Unified Token Model
PreviousUse Case Example: Building a Multi-Layered dApp with XCMNextBuilding a Robust Ecosystem of Service Providers
Last updated
Last updated
A fundamental aspect of Glue's design is the use of a single unified token as the fee token for both the Layer 1 and all Layer 2 solutions within the ecosystem. This unified token model is critical for nurturing collaboration, enhancing efficiency, and optimising the user and developer experience across the entire Glue blockchain.
By using a single unified token for fees across both L1 and all L2s, Glue ensures that the entire ecosystem is aligned towards common goals. This alignment incentivizes collaboration rather than competition among different L2 solutions. For instance, if Glue were to launch a new Solana VM L2, the ecosystem would not be concerned about losing transaction volume from the existing finance EVM chain. The transaction volume that would be more efficient to be executed on the new L2 would merely shift within the ecosystem, utilising the same token, thereby maintaining overall token value and economic stability. This model allows Glue to prioritise the best user experience, the best developer experience, and overall efficiency instead of myopically protecting the turf of the incumbent L2. This model can be expressed as:
Traditionally, L2s have been competitive rather than cooperative. In ecosystems like Polkadot, where different L2s operate with their own tokens, there is little incentive for L2s to bridge effectively or collaborate.
For example, Astar, an L2 on Polkadot, has little interest in being well-bridged to other Polkadot L2s because of competitive dynamics. If users move their transaction volume to another L2, Astar's token value could decrease. This competition discourages interoperability and cooperation, ultimately stifling innovation, and user experience. This model can be expressed as:
When a Layer two is introduced, some transaction volume shifts from the L1 to the L2.
Introducing a competitor L2, which has its own token and volume, in turn will cause volume to shift from both the L1 and the L2.
To cover all bases, coefficient k is introduced that represents the volume and value generated by new users that may have arrived into the ecosystem due to the new L2s that are introduced. However, k only contributes to the totality of the system and does not help alleviate the competitive environment. Meaning, the race to gain as many users as possible, followed by keeping as many users as possible due to the misalignment of the L2s and the L1, since each L2 is trying to maximise its own gains and profitability is inherent in the traditional system.
This competitive environment has undermined the incredible potential of Substrate. The lack of cooperation between L2s has led to fragmented ecosystems where the full benefits of an advanced blockchain technology cannot be realised. Glue's unified token model addresses this issue by aligning the economic interests of all L2s, promoting a cooperative environment where innovation and efficiency can thrive.
Enhanced User Experience: With a single token model, users benefit from a seamless experience across all L2s. They do not need to manage multiple tokens or undergo complex conversion processes when interacting with different parts of the ecosystem. This simplicity enhances user satisfaction and engagement.
Developer Empowerment: Developers can build applications that leverage multiple L2s without worrying about token compatibility issues. This unified approach streamlines the development process and encourages the creation of more sophisticated and integrated dApps.
Economic Stability: A unified token model provides economic stability for the entire ecosystem. Transaction volume shifts within the ecosystem do not impact the overall token value, ensuring a stable and predictable economic environment that benefits all participants.
Efficient Resource Allocation: The unified token model allows Glue to allocate resources more efficiently. Instead of competing for transaction volume, L2s can focus on optimising their specific use cases, leading to a more effective and balanced distribution of workload across the ecosystem.
Incentive Alignment: All participants in the Glue ecosystem, from validators to developers to users, are incentivized to contribute to the ecosystem's success. The unified token model ensures that everyone benefits from improvements and innovations, promoting a collaborative and supportive community.
Simplified Governance: A single token model simplifies governance processes. Decisions that impact the entire ecosystem can be made more straightforwardly, as all stakeholders share a common economic interest. Traditionally, the independent layer 2s run their own governance which may or not be aligned with the L1 governance proposals.
Related information from Glue Network: Governance white paper
