I MINTED my own token

In recent months, I have been exploring Web3 partly because a person whom I deeply respect said it reminds him of the Internet in the 90s. As I googled endlessly, I realised that I could not find a consistent definition of what Web3 is and what it would entail so I realised I had to get my hands dirty. I have made a couple of YouTube videos and I will continue to do so as I go along but the truth is, it is always much easier to write about what you have learnt as opposed to making a video on it.

Last week, I minted my own coin called HEAL which is actually just an amalgamation of my name. My intention behind the coin was first to understand how to mint a coin, second to see how an individual having his or her own token could in some sense, replace the current model where in order to support a creator, we could be a Patreon or Buy Me a Coffee subscriber and last, to understand the world of decentralised finance.

In order to mint my coin, I used TrustSwap and initially I wanted to mint my coin on the Ethereum blockchain but the gas fees were prohibitive so I switched to the Avalanche blockchain. Within an hour, my HEAL token was minted and I became the proud owner of 20 million HEAL tokens. Most of the time went to designing the HEAL token logo which I can’t say I am terribly proud of.

The next thing I did was to add my HEAL token into a liquidity pool on SushiSwap. I backed my token with AVAX in the ratio of 1 AVAX to 600 HEAL. As I didn’t have much AVAX left and the funds that I have set aside for my Web3 deepdive are all in my Metamask account, I could only add 0.25 AVAX and 150 HEAL into the liquidity pool. This is where it gets interesting.

Now that I have added HEAL into the liquidity pool, people are able to swap their cryptocurrencies like BTC and ETH for HEAL tokens. As there are only 150 HEAL tokens in the pool, the max upper limit is the 150 HEAL tokens available in the pool. But technically, I have a stockpile of HEAL tokens in my wallet, have I just created value out of nothing? Absolutely not. When I tried to sell the HEAL tokens in my wallet for ETH, I could only sell as much as the 0.25 AVAX in the liquidity pool backing the HEAL token could allow for and even then that was not allowed within SushiSwap as it would exert drastic downward pressure on the price of the HEAL token. If someone were to trade recognised cryptocurrencies for my HEAL token, it would exert upward pressure on the price of the HEAL token as the liquidity pool would have more AVAX with respect to the remaining HEAL tokens in the liquidity pool, so 1 AVAX would command fewer HEAL tokens. (<600 which was the initial starting point) Fundamentally, value is only created when a group of people buy into a token but also, there also needs to be sufficient liquidity of that token in the exchange.

Back to the question of whether creators could create their own tokens, let it float on the exchange and let market forces decide the value of their work - it seems that it might be something that could happen but at the beginning instead of putting tokens on the exchange, creators could directly sell tokens to their early supporters so that they get funds to pursue their life’s work and let market forces decide if their life’s work is meaningful later on. Selling tokens to early supporters resembles what Patreon and Buy Me a Coffee currently do, with the added benefit of being recognised as a supporter through a token and potentially gaining a financial upside later on in the event that token has benefits others might desire.