Shuffle Monster

an experimental ERC20, fuel for emerging tokenomics.

The Ethereum ecosystem is full of ERC20 tokens, and most of these tokens belong to projects and companies that aim to provide a service or create a network. The end goal is always the same; to create programmable money, defined as “a cryptocurrency that is governed by automated rules, systems, and can stand by itself without any central entity controlling it.

These tokens represent a “share” of the product, which are, more often than not, used only for transferring value through a system. The only requirement, therefore, is the ability to move tokens, hence most tokens are just that, a transferable balance.

Needless to say, there are exceptions to the rule. For example, MakerDAO use tokens to manage a complex system and create a stablecoin, Compound use tokens to represent a live lending position, and Uniswap use tokens to describe the participation on a shared liquidity pool; and there are more playful examples. For instance, Wednesday Coin creates an ERC20 only transferable during a “Wednesday”, and BOMB token destroys itself on each transfer, just to name a few.

At the end of the day, these projects remain the outliers, and most of the time, tokens are used only for transferring value. Still and all, they’re only a “spiced up” ERC20 with extra properties and characteristics. The application is usually built on a separate layer on top of the token, making the token dispensable.

Shuffle Monster takes a different approach, instead of creating an ERC20 and then building an application that uses the token, we’ve developed a token that is the application! Here’s how it works…

On each transfer of SHUF token, two things happen:

1% of the transferred value goes to a randomly picked address of the top 512 holders, creating a hybrid of a never-ending lottery ticket and a stacking mechanism.

1% of the tokens are burned (destroyed forever), decreasing the circulating supply and thus increasing the value of the remaining tokens, rewarding all the qualifying token holders equally.

The Heap

The most distinctive characteristic of Shuffle Monster is the 1% transaction shuffle. On each transaction, 1% of the transferred SHUF is rerouted to a random SHUF holder, within a limited pool containing only the top 512 holders.

Transferring 1000 SHUF

This feature requires us to maintain a publicly accessible list of all addresses with enough SHUF to be on the top 512. This is simple enough; in order to execute it using smart contracts, we use the most efficient data structure for the job — in this case, a “Heap”.

“The Heap” is the data structure used to keep track of the 512 top SHUF holders. When an address transfers its balance and drops out of “the Heap”, it’s no longer eligible to receive random transaction shuffles.

The shuffle reward is always assigned randomly; regardless of whether an address contains 50000 SHUF or 1000 SHUF, if it’s on “the Heap”, it has the same chances of receiving rewards.

Emerging tokenomics

The rules governing the behavior of Shuffle Monster token are fuel for complex and unpredictable emerging tokenomics.

One of the first unusual behaviors to emerge was users splitting their token stack into multiple wallets. This may be a wise move, given that there is an equal chance of receiving a reward regardless of whether an address holds 50000 SHUF or 1000 SHUF (so long as it is in the top 512 SHUF wallets). This redistribution encourages transactions, and therefore generates more token burn, and more rewards for “the Heap”.

This wallet splitting behavior also leads to the next unique tokenomic phenomenon, Heap Wars. Each time a user deposits enough SHUF into a new wallet, they “kick out” another SHUF wallet from “the Heap”. This constant competition in the heap forces holders to keep moving and adding to their stack, in order to maximize their spots on “the Heap”. This encourages further burning and reward distribution.

Merging and splitting of balances

So, when is it a good idea to spread tokens? Given that each transfer takes a 2% fee, wallet splitting only makes sense if the required transfer fees don’t cost more than the expected rewards. This may lead to some temporary stalling on the Heap, but as the Heap stalls, it becomes more accessible to new users, keeping the feedback loop alive and flowing.

All these tokenomics are only theories; the goal of the Shuffle Token is to discover what happens; we don’t have any precedent to predict how the Heap will behave. An infinite number of factors and participants should be taken into account, ranging from speculators and exchanges to holders.