The CRD Network is the future of finance and its Token will be key for this, find out more about how it’s managed.
The CRD Token and the CRD Network are a unique financial ecosystem, unlike other blockchain projects out there. As such, a lot of people try to transpose their preexisting knowledge about blockchain projects into the CRD Network environment, which leads to some misunderstandings about how we function and what we’re trying to achieve.
Today we will be addressing some of these common misunderstandings about the CRD Network.
Why are the CRD Tokens pre-minted?
The CRD Token is pre-minted to its theoretical limit of 1bn CRD as it is primarily a utility token that allows you to operate in the CRD Network DeFi environment. Given that the token’s long term planned price evolution is to eventually match the relative value of a stable and pre-determined asset, such as the euro, the governance board has to act like a central bank to guide this price development.
In other words, management needs to have the freedom to make policy decisions to increase or decrease the available supply of CRD to affect its price evolution, and thus token availability being subject to a mining function would reduce this necessary flexibility. Nevertheless, any CRD disbursement is subject to the “Dev Fund Policy”.
Isn’t pre-minting the CRD Tokens bad?
When first reading about the CRD Network, the pre-minted tokens to their theoretical limit of 1bn CRD is typically what raises an eyebrow. However, there is a good reason why this was done.
Unlike other cryptocurrencies out there, the CRD Network blockchain isn’t solely designed to operate as a settlement mechanism for transactions. We have ambitions to create a DeFi community that adopts novel and interesting use cases, as each new application strengthens the network through agglomeration and network effects.
In other words, given that the CRD Network is to occasionally be utilized as a bootstrapping mechanism for promising FinTech projects, we wish to tactically deploy capital to help them. The chief concern for the governance committees in the CRD Network is to increase use cases while reaching and maintaining our target price of 1 CRD = 1 EUR.
However, it is understandable that there might be some initial trepidation, as this business model is quite unlike what you see in the major cryptos, such as BitCoin or Ethereum. To address these concerns, we have created strict operational procedures that bind us to best practices. As such, any disbursement of the wallets that store CRD Tokens is subject to the “Dev Fund Policy”.
Where are the CRD Tokens stored?
Most CRD tokens are not active in the network marketplace and instead are stored in a series of wallets with specific disbursement policies and differing wallet sizes. However, their different purposes are covered by the “Dev Fund Policy”.
The bulk of the tokens stored in these wallets are not likely to be utilized in the foreseeable future. Furthermore, some wallets are even soft-locked to ensure there is never the risk of flooding the market with too big of a supply of CRD Tokens.
What is the long term utility of the CRD?
The CRD Token is primarily a utility token that allows you to access the various apps and functionalities built and executed on the CRD Network. As such, stability and price predictability are one of our chief concerns, given that any fluctuations in price could affect the operability and profitability of the various projects in development and in operation on the CRD Network.
Consequently, we intend for the CRD Token to appreciate through induced scarcity, and scaling up the network’s functionality, until it reaches the planned price parity between the euro. After which, governance policies will be introduced to maintain this ratio via active management.
Given that the CRD Network can also operate as a startup incubator, we reserve the right to tactically deploy funds to increase the network’s use cases. Because of this, the CRD Token is not a stablecoin, though it has aspirations of behaving like one unless our operating protocols decide that we ought to look for a more beneficial price point.
Chiefly though, we want to create an environment where people can deploy DeFi apps without concerns over major internal price fluctuations.
How do CRD Tokens get distributed through the system?
Typical cryptocurrencies primarily distribute the coins through their mining procedures, as this mechanism randomly distributes coins to miners, who will then utilize it in the market to pay for goods and services.
That said, the CRD Token has been pre-minted to its theoretical maximum of 1bn CRD, and the minting function is disabled. As such, no new CRD Tokens will exist beyond those that are presently available.
Consequently, the question then becomes how they’re distributed to the wider community from the wallets they’re presently stored in. This is mainly done via three ways:
- Liquidity & Stability pools and other reward programs — Users who aid in the functioning of the network’s operations, either as node validators, ensuring the CRDs’ convertibility to other currencies (fiat and crypto), as well as participating in other programs that help in the long term goals of the community will receive CRD in recompense.
- Bootstrapping capital for DeFi projects — Developers with interesting projects will be given CRD as seed capital to deploy these functionalities on the network.
- Financial Instruments — Loans, margins, and other such payments from financial instruments deployed on the CRD Network are CRD-denominated and so may be provided in said currency.
How does the availability of CRD Tokens get reduced?
The CRD Network does not possess a “token burning” feature, in that it doesn’t permanently eliminate CRD Tokens from network use. Nevertheless, it does have the ability to limit the available supply if the need arises.
It can do so via two main mechanisms:
- Reducing the outflow from the wallets that store the bulk of the CRD Tokens by diminishing the percentage it pays to the various programs.
- Increasing the fees incurred by network participants.
These are the primary monetary policies that the CRD Network’s governance committees have available to reduce the availability of CRD Tokens and thereby induce scarcity.
Nevertheless, these policies must be deployed with the utmost care, as if incorrectly deployed they have harsh consequences:
- Reducing CRD Token availability can restrict network growth and increase the operational price for existing developers to unsustainable levels.
- Increasing fees could diminish the usage of the network and might thus accidentally reduce the CRD revenue that was intended to be collected in the first place.
In other words, any execution of these policies must be done with the utmost care, so as to not jeopardize the careful economic balance that has been established.