What utility does $CAN provide?

First and foremost, $CAN is the native currency of the CanYa serviceplace, CANWork, and extended ecosystem including the CANApps. This is important for a number of reasons, see Chris McLoughlin’s post on why CanYa needs a token for a more in-depth token analysis.

Having a token allows CanYa to only have 1% fees, significantly lower than similar legacy options. This is because CanYa is not a strictly revenue based model, as traditional business models dictate. Instead, the CanYa ecosystem operates on a token economy model, whereby everyone in the ecosystem is incentivised to participate and all experience reward at the same time.

Token economies operate on similar principles to much larger economies, where we have a large amount of existing research and known principles. One of these principles is the Monetary Theory of Inflation, or MV = PQ; where M is the Monetary Base, V is the velocity, P is the price of the resource and Q is the quantity of the resource.

Rearranging we get M = PQ/V; which is the size of a crypto-asset valuation necessary to support an economy PQ, with velocity V. If CanYa desires a strong economy, with a valuable token price (P), we need to increase M.

Let’s see how.

Stakers and hodlers (speculative investors) reduce Q by taking tokens out of circulation. Reducing Q with no change to other parameters, will naturally increase P (price). Reducing the velocity of tokens, V, with no change to other parameters, will require an increase in P. Increasing P (price) and reducing V (velocity), with fixed Q (supply) will increase M (cryptoasset monetary base).

So as the budding economists we are, we need to find actionable ways to increase both the monetary base (M) as well as the price (P), but without manipulating the price. So we can look at V and Q. We do this by two ways.

Reducing V

We can reduce the velocity of CAN, where velocity = the number of times an asset changes hands in a given time period, by slowing down how quickly it changes hands in a transaction. This may seem counter-intuitive, so we can explain it another way.

If we encourage users to get liquidity into CAN, but discourage them (directly or otherwise) from immediately flipping it out into another currency we can slow down velocity and increase buy-side pressure. We do this primarily by having a great product that people want to use, and then with specific instruments such as the CANPay service and the marketplace escrows.

Firstly, the CANPay service is an incredibly easy and seamless way of getting almost any (hopefully soon) currency into $CAN. This directly increases buy-side pressure. Secondly, whilst the $CAN is escrowed between parties, it stops movement for hours, days or even weeks. So put simply, to reduce velocity, we need to provide attractive opportunities to users to buy CAN and place it into the escrow between two parties in the marketplaces.

Reducing Q

We can also look to reduce Q, which is the number of circulating tokens. We do this by encouraging users to stake tokens in our HODL club and our DAO (decentralised autonomous organisation). This is a great option for our users as by staking tokens they get the opportunity to earn by completing micro-tasks in our DAO, which helps maintain and operate the ecosystem. It also means they are economically aligned to improve the ecosystem, so it discourages bad actors. Win-win.

So there you have it. We need to reduce Q and V to allow the Price and the Monetary Base to increase. Economics can seem so simple (sometimes).