👀1.Background of Project
Last updated
Last updated
1.1. Low-Carbon Economy and E-Cigarettes
Carbon emissions have been globally concerned since 2006. According to the statistics of Our World in Data, the total global carbon emissions reached a peak of 36.702 billion tons in 2019, and the growth rate in 2010 has become the highest in the late 30 years.
From the perspective of global per capita carbon emissions, it continued to increase from 1960 to 1980. The second significant increase in it began in 2000 while started to decline after 2012. The highest global per capita carbon emissions were 4.91 tons in 2012.
The main reason for the global regional differences in carbon emissions is that in the rapid rise of China, Japan, South Korea, and other countries, they have started large-scale economic construction and rapid economic development, which dramatically increased the demand for energy such as electricity and oil for industrial production and has led to the sustained growth of carbon emissions.
Coping with climate change has gradually become a global consensus and reducing carbon emissions has increasingly become a common concern of the international community. Therefore, all countries in the world actively formulate policies and measures to control carbon emissions. In November 2021, a climate agreement was reached at the COP26 meeting in Glasgow, UK, which is the first global agreement that explicitly plans to reduce coal consumption. At the same time, according to the U.S.-China Joint Glasgow Declaration, it was clear that the United States has set a goal to reach 100% carbon pollution-free electricity by 2035, and China will phase down coal consumption during the 15th Five-Year Plan and make best efforts to accelerate this work. The EU launched the Fit for 55 plan and committed to reduce carbon emissions by 55% compared to 1990 by the end of 2030. The plan is aimed to force the development of renewable energy and green transportation by reducing emission allowances and increasing carbon emissions cost with market means. Germany has a more ambitious carbon emissions reduction target that it plans to withdraw from nuclear power in 2022 and will have phased out coal power by 2030. So far, major global economies have reached consensus on reducing carbon emissions.
According to Our World in Data, nearly three quarters of global carbon emissions come from energy use, one fifth from agriculture and land use, and the remaining 8% from industry and waste. In industrial energy use, carbon emissions from steel manufacturing and energy related account for 7.2%, while that from fertilizer, medicine, refrigerant manufacturing and oil and natural gas exploration account for 3.6%, and that from tobacco manufacturing and food processing account for 1.0%.
Based on the statistics of the World Health Organization (WHO), there are about 1.1 billion smokers in the world at present, more than 70% of whom are widely distributed in developing countries. About 47% of men and 12% of women worldwide smoke, and 80,000 to 100,000 young people become long-term smokers every day. China, with 250 million smokers, is the largest country in tobacco production and consumption in the world.
With the data released on the official website of WHO, tobacco production emits nearly 84 million tons of carbon dioxide equivalent greenhouse gases every year. From tobacco leaf planting, tobacco leaf curing, to the production of tobacco products and tobacco consumption, tobacco has caused environmental damage throughout its life cycle. Tobacco consumption also releases large amounts of pollutants and greenhouse gases. The production of a cigarette will emit 14 grams of carbon dioxide throughout its life cycle.
Scientific research shows that besides the large amount of carbon emissions from tobacco production, traditional cigarette smoke can significantly increase human carbon emissions. Each cigarette will produce 0.0015 grams of carbon dioxide, so if one person has one box of cigarettes a day, then a box of 20 cigarettes will produce 0.03 grams, which means 1.1 billion smokers will produce 33 tons of carbon dioxide a day and 12045 tons annually.
In 2003, Han Li, a pharmacist from Northeast China, invented the first nicotine containing e-cigarettes product, which uses piezoelectric elements to dilute nicotine in propylene glycol solution and evaporate it. His original intention was to invent a safe substitute for cigarettes, allowing smokers to inhale only nicotine to relieve addiction and remove harmful substances such as tar and benzene. In 2004, e-cigarettes Ruyan went public and achieved great success in the Chinese market. The popularity of e-cigarettes has attracted many imitators. From home to abroad, e-cigarettes have become popular in many countries around the world in a few years, such as the United States.
Due to disputes and policy issues, the e-cigarettes industry presents a global industrial chain pattern with demand centers in Europe and the United States but manufacturing centers in China. It is known that Shenzhen is the largest production center of e-cigarettes in the world with the e-cigarettes export accounting for more than 90% of the world's total output. E-cigarettes have become an innovative consumer electronics, even becoming more and more popular worldwide. The global market size of e-cigarettes reached 80 billion dollars in 2021 while the figure was $1.06 billion in 2010.
According to the latest research by Knowledge Action Transformative Project –the State of Tobacco Harm Reduction (GSTHR), there are 112 million smokers worldwide using ways to reduce the harm of smoking, including 82 million users of nicotine e-cigarettes devices. The group's research shows that the number of e-cigarettes users increased by 20% from 2020 to 2021all over the world.
E-cigarettes are regarded relatively healthy and environmental-friendly alternatives to traditional tobacco, and now becoming more and more popular around the world. Public Health England (PHE) issued a report in 2015 saying that e-cigarettes are 95% less harmful than traditional cigarettes. Dr. Blaha, clinical research director at the Johns Hopkins University's Ciccarone Center for Preventive Cardiology, said e-cigarettes are less harmful than cigarettes, but there are still unknown security problems.
So far there hasn’t been any exact research report on what the harmful substances of e-cigarettes are, but in terms of the characteristics of e-cigarettes that use nicotine salt to heat but not burn for atomization, its low-carbon emission reduction attribute compared with traditional paper cigarettes is beyond doubt. The emission of second-hand smoke (carbon dioxide) barely generates when using e-cigarettes. While e-cigarettes are widely used to replace traditional cigarettes, the reduced carbon emissions are also very considerable. At present, there are 82 million e-cigarette users worldwide. Take saving one pack of traditional cigarettes per person per day as an example, the carbon emissions of each cigarette are 0.0015g, and those of 20 cigarettes per pack are 0.03g. The global e-cigarette users will reduce their carbon emissions by about 0.03g * 82 million * 365=897.9 tons per year. Meanwhile, it has reduced the huge carbon emissions generated by the manufacture of nearly 600 billion cigarettes.
1.2.New Advanced Technologies and Opportunities Web3 Brings to Traditional E-Cigarette Industry
Web3 originated from the blockchain network concept proposed by Dr. Gavin Wood, the co-founder of Ethereum in 2014, which is based on the core idea of "building a decentralized and verifiable network without core servers, a distributed internet where users control their own data".
In short, Dr. Gavin Wood believes that the core points of Web3 are "decentralization" and " users control their own data". Users can not only participate in the output of the content but also participate in the project at the operational level and benefit from it. This is the decentralization of the blockchain, in which everyone can participate.
The primary features of Web3 are openness, privacy, and co-construction.
First, openness means that user behavior is not restricted by third parties. Internet applications break the original so-called intra-ecological and inter-ecological boundaries, and there is a high degree of combination and compound between applications. Anyone can innovate through the internet.
The second is privacy. Web3 comprises blockchain and cross-chain technology, decentralized identity, distributed storage, privacy computing and other infrastructures, which provide unique advantages in the privacy.
The last is co-construction. In terms of community governance, the token incentive mechanism of blockchain effectively feeds the value of the content economy to the creators. Another facet of co-construction and sharing is co-governance, which is DAO.
Web3 is a brand-new internet iteration direction based on blockchain technology, which combines the concepts of decentralization and Token economics. Its aim is “User Created, User Owned, User Controlled, Protocol Assigned”. All users' data belong to users, and users can authorize other platforms to access their data. Web3 is an open protocol suite that will generate more abundant and diverse innovative business models based on Web3.
The X2E model was first proposed by the CEO of Rabbithole, Ben Schecter, in 2021. Economic benefits do not appear out of thin air; the key is the coordination of decentralized autonomous organizations (DAOs), which allow DAOs to evolve through the active participation of their members, thus creating value that is fed back to users. The traditional way of making money is "Work To Earn", so the future way of earning money is "X To Earn", where X stands for Everything and E stands for Earn, which will bring economic benefits. The ideal vision of X To Earn (hereinafter referred to as X2E) is to "take it from the people and use it for the people." It breaks the centralized distribution method in the traditional Web2 era and returns the rights that originally belonged to the participants to them.
Axie Infinity, which was unexpectedly popular during the epidemic, is a typical example of the X2E model. The main concept of this product is "Play to Earn”, which means that users can earn money while playing. Users need to buy a pet (Axie) NFT first, and then they can cultivate their pets, and let them fight and compete to earn income. Axie's DAU started to increase rapidly since May 2021. The number of daily active users grew from 100,000 in May to 1.95 million in October, with an increase of nearly 20 times, and it took about 5-6 months to reach the peak from the rapid growth stage. By July 2021, the market cap of Axie has reached $1.4 billion. The price of its token is $23.
Another popular project, StepN, featuring "Move To Earn", basically follows Axie's design, except that running shoes replace the pets, and the method of earning income is changed from virtual battles in the game to running in reality. StepN's DAU in April 2022 is 200,000 to 300,000, equivalent to Axie's DAU in June and July 2021. Currently, the market cap of StepN is $1.3 billion, and its token price is $2.2. According to Token Terminal, Axie had an agreement revenue of 8.2 million on July 15, 2021.
The phenomenal chain game Axie Infinitely pushed the P2E (Play To Earn) concept into the public eye, and the M2E (Move To Earn) chain game StepN went viral. These successful examples have contributed to the greater feasibility of the X To Earn model, which also successfully triggered the experiment of combining Web3 and the real world. As of April 14, 2022, StepN's agreement revenue reached $1.9 million.
There are also projects such as StarSharks and Crabada that have been continuously booming, completely igniting the Web3 craze. According to incomplete reports, 102 top VCs and infrastructure providers in the crypto market have bet on the X2E concept with an investment of more than $12 billion as of early 2022. It is no exaggeration to say that X2E has become the most popular business model in the Web3 trend.
As the foundation of building Web3, blockchain is also the technical support for its realization of "ownership". Presently, there is a certain foundation for developing Web3-related technologies, but due to the relatively short development time, the mass development of related applications nowadays still faces certain difficulties. Take social applications as an example, At the database level, the social data covered by social applications show the features of fast updates and huge data volume due to the continuous and frequent social activities, so it is a great challenge for decentralized storage, description, and management of data.
Currently, service fees need to be calculated for each storage on the blockchain. In the face of the social database that updates every second, it is too costly to achieve timely and high-frequency storage, so in terms of the whole stack, new storage technologies are required to meet the storage needs of decentralized social applications and more powerful decentralized underlying technologies are also needed to build more decentralized servers.
Due to the continuous progress of infrastructures and underlying technologies, many commercial applications based on Web3 and blockchain will usher in full-blown growth in the next three to five years. What needs to be considered is how to use blockchain to solve the problem of going from off-chain to on-chain and offline to online, thus combining off-chain and on-chain, offline and online. The future blockchain applications will tend to expand the existing native applications, such as many applications used by the public today, based on the technology and stack of Web3 to achieve decentralization, that is, to achieve "the foundation and architecture of decentralized applications, which can penetrate more realistic scenarios and needs of users and can achieve the smoothness and functionality of some current centralized applications". Offline assets and applications will be the main prospect of Web3 in the future.
1.3. Value Reconstruction Theory
The relations between consumers, distributors, and other partners should be reconstructed, and the form of distribution of enterprise value should be reconstructed. Specifically, consumers, distributors, and other partners are the creators of enterprise value and should also share the value of enterprise growth.
The theory reconstructs the relations between capital, production and operation factors, and consumption, which will overturn enterprises' existing operation concept and management model. It will significantly impact the cognition and psychology of consumers and business partners, forming the common value belief of "co-creation and sharing of enterprise value", thus creating a powerful attraction and cohesion.
Blockchain technologies have built the path to realizing the above concept through product capitalization and asset tokenization.
The core of Value Reconstruction Theory is the participation of consumers and partners in the distribution of enterprise value, and the essence of X2E is also an innovation of interest distribution mode. X2E is presented in a way that participants as contributors are paid for their contributions through product capitalization and asset tokenization.
Overall, general X2E projects have explored the "Earn" model as an innovative point, but there is nothing new in terms of value creation. This means that the users attracted by the money-making gimmick can neither empower the project nor produce a high degree of stickiness to the platform for the project side. When the defects of poor playability and decay of the money-making effect are not corrected, the project will eventually fall into a "death spiral", and the project's life cycle will end.
Therefore, the judgment of whether an X2E model is of high quality and healthy lies in whether the behavior brings a contribution outside itself, and this contribution generates a benefit to another subject. If a subject outside itself occupies this benefit, the model design of X2E will be needed to realize the interest redistribution. This is also the foundation of X2E model, and the necessity of X2E existence. When "X" can consistently contribute to the value of the entity, the on-chain application products will inevitably enhance the interaction with offline scenarios, and the economic incentives become quantifiable after the specific behaviors are data-driven. More importantly, X2E creates a new way of incentive for positive behaviors.
We believe that a suitable application scenario for the X2E model needs to meet the following major factors: a specific application scenario, quantifiable behavior, refinable data, positive feelings for the users, and value creation for the external community, which is a truly healthy and high-quality X2E model. We have witnessed some useful exploration and experimentation in the Meta Carbon project.
The external circulation of general X2E project means that old users reinvest the money invested by new users, and new users pay interest and short-term returns to old users to create the illusion that old users are making money. In fact, there is no actual revenue generated by the project. As the newly generated tokens keep increasing, users will keep selling, resulting in the token liquidity pool with only sellers and no buyers, and eventually token price will fall in a death spiral.
This is why most X2E projects have one and only one life cycle. Once a project is in a death spiral, it is tough to get restarted. The difference lies in the different cycle shapes brought by the impact of different models, teams, backgrounds, operations, and the environment.
Value Reconstruction Theory introduces the consumers' consumption behaviors into the economic system when the users' consumption behaviors (actual consumption) add positive external revenue to the whole project, totally changing the complete reliance on new admission funds to pay for the old users' returns. The consumption behaviors can bring revenue by injecting the consumption revenue into TOKEN as net assets, thus creating the project's long-term value, and meeting the secondary market expectations and bottoming out the secondary market trend as well.
In addition to the continuous iteration of the project and system improvement, the project sponsor will regularly use part of the project's external revenue to buy back and destroy the project token in the internal cycle, keeping the deflation of the token market and token price steadily rising, reducing the frequency and probability of selling, thus avoiding the arrival of the project's death spiral cycle.
As a leading-edge X2E project, MIST avoids the death spiral through the dual model of the internal economic cycle and external positive benefits. Consumers (users) participate in mining by purchasing physical e-cigarettes, and the MIST obtained from mining can be withdrawn from the exchange. The project will regularly use part of the profits from the sale of e-cigarettes and cartomizers to buy back and destroy the MIST to keep the deflation of MIST and a stable price. The X2E model of the internal economic cycle and external positive benefits avoids the death spiral.
