A Novel Framework for Reputation-Based Systems

Yet these two roles are in opposition to each other. A token needs to be exchangeable in order to be liquid. But the more liquid a token is, the less effective it can be as a pure signal of reputation. 

To provide a form of compensation that enables contributors to liquefy some of the value they have created into an exchangeable currency.

To identify and reward the users who have contributed value to the platform—a form of signaling, which those users can parlay into public reputation.

Reputation tokens on digital platforms typically serve two purposes:

We’ve outlined some core principles of social token design, but it’s equally important to complement such designs with product-market fit that intrinsically motivates users. For example, a play-to-earn game that focuses its efforts on enabling users to profit but that doesn’t get the “play” element right misses the point: that games are, first and ... See more

In many crypto projects, the largest holders end up being just the people who were aware of the project earliest. But those early adopters are not necessarily the most valuable to the future of the ecosystem. So it is essential to maintain incentives for ongoing contributions and engagement. One natural way to achieve this in a two-token framework ... See more

That said, the platform may not have a clear sense of the contributions’ value, especially early on, so there needs to be a mechanism for experimentation and recalibration around token distribution.

For platforms where participation functions like employment, as with gig or creator platforms, the optimal strategy would be to distribute coins to point holders at a regular interval: for example monthly, or even daily. That means the users who make valuable contributions, thus maintaining a certain point level, receive a stable income.

Even so—and contrary to some standard intuitions—coin supply does not necessarily have to be bounded. If, for example, coins are redeemable for a share of a platform’s treasury, then the total coin supply can expand as the treasury grows. In these cases, dividends could be the same total size, or even growing over time, so long as the dividends are... See more