Na Pepper write this opinion article. E dey for Marketing & Growth team for Alephium
Una good morning and welldone o. How bodi dey? I hope una dey okay. Na the second column article be this from Mr Pepper, Him don write one before. Na Him be the Head of Marketing & Growth for Alephium company. So abeg make we sit down hear wetin him wan talk. Him first article bin dey talk on the danger wey dey inside centralized exchanges, corporate-backed Layer 1s (L1s) wey dem dey build. But for this new op-ed, him come follow that one with more matter about how life and things be for permissionless L1 true true.
Note: Abeg make we carry for mind say the things wey Mr.Pepper talk for this article na the things wey him carry for mind and him own opinions. E no mean say na him be the official position of Alephium. Him na senior for the company.
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“A society dey grow big when old men plant trees wey dem know say dem no go sit for their shade”. This one na parable wey Mr.Pepper quote so that we fit understand wey him dey go for this talk.
By the time you reach the end of this article, this quote go clear well well. You go see wetin him carry for mind true true.
E don tay wey, I don dey talk about the threat of Web2-ism and how big companies dey enter Web3 sharp sharp like Trojan Horse wey fit scatter decentralization. No company dey waste time again. No be only me dey talk am. Many other people wey sabi pass me don join voice for the matter wey dey for ground and them dey enter web3. But as I dey reason this matter, I notice say I don dey focus too much on the ideology and Web3 purity, I come dey forget say plenty people no even come here for beliefs — na money bring them. Na money everybody dey find.
So make we enter the real matter wey carry us come here—economics, philosophy, and all the things wey dey for their domot wey concern the two of them.
After 8 years wey I don dey work inside Web3, I don see say the blockchains wey still concern people today na the ones wey build on foundation wey strong with proper strategy for hand. Those ones wey build on short-term incentives, wey no take their time build wetin make proper sense no too last for market. Unless you wan consider their Twitter/X page wey nothing dey happen or their website wey dey show 404 error messages.
For me, the big difference wey separate the two Layer L1s no dey hard to see. Make we start from there dey explain the matter.
Spotting the Difference
The first simple test wey go make us understand this matter na this question:
“This blockchain economic engine, shey na inflation dey run am or na fees e dey generate?”
Many new L1s wey dey commot for market, especially the ones wey dey use Proof-of-Stake consensus, dey quick quick enter straight to inflation (just be like how price dey rise for market). E dey sweet for crypto casino, so you fit understand why dem dey do am and e dey hard dem to stop. But this choice wey them dey make dey cause serious long-term wahala when you reason financial sustainability.
Alephium don spend four years for the market to make sure say the core foundation dey strong well well, so that for Phase Two, the economics go dey centred around fees and e go also bring deflationary mechanisms join. Na this thing wey I explain now first carry my mind put for Alephium. I know say many of una don dey here before me and una waka dey different from my own; Even though many of una don dey here before me and una journey different from my own, I still dey see better signs for this waka.
I don see one network and team wey wan create scarcity for market (burn tokens and buyback plenty tokens) and dem also wan dey stronger with every transaction wey dem carry out for market ( wey dem go dey reward stakers wey carry their mind put for the network from generated fees). No be many blockchains or coins dey run pure inflation again for the industry, so e make sense to balance things well well.
The Financial Dilution of the Inflationary Model
All of us don see am na; inflation na the most common economic model wey them dey use if you wan secure and reward Layer 1 (and small small Layer 2) projects. This better system dey mint new tokens nyafu nyafu to use am pay validators and stakers. If we wan look at for short term, tye model dey work but for Long term? Na there wahala dey; The thing no make sense at all. If we look this thing well well, na financial dilution dey cause am.
When bear market show nko, the time wey the whole market dey drop? When VCs waka go purse new trend nkor? When other blockchains begin fine pass you nkor? Use
All these inflationary chains wey I dey explain for up dey carry their mind put for constant gbege or hype, fresh money, and for people wey just open new wallet . But for this crypto market wey don choke with plenty plenty competition, that kain attention no easy maintain again, e dey hard.
A Closer Look at the System
For every person or investor wey buy and come dey hold token, the network dey small small add new supply, e no dey make noise. This kain thing dey reduce the value of all the tokens wey people don hold already, e no even matter the kind of adoption, or partnerships, investment, marketing, or utility wey don dey for ground.
Inflation no dey look person face.
If you look am well well, na two things fit happen from this kind situation:
1. E no go last atall (Unsustainability)
2. E go turn to extractive behaviour
Unsustainability
Any project wey dey mint new tokens nyafu nyafu must always dey find new money wey go enter the system, so e fit swallow the extra supply wey dem dey add for people hand. If not, price go fall gbrekete.
This kind matter dey turn to one kain financial Ponzi scheme later on wey depend on new people to enter the system and new money, instead of real value.
Question be say: “Number fit dey go up forever?”
If you look am well well, no be so e dey work.
When new money no dey come again, everything go begin get comma.
This kain model dey push people to pursue short-term money, long-term support no concern them. People go dey farm inflationary rewards, because them go make quick gains like airdrops, staking rewards, Liquidity Pools emissions, all of them. And once e enter their hand, then them go rush sell sharp sharp.
This kind thing dey cause:
► People to rush sell sharp sharp
► More people wey dey sit down dey look wetin dey happen, instead of real users
► People wey no carry their mind put for the network
► Misalignment or Quanta between protocol and community
If L1 security dey carry their mind put for minting tokens anyhow, e don already get comma. E don turn extractive, e no connect with users again, and once hype, the whole Paparazi or demand calm down, e dey scatter sharp sharp. Na big wahala sha.
Credit: @rekktguy
Al#ephium Antidote: The Aligned Ecosystem Loop
Alephium Phase Two “Aligned Economics” fit look like one kain attack against purely inflationary system from outside. But if you look am well well, e true true be like adjustment or better solution. Make we commot the good part from inflation, cement am with deflationary elements. But this kain waka dey only work if your technical foundation strong well well.
Because the company Alephium commot plenty years build solid infrastructure for Phase One wey make sense, the development team fit now commot time create better economic engine wey steady, Kanga, strong, and fit last for long time.
Na this matter we dem dey call the “Aligned Ecosystem Loop”: one better design wey connect token value to real world usage. Wetin this one come mean be say, the network go dey powered by activity, no be by printing more token supply.
So with this solution, you go see say $ALPH go continue to be utility coin as e don always be, help the ecosystem from down down go up, and help the Blockchain last tangar or longer.
Fee Generation vs Inflation
Make we reason am like this: fee generation and inflation no be enemies, them no get any quanta atall. Dem be tools wey you fit use. You fit use one more than the other, e depend on where your blockchain dey for im life cycle.
Make we look am like this: Even Bitcoin dey use the two solutions: fees (fee-generating) and block rewards (inflationary). When Bitcoin come finally finish block rewards, the hope be say him ecosystem don solid gbrekete to dey run on fees alone.
Most new blockchains wey dey commot no get this balance. Dem dey carry their mind put too much for inflation and them no no dey generate enough real fees. Our aim now na to better the fee side on top of normal transaction fees wey don dey before.
1. Fee-Generating, No Be Inflating
Alephium Phase Two get two major pillars:
► The Core dApp (CLMM DEX)
► ALPH staking
The utility wey the company do build dey aim to turn turn come reverse the financial damage wey inflation dey cause. And as e be, e get strong chance say e fit work.
Usage dey fuel deflation:
Every transaction wey dey happen for the Core dApp go generate swap fees. 100% of the fees wey the company people don raise go enter $ALPH buybacks, burns, and staking rewards. This one go create persistent deflation wey go increase value of remaining tokens wey dey for people hand and for market.
PoLW increases scarcity:
Alephium Proof-of-Less-Work (PoLW) consensus go later make network security and fees add even more scarcity. This feature never activate yet. This one mean say: the economic health of Alephium go depend directly to how people dey use am. If you be person wey dey hold $ALPH and you want make the chain make am, nobody go tell you say make you:
► dey use the ecosystem
► dey do more transact
► dey interact with dApps
► and to dey carry your mind put for with long-term vision
This one no be financial advice o — na just how the design be.
2. Your Coin go Become a Productive Asset
For inflationary models matter, if you be person wey dey hold and you no dey use am, you dey lose value.
But for Alephium aligned model matter, if you stake, your coin dey produce better reward.
Yield from real utility:
Fees wey dey commot from the Core dApp na him them go dey redistribute to xALPH stakers. Meaning say: $ALPH no go just be coin wey person dey hold dey use pass time. E go dey earn you yield wey go dey commot from real protocol activity. So people wey dey stake for long-term go dey help naturally support growth because dem dey gain as usage dey increase.
Decentralizing Growth:
This design dey also allow money to support community DAOs and to help grow the ecosystem in a way wey go dey decentralized. By the time wey e don reach 80 years when emissions schedule don change kpatakpta, the team no go even dey around for ground to witness am atall (except Bryan Johnson’s Blueprint work miracle). Dem build this blockchain for today people and for future generations to understand am, use am, and benefit from am.
This complete system dey ensure say as ecosystem dey grow na him:
► liquidity dey strong and dey tanga
► utility dey expand gbrekete.
► and value dey return on hand to long-term believers
Foundation for the Next Century
Remember the quote wey talk say at the beginning? “A society grows great when old men plant trees whose shade they know they shall never sit under.” E clear now, abi?
While corporate L1s companies dey pursue short-term partnerships and quick-moni trends, Alephium dey build something wey go last well well for decades, centuries, and even generations wey go come.
Our first chapter wey we do, don already show say Proof-of-Work fit scale gbrekete, through native sharding and the security-first sUTXO model wey solve the blockchain trilemma before. The second chapter go prove say PoW no just fit scale, e fit sustain gbrekete. We don talk am well well for our communications because na him be the heart of our belief system. I go still dey to tweet am reach tomorrow.
As Alephium company waka choose fee-generating, anti-inflation economic model, dem don create financial structure wey go guarantee long life, security, and proper alignment. This one alone sef fit even be the main difference between project wey only wan shine for market for one bull run season and project wey dem build to survive the next hundred years to come.
For people like me wey dey Web3 space dey run am because we believe for decentralized finance, we believe for person to own him own asset, and we believe for freedom from censorship, and many other values wey make sense; Na Alephium be the correct chain for you.
