How the Economics of the $OST Token Drive Dapp Development and Growth

The design of the Open Simple Token (OST) is premised on just that: openness and simplicity

The OST token is uniquely designed to spur development and grow a network of crypto-powered apps whose individual success benefits the entire ecosystem. It incentivizes communities to adopt and use the token by making it as easy as possible to develop custom app tokens whose value is backed by the value of the $OST token, creating space for an almost unlimited number of cryptocurrency use cases.

OST technology supports the development of app tokens through staking. In this way, app tokens are backed by a shared guarantor and the success of one benefits all. Essential, constructive behavior on the part of network validators is incentivized through staking as well. Ultimately, the vision is for the widespread adoption of many different, useful app tokens that share a common foundation of support in OST technology.

Staking to Build an App: OST Goes In, Pepo Comes Out

More and more people are sharing content on apps like Pepo, where creators are rewarded with OST-backed Pepo Coins instead of just likes. It’s not only Pepo — OST technology enables builders to create tokens that can be integrated into any app. In order to establish value for these Layer 2 tokens, the OpenST Protocol lets developers stake value in OST on Layer 1. This means the value staked on Layer 1 is mapped with the new app tokens being created on Layer 2. Simply put, OST goes in on one side, and out comes a Pepo on the other side.

The tokens are locked in a smart contract on Layer 1. Holders of an app token like Pepo own an OST by virtue of holding a Pepo coin; the latter is always backed by the former. This doesn’t mean the exchange rate has to be 1:1; for example, the LGBT token is backed by OST at a ratio of 10:1.

Because all the Layer 2 tokens are backed by OST at their respective fixed rates of exchange, they always have the same value relative to one another. They rise or fall synchronously. That means that the success of any individual app built on OST benefits the entire ecosystem. And the more people build their own apps and tokens on OST, the more the utility of these coins should drive adoption. This is already happening. OST recently experienced its own kind of “flippening” where there are now more holders of tokens created using OST protocols than holders of the underlying OST currency itself.

Rewarding Validators in OST

The OST network relies on participants known as Validators to confirm and “seal” transactions. To provide adequate incentives, the network rewards certain participants in OST for validating transactions on Layer 2 blockchains in the network. The second step is to seal the transaction, which took place in a dapp on Layer 2, on Layer 1. For this, OST uses a Proof-of-Stake mechanism within a new protocol called Mosaic. Validators sealing transactions on Mosaic are required to stake OST in order to perform their function and be rewarded. Enough OST must be staked to reasonably ensure good behavior — say, $10,000 worth — so there is adequate disincentive for destructive behavior.

Further details on the Mosaic protocol Proof of Stake economics for 3rd party validators and sealers is set to be released in Q2 2020 (possibly) as more 3rd parties are brought onto the network.

A Token Ecosystem Driven by Builders and Users

Anyone can create a custom token backed by Ost technology and the $OST token, by staking. For example, the Pepo economy started by staking 10 million OST to create ~$100,000 worth of Pepo Coins at launch, with the app giving each new user 500 Pepo — equivalent to $5. OST’s token economics are premised on this type of staking of tokens to create derivative app coins like Pepo and LGBT. You can’t make a Pepo without an OST.

Of course, all tokens created by staking OST serve different purposes in their respective apps. But collectively, they also comprise the OST ecosystem. As more people acquire and use the various app tokens — in order to like videos on Pepo, for instance — overall OST adoption also grows, but organically. OST is not intended as a speculative asset — it drives real use cases. OST is designed to empower builders to create tokens that lead to better products.
Supply, Demand, and a Finite Number of Tokens

There will only ever be 800 million OST — that finite supply is fixed in the Simple Token smart contract and can never be changed. 20 million of those 800 millions OST is now locked in Pepo smart contracts, held by users of the Pepo app to reward each other for sharing content. Laws of supply and demand render the remaining token supply a sort of Zeno’s Paradox. The fewer tokens remain outstanding, the higher the value of each token is likely to be. This means creators can inject the same real value into a dapp with a much lower number of absolute tokens, allowing for virtually indefinite ecosystem growth.

OST Team Aims to Be Lifelong (Crypto) Learners

The OST team is continually learning and improving this young & powerful technology. On Pepo, Ost’s CEO Jason has discussed the tokenomics of the app and of the broader OST ecosystem. OST is built on the principle of mutual growth and reinforcement. The more builders decide to develop apps on OST, the more people use those tokens for their specific purposes, the more robust the entire ecosystem will become.

OST Token Value and Why I Included it in My Portfolio

With the strong foundation the team laid out (building for more than four years now), OST project is set to have an amazing 2020 and beyond, in my opinion. Many companies will eventually start building using OST technology and the demand for $OST will exceed the supply.

In addition to Bitcoin, Ethereum, BNB, and Tezos, I HODL $OST tokens.

Currently, $OST is around $0.011 on CMC with previous ATH of $1.47 USD (Jan 11, 2018). You could trade it on Binance, UpBit, Huobi, Bittrex, Kyber, Gate.io and others. Not an investment advice. Just an opinion.

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