Programmable Equity

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Discussion

Nader Al-Naji:

"Imagine that whenever you wanted to buy something from McDonald's you couldn't use dollars and were instead forced to pay using shares of McDonald's stock. Similarly, imagine Burger King forced you to pay with BK stock, Wendy's forced you to pay with Wendy's stock, etc... This would obviously create problems. For one, having to hold stock in all of the companies you purchase goods from is annoying. But, on top of that, stocks are volatile, and so if you have to hold all these shares you're being exposed to the share price volatility constantly. All this seems ridiculous, right? It's clearly better to have everyone hold a stable currency like dollars, and transact in that instead. Yet this "equity as money" concept is exactly what's driving the current "tokenization movement" today, and it doesn't make any sense. In this article, I'm going to explain exactly how tokenization relates to this example and then explain how Basis, a stable medium of exchange, can solve all of these problems and create a game-changing new paradigm, which I call programmable equity, in the process.

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Let's suppose you capture a transaction fee every time someone does something on your app. Then all you have to do is programmably attribute the revenue from your app to the app tokens pro rata. For a concrete example, suppose we have a Blockchain eBay app, and that this app has an eBay token associated with it. Everyone pays with Basis and the app captures a 2% fee on every transaction. To give the eBay token value, the blockchain programmatically distributes all of the fees it collects to the holders of the eBay token pro rata. What's cool about this is we still have an app token we can sell to raise money for the project, the eBay token-- but the fact that we used Basis as the currency allowed us to isolate the eBay token to only capturing the equity component of our app, making the app itself more valuable by improving its user experience. What we've essentially created is programmable equity.

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The ramifications of programmable equity are massive, mainly because they create the potential for networks of value-creation to exist that require no human intervention whatsoever. For example, imagine some engineers wrote a really good blockchain eBay, created eBay tokens to capture the revenue, and stewarded the network to a point where it could run without any more human maintenance. Then investors in the eBay tokens would literally be buying and selling the value-creating potential of an autonomous machine, with no CEO, no management, and no employees. How would software updates work? Imagine an on-chain majority vote of the eBay token holders to approve new software updates. If that doesn't shake you, imagine we got to the same point with self-driving car software. The cars would drive themselves, service themselves, collect fees from customers, and attribute those fees to the equity tokens-- all without human intervention. Satoshi could have created more than just Bitcoin if programmable equity existed, he could have created Uber, AirBnb, and more. Put simply, the concept of programmable money and programmable equity together push us into a world where unprecedented value can be created by autonomous value-creating networks." (https://docs.google.com/document/d/1mm_krUG2qIv56n-AhZF13TVFaBhes9Jbe2mtjUGwtlU/edit)