We’re fairly close to the development of working stablecoins on Ethereum. Probably the two best projects in the space right now are MakerDAO. A conservative estimate would be 12 months to the launch of main-net stablecoins.

There are many prominent projects in the space that raised funding through sales of tokens that we consider forkable — the removal of the token from the project requires forking the GitHub of the project and ctrl+f’ing to replace with ETH. Examples include Golem and Raiden. Frequently it’s not as blatant but GNT/RDN are pretty obvious.

Note: I use GNT/RDN as examples of unnecessary payment tokens because it is generally obvious and their creators acknowledge this status. This isn’t a commentary on the usefulness or viability of Golem and Raiden but a warning about speculating on “payment tokens.” I quite like the ideas behind both projects and would like to see them be successfully developed.

Before the development of stablecoins there might be an argument to be made for the network effect value proposition of these kinds of tokens. We’ve (Pantera) never really bought that argument and prefer functionally necessary tokens; Augur is a great example of this. While it would be possible to fork the entire Augur project and create a new REP-like token to serve the required functionalities, I think the network effect argument is very valid here. In fact, the network effect argument is designed for situations like these. Using it in cases where you can just drop in ETH as a universally better replacement is a really insidious co-opting of a valid explanation as to why REP (and other useful tokens) won’t get replaced with a copy-cat.

The reasons why ETH would be better for payments than GNT/RDN on their respective networks are better liquidity and lower aggregate fees (GNT/RDN don’t take rent-seeking fees but they do add unnecessary exchange fees + bid/ask spread to and from ETH). So far these arguments have been too far removed to make a lasting impact. The reason we haven’t seen a project get token-forked yet is probably because the relative gains in market efficiency are so small that they are socially outmatched by network effects. Liquidity is the bigger gain of the two and while people are just speculating on GNT/RDN vs. actually using the software it’s not as noticeable; if/when the platforms get major adoption it becomes a massive issue for users.

Now that we have stablecoins we have the killer reasoning: GNT and RDN are purely payment tokens and there are no good reasons as to why you would want to use individual, relatively illiquid, significantly more volatile payment tokens over working decentralized stablecoins. If I’m legitimately using Golem to frequently render Blender animations at low costs why would I ever want to take on the inventory risk of holding the volatile GNT token to pay workers with over a stablecoin? Sure, a network can try to force me to, but as a pragmatic crypto-economic activist I’m just going to fork them and replace those useless tokens with my liquid stablecoin of choice.

From the perspective of the providers on these networks (computational workhorses and state channel maintainers in GNT/RDN respectively), I prefer to use a stablecoin for the same reasons as the users I’m servicing. I imagine a world in which everyone is running Golem, Filecoin, Mysterium, Orchid, etc. to consume all of their unused digital resources for profit and social good. Why would anyone ever want to accept n different payment tokens that they then have to exchange (for a fee and the market spread) back into a common unit of account over a single stablecoin?

It’s a hard question and one that will force new projects to evaluate whether or not their governance and use models require a token. I’m not sure what the correct incentivization/funding mechanism is for projects like Golem and Raiden; it might be the case that their development is just destined for donation-based funding. They are interesting, useful projects that deserve to exist. There’s just no intuitive reason why these projects’ tokens won’t get forked into oblivion, and if they prevent it by remaining closed-source we’re back to pre-blockchain, rent-seeking, exploitative business models. Ideally we’ll come together as a community in following Vitalik’s example and find ways to altruistically fund worthy projects that don’t have Paris Hilton promoting “the next 100x ICO!”.

I think the inconvenient truth is that token sales are a laughably easy way to raise lots of money, even when it makes no sense to have one, and it’s a lot harder to get rich the right way than the easy way.