Token Engineering on Cardano: Step-by-step tutorials to design economic mechanisms

[GENERAL] Name and surname of main applicant

Yohann Irani

[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)

Entity (Not Incorporated)

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

3

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language.

No

[GENERAL] Summarize your solution to the problem (200-character limit including spaces)

Equip product owners & developers with applied EUTxO token engineering. Over 5 lessons, we'll share economic system design insights. Each lesson includes text (English/Japanese), videos, and code.

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

No

[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.”

No dependencies.

[GENERAL] Will your project’s output/s be fully open source?

Yes

[GENERAL] Please provide here more information on the open source status of your project outputs

CC-BY-NC-SA (Content) and Apache 2.0 license(Code).

[SOLUTION] Please describe your proposed solution.

We'll deliver an introductory video + five concise high-quality tutorials (each 5-10 mins) with supporting text, images/animations, collaborative canvas tools, and where applicable - code. All videos will be published on Youtube, content will be published to our website, and code to our Github organisation. Our focus is to produce quality content to our website (tokenflows.xyz) and make a complex topic clear and understandable. The videos will cover a range of topics which are outlined in the project milestones section below.

Note: Our intention is to start building a community around token engineering practice. As such we are currently developing a website, tokenflows.xyz to be the central place to collect tutorials, code, and articles on EUTxO token engineering. The initial website will host this proposal and be available for community review. All proposal outputs will also be hosted on tokenflows.xyz

Our aim with the tutorials is to increase Cardano's value. To do that we need a better understanding of how to use it as a tool to build digital economic systems. To do so, we need to create more advanced digital micro economies. Digital coordination systems that use tokens beyond the base Cryptocurrencies or NFTs. There is little experience in the Cardano ecosystem on how to design and engineer these digital micro economies so our tutorial is a first-step toward that and bootstrapping a token engineering community of practice.

Incentive systems generate network/community value: Token engineering provides the conceptual tools and understanding of software implementation to help design more advanced incentive systems. Blockchain technology regulates agents' behaviour through explicit rules and the immutable recording of interactions (transactions). Most tokens are simple, used as digital monies or unique digital property, but that’s like treating the automobile as a "horseless carriage." Both are very simple coordination systems, more advanced incentive systems (market mechanisms) create value and help solve more complex coordination and collaboration problems. By introducing the application of market mechanism in an approachable and open way, we can encourage more people, like us, to think differently, putting Cardano at the forefront of the emerging discipline of token engineering.

New forms of governance and collaboration: Our generation and those that follow us need more scalable governance systems and ways to develop sustainable ecosystems. Enabling people, companies, and DAOs to contribute to our communities. We need to bridge the gap between bureaucratic systems and free-market profit maximisation as our primary ways of organising. 

If we keep relying on voting — plutocratic, approval, or one-person-one-vote — we are just reinventing a hierarchical bureaucracy, albeit in a digital form. We can show how using our collaborative canvas tools can lead to a shared understanding of other approaches.

Now is our opportunity to empower a whole generation of open-source, open-society contributors to design markets and incentive systems that do scale, are more decentralised and make designing and developing a better world for all really possible.

Education for software development: If DApp product managers and software developers don’t know about token economics or token engineering concepts, they will design sub-par solutions. Solutions that involve minimal use of Cardano's settlement and service (computational) layers. That means Cardano has sub-optimal utility. Designers and developers can only imagine solutions to problems using the conceptual tools at their disposal; because designing for blockchains, smart-contracts, and tokens is knowledge and labour intensive. Sharing our understanding of token engineering will give people the imagination, knowledge and power to solve local problems with robust incentives. 

Align open-source effort: We will attract many new developers and entrepreneurs to Cardano who'll benefit from sharing the knowledge we've already acquired. Having a common language of core token engineering concepts means project teams will understand each other, work out how they can interoperate more easily, leading to collaboration. Ultimately a shared understanding improves interoperability. Our tutorials help build this common understanding of market mechanisms and token economics that help teams work together building better tools and communities.

Throughout the tutorial series we will use our story to illuminate the path for others! Starting with an introduction to how we, a mechanical engineer and a commercial music major, both in our 20's, ventured into the world of blockchain, token engineering, and started contributing to Cardano.

 

Cardano needs to attract more young talent. If others get inspired, up-skill and develop new insights from our story (why we do what we do and how we did it) and the concepts we share, Cardano will attract the quality creators we want to work alongside. They’ll join us and add to the community for years to come.

In essence, this project goes beyond funding a team; it fuels the future of Cardano by empowering its community with the knowledge of token engineering. With this Cardano's capabilities will be utilised, attracting new participants and making the ecosystem stronger and more resilient.

[IMPACT] Please define the positive impact your project will have on the wider Cardano community.

We have come to the realisation that token engineering is the crossroads where critical economic incentives, governance models, and technology meet. It's where they connect to develop flourishing token networks. This practical, hands-on knowledge, communicated well, will significantly increase adoption and utility of the Cardano.

We view this educational series on token engineering as a long-term investment in the Cardano ecosystem. The series aims to shed light on how Cardano's unique EUTxO model, Native Asset support and Plutus, can be used to construct intricate micro-economic systems. As we continue to evolve towards the Voltaire stage of the Cardano roadmap, these token engineering principles will prove invaluable for fostering effective on-chain governance and decision-making processes.

By arming designers and developers, Catalyst community members more broadly, with an understanding of token engineering fundamentals, we aim to create interconnected ecosystems of cooperation and value exchange. Each tutorial will encourage those watching to contribute their ideas, problems, and designs back to Cardano’s ecosystem through tokenflows. We envisage tokenflows being a hub for token engineering on EUTxO blockchains, and Cardano in particular. Building a culture of collaboration and knowledge sharing is crucial as we navigate new territories of algorithmic governance models. 

While token engineering is established on Ethereum, our proposal's value lies in spreading awareness and practical skills within the Cardano community. If we estimate that about 60k people are currently in the Catalyst community, we believe a target of 300 (0.5%) engaging in learning token engineering within the first year of the content being released is a conservative goal. When you account for the improvement in protocol design and the natural spread of this knowledge, we anticipate a significant positive impact on the ecosystem.

The Value (who benefits):

Our tutorials will arm entrepreneurs, product designers and developers with new concepts that will help them design better economic interactions, build open-source frameworks, construct DeFi /ReFi/RealFi protocols, and develop tools for DAO's and stake pool’s.

• Students of this course: They’ll learn new highly sort-after skills and increase their choice of future opportunities.
• Cardano: Top of the list is attracting fresh thinking and robust DApp designs.
• For us as individuals: We’ll grow our understanding by teaching what we've learnt.
• The projects we contribute to: will benefit from our enhanced understanding, while also being able to draw upon a base of community developed practices and skills. Making the projects more robust and trustworthy. 

To measure the success of our token engineering video series, we'll combine both qualitative and quantitative measures that reflect its direct and indirect impacts. Here's our plan:

1. Video Metrics: We'll monitor the number of views for each tutorial on Youtube, providing us with a direct measure of the interest and reach of our educational content.
2. Community Engagement: We will assess the quantity and quality of community interaction through different communication channels. This includes discussions, feedback, and questions related to our tutorials, which will provide insights into comprehension and application of the content. We can measure this engagement.
3. Spreading Awareness: Token engineering integrates a lot of knowledge and ideas from many disciplines. Token engineering may be too difficult for someone to undertake, however just watching our tutorials will help them gain an appreciation of the topic. That increases the awareness of how token engineering can be utilised. Over time, as the topic becomes widespread, and those we teach start teaching others, more people will begin asking for and applying these techniques; we therefore expect...
4. Progression of Token Engineering in Project Design: Over time, we expect to see token engineering progressively becoming part of the design process for future projects within Cardano, indicating the assimilation of our teachings into practical application.
5. Quality Improvement in Cardano Tools: The application of token engineering concepts should lead to an improvement in the quality of tools and applications developed within the Cardano ecosystem. We can measure this through the occurrence of the token engineering term within the Cardano ecosystem. For example the frequency the 'token engineering' term or tags are used in Catalyst proposals to signal 'quality.'

The above categories of metrics, taken together, will provide a realistic and comprehensive understanding of the direct outcomes and reach (impact) of our project. The ultimate goal is to make Cardano the hub of token engineering, strengthening its standing as at research led, well engineered blockchain.

Tutorial outputs will be shared through Cardano and Token Engineering (TE) Academy Discord channels. We’ll also get distribution through our existing website, Youtube and Tiktok channels, and individual social media accounts. Word of mouth will also play a big role in spreading content. We will start distribution immediately after completing the content, and follow it with promotional content throughout the following months. 

The first, main target audience will be developers in Cardano's ecosystem. Up-skilling those looking to learn and apply TE to their projects. This will then lead us to targeting people looking to carve out a role in web3.

As participants in our course master the concepts, demand for more advanced TE content will validate the need for more to be created. Likely, it will take on a similar structure to this project but will include all the insights generated through this first tutorial series.

The course content will be translated into Japanese (subtitles and written content) using services such as lokalise. Our aim is to increase adoption and utility. There is ever increasing potential in our Asian community, so we want to spread the knowledge as far as we can.

[CAPABILITY & FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

We've have both spend the last several years getting a understanding of web3 and have experienced what its like to learn an immense amount of new, to us, material in unfamiliar disciplines of computer science and computational engineering, economics, and law. Along with this, we have relevant knowledge from engineering and commercial music degrees, software engineering (Haskell/Plutus), commercial and Project Catalyst experience.

Yohann currently works as a token engineer & engineering consultant. He has completed Token Engineering, Python, and cadCAD courses (applying this to develop tools in Cardano). He was the project engineering manager on a successful $350k NZD project. Additionally, he's had prior experience as a math tutor, teaching high school & university students.

Jack has been a software engineer on Cardano for three years with experience writing Haskell and Plutus. He's contributed to Catalyst projects since fund 2, Co-Founder of the Eastern Town Hall community and has experience in audio and video content creation. He has trained many members of the Eastern Townhall in translation, using git and several other topics. Check out his previous content below. (He has come a long way since then!)

https://clik.vc/mintingnativeassets

• 281 subscribers on Youtube with videos reaching up to 7.1k views.

https://www.tiktok.com/@yumi.protocol

• 110 followers on Tik Tok with videos reaching up to 5.7k views (aimed at attracting youth).

Our wider collective team, who we’ll look to for advice and tutorial content validation, have been involved in Catalyst since fund 2. They have worked on more than 10 projects, led challenge teams and been catalysts and contributors to several community-led projects.

Relevant technical knowledge and experience, a unique story to share, teaching experience, and having recently studied token engineering, make delivering this content with high trust and accountability a safe bet. And, FYI, we think its Important to note, this project only just missed out on funding in fund 8.

Our overall goal is to see token engineering adopted in more projects on Cardano, delivering optimised design solutions. Spreading awareness and building understanding of token engineering in an EUTxO environment will make mastering the basics for developers on Cardano simple and accessible. 

Project Goals:

• Content Creation: To produce an introductory video and then concise five-module tutorial series on token engineering. The success of this objective will be measured by the completion and publication of all five modules as planned.
• Reach and Engagement: To reach at least 300 community members within the first year of the content being released. This will be tracked through video views and community interactions on various platforms.
• Knowledge Application: To see an increase in the application of token engineering principles in the design and development of projects within the Cardano ecosystem (quantitative) and by observing the discourse in the community (qualitative).
• Foster Collaboration and Growth: To promote a culture of collaboration and knowledge sharing within the Cardano community (as well as growing it). This will be measured by the quality and quantity of user contributions, feedback, and discussions around our content.

[Project Milestones] What are the key milestones you need to achieve in order to complete your project successfully?

Workflow for each milestone: 

• Detailed topic and curriculum research/planning
• Content creation: depending on need - text, scripts, animations, exercises, code.
• Verification
• Video recording and editing
• Translation to Japanese using Lokalise (or similar)
• Publishing and promotion

For each milestone, success looks like: (acceptance criteria)

• Module content and videos published tokenflows.xyz and Youtube; accessible to the public.

We will deliver two videos for milestone 1 thereafter, one video per milestone + relevant docs.

Introduction - Our Story + Overview

• Our journey to Web3 and Cardano
• Motivation behind producing this series
• Overview of course content

Module 1 - Introduction to Token engineering

• Seeing blockchains through an institutional perspective help us understand digital crypto-economic systems.
• Why is it important to understand human behaviour in an a digital world of complex interactions.
• The what, why and how of Token Engineering and why it matters.

Note: This initial module will incur a higher sunk cost due to setting up production workflows for the other modules.

Module 2 - Market design

• What are markets really and what do they do
• Markets as a tool for governance
• Markets as computational systems and the role of the pricing function
• Rules make/enable free-markets
• The importance of incentive mechanisms (market mechanisms) and incentive compatibility
• Principal-agent problems
• Market case study: a closer look at Auctions

Module 3 - Game theory, Mechanism Design, and Control Theory

• What is game theory and how can it be applied when designing complex systems
• The Types of Games and their Relevance
• Cyber-Physical systems and control theory's application to token systems
• Seven-Layers of Financial Cryptograph and 'Governance as capital'
• Bringing it together: a closer look at mechanism design and how can it be used as a tool for coordinating social behaviour

Module 4 - Token Design + Token Policies

• The basics of token design
• Governing token economic systems
• Bargaining in Social Networks
• Network Effects and Dynamics
• The laws of power and mechanisms for expressing decisions
• Considerations when designing a token economy
• The legal code
• Economic Design
• Techno-ethics

Module 5 - Incentive Design

• Ledgers in society
• Making things ledge-able
• What makes something a ledger
• Blockchains as an institutional technology
• The New Code
• The Alchemy of money
• The digital code of Property Rights and Capital
• Network States, digital geography & jurisdictions: Escaping the geographic limits for the rest-of-us!
• Capital formation - Co-ordinating token sales and project funding
• The hope and pray of Initial Coin Offerings (ICO's) 
• Token Air drops to bootstrap demand
• Forgoing opportunity costs and Initial Stake-Pool Offers
• Competitive contestable funding and Catalyst's plutocratic voting system 
• Estimating funding preferences with Quadratic Funding
• Assurance contracts and Augmented Bonding Curves
• Pay-for-Results and Alphabonds

[RESOURCES] Who is in the project team and what are their roles?

Our team are engaged on Discord and Cardano Forums. We have relationships with Project Catalyst Fund operational and technical team members and are involved in various communities.

Yohann Irani (Token Engineer, Content Creator): 

Bachelor of Mechanical Engineering. 3+ years Industry experience in systems design and project management. Recent graduate of Python, cadCAD and token engineering courses. Working token engineer, developing a Cardano stake pool model using cadCAD and Jupyter notebooks. Developing DAO compensation plans into cadCAD models.

Profile:

https://twitter.com/Yohannirani

Jack O'Brien (Media Production): 

Software engineer with experience in Haskell, Plutus, Nix, Rust and Wasm. A graduate of Massey University College of Creative Arts, in Commercial Music, Technology major. Experience in music and video production. Co-organised the Catalyst Eastern Town-hall; setting up and maintaining the translation pipeline and providing open-source training materials and workshops for the community. Studying Evolutionary, Institutional Economics, and Mechanism Design.

Profile:

https://poly.me/parduseidolon

[BUDGET & COSTS] Please provide a cost breakdown of the proposed work and resources.

The requested budget is for our time and expenses for three months of the project from its commencement in March to June 2024 to deliver the videos for each milestone. The first module (most labor intensive) will encounter a higher sunk cost for setting up templates and creating a workflow that is repeatable.

Our project is structured as an intro + five distinct modules, each having its own set of deliverables and associated costs. The estimated costs include all overheads and are normalised at an hourly rate of ₳235, adjusted for the short-term intermittent nature of project funding. This rate accounts for a 10% project contingency and 20% uncertainty cost due to the volatility of ADA over the last six months.

The software services and tools we plan to utilise are:

• Craft for documenting
• Linear for project management
• Figma for designing
• OBS, keystroke pro, cursor pro and desktop curtain for video recording & presentation
• Davinci, Logic and Adobe After Effects for motion graphics audio and video
• Lokalise (or similar) for translating video subtitles to Japanese

These software costs are included in the budget for each module. Breakdown below:

Introduction - Complimentary video :)

Module 1 - Introduction to Token Engineering (27%): This foundational module includes setting up workflows, document structures, and creating the first set of learning materials.

• Research & Content Creation: ₳13,034 ADA
• Video Recording & Editing: ₳2,962 ADA
• Publishing & Promotion: ₳1,777 ADA
• Workflow Setup & Document Structures: ₳8,522 ADA

Total ₳26,296 ADA

Module 2 - Market Design (18%)

• Research & Content Creation: ₳13,034 ADA
• Video Recording & Editing: ₳2,962 ADA
• Publishing & Promotion: ₳1,777 ADA

Total ₳17,774 ADA

Module 3 - Game Theory & Mechanism Design (18%)

• Research & Content Creation: ₳13,034 ADA
• Video Recording & Editing: ₳2,962 ADA
• Publishing & Promotion: ₳1,777 ADA

Total ₳17,774 ADA

Module 4 - Token Design + Token Policies (18%)

• Research & Content Creation: ₳13,034 ADA
• Video Recording & Editing: ₳2,962 ADA
• Publishing & Promotion: ₳1,777 ADA

Total ₳17,774 ADA

Module 5 - Incentive Design (18%)

• Research & Content Creation: ₳13,034 ADA
• Video Recording & Editing: ₳2,962 ADA
• Publishing & Promotion: ₳1,777 ADA

Total ₳17,774 ADA

Software Services (accounted for): 4,083 ADA (4%)

Verification (accounted for): 2,649 ADA (3%)

Total Project Cost: ₳97,393 ADA [US$36,766 (₳ = 0.3775USD)]

[VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

Token engineering crosses many disciplines- economics, math, design, engineering, software development, community building- it's a powerful skill. It can be applied to all manner of coordination games, so there's no reason why all projects in Catalyst can't use it for designing and engineering better tokenomics for their communities.

Developing their team skills and engineering better solutions and value for their communities.

Several year's worth of full time work has gone into learning, applying and testing token engineering fundamentals to the Cardano environment. The tutorials pass on what we've learnt. The videos will have a high production value, explain advanced concepts succinctly, and apply Token Engineering to an EUTxO environment. Designing and organising a course curriculum, designing the individual course material, producing the content - especially useful and engaging content, takes a lot of time. All we ask for is funding to develop and produce the course content to share what we know, to build and practice token engineering on Cardano.

Since digital content and software has infinite leverage, even if only 100 developers start using token engineering, the value created will be significant (for themselves, users of the tools and Cardano) and the impact will last for many years to come. With your support for this project, we can all look forward to reading about, and benefiting from the sophisticated incentive designs people have created in future Catalyst proposals.

[IMPORTANT NOTE] The Applicant agrees to Fund Rules and also that data in the submission form and other data provided by the project team during the course of the project will be publicly available.

I Accept