Applied to ORIGIN Protocol
The idea that internal coordination is as crucial as price coordination is implemented in the ORIGIN protocol. The ruleset of the ORIGIN protocol has three aspects: pledge (internal coordination), bonds (price coordination), and Treasury (reserves).
This rule set is controlled by three primary levers: reward rate and APY (an internal measure of internal coordination), bond control variables (an internal measure of price coordination), and premium above RFV (an internal measure of price coordination, RFV: risk-free value).
Policy leverage is the primary way for ORIGIN DAO to self-regulate irrational and out-of-control reflexivity under market conditions. Policy levers then serve as focal points, either counteracting or cooperating with external market forces to maintain internal productivity.
Staking (internally coordinated): (3, 3) is a win-win situation, with both players staking their LGNS tokens. In return for taking them out of circulation, stakers receive compound rewards based on a rate of return controlled by ORIGIN DAO’s policy team. (3, 3) The focus essentially states that internal coordination — general agreement, positive-sum, cooperative behavior — is more economically productive than price coordination — zero-sum, competitive behavior. Internal coordination creates a demand synchronization that absorbs economic value proportional to network effects. Price coordination is also a win-win equilibrium but to a lower degree than internal coordination equilibrium. Internal coordination is a summary of economic demand, and price coordination is a summary of economic supply.
Bonds (price coordination): (1,1) is also a win-win situation, to a lesser extent. A bond is when a buyer purchases LGNS tokens from the protocol at a price below the market price. The buyer provides another asset (stablecoin, LP token, etc.) to the protocol treasury in exchange for LGNS tokens. The discount is determined by market forces and bond control variables controlled by the policy team. The bond control variable sets specific bond capacity or target limits for most assets the Treasury hopes to receive within a specified period. As bond sales approach capacity limits, the discount on the bonds is reduced to ensure that the appropriate amount accumulates in the Treasury. Price coordination equilibrium is a summary of economic supply.
Treasury (reserve support): Funds from bond sales go into Treasury reserves. These are the reserve assets that support the value of each LGNS token. The risk-free value (RFV) is the stablecoin amount backing each LGNS token minted and sold through bonds or reward allocations. For every LGNS token it mints into circulation, the Treasury must contain this RFV amount of stablecoins. The market capitalization indicator supported by each token is backed by treasury reserves composed of treasury assets other than stablecoins and, therefore, may have greater volatility.
Introduction to policy levers
Staking Reward Rate: This metric determines the number of new LGNS minted for stakers. Then, the percentage of pledged LGNS determines the annual income (APY). Bond sales volume and the reward rate together determine the supply growth rate. Each minted LGNS token must be backed by one risk-free value unit. The reward rate is combined with the percentage of the total LGNS supply staked to arrive at the APY. APY is the primary internal measure of internal alignment. It is an inverse measure of the health of ORIGIN DAO. When ORIGIN DAO is doing well, the APY will be lower because the reward rate will be lower (meaning the protocol has been around longer), and there will be a high staking percentage (meaning there is a long time), which means long-term internal confidence.
Bond Control Variable: The policy team partially controls this measure to incentivize the precise treasury composition desired by ORIGIN DAO. ORIGIN DAO What kind of reserve assets need to be considered to support the value of LGNS, such as liquidity providers and stable currency assets? Each asset has different reserve-backed attributes that must be weighted in the aggregate to achieve healthy growth and sufficiently stable reserve support. The bond control variable is an internal measure of external price coordination because it sets the discount rate for purchases directly from the protocol rather than from a third-party market maker.
Above RFV: This is not a policy lever but a market measure. The transaction value of each LGNS token is higher than the value of the stablecoin backing each token. That’s a multiple comparable to the price-to-earnings ratio that value investors are familiar with. Premium is an external/ price measure of internal coordination; LGNS trades at a higher price than RFV because the external market perceives effective internal coordination from ORIGIN contributors. This external view reflects that investor staking ratios for LGNS will remain high, contributors will continue to work for ORIGIN DAO, the protocol will continue expanding its network to form new partnerships, and demand for LGNS will remain high. Confidence increases. Therefore, the premium relative to RFV measures ORIGIN DAO’s economic productivity and expected future cash flows. This measurement is set by the market rather than directly by the ORIGIN DAO policy team, but it can be affected by policy levers.
