How KIN/ BITS can come out on top

(Or, break it so you can fix it)

I’ll keep this short and sweet, with the intention of bringing up more discussions and ideas on what KIN or BITs can do next to maximise their chances of success.

In case you missed it, Code’s announcement to fork Kin and rebrand/ re-strategize brought a storm of debate between the Kin Foundation and the founders of Code.

The reasons behind the fork or the friction within the foundation are not as critical as “What next”. Solutions can never be found in the past, and it is only by looking forward we are able to move forward.

However, the past does hold valuable lessons that Kin or BITS (or both) can take.

Kin’s glaring problem (Inflation)

Kin succeeded in a lot of ways and its core mission to bring cryptocurrency to the masses, in a simple to understand way has been wildly successful, given it is the most used cryptocurrency in the world.

However, here is where Kin / Kik went wrong.

For brevity, we’ll leave out the legal, business and technical details of what made this incredibly hard to achieve. Suffice to say, Kik did not prove a business model. Apps adopted their own.

The current business model adopted by apps using Kin leads to:

1. Short term gains for the apps (sell Kin to cover costs and profit)
2. Long term side effect of inflation (KRE inflates faster than Kin bought from the market)

Kin had hoped this inflation would be offset with time by:

1. Increasing the number of apps to soak up the inflation
2. Reducing the KRE rewards over time
3. “Value by association” — Kin’s price grows with faith

The problem is that:

1. Legal issues affected the value by association
2. Apps joining were not given an effective business model to:

• Get their users to buy Kin
• Profit from this behavior

For Kin / Bits to win, they need to prove the above specific business model. Any other model introduces inflation or relies on factors that Kin cannot control

Proving the business model

A business model is something that needs to be iterated and experimented on to come up with an ideal solution(s). However, the model should have the following single constraint:

The KRE can never inflate more Kin than was bought from the market into apps.

This was coincidentally a recent proposal. This is a hard constraint that is difficult for apps to implement without iteration, and not all apps may manage it. Ideally, this is the 3rd and final stage of Kin’s development. If Kin were undergoing a fork or a reset, starting on the final stage would be a big win.

Although the KRE can be tweaked with all sorts of formulas and new apps can join, the issue of inflation can only be addressed with that constraint.

Other improvements are possible, including aggressively targeting use cases in DeFi and even forming a DAO. However:

I would argue that a small economy of a handful of apps proving a sustainable model is better than efforts of adding new apps or more branding — all useful exercises after the model has been proven.

The What, not the How

I have kept the post short to encourage the community focus on the what, so that the next step can be about drafting the how, as the community, with the stewards of Kin.