The OPENToken is used primarily by developers in initializing Scaffolds. At a high level, a developer can create a Scaffold by using the OPEN API, but for that Scaffold to be used, the developer must stake a certain amount of OPENToken with it. Upon staking their OPENToken, an oracle records the market price of the OPENToken, and when the developer wants to retire a Scaffold, they may close it out and receive their staked OPENTokens back.
To mitigate the rapid activation and deactivation of Scaffolds, OPENTokens that are staked in a Scaffold will be locked up for a specific time period. After the lock-up period, the developer is free to close-out their Scaffold or keep the OPENTokens in the Scaffold.
Because OPENToken’s value may fluctuate during the time period the tokens are staked, the value of the OPENToken’s held by the Scaffold may be different from the time they were first staked. The OPEN platform handles the issue of OPENToken price volatility by implementing a slashing mechanism when the developer closes out a Scaffold. When the value of the OPENToken has decreased or retained value since the staking of the Scaffold, the developer receives back the same amount of OPENTokens that they staked the Scaffold with. When the value of the OPENToken has increased since the activation of the Scaffold, then a profit is realized by the developer. A certain percentage of the developer’s profits are slashed and distributed evenly to the users as members of the community that have a positive OPENToken balance. The developer receives back the original value of their OPENTokens plus the profits that were not slashed. This feature of OPEN, the closing out and airdropping distribution to users with a positive OPENToken balance, serves to preserve liquidity in the ecosystem and encourage community involvement. This feature also provides incentives for developers to utilize the Scaffold and provides a full-circle approach to the entire OPEN ecosystem. Moreover, staking tokens to Scaffolds prevents developers from creating unnecessary Scaffolds on the OPEN system.
Additionally, the OPENToken can provide utility to the users if application Scaffolds are implemented to give discounts or currency bonuses to individuals that hold OPENTokens in their OPENWallet, or pay the Scaffolds in OPENTokens. This added utility would provide an incentive for users to purchase and utilize cryptocurrencies such as ETH and BTC and carry OPENTokens over fiat currencies to support a conventional app in a decentralized environment. Moreover, it makes sense for users to hold OPENTokens because each time a Scaffold closes, OPENTokens will be airdropped to all wallets with a large enough balance of OPENTokens.