Vether is an experiment in digital scarcity on Ethereum. Digital scarcity doesn't just refer to an asset having a finite supply or emission, more-so it is about distribution: how to distribute it to as many people as possible without eroding its value.
**PoW**
In a Proof-of-Work network the asset is emitted to those who contribute computational power. That power is purchased out-of-band and the asset is emitted in return for proving having made a computation. The difficulty is adjusted in response to increases of resource commitment. Capital is continually expended in order to maintain the ability to acquire newly minted assets. Thus it can be said that those assets are acquired "at-cost".
**PoW-like**
Merkle grinding (
https://multicoin.capital/2018/11/09/new-models-for-token-distribution/) was an experimental method to give out assets in return for a computational proof. 0xBitcoin (
https://0xbitcoin.org) is another asset that was emitted in return for a PoW scheme on Ethereum. However the problems with PoW or PoW-like schemes is the subset of users who can participate is limited to those who can run a client on a physical machine and consume physical energy.
**Capital-based**
An alternative is to consider that capital itself is finite, and that it can be consumed when acquiring a new asset - aka the ICO model. Theoretically this sounds fine (distribute the asset in return for capital), but that capital is spent elsewhere - so it is value-dilutive. As an example, if $15m was collected for a new asset, then there is now $15m in token value and $15m in the original ICO funds. How can the additional $15m be justified? Value can't be created in that manner.
Additionally, ICOs typically had founder tokens (advisor, reserve, marketing etc etc), and these tokens are distributed at significant mark-down. This further eroded the ability for the asset to have value integrity and the number of assets in -90%+ drawdowns is testament to the poor ability of these assets to retain value.
**Airdrops**
Airdrops give out assets for free, and are a poor model since if no value is committed for an asset it is difficult for it to attain a monetary premium.
**Proof-of-Value**
Proof-of-Value is an experiment in asset distribution. Vether, which implements PoV, begins with a supply of 0 and a value of $0.00. Every day, any user can acquire newly minted Vether by provably burning value. Instead of $1 being sent to an ICO address, the $1 is forever burnt. The emitted Vether then has a cost (and perceived value) of $1 much more convincingly than an ICO token.
If Vether attains a monetary premium then the daily burn of value will equal the daily emission of asset. Ie, if Vether has a market value of $1, and 100 is to be emitted, then the amount of capital burnt will equal <$100. If the market cannot support $100 of Vether being sold, then it will settle on a new price. This will cause Vether to settle to an equilibrium of its true market price much quicker and sustainably.
This phenomena was observed during the 350-day EOS crowdsale, where every day 10-30k Ether was consumed by the contract and sold on Bitfinex markets. The Bitfinex market was able to absorb the selling pressure and the price of EOS was very stable throughout (in terms of ETH). However the use of EOS funds is questionable. Will $4bn be 100% consumed to benefit the ecosystem or will it in turn be value-dilutive?
In terms of accessibility, Vether can consume most assets on Ethereum, (Eth and ERC-20 tokens with/without markets) so is an extremely accessible asset. All that is required is an Ethereum wallet with assets on it.
**Liquidity**
It is important for Vether to have liquidity in order to allow faster price-discovery. Accordingly, a liquidity pool will be bootstrapped on UniSwap and its price discovery will be encouraged. Thus, any holder of Vether can exit or enter at any price the market can support.
**Future Plans**
Vether has a long (10 year) emission schedule and thus has sufficient time to converge to a fair price. Vether will be a unique asset, one in which anyone can fairly acquire and nobody can unfairly benefit. It should have a much more stable price than most other assets and thus is suitable for a variety of use-cases that require price-stability. Two immediate use cases are:
1) Liquidity Asset
2) Debt Asset
These two use-cases will be activated in a later Era.
- ss
