The true disruptive power of crypto is difficult to comprehend — full understanding often stems from a sequence of small epiphanies. You and I are experiencing them daily. There is a core theme to disruption-via-cryptocurrency mindset, involving endless applications and a multitude of industries; it cannot be taken lightly. Crypto unlocks new, previously impossible behavioral incentives and modes of value creation. The examples are abundant.

Regarding Matryx

When introducing Matryx (Nanome’s blockchain product) and our team’s ambition, I reference the lack of collaboration between amateurs and professionals in the pharmaceutical industry. Matryx is designed to maintain the spirit of competition and unlock the power of collaboration in tackling global problems. If a Zika Virus 2.0 hit the population, NGOs, Non-profits, and the National Science Foundation (NSF) could place multiple cash bounties for a drug solution. The first institution to develop this solution through R&D and clinical trials could see a multimillion-dollar payout. While institutionally-backed tournaments for drug development sound like a nice idea, many factors prevent them from becoming a reality. Today, entities are incentivized to HODL (sic) their data from other institutions, slowing the discovery process. Often, a company may exhibit strength in only one portion of the discovery process while another with a different core competency could accelerate other aspects of development. Yet competitors seldom share insights, given a lack of economic incentives, and innovation is slowed dramatically.

Say Pharma Company A excels in identifying target proteins and Pharma Company B is amazing at creating small molecules for binding. These are two different and complementary steps of the drug discovery process. Pharma Company A & B have no reason to take the optimal collaborative route thanks to the winner-takes-all grant process. Currently, shared and complex intellectual property (IP) like drug development is difficult to define and track…and it’s not just enterprise: individual scientists and hobbyists viciously defend their data, as well.

With Matryx, we aim to tackle crowdsourced science by tracking contributions and providing decentralized governance for attribution. As our CEO Steve McCloskey says, “we’re tracking and monetizing economic production from the atom up.”

Programmable Tokens and Oracle Systems: Basics

While the Matryx team has identified key areas where incentivization mechanisms can be useful, the application of these rely on a combination of Programmable Tokens and Oracle Systems.

Programmable Tokens

The core capability of digital currencies on Turing-complete systems (like Ethereum) is often overlooked. Engineers regularly deploy programmable ERC20 standard tokens on Ethereum Virtual Machine (EVM), bootstrapping small economies around these tokens through ICOs or Token Sales and non-traditional funding routes. At the end of the day, a token is a pile of code that can be functionally and arbitrarily changed before deployment. With Matryx, we have the theoretical power to program monetary policy directly into the MTX token. If a token sale fundraising threshold is too low at the end of the sale, the team can manually or automatically “burn” unsold tokens and reduce total supply. A token “burn” is when unsold tokens are sent to verifiably inaccessible Ethereum addresses effectively taking those tokens out of circulation and decreasing to the total circulating supply. While this example is common, there are many far stranger and interesting ones.

Token Complexity Example

Token contract A has issued 70,000,000 of 100,000,000 authorized tokens. The remaining, uncirculated 30% of authorized tokens will not be released or executed by the contract until one of a variety of conditions are met: a) the company hits milestones set forth in its White Paper, b) token transfers meet a certain threshold volume or c) some other triggered response unlocks these tokens, creating a larger circulating supply affecting the immediate token value. Token A is a common and sophisticated example of on-chain monetary governance.

Oracle Systems

Oracle systems present an interesting thought experiment: how can data from the outside world be safely used to inform the operations of a smart contract? Oracles are API connected extensions for Smart Contracts to use off-chain data. To expand, Web 3.0 will need real-world data to inform contracts and governance, and oracles will play a large role in providing this. For instance, if you’re betting on a horse race via a smart contract, an oracle will pull the data from the racing organization with the real winner. If you’re selling your home via smart contract escrow, the City Government Office will need to provide real data to the network. Just like traditional ones, decentralized applications need real-world data.

With oracles and programmable tokens in mind, token smart contracts (ERC20, ERC721, etc.) start to make more sense. They can respond to off-chain data and real-world APIs. Monetarily, this capacity is crucial to disruption-by-crypto…

Nanome CEO, Steve, piqued my curiosity to dive deeper into behavior incentivization when he spoke at UC San Diego’s Blockchain forum alongside Edge CEO Paul Puey and myself. Steve had mentioned an interesting idea surrounding Venezuela’s president Nicolas Maduro creation of the Petro, a token backed by national oil to combat hyper-inflation on the Bolivar, Venezuela’s national currency.

Introducing Petro

Steve explained that the market cap of the Petro actually represents the future value of oil in reserves. Maduro never clarified what happens to the Petro when the last of the oil is extracted and sold. Will Petro token holders receive a dividend of oil profits? Or could they claim the oil in the ground and hold or sell it? This brought me to a takeaway:

If the Petro is an asset representing untouched oil reserves, HODLing Petro is the same as keeping oil in the ground.

Petro incentivizes sustainability, perhaps even better than carbon credits. While carbon credits quantify and restrict emissions, they do not directly incentivize strict conservation. The Petro may be a superb economic mechanism method with serious ethical implications depending on how the Venezuelan government handles the sale of oil reserves and upholds their idea of oil asset ownership through the Petro token.

As fossil fuels increase in value, the average Petro holder will see their currency deflate with no incentive to sell. If fossil fuels decrease in value, non-profits and international NGOs may have an opportunity to purchase and hold Petro tokens, effectively preserving the environment and reducing greenhouse gases across borders. Petro is an incredible experiment that has yet to be proven, and I hope the implemented outcome potential can be used across the world as a new way to conserve environments.