regulate its supply of money. Simply put, either new VERA supply will be minted and distributed to the community, or the number of currency not in circulation will be reduced.
To stabilize the economy over time, the platform plans to account for an inflation target of three per cent year over year. They arrived at the three per cent mark through ongoing simulation of Verasity’s proposed economy. The platform’s economic structure was tested hundreds of times by economic modelling tools. These simulations indicated that a moderate, positive inflation target, resting at three per cent, performed better than a zero-inflation target, even in the face of external shocks to the economy.
Based on fiscal policy, the Verasity allocates newly minted VERA cryptocurrency to a diverse range of platform users, including both active viewers and creators, to reward participation on the platform. While this bolsters the platform’s overall economy, it also helps to create what is known as a “multi-sided market.” That means that by rewarding each user group’s participation on a platform, it incentivizes engagement from all sides of the economy. With different user groups on each side (viewers, content creators, sponsors and advertisers), the more each side uses VERA, more value is created for the other sides. Theoretically through increased use of the token, the overall value of Verasity as a platform would also increase.
Two of Verasity’s fundamental principles directly speak to this. One, that there should be multiple monetization methods, in order to best suit each user within the ecosystem, and two, that all value exchanged should stay within the economy and ecosystem, therefore supporting growth and innovation as well as ensuring that all users, creators and advertisers are fairly compensated for their contributions.
Ultimately, Verasity’s idea of a stable economic ecosystem aims to give the power back into the hands of the users and content creators by forging a better system for all. Their goal is to be one of the first blockchain-based platforms to offer a stable economy for its users. Based on their successful economic simulations and the support they’ve received from cryptoeconomic professors so far, it seems they are poised to be well on their way.
