How do crypto currencies distribute non-fungible tokens? When generating bitcoin, you know how many are going to be distributed and you know their value (even if they are non-fungible). But when you generate randomly assigned values to a token, how does one distribute them? Crypto kitties hold auctions to determine the worth of any new cats generated. But doesn't this devalue the other cats if the algorithm generates new cats that are worth more than any existing cats that already exist? Of course, after the Gen0 are done generating then the market knows what is available and how much most cats are worth.
But the issue still remains. They have an issue distributing the cats to begin with. They could resolve this by distributing all cats at once in the form of an ICO, but this means that one or two peoples could buy all the cats, control the breeding market and control the entire token. There has to be a way to distribute these new tokens, without causing instability in the token.
What if winners/losers of a game were given new currency that was determined based on the value of their currently existing tokens? If this happened you might have a race condition to get the best tokens so that you can generate more tokens, or you may want to lose to generate more tokens as well. Playing a game could also cause inflation, what if only a certain number of games between parties in a certain timestamp would cause new tokens to be generated. These new generated tokens would have value based on the existing generated tokens.
If every player was given the ability to play the game, and generate new tokens in some form of randomness, would this create inflation? I believe it would, but not out of control inflation. The amount of tokens generated would be set and there could be an equal distribution if you were able to truly randomly distribute the tokens among the game players.
This ties right into staking. But the issue with staking is that those with lots of the token to begin with will generate more of the tokens, but they are also performing a service so it is justified. Staking creates a hunger game for tokens, and if you can stake them it creates scarcity since the more you hold the more you gain. It is almost a game of lets forget the worth of what you hold, but instead collect as much of it as you can.
ICOs require a lot of participants and it requires sufficient knowledge of the product (or at least the idea) so that investors are on the hook for something worthwhile. But this can be misleading as we have seen, projects over sell, ideas are the product, and everyone buys a stake in an idea before work has been done. Airdrops are nice, they make sure many people are involved. But this still does not address the issue of non-fungibility of the token.
If the tokens are generated values, I would assume they are given values by a centralized source. If this is the case, then the value of a decentralized coin is greatly diminished. We should be able to keep the value of generated tokens while also generating new, unique tokens that have new, interesting attributes. We could vote on newly generated tokens, but that would mean that current holders of the token would vote for worthless tokens be introduced to the system so that they could keep the value of their token.
So new tokens need to be introduced in waves, the community wants useless tokens to be added (if any), the majority of users would like an equal distribution so they receive a chance to use the token and have worth (and so the entire market isn't determined by few). If we generate new tokens during a form of game then they still leaves a big open gap in how much value newly generated tokens would be assigned. How can we fix this issue?