---
# System prepended metadata

title: Local Community Tokens

---

# Local Community Tokens
Tokens for various uses can be created. These can represent for example local currencies, volunteering hours, voting.


- **Currency token** - value token to pay for goods and services 
- **Volunteering token** - 1 token per hour, cannot be transferred to others
- **Voting token** - can be same as volunteering token or a different, represents voting power in the community


### Local Currency
A local currency can be implemented in the following way:


- ERC20 token is created (lets call it COM)
- This token can be used as an alternative payment inside the community. Initially it's value will be equal to the trust in it (similar to fiat currencies). If I accept this token as payment for something I trust I can use it to buy other goods or services. This token is easily transferred with a digital wallet similar to the Swish app (or any crypto wallet).
- A token pair is created with this token and one with a fiat value such as USDC to create a market and provide liquidity. Ex $100,000 and 100,000 COM. The token now has an intrinsic value of $1 per COM.
- Participants can now buy these COM tokens from the marketplace for USDC. Buying and selling tokens change the value of the token because it changes the supply. Providing USDC in exchange for COM lowers the supply of COM and its price rises.
- New COM tokens can be minted. Either by a single actor (admin) or as a collective decision from the community. This can even happen via a governance process where a proposal is created and voted for and if approved new tokens are automatically minted. Minting new tokens lower the dollar-value of the token because of the influx of new tokens to the ecosystem
- Additional liquidity can be provided to the marketplace by sending USDC and COM. It can also be done by just providing USDC and thus increasing the value of COM.

Tokens can additionally be programmed with features such as:
- **Inflation** - token minting can happen automatically to create an influx of tokens in the economy. This dilutes the token value over time but encourages spending (if the value is believed to increase, there's an incentive to hoard the tokens for future profit).
- **Tax** - every transaction can transfer a percentage to another account as a way of tax. This account can be seen as a fund to support projects and initiatives in the community. Whenever transactions happen in the community a small amount is set aside for this pool that funds projects or purchase of external goods and services (food, water and electricity bills etc).


### Project Coordination

Any project such as growing a community garden can be created as a proposal with detailed description on what's required for the project to succeed. Financial resources, builders, materials etc. This proposal are then voted for and funding can be distributed automatically if it succeeds.


### Funding of projects

These initiatives can be funded by both people in the community as well as outside actors such as organizations, municipalities, governments.

Different mechanics for funding can be used:
- **Vesting** - slowly releases the total amount over time. This creates trust in future financial funding for the project and it adds accountability for the project to deliver results.


### Project Lifecycle
1. **Proposal Draft** - a draft is created and shared with stakeholders (community members, potential funders) to gauge interest and iterate on the proposal details.
2. **Proposal (on-chain)** - the proposal is created on-chain with parameters for what smart contract functions to call if quorum is reached. The proposal details cannot be edited once this is done.
3. **Voting** - the stakeholders vote for the proposal by transfering tokens to the smart contract (what kind of token and how the stakeholders receive these tokens can vary) 
4. **Funding** - if the proposal has budget requirements it can be funded. Funding could also be a way to approve proposals without having to vote for it.
5. **Implementation** - the decision is implemented, the project gets built, the initiative gets started.
6. **Impact Evaluation** - what impact did the proposal generate? Depending on the type and details of the proposal, the method of evaluating can vary. Did the garden produce what the proposal said it would? Was the sauna built and can we see photos of it?