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How to Balance an Unstable Token Economy: The Theoretical Perspective
In this article, we try to analyze ways to achieve equilibrium in the Mirror World Ecosystem from a theoretical point of view and use this as a guide to design our token economic mechanisms.
To start, let's briefly review the history of money and how it has evolved over the centuries. In the physical world in which we live, we have high demand and dependence on different natural resources, which often leads to resource scarcity problems. With the evolution of civilizations, however, we learned to store, exchange and trade these resources, issuing credit notes among local communities. Over time, the way humans perceive money gradually expanded from stone money on Yap to gold across the globe. This was when the gold standard monetary system and paper credit emerged.
We can observe from the process that money often evolved after devastating economic crises, in which financial markets, far from trending towards equilibrium, are inherently unstable. There is thus an urgent need to recognize today's volatile, dynamic business environment, where we cannot expect a particular mechanism to address all the problems once and for all.
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In the essay Liberalism and Labour, John Maynard Keynes defines the political problem of mankind as combining three things: economic efficiency, social justice, and individual liberty.
As he further explains that
“The first needs criticism, precaution, and technical knowledge; the second, an unselfish and enthusiastic spirit which loves the ordinary man; the third, tolerance, breadth, appreciation of the excellencies of variety and independence, which prefers, above everything, to give unhindered opportunity to the exceptional and to the aspiring."
In fact, these three things should co-exist as the core values of society, shaping the policy prescriptions for a good economy. With the increase in manufacturing capacity, however, more countries chose to compromise by emphasizing economic growth and neglecting the other two. As a result, leading a policy design and implementation change became the last and only resort to deal with constitutional issues.
Today, despite the economic turmoil, we witness an increasing need for creating a virtual world, charting a path to future prosperity and sustainable development. Having that in mind, Mirror World Ecosystem defines the major objectives of economic growth as:
Economic Efficiency: Match the demand and output of MWM Token for key ecological players.
Ecological Development: Having Mirror World Mobile SDK as the foundation to generate quality content in bulk.
Freedom & Democracy: Everyone can participate in building under the governance of DAO.
In Mirror World, MWM Token acts as the only token that connects all participants within the entire ecosystem. Hoping to address its economic instability, Mirror World not only publishes different types of games, but also offers a range of in-game mechanisms to facilitate trade and stabilize the token economy in different stages of growth.
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