Editing Reputation tokenomics (section)

== Overview ==
Reputation tokenomics is a sub-discipline within general tokenomics, which is a sub-discipline of finance, which is a sub-discipline of economics. Tokenomics is the study of the value of digital tokens in online networks, originally blockchain based. 

There are many valuable blockchains and [[wikipedia:Distributed_hash_table|DHT]] networks holding digital financial tokens that fall under the domain of interest for tokenomics. Currently, the digital tokens of greatest value and interest are Bitcoin, ETH, and the sub-tokens of Ethereum, typically fungible ERC-20 tokens<ref>Fabian Vogelsteller & Vitalik Buterin, "[https://eips.ethereum.org/EIPS/eip-20 ERC-20: Token Standard]" (2015 November 19) ''Ethereum Improvement Proposals''. Retrieved 2023 April 7.</ref> representing ownership of DAOs and non-fungible ERC-721 tokens<ref>William Entriken, Dieter Shirley, Jacob Evans & Natassia Sachs, "[https://eips.ethereum.org/EIPS/eip-721 EIP-721: Non-Fungible Token Standard]" (2018) ''Ethereum Improvement Proposals''. Retrieved 2023, April 7.</ref>, called NFTs, representing ownership of individual properties. 

These tokens fall under the financial instrument categories of [https://www.investopedia.com/terms/e/equitymarket.asp equities], [https://www.investopedia.com/terms/s/security.asp securities], [https://www.investopedia.com/terms/c/commodity.asp commodities], [https://worldcoin.org/articles/what-is-a-utility-token utilities], and [[wikipedia:Derivative_(finance)|derivatives]]. However, most current tokens are combinations of these types. For example, the basic token of the Ethereum network, ETH, confers on its owner the power of using the network for information storage, processing, and transmission, because ETH is used to pay the network to run smart contracts. Therefore, the argument usually made to securities regulators is that ETH is a utility token. However, ETH has also been used in the past to make [https://ethereum.org/en/governance/#who-is-involved governance decisions].<ref>https://ethereum.org/en/governance/#who-is-involved Retrieved 2023, April 7.</ref> Therefore ETH also has some properties of an equity in the quasi-corporation that is the Ethereum network. ETH also has some aspects of a security, since the governance design has chosen to limit the quantity of ETH in the hopes that it will grow in value. 

There is an active legal argument concerning what type of financial instruments these tokens represent for the purposes of national and international regulation. However, since Ethereum is not centrally incorporated, its governance is not structured like any traditional corporation. Therefore its regulation arguably falls outside the scope of the SEC in the US or the ESMA in Europe. (''Main article: [[Legal regulatory issues for DAOs]].'') The ownership of Ethereum is certainly international and arguably supranational.

REP tokens under DGF similarly overlap these financial categories. They are utilities in that they confer the power to obtain work through the [[availability smart contract]]. They may be equities if they are the type of REP that confers power over governance in the DAO. Our primary concern in reputation tokenomics is analyzing a REP token's value as a security. REP tokens have the quality of securities in the sense that they are a type of [[wikipedia:Annuity|annuity]], since they hold claim over any future fees the DAO earns through the [[Validation Pool#REP salary|REP salary]]. Though REP tokens are not a typical annuity, since they pay out at random, when the DAO attracts outside fees.