Tokenomics for UBI

I’m looking forward to read ideas and proposals on how to improve the tokenomics of UBI.

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What a time to be alive!

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$UBI has reliably been losing 25-50% in value each day for the past week.

This deflation is a problem for:

  1. Verified accounts
  2. Liquidity providers
  3. Traders

The market needs to incentivize at least one of these groups for stability.

One short term option would be for the DAO to consider doubling the pool rate rewards. The market needs juice.

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The value/quotation of $UBI and its conservation, in my opinion, is a critical and clearly essential point within the concept of universal basic income, since if it doesn’t comply with the main premise of serving as income (both because the currency is not accepted for normal transactions OR because it has a very low “transactional” value compared to any FIAT currency such as USD), the incentive for people to register and validate their humanity will be increasingly undermined by the initial cost of entering the registry (0.157 ETH + GAS).

In addition, the fact that the registered person receives $UBI’s for the mere fact of being a human within PoH, makes the valuation of this token even more fragile because there is no reason not to think that whoever enters, would not want to quickly convert to cash the UBI’s they accumulated.

I have no doubt that many of us here are convinced that this project has a lot of potential to change things in the world, so we are not just thinking about the money, but I believe it is necessary to design certain policies / platforms that:

Encourage people to hold $UBI - instead of having normal “savings accounts”, what about having “current accounts” (Argentinian translation, sorry!) where the interest paid for holding $UBI’s is calculated with some kind of ratio that takes into account the transactions made from UBI to ETH and vice versa (so, if you are naturally a $UBI holder, you’ll be rewarded with a higher interest rate);

Make $UBI an accepted exchange currency - why not think of an Amazon-like platform, allowing us to trade goods and services with each other. If there’s support from companies that would allow payments in $UBI, great! But why waiting for them?

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I believe, right-now one of the main issues is the whole user experience.

Imagine a guy far away from our technology world, that everyone here is thinking on him as the Ideal User Persona that will receive this Universal Basic Income, which is the main purpose of PoH. So, We should think in few issues to makes them life easier:

  • Proof of Humanity: In 3 easy steps the user should be able to create their account. Selfi / Video / ¿deposit? I don’t belive they could.
  • Wallet: After approval, user must be able to easily see their incomes, and their spends in a very graphical and trackable way.
  • Transactions: Possibility to exchange UBI tokens with a purpose. Possibility to Swap it to FIAT Currencies to pay instantly in a store.

I’m happy to collaborate in UX and design thinking to truly achieve the goal of reaching the User Persona. Simplicity will be the path to reach this goal to everyone.

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In order to give value to Ubi, new profiles must auto-vouch themselves by buying and expending UBI and/or ( why not pooling UBIETH UBIDAI). After that the system will deliver a request to:
Option 1- Randomly to a registered user in order to verify (will work on How) the humanity of the new profile. If the registered human doesn’t take action regarding the system requirement, his or her dripping rate will decrease and the request will move to another registered user.
Option 2- when submitting a new profile the system requires to both the new profile and the registered profile to indicate that they are willing to collaborate between each other. If the registered profile doesn’t take action, his or her dripping rate will decrease.

Still working on these ideas but I’d like to share in order to improve them faster.

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If I’m reading it right, it looks like any smart contract can burn UBI tokens, so 3rd parties could get creative to find ways to get folks to burn their tokens instead of trading them. Perhaps a UBI NFT shop that burns half the tokens (art for basic income) or a lottery that burns the house winnings. All sorts of possibilities.

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I think that as a basic income we need to find services that accept UBI as payments. This services should be all in the tier of first necessity, food, health, transportation, etc.

Probably only allow swaps to service providers or people with some kind of % locked in pools or other places that help the UBI to be stable.

I have a worldwide network of rent a car businesses were i could implement accepting UBI as payments helping the transportation tier.

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Agreed, as is it is massively inflationary so there is no incentive for anyone to hold it, and spending it would be hard because no one with anything else would want to trade their goods for a rapidly devaluing token which they must immediately ditch or lose money.

Folks should look at the Terra platform and their synthetic UST stable coin which creates stable coin of $1 value (1 UST) by burning an amount of another token (LUNA) of equal value. They have already captured over $1B in stable coin market, and made LUNA a > $8B asset. I feel like there is an angle where the UBI is linked to a stable or other asset in a similar fashion to bootstrap UBI into an asset of true value. Although UBI is emitted daily its increase in total supply would eventually met by burning of UBI to get a stable coin Humanity Dollars or USH.

Another issue is if UBI becomes something people want to HODL then by definition early adopters are made elite one-percenters of the PoH community. Bad Gini index.

I think there is a way to incentivize people to register without immediately spraying them with UBI. Maybe their registration deposit is held and use to generate a reliable yield (in USH?). Anchor protocol has a fixed yield of over 20%, PoH could do the same. Hold back yield until there is a certain number of registrants, or until network effects achieves a certain metric. Yes there is probably some DeFi magic in there to make it happen but there is no reason why PoH needs to be economically foundationless just because it is good.

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Nice ideas around here!!!

I think Proof of humanity has an advantage in the options that it has to pump the price. Lessons from Dogecoin can be applied to this. It will be cheaper to scale irrationally rather than rationally.

Proof of humanity plus verified Twitter account plus Twitter API performance data could give a share of a ‘Pump Pool’. The users who create the most likes, retweets, shares etc can get the greatest % of coins in the pool. The pool could operate dynamically to the desired level of distribution. 71% of the global population lives with 10 or less [$usd]. Making more pump pool coins available when the price is lower than this level and switching them off when the level is reached would be a mechanism to drive widespread user adoption and also stability.

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I think that for an healthy ecosystem, there should be both demand for UBI and supply of UBI. The supply part is handled automatically, but the demand part is lacking and therefore users are just selling their UBI on Uniswap.

For the demand to happen, there should be a clear economic incentive for someone to accept UBI. Here is an idea: business owners currently pay between 3 and 15% to accept credit/debit card and it’s particularly bad in Latin America due to monopolies. Using cash also has some costs to make it secure, deposit to a bank, … However to accept payment in crypto is at zero cost and extremely secure, even better you can be paid interests on your funds using DeFi. Why not providing a mobile application for small businesses to accept payments in UBI, with the price being 3-15% lower than with a payment card?

Example: As a traveler, I want to stay at a guest house, the price per night is $100 but it’s only $90 if I pay in UBI. I scan a QR code (or I scan an NFC code) that the owner shows me and deposit the amount of UBI to the guest house’s owner. As the guest house’s owner knows he can also pay cheaper for groceries using UBI, he is also incentivized to keep UBI instead of immediately converting it to fiat.

As the amounts are low and current gas fees on Ethereum prohibitive, it would make more sense to have this application on a “layer 2” scaling solution such as zk-sync or optimism

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Absolutely on board to help with this too!

Another idea for tokenomics would be to have a system of loans backed by PoH.

Currently when you want to open a loan in DeFi (eg: Compound, Maker, AAVE), one needs to be provide a collateral as a deposit which is in ETH or with another token and for an amount greater than the loan value. This is useful for traders, but less useful for more common use case where people need a loan to create a business or for other personal needs. Also in general micro-lending is very successful in many areas to improve the quality of live and repayments rate are very good.

I think PoH and UBI could play a great role here, as follow:

  1. Lenders would provide UBI to a lending contract (similar to Compound and gain interest on their deposits in UBI)
  2. Borrowers would open a loan denominated in UBI, but instead of providing collateral they would ask for a special type of vouching from the lenders. This special type of vouching would make the lenders actually responsible in case the borrower does not repay his loan. In real life, people could ask this vouching from people they trust like friends or family members; or provide physical assets as collateral.
  3. Once the loan is open, the borrower would likely sell the UBI for fiat but as the loan is denominated in UBI and interests are accruing, the borrower would need at some point to buy back UBI from the market at a greater value, generating demand.
  4. In case the borrower does not repay his loan, then the loss is supported by the protocol and the ones that provided this special vouching would lose a portion of their capital.

The exact mechanism for loan can be adjusted and improved, but as a concept it improves the tokenomics because:

  • A portion of UBI is staked in the lending protocol, reducing the available supply.
  • Borrowers must purchase the borrowed UBI plus interests from the market, creating demand

Let me know your thoughts.

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I think the Argentinean exchange Ripio already integrated PoH to do this. I like the idea.

  1. create demand for the token .
  2. ???
  3. Profit.

Considering neither democracy earth, nor kleros, nor any other institution related with the project has any interest or incentive to buy tokens from the market, The tokenomics is currently a race to a 0 valuation, while extracting eth from the liquidity pool providers.

Since only utility for UBI token is currently especulative, there’s really nothing presenting upward pressure.

And each 3.5 days we have more people accruing UBI.

I agree… One starting point is to use a fixed amount of UBI to fund you POH account instead of ETH… But I don’t know how well that integrates with Kleros…

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Deep noob alert, but I’m failing to understand an important part of $UBI and probably someone here can explain it: How is it not just draining to zero?

AFAIK

  1. In 2018 there was a private sale of the $HOUR token, which helped fund the project.
  2. In March/2021 the $UBI token was launched and we can receive it ‘for free’ proofing humanity or we can swap it for $ETH.
  3. Now what? How does it keep its value? Even if the rate gets lowered to 1 UBI/day it’s A LOT of money when it reaches thousands of wallets. What’s the carrying capacity of UBI? How could it support a million people?

Maybe that’s what is being solved in this topic and we’re all asking the same question…
Thanks in advance!

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It would be interesting to ask what are the most human ways of creating an economy at the bottom of the pyramid? Things like microfinance and village savings and loans schemes are proliferating around the world. Proof of humanity allows for high trust peer to peer saving and lending networks to form that is independent of location. These models previously have required small scale and physical locality to be successful. From that perspective, there is the opportunity that is both regenerative from a poverty alleviation point of view but also a way of generating value in the network. What would staking $ubi directly in other humans look like? How could it be used to improve the economics in the system?

Additionally, I would put the UBI streaming as collateral. In case of not paying, the debtor account would stream a % to the lender, as agreed in a smart contract.
Ethics are applied where no smart contract would allow a stream of more than XX% of the monthly UBI, as it would make the person go to a worse situation.

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