ONO White Paper: Part 4 Economic System
Tags: FAQ, Blockchain, Social Network, Eos, White Papers

Chapter Four

Economic System

Preface

Entering into the 21st century, society finds itself in an age of information and data overload due to the ubiquity of high-speed internet infrastructure.

“The only thing becoming scarce in a world of abundance is human attention” — -The Inevitable by Kevin Kelly

“Totalitarianism at the top of the internet attention pyramid”

Hierarchical social networks decide the flow of user’s information and data feeds through an algorithm which is too centralized and not diverse enough. The software algorithms that determine what you see on social media sites prioritize revenue over veracity. It directly affects the gap between the rich and the poor in the real world and extracts an excessive amount of value from creators and users. This is generally known as the Matthew effect of the platform. In these cases, decentralization of power has the ability to make the network healthier.

Summary of ONOT

ONO’s system returns the value to the users who created the attention.

As an important value certification with public trust in the social media network, ONOT can be divided and transferred; it is the value benchmark to place ads on the ONO social media network. This is the external use value and product attribute of ONOT.

At the same time, ONOT also has many application scenarios in the social media network. It is also a free circulation pass. This is ONOT’s internal value and circulation attribute.

4.1 The Total Amount and Distribution of ONOT

The initial circulation of ONOT is 75 billion. With the year-by-year incremental creation mechanism and the destruction mechanism, the final amount should total 100 billion ONOTs. ONOT is the ONO social media network’s only circulation token.

Based on Proof of Contribution (POC), ONO will distribute ONOT to individuals who contribute to the social media network.

The initial distribution proportion is as follows:

Founding Team:

A total of 20 billion ONOTs will be used to support the founding team for the ongoing development, growth, operation and maintenance of the ONO social media network and the maintenance of the ONO ecosystem.

Co-founding Partners:

A total of 35 billion ONOTs will be used to provide phased financial support and development assistance for the ONO social network. These ONOTs will be distributed in phases based on actual needs and the situation of the ONO ecosystem.

Ecosystem Incentive Pool:

A total of 20 billion ONOTs will be kept and used as incentives for keynote partners, cooperation partners, and outstanding developers who make contributions to the ONO social media network.

Contribution Incentive Pool:

The annual increment of 5 billion ONOTs will continue to be used to motivate users. The incentive distribution plan is determined by the level of contribution. For the corresponding additional 5 billion ONOTs, from the sixth year a maximum of no more than 5 billion ONOTs can be destroyed. This decision is made through voting. (see 1.3)

4.2 ONOT, a certificate of value

The intrinsic value of ONOT is achieved because of its democratic, standardized, and decentralized nature.

“The main function of the institution is to constrain people’s behavior through both internal and external coercive forces, to prevent opportunistic behavior in transactions, to reduce the uncertainty of transaction consequences, and to help transaction entities form stable expectations…” — Institutions, Institutional Change and Economic Performance Douglass C.North (the winner of the Nobel prize in economics in 1993)

ONOT, A Democratic, Standardized and Decentralized Solution.

4.2.1 What is a value certificate? A story about the Chinese ginger.

1. Informal Institutions — — Solutions for Non-Standardized Decentralization

A small village in Yunnan grew a lot of ginger plants, and many villagers went to collect this ginger in order to stay healthy.

One year, an experienced businessman heard about this practice and saw a business opportunity. He decided to purchase the ginger from the villagers. Since the large demand, output, productivity, and bargaining power of each villager was different, the businessman could only negotiate and purchase from house to house.

The businessman was very good at bargaining, and many villagers did not understand the market of other places and were uncertain about the value of the ginger. This led to a lot of fraud and other inequities in the transactions between villagers and businessmen.

That year, the villagers didn’t make any money, but the businessman was very happy —he purchased a huge amount of ginger at a very low price. He successfully “trapped” the villagers and earned a lot through inconsistent information.

The village’s economy did not prosper because of market demand.

The next year, the businessman tried to repeat the trick and went to the village to purchase ginger.

This time, the businessman was surprised to find that the villagers raised their prices one after the other and ignored his bargaining. It turned out that the villagers heard that the businessman earned an exorbitant sum of money selling the ginger in other places during the previous year. They were very upset and decided to band together and “trap” the businessman.

That year, the villagers made some money, but because the cost was too high, the businessman lost money and he never came to the village again to purchase goods.

The village’s economy had not yet been developed because the informal institution’s bargaining system changed.

2. Formal Institutional System — A Centralized Solution

Five years later, due to mistrust in businesses resulting from problems like information asymmetry and difficulty in commodity pricing, the small Yunnan village experienced an economic decline, while the neighboring village became increasingly prosperous. It turned out that the neighboring village had embarked in industrialization.

Just when villagers were worrying about it, the boss of a processing plant from the neighboring village came and pointed out a way for those villagers, saying, “You just need to bring all the ginger to my plant and we’ll grind it into powder. Then you can sell it by the pound at a transparent price.”

After some consideration, the villagers thought it was a good idea that was mutually beneficial, therefore, they all agreed to take part in this. At the beginning, the villagers could earn a steady income, which attracted villagers from 7 or 8 neighboring villages to do business with this processing plant as well.

With the plant’s business expansion, the boss monopolized all sales channels, with his business dominating in over 20 villages. When confronted with a stronger business rival, the plant’s business started to face pressure. The desire for profits forced the boss to begin cheating in work and cutting down on materials and to defraud both customers and villagers. The plant started to have corrupt practices.

Despite the economic development in the village, villagers here still didn’t earn much. No longer being farmers or self-employed workers, they now became exploited workers. What was more worrying is that with the monopoly of the pyramid-style businesses, villagers had little bargaining power.

3. Decentralized System —A Democratic, Standardized and Decentralized Solution

After another five years, due to the extremely heavy monopoly of the processing plant, villagers all protested against it and terminated their business relationship with the plant. Having learned a lesson, these villagers jointly established a ginger processing plant in order not to be taken advantage by any middleman. The processing plant was only responsible for the collective management and processing of the ginger.

Equity distribution became their biggest concern, for they might fall into the same old trap again if there was a substantial shareholder, but would be unable to settle disputes without it.

In order to determine the value, villagers unanimously agreed to not distribute profits by equity after negotiation. Instead, they could take the ginger they collected to the processing plant and exchange it into the corresponding ginger currency, based on the quantity and quality of their collection. Such currencies could be used to exchange processed ginger powder. The currency issuing machine was locked by a multi-layered security door and each villager kept his own password. Only with the consent of more than half of the villagers could new ginger currency be issued. At the same time, in order to prevent mutiny, villagers jointly drew up rules and principles that they all should abide by, with the content constantly being revised and improved.

Villagers can sell their ginger currency in standardized secondary markets where buyers are only needed to purchase large numbers of such currencies to exchange it for the corresponding ginger powder with the processing plant.

The corruption brought about by centralization was tackled then and the village finally achieved economic prosperity and sustainable development.

Summary

In a decentralized system, “value certificates” are indispensable. They standardize non-standardized value and circulates freely in the second-level market, increasing efficiency and making transactions transparent.

4.2.2 Adding and destroying ONOT

Quantitative increase of ONOT — building an incentive pool

“The effect of a telecommunications network is proportional to the square of the number of connected users of the system.” — -Metcalfe’s Law

The portion distribution of ONOT is based on a constant definition: ONOT can measured by the value of the users’ contributions to the ONO social media network. The daily dynamics and content creation of social media networks are of equal significance to the sustainable development of a community.

Just as an individual who has been continuously promoted or a company whose earnings have continued to grow, benefits also rise as time goes on. What cannot be ignored is that the relentless struggles of individuals at the early stage or the foundation-laying efforts of enterprises are of equal importance to the individuals or enterprises.

We will use the story of Xiaozhang as an example to illustrate the growth and increased value of the social media network.

Xiaozhang

After Xiaozhang graduated, he worked as an intern with an annual salary of 60,000 yuan. Five years after being in the workplace, he accumulated more experience, got promoted and had his salary raised, earning 300,000 yuan each year. During the five years, Xiaozhang’s income increased fivefold.

Xiaozhang in the Parallel World

In a parallel world, Xiaozhang fell seriously ill after he graduated, and thus became unable to work. He didn’t recover until five years later. When he first entered the workplace, he was unable to make 300,000 directly, having skipped that stage, so was only able to make 60,000 a year.

Summary

The growing process of a social media network is basically similar to that of Xiaozhang. No social media network can thrive in a moment, that is to say, it will have to experience a process of continuous growth.

A mature and thriving social media network requires the joint efforts, devotion, and patience of all members, which will make the network more and more attractive to users.

Therefore, we predict that the value of the content in the social media network will continuously increase. From beginning to end we will persevere in having a fixed distribution of 5 billion ONOT added every year.

This also means that the earlier someone joins ONO, the easier it is to receive ONOT. In fact, from a perspective of individual equality, the sooner someone joins and constructs the social media network, they will receive more incentives. It is important to clarify that these awards are not without limits or complete. The ONO social media network will not provide unconditional support for those individuals who joined earlier.

Destruction of ONOT

“Quantitative addition of ONOT” allows us to understand the need for continuous addition and how it serves the value of the ONO ecosystem.

ONOT is an important public trust value certificate. It can be divided, it can be transferred and it is the benchmark for placing ads in the ONO social media network. When an ONOT exercises its rights in a social media network, the embodiment of the value has been fulfilled and the ONOT has to be destroyed in theory.

In fact, ONOT is a free and decentralized system. In order to fulfill this vision, the decision to destroy them or not is made by the voting by all users. Therefore, after exercising the rights of ONOT, it will be transferred to the OAA pool to be destroyed.

ONOT Adjustment Account (OAA)

The ONOT inside the OAA will be used to adjust the amount of throughput in the market. Users have the right to vote to choose how to handle the ONOT in the OAA.

For example:

1. Allowing the extra to flow into the market

Solving the lack of flow problem: For example, voting can be used to use the ONOT inside the OAA to give to third-party groups to develop applications.

2. Destruction

In order to solve the concern of depreciation caused by additional issuance, the destroyed ONOT will be immediately burnt. Users can decide the amount of ONOT flowing in the market by themselves. This will enhance ONOT holder confidence.

3. Distributing Formula

ONO plans to make the additional issuance of 5 billion ONOTs each year, that is, 13698630 ONOTs will be printed each day.

Among them, 85% will be put towards rewarding social media content, which totals 11643836.

5% will be put towards incentivizing behaviors of the more influential OP holders, which total 684931.

10% will be put towards users’ active behaviors, which shall be 1369863 at most.

Content Incentive

The content influential factor p:

It is set that the newly increased remarks of the users on the current day are a, the transfers are b and the times of the behaviors to click the thumbs-up button are c.

The influential factors of the user i on the current day:

(The repeated behaviors (thumbs up, comment and forward) of a user Acting to another user (The repeated behaviors (thumb up, comment and forward) of

Rewards for OP Influential Force

When the user i is affected by OP account (such as to click the thumbs-up button, transfers and replies and so on), the OPI value will be obtained. The OPI value of the user is the total number of op held by the person influencing it.

Rewards for users’ login

When the number of logging in is equal to or smaller than 136986, 10 coins will be assigned to each person, and the rest will be transferred to the reward account for activities, and used as task rewards in special activities.

When the number of logging in is equal to or larger than 136986, the coins assigned to each person will be 136986/the number of users logging in.

The ONOT received by each user logging in:

Summary

5 billion additional ONOT will be produced on a daily basis with a total of 12698630 ONOT produced according to the attention value produced that day. In the same way, 12698630 ONOT will be destroyed, representing a surplus of the attention value.

4.3 ONOT — free flow pass within the social media network

Every year a fixed number of 5 billion ONOT will be added and only 5 billion ONOT can be destroyed.

Because ONOT is only a value marker, it has its application attributes (right to exchange for ads). At the same time, it is also a pass to flow freely within the social media network.

4.3.1 Humanity’s Social Gold Mine

“Money is not natural gold and silver, but gold and silver are natural currencies.” — Das Kapital, Karl Marx

Gold and silver are just minerals in essence, and currency was born because of the human need to trade.

The expression, “gold and silver is a reason for currency to be natural” has the following attributes:

Easy to save, easy to split, has no losses/low losses.

2. It has its own inherent use case (just as gold can be used for construction or decoration).

3. Its production can be controlled, should not appear suddenly, and impacts the market.

In a similar way:

ONOT’s account is saved on the EOS blockchain and has no transactional losses.

2. ONOT has its own value, as there are cases where it can be utilized.

3. The total flow of ONOT is 100 billion.

But we know that the most important thing that makes gold different from others is that its widely accepted. It’s a currency that has been preferred for thousands of years.

So how dos ONOT compare to others of its kind? Let us imagine that a content environment is a gold mine: content creators invest their time and energy to mine “gold content”.

ONOT is a standardized token that takes this kind of human-given value and processes it through algorithm pricing.

ONO wants you to recognize the importance of this mechanism, meaning:

Recognize that human labor is not only about material output, but also about the long term and far-reaching impact of human intelligence generated by intellectual achievements, which is of considerable value. This value exists naturally within humans and is not decided by external factors.

Recognize that this kind of human value can obtain results short-term in the market, but the intrinsic value is much more potent and valuable than short- term gains.

Recognize that a decentralized social media network that mainly saves, encourages, and transmits premium human content, will deeply affect human society for a long time.

Recognize that a decentralized ONOT distribution mechanism acts as a part of the social media network to jointly construct, maintain, and iterate the ONOT distribution mechanism, creating a “humanity’s social gold mine” with public credibility.

Recognize the early investors and developer teams have an indelible contribution to the development of this kind of social media network.

This is the root of the existence of ONO.

Based on the “circulation” attributes of the ONOT life cycle as well as the ONO ecosystem’s medium and large-amount circulation scenario. ONOT is not just a kind of “proof of value”, it is not a kind of “circulation system”. The core system of ONO ensures that there will not be a large amount of selling ONOT on the markets which could lead to chaos, just as with the value of gold.

4.3.2 Application and circulation of ONOT

My box — developer ecosystem

ONO is not just a social media network, it is also a vast and prosperous digital application ecosystem.

Since social media fulfills the needs of users, it has stickiness and can quickly develop into powerful network effects. This will create a continuous basis for perseverance in the ongoing construction of the social ecoystem.

Traditional centralized platforms occupy an exploitive value chain, through its own centralized arrangement and through the collecting, extracting and selling of social data/energy in its large-scale centralized design.

ONO is adhering to the principles of openness, collaboration, sharing and value feedback, and is willing to work together with all users and developers in the social media network to create an ONO developer ecosystem.

ONO’s open scripting language and APIs enable application scenarios that can be expanded without limits. Third-party developers can develop a wide variety of small programs, and can also give ONO added-function plug-ins. Games, paid APPs, music software, and in theory all APPs can join the ONO ecosystem and become a member that has the ONOT token. (See 2.2–8)

Users will use ONOT as the only circulating token to pay, purchase, and reward.

Referendum

In the module of referendum, the users will vote for many projects needing to use ONOT.

Transfer transactions

ONO issues the ONOT virtual commodity for use in the community, to support the transactions of users within the community, including but not limited to the transfer, reward, purchase of services and payment of content between users.

4.3.3 Feasibility analysis of ONOT circulation

Economists told us that measured currency will lead to deflation and liquidity constraints, and it is encouraged to have money holdings rather than to create consumption and investment. There will be no such concerns in the ONO economic system.

Natural benefits redistribution mechanism

One of the concerns of deflation is that it is difficult to achieve redistribution of benefits.

Because of the strong speculative value of deflated currency, it mostly encourages holding, and the most direct harm is spending inhibition, investment containment, and liquidity obstruction. In such an environment, the creator of value will not get matched returns, which will lead to depression.

ONO’s quantitative addition mechanism rewards content creators, which is a natural benefit redistribution mechanism. It can ensure the long-term development of a content ecosystem.

It’s not a legal currency: cannot be a fully “decentralized” currency.

This kind of conversation often happens: How much is a bitcoin worth?

10,000 dollars.

We still use centralized currency, pricing a decentralized electronic currency.

There are many arguments regarding whether or not electronic currencies can become legal currencies. Whatever the case is, ONOT will not discuss this.

ONOT at no moment will posses the attributes of a legal currency.

An intangible property that is attached to the ONO community value and is jointly recognized by ONO social media network members through agreements.

A kind of pass to circulate freely in the ONO social media network.

And an intermediate that allows members to share social media network value of social networking in real life.

At the same time, ONO’s economic system is completely connected to the world — it is not an isolated economic system, but an open economic system.

Based on this, one cannot use a traditional deflation mechanism to understand ONOT. Under the ONOT circulation model and circulation scenarios, ONOT adds value and at the same time the circulation will not be hindered.

You will not always invest as the measure of the value of all products in real life, as well as the general.

equivalents held by most residents, deflation will lead to economic depression.

However, as mentioned above, ONOT is not a legal currency and you can regard it as a value added asset — it should be just part of your asset allocation.

In addition to this attribute, the essence of ONOT is that the ONO social media network and within its wide application ecosystem, is the only circulating token, and is an intermediary in the currency exchange of the products and services within the social media network.

“Investment” and “consumption circulation” are two characteristics independent from each other, but they coexist in the ONOT life cycle.

Just like people buy houses, stocks, and other assets, they also buy cars, new smart phones, and other other consumables.

Therefore, the circulation of ONOT depends essentially on the quality and prosperity of the application ecosystem.

Dynamic balance: excessive speculation hinders addition of value

“The invisible hand: everyone tries to apply his capital to maximize the value of his products. In general, he does not attempt to improve public welfare, nor is it clear how much public welfare is promoted. What he seeks is only his personal happiness and personal interests, but when he does this, there will be a pair of invisible hands to lead him to another goal, and this goal is not what he is pursuing. Because he pursued his personal interests, he often promoted social interests, which was much more effective than he really wanted to promote social benefits.” — The Wealth of the Nations, Adam Smith

As Adam Smith stated, in the ONO social media network, even if all members of the social network have the egoist mentality of a “need to profit” , the whole ecosystem will continue to grow in the direction of health and prosperity because of the invisible hand.

A simple logical chain:

Assuming that users are excessively holding ONOT, the liquidity of the market will be blocked, the income of third-party developers will be impaired and the social network ecosystem will affect the social media health. This will result in the value of ONOT falling. For that reason, invisible hands will bring the market to a reasonable level of holding as well as spending.

There will always be a tendency to be stable.

We expect ONOT to continue to increase in value, but this will be just a result, rather than an embodiment of the value of the ONO social media network.

We look forward to building a social media network that is decentralized and respects the value of attention. This is consistent. The prosperity of the social network will cause ONOT to increase, but the growth will always have an upwards trend.

Assuming that the ONO social media network can do the equivalent of Facebook, we can predict that the growth can be vast and, of course, the price of ONOT will be very high.

When ONOT tends to be stable, the speculators in the ONOT market will be greatly reduced, but ONOT will maintain a positive and steadily growing ecosystem.

What cannot be ignored is that with the continuous expansion of applications, ONOT will continue to discover new growth opportunities.

The infinite possibilities of the future

ONOT hopes that with the unlimited expansion of applications, it will gradually become independent from the ONO social media network and become an independent ecosystem with independent growth.

It is worth mentioning that there is only one fertile soil for the ambition of ONOT: a wide acceptance of a universal social media network.

In the future, the application ecosystem of ONOT will not be confined to the ecosystem of the ONO social media network. Any scenario that is willing to circulate ONOT will be supported.

4.4 OP (ONO POWER)

The launching of start-ups needs long-term capital investment and investors’ commitment for long-term holding. The investment in start-ups needs the investors’ resolution for long-term holding, that is, to sell the stocks several years later when value has been added and profits can be made. If the investors are not committed to long-term holding, start-ups that are eager to enlarge size by increasing stocks and financing will compete with the existing shareholders aiming to withdraw their investment. Professional investors shall understand that when new capital goes into the pockets of the old investors, the enterprise will lose the chance to expand operation forever and achieve economic growth.

Similar to above conclusions, we believe that the construction of the ONO social network also depends on all members’ acceptance of the values of community flow, intellectual property and user attention and also the acceptance of community virtual goods, ONOT.

Long-term holding of ONOT will have significant value for the ecological development of ONO. This is because it enables social networks to formulate long-term plans which also guarantees the smooth operation of the founding

team. The long-term attitude held by stakeholders will help them achieve healthy and long-term economic growth, instead of the speculation featured by fast input and output.

ONO aims to establish a social network based on a principle of common development and achieve prosperity step-by-step, for which, OP comes into being. OP is the only reputation and interest certification in the ONO social network. OP is non-negotiable and non-transferable under any circumstance.

The only channel for users to gain OP is to lock ONOT in the system by 1:1 exchange rate. The locking term is 13 weeks. After the locking term expires, OP launches the automatic unlocking function, which will be conducted after one week from launching. In each week, one third of ONOT with the corresponding OP quantity will be released to the users’ accounts, with the exchange rate of 1:1.

The quantity of OP one holds will determine attributes like influence and will also generate social clout. Additionally, OP holders will gain interest generated by the OP balance from the locked parts. The interest received by each holder will be determined by the quantity of OP they each hold, and in positive proportion to the total quantity of OP held by all users.

Read the ONO White Paper:

ONO White Paper CH. 1

ONO White Paper CH. 2: ONO DApp

ONO White Paper CH. 3: Technical

ONO White Paper CH. 4: Economic System

ONO White Paper CH. 5: Advertising System

ONO White Paper CH. 6: Abuse Management

ONO White Paper CH. 7: ONO DAC

ONO White Paper CH. 8: Common Program

ONO White Paper CH. 9: Roadmap

ONO White Paper CH. 10: Challenges & Strategies

ONO White Paper CH. 11: ONO Core Team

ONO White Paper CH. 12: Investors

ONO White Paper CH. 13: Nome Foundation

ONO White Paper CH. 14: Disclaimer

ONO Official Links