1 Token economy
Token economies are data-driven, multiscale, adaptive, and dynamic peer-to-peer economic systems enabled by a blockchain.These systems use cryptographic tokens as information carriers, allowing for economic activities to emerge on top of a shared distributed ledger technology (DLT) enabled infrastructure such as blockchain. DLT creates the conditions for a digital economic game with enforced state-space restrictions, by providing a tamper-proof universal state layer.
2 Impact bond
A social impact bond is a type of bond where repayment to investors is contingent on the bond's success in achieving certain pre-specified social impact objectives.
3 Bonding curve
Token Bonding Curves are continuous liquidity mechanisms which are used in market design for cryptographically-supported token economies whereby tokens are automatically issued using buy and sell functions. Academic literature increasingly refers to bonding curves as "configuration spaces" as Bonding Curves are part of a larger theory of scalar functions that remain invariant under legal changes in state.
4 Claim
Claims are submitted by project participants to report impact or progress towards achieving the project's predetermined outcomes. The claim mechanism involves the lifecycle of claims. Claims undergo the stages of submission, evaluation, audit, and resolution. Claims Submission: claims are submitted to prove impact or progress towards achieving the project's predetermined outcomes. Claim Evaluation: submitted claims go through a process of evaluation to verify their validity. Claim Auditing: submitted claims may be audited. Claim Resolution: claims are resolved and completed. During resolution, a dispute could be submitted which would result in subsequent dispute evaluation and resolution.
5 Dispute
Disputes are submitted to dispute the resolution of a claim4.
6 State space
Set of all possible configurations of a system. It is a useful abstraction for reasoning about the behavior of a given system and is widely used in the fields of artificial intelligence and game theory. May be interpreted as that collection of variables which serve to define the system at any point in time.
7 Action space
The set represents the set of feasible actions, given agent a’s local state space
, and the global state
.
8 Configuration space
The reachable state space. The configuration space describes the allowable state and action space available to agents acting within a system, given its conservation laws. It is a subset of a system's (global) state space, representing all achievable states under the designed mechanisms. Any global properties that are true for all points in the configuration space are true for all possible sequences of actions on the part of agents. It is a manifold characterized by the enforced conservation of one or more desired global properties. The configuration space serves the role of enforcing desirable macro-economic properties, while retaining sufficient degrees of freedom for the agents at the micro level to act according to their own private preferences.
9 Markov chain
A Markov chain is a stochastic model describing a sequence of possible events in which the probability of each event depends only on the state attained in the previous event. In continuous-time, it is known as a Markov process. Markov processes are the basis for general stochastic simulation methods known as Markov chain Monte Carlo.
10 Portfolio
An investment portfolio consisting of multiple bonds picked by an investor, based on their preferences, evaluated on their risk/return ratio.
11 Bond-to-mint
The bond-to-mint mechanism mints bond tokens in exchange of external currency through an agent’s action . The agent’s action represents a transaction to transfer
quantity of external currency into the bonding curve system.
12 Burn-to-withdraw
The burn-to-withdraw mechanism removes bond tokens to redeem external currency through an agent’s action . The agent’s action represents a transaction to remove
quantity of bond tokens from the bonding curve system.
13 Attestation
Attestations are the act of bonding tokens either towards the success or failure of the project in the risk prediction mechanism, which adjusts the alpha parameter upwards or downwards accordingly.
14 Pre-initialization Phase
The pre-initialization phase is meant to represent all of the activities that occur prior to launch of the bond. This includes all of the prior planning and setup. It includes agreements, expectations, obligations, decisions around bond parameters, initial conditions, payment conditions, roles and rights of stakeholders, et al. During the pre-initialization phase, the bond is set up with an associated wallet and repository and all bond participants are identified with digital IDs, public keys, and credentials. All investments including funding as well as resources, materials, and equipment are agreed upon. At the end of this phase, the bond should be for all intents and purposes ready to launch.
15 Initialization Phase
During the Initialization Phase, the bond is launched. All of the parameters, roles and rights, thresholds, conditions, etc. are set. All funds as agreed upon are deposited in appropriate accounts. Initialization is essentially the instantiation of everything that was agreed upon in pre-initialization.
16 Execution Phase
The execution phase is the phase where active bond trading occurs.
17 Dispute Pause Phase
In the Dispute Pause Phase, disputes issued against the bond will undergo external resolution. During this state, all system activity except those directly involved in dispute resolution is paused.
18 Settlement Consideration Pause Phase
In this phase, the bond is evaluated against the Settlement Conditions for success or failure. Similar to the Dispute Pause Phase, all system activity other than settlement consideration activity is paused during this phase. A detailed view of the Settlement process is shown here.
19 Settlement Phase
During the Settlement Phase, bond tokens are converted into a compatible form and are distributed to the participants in the bond along with any outcomes payments based on the project's success.
20 Impact Token
Impact tokens are community tokens in the ixo ecosystem. They represent social impact achievements and may be awarded at various points to various stakeholders especially at a project's completion. These tokens are considered external to the bonding curve implementation and are intentionally excluded from mention as much as possible to avoid confusion.
21 Bond Token
Bond tokens are the supply tokens35. At time , the local state of agent
comprises of the individual holding of bond tokens,
.
22 Operational Requirement 1
Trader Agents can call the Bond Action and the Burn Action.
23 Operational Requirement 2
An agent which is able to execute the *Bond-to-Mint* or *Burn-to-Withdraw* mechanisms - such as Trader Agents - must not be involved in the Claim Evaluation, Claim Auditing, and Claim Resolution stages of the *Claim* mechanism as this creates a conflict of interest.
24 Operational Requirement 3
Claim & Dispute Issuers call the SubmitClaim Action or SubmitDispute Action.
25 Operational Requirement 4
Claim & Dispute Issuers are explicity excluded from having the ability to call EvaluateClaim Action, AuditClaim Action, or ResolveClaim Action. It would produce a conflict of interest if those that issue claims and disputes could also participate in evaluating, auditing, or resolving them.
26 Operational Requirement 5
Evaluators can call the EvaluateClaim Action, AuditClaim Action, or ResolveClaim Action to process Claims, or the EvaluateDispute Action or ResolveDispute Action to process Disputes.
27 Operational Requirement 6
Agents involved in the Claim Evaluation, Claim Auditing, and Claim Resolution stages of the *Claim* mechanism, such as Claim & Dispute Evaluators, are explictly excluded from holding or trading bond tokens as it results in a conflict of interest.
28 ProjectTime
The ProjectTime state variable describes the duration for which the project has been in the Execution phase.
29 ProjectTime Threshold
The ProjectTime Threshold describes the maximum allowable duration for a project's Execution phase.
30 ClaimsSubmitted
The ClaimsSubmitted state variable describes the number of claims submitted towards the project during its Execution phase. Claims submitted demonstrate the project's progress towards achieving the predetermined outcomes.
31 ClaimsSubmitted Threshold
The ClaimsSubmitted Threshold describes the minimum number of claims required to be collected during the project's Execution phase.
32 Alpha (state variable)
The Alpha state variable is an estimate of the probability of project success. It is represented normalized such that
indicates that the project is estimated to fail, and
indicates the highest likelhood of success.
33 Alpha Threshold
The Alpha Threshold is describes the minimum alpha value required for the settlement to be successful. At initialization,
is set to a real value between 0 and 1
34 Reserve Funds
The reserve . at time
is the total quantity of external currency bonded to the bonding curve contract.
At time , each agent
possess their holding of reserve currency, denoted by
.
35 Supply Tokens
The supply at time
is the total quantity of bond tokens21 issued by the bonding curve contract.
At time , the local state of agent
comprises of the individual holding of bond tokens,
.
36 Project Success Attestation Supply Tokens
Supply (bond tokens) that are bonded to attest that the project will succeed.
37 Project Failure Attestation Supply Tokens
Supply (bond tokens) that are bonded to attest that the project will fail.
38 Reserve Ratio
The Reserve Ratio of a bond is the ratio of the value that is bonded to the bonding curve reserve to the total value of bond tokens issued (price * value of one bond token). The Reserve Ratio is determined by the curvature of the bonding curve
, and is given by
39 Price
The price signal at time
is an estimate of the value of the bond token, in units of
per units of
.
40 Outcomes Payer's Commitment
Outcomes Payer's commitment of a set amount of external currency that they will pay out during the Settlement Phase conditioned on one or many state variables, typically . The outcomes payer's commitment
is set during the Initialization Phase. The bond terms set during Initialization outline all
pairs, and remain constant through the following phases.
is known to all agents after the Initialization phase.
41 Initialization Conditions
Criteria specified at the Initialization Phase which need to be met for the state to transition into the Execution phase. In the bonding curve use case, the initialization conditions are also referred to as launch conditions.
42 Settlement Conditions
Conditions that need to be achieved by the bond during the Execution Phase for a bond to be considered successful.
43 Conservation Function
The bonding curve conservation function describes a conserved quantity, which is a functional relationship between the reserve and supply tokens.
This conservation function imposed over the bonding curve ensures that the price of the token reflects the amount invested into projects in the platform, thus preventing imbalances through incentive design.
44 Project Operating Funds
Funds that are available to execute the project. These funds would be used for example to pay for goods and services. Upon launch of the bond, a portion of funds raised from investors goes towards the Project Operating Funds and a portion goes to the Reserve Funds34 to provide liquidity to the bonding curve.
45 Fund Fee
A fee charged that goes directly into the Project Operating Funds44.
46 System Requirement
System requirements are all of the requirements at the system level that describe the functions which the system as a whole should fulfill to satisfy the stakeholder needs and requirements, and is expressed in an appropriate combination of textual statements, views, and non-functional requirements; the latter expressing the levels of safety, security, reliability, etc., that will be necessary.
47 Functional Requirement
Functional requirements describe qualitatively the system functions or tasks to be performed in operation. Generally, Functional Requirements can be thought of as requirements more from the perspective of the "system plant" itself and how it functions.
48 Operational Requirement
Operational requirements define the operational conditions or properties that are required for the system to operate or exist. This type of requirement includes: human factors, ergonomics, availability, maintainability, reliability, and security. Generally, Operational Requirements can be thought of as requirements more from the perspective of the (agent) operation of the system.
49 System Boundary
The system boundary is a conceptual line that divides the system that you want to study from 'everything else'.