Inverse Economics
The economic model proposed by the Owy team aims to create a system focused solely on increasing the value of money, effectively making saving great again. It serves as a mirrored version of traditional economics, naturally encouraging individuals to save and invest more wisely by enhancing the intrinsic value of money.
Inverse Economics consists of open principles that can be tailored and applied by an individual who desires to design an economic system. This page only contains a concise explanation. If you need more explanation, visit Whitepaper. If you want to know how Owy applies these principles, read Tokenomics section.
In inverse Economics, we proposed that value is represented as the product of two factors: time and productivity.
Time, in this model, represents the duration an individual has saved their store of values, while productivity refers to their contribution to economic growth through paying taxes.
Incorporating the factor of time into the formula allows individuals who save for extended periods to surpass those who primarily contribute financially through productivity. This approach provides dedicated lower-class individuals the opportunity to elevate their economic status through saving alone, leveling the playing field and enabling them to compete more effectively with those from higher classes—something that traditional economic models have not facilitated throughout history. See Basic Value Flow as an illustration.
There are four main topics revisited and revised in Inverse Economics, as stated below.
1 Supply Distribution and Management
In Inverse Economics, we begin with a fixed maximum supply of tokens and guarantee no new tokens are created after deployment. Unlike inflationary economies (e.g. USD, Gold, Bitcoin) where supply is continuously emitted until a maximum limit is reached (if one exists), Inverse Economics ensures that the supply decreases with each transaction.
Participants in the ecosystem influence token deflation and scarcity through their spending and saving activities.
With a supply contraction mechanism, each transaction burns a small fraction of the transfer value as a tax, permanently reducing the total supply. As the supply diminishes, the value of the remaining tokens increases, resulting in a higher percentage share for each holder.
2 Tax and Incentivization
Taxation is determined proportionally to transaction values. When participants make a transaction, a fraction of the transfer value is deducted and permanently burnt from the system. This approach efficiently redistributes value to all holders while ensuring that the funds do not re-enter circulation, avoiding any resemblance to a Ponzi scheme.
When tax is burnt, value is redistributed to holders (savers), who benefit from others' spending. Now, let’s shift our focus to the spenders. In this economic model, productivity is tied to tax payment, and as money becomes more valuable, it is crucial to design effective incentives to encourage spending. People will not save indefinitely due to basic consumption needs. However, a well-designed incentivization system can motivate more frequent spending (if the investment is worthwhile). The system aims to reward efficient spenders with meaningful incentives that generate future value, such as tax discounts, exclusive access to investment products, or other financial privileges. If these incentives scale with the overall economy, they will make long-term investments more attractive and beneficial.
The purpose is to redefine spending as an investment opportunity and tax payment as a privilege engagement rather than a penalty. By aligning returns with economic growth and agreed-upon conditions, we transform spending from a mere opportunity loss into a strategic advantage. This approach ensures that both saving and spending are incentivized, to balance a thriving economic environment.
As incentives become more valuable and spending, along with paying taxes, becomes the primary way to earn rewards, individuals are motivated to make more strategic spending decisions. Poor decisions may lead to significant opportunity losses, while careful planning and wise expenditures can result in favorable outcomes.
3 Dependency and Decentralization
The system fosters open competition among participants. Spenders compete through strategic spending to maximize their returns, while savers aim to increase their share of value from burnt tokens. This mutualistic relationship benefits both groups: savers gain value from tax payments, and spenders utilize savers' liquidity provided by savers. This interconnected dynamic ensures that neither savers nor spenders can thrive without the other, creating a balanced and interdependent economic environment.
An individual’s status and privileges should be determined exclusively by metrics within the economic system. For example, in a saving time competition, incentives are awarded based on how much an individual’s saving time exceeds the average of all participants, rather than the absolute time saved. This ensures fair, challenging, and dynamic competition, adapting to the performance of all participants.
Decentralization of economic power is based on value-weighted contributions. Individuals can gain significant influence by making substantial contributions to the overall economic value through savings and tax payments. Therefore, besides the amount of tokens an individual holds, the value associated with their tokens also matters.
In Inverse Economics, both saving and tax paying operate similarly to Bitcoin mining, but with a different focus. While Bitcoin miners compete for amount shares of newly minted tokens until a supply limit is reached, participants in Inverse Economics save to gain value shares from newly burnt tokens until a lower supply limit is reached. This model shifts economic competition from mining to saving, lowering entry costs and making participation more accessible, though it remains competitive to secure a position within the final supply.
4 Final Supply
Bitcoin established the concept of a final supply limit with its 21 million cap, setting both the maximum quantity of tokens and the endpoint for additional incentivization (subsidy) to kickstart the economy. This finite supply serves as a crucial psychological anchor, giving participants a clear understanding of total availability and aligning individual goals with predictable profitability.
Inverse Economics adopts a similar approach by establishing a final supply, but with a deflationary twist. The token supply decreases until it reaches a predetermined lower limit, at which point deflation halts, stabilizing the remaining tokens. Participants compete to save and retain value, striving for a larger share of the increasingly valuable supply until no more tokens can be burnt.
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