How to analyze a token #3 – the framework

In the first two parts we presented the possibilities of token classification with regard to different aspects. In order to get a complete picture of a token, a combination of these different points of view is useful. Untitled INC achieves this with the Token Classification Framework.

The first two parts of this series have shown that a token can be viewed from different angles. In the case of the Distributed Lab framework, you could already see that the overall picture of a token is very multifaceted.

Bitcoin news: This approach is deepened in the Token Classification Framework of Untitled INC

Untitled INC is a think tank whose members are located in Berlin, Frankfurt, Munich, Vienna, Zurich, Tokyo and San Francisco. Bitcoin news focuses on the Distributed Economy and the Blockchain like explained in this review. The goal of one of the projects was a framework for a more precise classification of tokens.

The presented approach wants to classify a token by considering five dimensions:

the target of the token (crypto currencies like Bitcoin, network tokens like Gnosis, investment tokens like DigixDAO)
the utility of the token (usage token for access to services or network itself such as Bitcoin, work token, which give individual users the right of active participation in a system such as REP and hybrid token such as DASH)
the legal status (utility token like STEEM, security token like SPiCE or crypto currency like Litecoin)
the technical level (At which level is the token implemented? Is it blockchain-native like ether, a non-native protocol token like a REP or associated with a dApp or application like WIZ by Gnosis?)
the underlying value (Where does the value of the token come from? Is it asset-backed like Tether, does it have a value coming from the whole network like Bitcoin or can it be compared to a stock like DigixDAO?)
A complex image of a token can now be characterized along these five dimensions.

Bitcoin news about archetypes of tokens

If one examines different tokens for this Bitcoin news, one notices that some patterns occur several times. Bitcoin news tokens often feed their value from the network. In contrast, investment tokens are often covered by an asset or can be compared to a stock. Specifically, the Untitled INC team has named the following use cases:

Crypto currencies are used as a means of payment or store of value. They are not issued by a central authority. They can be mined (or acquired via another consensus mechanism), as long as the total quantity has not been generated by pre-mining or something similar.
Tokenized assets can give users access to classic assets such as gold or the like, so that even the smallest shares of gold can be traded. The price of the tokenized assets is not only subject to the mechanisms of supply and demand, as is the case with crypto currencies. The problem is that a central entity controls these assets. Accordingly, tokenized assets stand in a certain contradiction to the ideals of crypto currencies.
Platforms can also be organized as tokenized assets. Unlike the assets addressed, they are not owned by a single entity. The value of a tokenized platform is given by the whole network.
Finally, tokens can also be part of a project, as is the case with The DAO or various ICOs. Security tokens can lead to payouts on the one hand and give the token holders a say on the other. One problem is that such tokenized shares count as securities in different countries and are treated accordingly.
Token in a larger context
So far the Token Classification Framework corresponds to the approach of Distributed Lab or is only a slight extension of it. Untitled INC goes one step further and considers the different levels of blockchain systems. A distinction is made between the Governance Layer, the Token Layer and the Technology Layer.

The governance layer includes aspects such as the decision as to which legal form the project should have behind the token, how far token holders are integrated or how to organize the network. This also includes the question of how to make decisions within the system or how to regulate governance processes beyond the chain.

The token layer is described by the type of the token, i.e. by the previously used token layer.