The new Model explained - "Under The Hood" Magic

"Under The Hood" Magic

To support the 3-layer Seeds family, various protocols, gateways and liquidity pools have been designed to create the required balance in the Seeds economic system to create a real change in the world. The diagram below illustrates the likely structure of implementation (subject to change during the implementation project).

The relationships

Seeds is an autonomous, decentralised and whole financial system which doesn't rely on the health of any other economic systems or currencies. The new Seeds tokenomics model has been designed to be independent from any current economic systems, fiat currencies or other crypto currencies.

The current fiat-based economic systems are in crisis with a high rate of inflation. To that effect, the new Seeds economic model isolates the outward gateways to fiat as independent pieces of the puzzle, so that they don't impact the inward balance of the Seeds ecosystem, should they be threatened, attacked or forced to close by the market forces, regulators or hackers.

a) External relationships

Fiat/Crypto <> Global Market Seeds (SEEDS)

Global Market Seeds or gSeeds (Ticker symbol = SEEDS) can be purchased or sold through the following channels:

  • Seeds Commons and/or Seeds Bank:

    • Seeds Collaborative token sale.

    • "Collaborative Selling Contract" where people can post their Seeds they want to sell to the Seeds Commons, who would then add to selling pool and distribute proceeds in a "fair" manner to those in the selling pool (including themselves).

  • or via Peer-to-Peer exchanges.

Fiat/Crypto <> Constant Seeds (CSEEDS)

In order to keep the Seeds ecosystem independent from the fiat/other cryptocurrencies economic systems, the model doesn't provide a direct gateway between Constant Seeds and the external fiat/crypto world.

To purchase or sell Constant Seeds, token holders must use the internal (Mint/Burn) relationship between Global Market Seeds (SEEDS) and Constant Seeds (CSEEDS).

That doesn't need to mean that the user experience has to be complex or clunky. We are planning on making the conversion very easy by:

  • Providing a button that will exchange fiat/crypto into Global Market Seeds at market price and then convert them into Constant Seeds (at current Seeds Commons price) in real time.

  • Providing a button that will convert Constant Seeds (at current Seeds Commons price) into Global Market Seeds and then exchange them into fiat/other crypto on the market at market price.

Both buttons will use the internal (Mint/Burn) relationship between Global Market Seeds and Constant Seeds (See section Internal Relationships section below).

Fiat/Crypto <> Community Seeds (OSEEDS)

Each community will define the best gateway to fiat/crypto for themselves using prosperity pools. Some communities may decide they do not need a prosperity pool and that all transactions purely remain in the realm of the community agreement within the boundary of the community. Others may see the utility of a prosperity pool allowing community members to purchase or sell Community Seeds for fiat/crypto.

Prosperity pools can be backed by local resources, benefactors, investors money. Each community sets up their community in the best way for them to fulfil their own purpose.

b) Internal relationships

Global Market Seeds (SEEDS) <> Constant Seeds (CSEEDS)

This is an essential relationship as, not only it gives access to constant Seeds that are central to bridge communities with each other and create their liquidity bridges/pools, but also offsets the cost of inflation, providing a valuable service to the entire ecosystem.

This is an internal (Mint/Burn) relationship. How does this relationship work?

  • The Seeds Commons will determine - to the best of their ability - the cost of inflation for Constant Seeds, based on official figures from respective central banks.

  • When a Seeds token holder decides to convert some or all of their SEEDS into CSEEDS, they use a convert button in their SEEDS App. This button will then burn their SEEDS and mint new CSEEDS.

  • The conversion rate takes into account two important parameters:

    • Market price for SEEDS at the time of the conversion

    • Current Seeds Commons price for CSEEDS (which includes the cost of inflation)

  • When a Seeds token holder after some time decides to convert back some or all of their CSEEDS into SEEDS, they use another convert button in their SEEDS App. This button will then burn their CSEEDS and mint new SEEDS. The conversion rate takes into account 2 parameters:

    • Current Commons price for CSEEDS (which includes the cost of inflation)

    • Market price for SEEDS at the time of the conversion

That way, the cost of inflation is covered at all time as an independent feature of the SEEDS Economic model. Using the external relationships described above, token holders can then convert to fiat/crypto without losing their purchasing power.

Global Market Seeds (SEEDS) <> Seeds Index Tokens (SEEDIDX)

SEEDIDX is a token representing the "sum" of the regenerative value created by Communities using Community Seeds. A redeem function will be available to transform SEEDIDX tokens into a representative "collection" of individual Community Seeds.

There will be natural volatility in the Global Market Seeds, and the design of the SEEDIDX token is to help buffer this volatility, with the direct connection to actual on-the ground projects throughout the ecosystem.

How does this relationship work?

  • There is an internal (Mint/Burn) relationship between Global Market Seeds and Seeds index tokens:

    • Global Market Seeds can be converted into Seeds Index tokens.

    • Seeds Index tokens can be converted back to Global Market Seeds.

  • Global Market Seeds can be converted into Seeds Index tokens using a conversion button available in the SEEDS Apps. When a Global Market Seeds token holder decides to convert some of their tokens and presses this button, some of their Global Market Seeds will be converted into SeedIDX tokens.

  • Similarly, Seeds Index tokens can be converted to Global Market Seeds using a conversion button also available in the SEEDS Apps.

  • The mint/burn relationship between Global Market Seeds and Seeds Index tokens is not intended to be related to pricing. Rather the proxy relationship will happen based on scaling due to Seeds Commons and Harvest issuance of new Global Market Seeds.

Furthermore, in a proposed next step, Seeds Index tokens can be converted further into a series of Community Seeds (representative sample):

  • This is a one-way internal (Mint/Burn) relationship, burning Seeds Index tokens and converting them to a group of Community Seeds

  • The ability to convert Seeds Index tokens into Community Seeds will come in one of the further down the road "Horizons", as it depends on a sufficient volume of Communities coming into existence.

  • People converting (ie burning) Seeds Index tokens for Community Seeds (Minted) can be thought of as a kind of a fee being covered by the stronger communities.

Constant Seeds (CSEEDS) <> Community Seeds (OSEEDS)

The strength of a community will be defined - amongst other parameters - by the strength of their liquidity bridge to Constant Seeds. Communities who intend to be open and interconnected with other communities to transact, learn, or share will create a bridge to Constant Seeds.

Constant Seeds offsetting the cost of inflation is a reliable reference for Community Seeds conversion from one community to the other as Constant Seeds doesn't lose purchasing power and therefore is a solid, strong and reliable asset for liquidity pools.

The way it works is that each community will be able to mint their own Community Seeds (OSEEDS) using the rainbow protocol - see below. They will then acquire the equivalent value in Constant Seeds (CSEEDS) to create their liquidity pool.

The underlying protocols

Seeds Index "Balancing Act" Protocol

The Seeds Index is an aggregation from the ground up. Global Market Seeds (also called gSeeds) are driven by the markets.

The balance between Market Seeds and Seeds Index tokens is what connects open financial markets forces with regenerative measurable outcomes on the ground. If we manage to maintain both of them approximately equal (proxy), we then have a model which is grounded and primarily focused on regeneration. That wouldn't be possible if the Seeds Index tokens were volatile and subject to the financial markets dynamics.

If we put the Seeds Index in direct interaction with the financial markets, we would lose the reference to actual regeneration measurable outcomes. Market forces would interfere with this evaluation. Keeping them separate but strongly connected guarantees we keep integrity, purpose and focus in the way we communicate on actual results and positive change on the ground.

Potential Working Draft Concept

a) At Time 0

Say that 12 pilots are operational on the ground, and that SEEDIDX is worth 1.2M of regenerative value on the ground (Say 100K per pilot on average).

The Seeds Commons can then mint 1.2M worth of gSeeds to match the current value of SEEDIDX bringing 1.2M of working capital to develop the tools, processes, knowledge, templates etc... to support communities.

Say that the price of gSeeds is now going up, bringing the market cap of gSeeds to 1.4M. Then the SEEDS Bank and/or SEEDS Commons can use one or more of the following levers or choose status quo:

  • Price - Sell some gSeeds to increase selling pressure and bring back the market value approx. to 1.2M and/or Mint (harvest) more gSeeds to decrease the price.

  • Circulating Supply - Create an incentive to stake gSeeds, limiting the circulating supply,

  • or Choose Status Quo - Decide to wait for SEEDIDX to catch up at T1 (next SEEDIDX metrics evaluation).

Say now that the price of gSeeds is going down bringing the market cap of gSeeds to 1M. Then the SEEDS Bank and/or SEEDS Commons can use one or more of the following levers or choose status quo:

  • Price - Buy some gSeeds to increase buying pressure and bring back the market value to 1.2M or Burn some gSeeds in circulation.

  • Circulating Supply - Create an incentive to unstake gSeeds, increasing the circulating supply,

  • or Choose Status Quo - Decide to wait for gSeeds to catch up at T1 (next SEEDIDX metrics evaluation).

b) At Time 1:

Say that SEEDIDX increases as a lot of regeneration happened on the ground and is now worth 3M based on the commons metrics (say 24 pilots, more value created by the original 12 pilots etc...).

Then the same cycle repeats itself and the levers can be used to adjust. Only at this stage, the SEEDS Commons might decide that it is ok to let the price of gSeeds go up to the next level in order to reward gSeeds holders, by only minting for example an additional 1.6M for working capital out of the 1.8M additional available so that the price of gSeeds can go up.

Doing that allows to not only reward gSeeds token holders but also inject more working capital for the benefit of communities. In a context of exponential growth this model could help support a large number of communities through the SEEDS Commons.

This is to illustrate how gSeeds is just a proxy of the value created on the ground materialised by SEEDIDX. Not equal at all time but just following the same long term growth pattern, as close as possible from the reality on the ground.

Value Generated "Re-Distribution" Protocol (Evolution of Plant and Harvest Protocols)

This new "Re-Distribution" protocol isolates and measures the value created by the SEEDS ecosystem in the "Real World" and re-distribute the value generated towards more regenerative behaviour and activities.

This protocol will leverage the planting and harvest protocol and re-invent the way to distribute value for this to be as efficient as possible to encourage regeneration. A combination of scores, incentives and Seeds air drops that will meet the needs for more support where regeneration is the most vibrant and vivid.

In correlation with the Seeds Index, aggregating the sum of the regenerative value created, this protocol makes it come to life by re-distributing resources created by the whole ecosystem where they are the most needed.

Collaborative Sale Protocol

Initially, general users are able to participate in the collaborative sale ("cosale") by exchanging their legacy Seeds. The proceeds are distributed on a pro rata basis to all participants in the cosale.

When the collaborative sale is "turned on", Seeds Commons will be the first participant, placing the "milestone Seeds" that they control into the cosale. It is likely that the quantity of milestone seeds will be so large that general user participants' pro rata share would be discouragingly small. In order to make participation more attractive to ordinary Seeds users, the Commons participation is not calculated pro rata, but is allocated a defined percentage of the proceeds (e.g. 50%) regardless of the number of Seeds it has placed into the cosale.

A cosale participant may sell some or all of their COSALE tokens to other SEEDS Members. This opens up a pathway for Seeds holders to get "ready cash" by joining the cosale, then turning around and selling the COSALE tokens to another person who is able to wait. We expect that this option will be more attractive than selling Seeds themselves directly for fiat.

Community Currencies (oSeeds)

Community currencies (also known as oSeeds) support regenerative economic activity at the local level. The SEEDS ecosystem recognizes community DAO native tokens and Rainbow tokens as forms of oSeeds. Each community is able to have its own oSeeds tokens with its own token name.

Benefits

  • Keeps value local: Local communities prefer local currencies because they keep value local!

  • Builds community: They build connection, support, and trust between people in the local community, enhancing community spirit — very valuable where community has been breaking down.

  • Promotes resilience: They promote resilience in the local community, protecting communities against the destructive instability of the global markets and the conventional currency system.

  • Grows awareness: They encourage us to think more about our purchases and who the currency is benefitting so that we can make better economic choices.

  • Promotes creativity: They promote creativity and resourcefulness in the local community, utilising and developing our untapped skills, enthusiasm, and potential — even when austerity is called for in national and global economies.

  • Localised risks and rewards: Communities creating their own currency carry all the risks and capture all the rewards by themselves.

  • More flexibility for radical experimentation: Communities creating their own currency have much more freedom and flexibility to design their currency in radically new ways without needing to build consensus or agreement amongst other communities

  • Focused support and liquidity: There’s been a lot of desire for financiers to fund local and regenerative economy pilots in specific communities, yet so far in SEEDS this hasn’t been possible. That’s because Seeds aren’t local — they’re global. So, it hasn’t been possible for a funder to provide liquidity for a single region. With Rainbow Seeds, those who want to fund a particular community can then provide liquidity for community’s token directly (opposed to providing liquidity for all Seeds).

Community currencies provides space and flexibility for more radical experimentation in currency design to meet a cultural needs.

Recognition and rejection of tokens for use in the SEEDS ecosystem

In order to protect against fraudulent actors who create misleading tokens, and also against accidentally-confusing token names, there are two levels of recognition: "Acceptable token" and "Ecosystem token":

  • Acceptable tokens are supported for send/receive functions and currency tabs in the SEEDS Wallets. This level of support could be quite broad (covering almost any Telos token) but cannot be wide open -- to protect wallet users from outright fraudulent parties.

  • Ecosystem tokens have a special badge that identifies them as part of the Seeds ecosystem. Naturally this includes gSeeds and cSeeds, and the native tokens of several SEEDS DHOs. It also includes Rainbow-based local tokens of communities that are part of the SEEDS ecosystem.

Visibility in the SEEDS Apps

To be visible in the official SEEDS Wallets, tokens need to be registered with Token Master List Contract by the issuer AND must be approved by the Token Master manager for each "use case" (e.g. Light Wallet, Desktop Wallet, Peer Swaps) before the associated application will recognize it.

It is possible for the manager to rescind approval if necessary. We may not want to accept tokens into SEEDS Apps which are not mission-aligned or are actively anti-aligned for example.

Policies for recognition of tokens

The Currency Working Group do not believe that we can - at this stage of the SEEDS evolution - define criteria for token recognition which operate purely mechanically; there will be human judgement required in many cases.

The observations of the Currency Working Group are that:

(a) it is worth aiming for an initial set of policy guidelines with better consensus,

(b) we need to envision a governance process for adjusting policy,

and (c) we need to envision a distinct governance process for implementing policy as specific decisions about specific tokens.

These governance processes should be in accordance with SEEDS Constitution principles, which suggests they should be decentralized to the extent possible.

DAO native tokens as oSeeds

Each community can create a DAO to get on-the-ground activities organised. Classically a DAO is primarily used by the project team in charge of coordinating the community pilot and, later on, ongoing or new regenerative activities.

With their own DAO up-and-running, Community project teams can better coordinate the regenerative actions of the community through a structured governance, voting system and clear roles, assignment, quests and accountabilities. Communities can create their own native tokens within their DAO and use it as an irrefutable on-chain accounting of the contributions of their active members. The native token market cap in a DAO represents the value created by the sum of the active contributions voted in the DAO.

These native tokens are classically different by nature from a community currency, such as oSeeds. They are accounting tokens to capture all the contributions that were needed to successfully deploy regenerative activities in communities whereas a currency, such as oSeeds, is designed for transactions and marketplaces activation.

In theory, nothing would prevent a community from deciding to use the native token as their oSeeds currency. That may makes sense in some scenarios, such as supply chains, services providers or conversion bridges. However, it is important to be aware that DAO native tokens were not primarily designed as a local currency and therefore is far less flexible than a rainbow token - see below.

Another scenario would be to use a rainbow token - oSeeds - as the native token of the DAO. This scenario is more likely to happen in various contexts where the community wants to reward contribution with oSeeds. As all these tokens being on the blockchain, a bridge can easily be created in order to show oSeeds from within the Community DAO. This is therefore a valid scenario for communities where the flows are fully integrated around the oSeeds currency.

Rainbow tokens as oSeeds

Like native tokens, the Rainbow Smart Contracts allow Communities to create local (bioregional, community, etc), topical (local food, regenerative health, etc), and organisational currencies for bootstrapping globally regenerative economies. The Rainbow contract, specifically designed to meet the currency requirements, has several configuration options which make it more flexible than a native token, but more complex to create and manage.

Membership

Rainbow tokens can be configured as a "walled garden" which are usable only by community members.

Mutual credit

Rainbow tokens can be configured to allow negative balances and thus allow users to create new currency as needed.

Backing Capabilities

In order for the Community Seeds to be trusted, it may be important based on each specific community context to back them up with Market Seeds, fiat, other cryptos, land and/or any other resources that the Community has available.

Backing with Market Seeds is a preference not an obligation. Below are some foundational principles:

  • Free choice is given to the communities to back their "Community Seeds" tokens with Market Seeds (or NOT). The Rainbow Smart Contract will work for both scenarios.

  • Backing "Community Seeds" with Market Seeds creates TRUST (but is NOT mandatory if the communities decide otherwise).

  • The same tools we have can be used to create "Community Seeds", whether they are backed or not backed by Market Seeds.

New Token Approval

When an issuer wishes to create a new token symbol under the Rainbow Smart Contract, they must first send a non-refundable submission fee to the contract. The issuer submits a creation action, which gets human review and must be approved by the Rainbow Smart Contract account -- the same account that executed the set contract action which installed the Rainbow code on the blockchain.

This approval grants the issuer complete authority to set and change the behaviour of the token under that symbol.

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