Taxonomy and Universal Success Parameters of Token Models in Distributed Ledger Systems

Abstract

Token models introduced by Distributed Ledger Systems (DLS) such as Bitcoin or Ethereum enabled a fundamental shift in the economic structures of our society. This led not only to a large number of different token models but also to a multitude of development strategies for them. However, only a few of existing tokens proved a significant success on the market. The reason for that is a missing unified understanding of parameters required for success and the lack of standardization in token economics in general. This paper derives a unified token economics taxonomy considering regulatory authorities, practitioners, and academics. The taxonomy encompasses five dimensions which are essential for classifying token economics. Finally, this work derives eight universal success parameters of a token model and in a broader sense of DLS. The clear taxonomy and parameters will enable a more efficient and expedient approach for token development.