Unlock DISCOUNT Token – Use case and Intrinsic value

Problem statement:

The core team premined a total of 1,000,000 tokens and is expecting to have distributed 300,000 tokens by May 1st 2022, through grants, bounties, and matching. This implies, the tokens will be sold on the market against the price set by UDT token holders (investors and speculators). Meaning, the amount of $$$ the core team can spend on grants, bounties, and matching, depends on the market price of the tokens.

However; No incentive has been created for creators and users to use the token, and in turn for investors and speculators to buy the token, to set and drive up the price which in turn would give the core team more $$$ to spend.

The Unlock protocol currently gives back newly minted UDT (effectively a discount) through its inflation model to each user for every new membership purchased, regardless of which ERC20 token is used to process the purchase.

Conclusion:

While the core team benefits from investors and speculators buying UDT in order to be able to provide grants, bounties, and matching, to increase adoption of the protocol and grow the network, no benefits have been created for investors and speculators to buy UDT in the first place.

Proposed solution:

In order to create synergy between the core team, investors and speculators, all parties involved need to be able to benefit from increasing adoption and growing the network. This can be achieved by creating a use case for UDT which would give it intrinsic value.

To give UDT intrinsic value, I propose to create a clear incentive for creators using the Unlock protocol, to use UDT over other ERC20 tokens. This can be achieved by giving back newly minted ‘Unlock DISCOUNT tokens’ (effectively a discount) to each user for every new membership purchased ONLY when it is purchased using UDT. In turn, when a membership is purchased using ERC20 tokens other than UDT, no newly minted UDT will be given back (effectively no discount).

Conclusion:

By making a distinction between who is eligible to receive a discount (newly minted UDT), a real use case is in place and intrinsic value is established.

Creators will be incentivized to accept UDT because it will give their end-uses who purchase their memberships a discount paid for by the UDT inflation model without impacting their revenue stream.

End-users will be incentivized to buy UDT on the market to purchase memberships, in order to receive discounts.

Demand for UDT will grow, which will be reflected in its price.

The core team will have more $$$ to spend on grants, bounties, and matching to increase adoption and grow the network.

Investors and speculators will be equally rewarded for facilitating and enabling the core team to spend more $$$ to increase adoption and grow the network.