Sam Williams: Mechanism Design 101

Incentive DesignTokenomics are a tool for aligning the incentives of participants in a network. It is extremely important to identify what behavior is required from each participant in an ecosystem in order for the network to achieve a virtuous cycle. Equally important is designing suitable token incentives that encourage the desired market behavio... See more

One of the most powerful features of crypto-economic protocols is their ability to create incentive structures that allow anyone in the world to permissionlessly contribute to a set of shared objectives. These incentive structures can be finely tuned to facilitate large-scale coordination to achieve specific goals. This represents a step-function i... See more

From miner rewards, to transaction fee-setting mechanisms, to token curated registries, to prediction markets, incentives are everywhere in blockchain platforms.

-We can create digital tokens, which enables us to design financial incentive structures for products on the web.

We think that there is an opportunity here to help DAO operators identify their most important objectives before trying to decide which incentives to use or tools to experiment with.

The field of game theory models interactions between rational decision makers, identifying dilemmas of cooperative, zero-sum, and symmetric games and their inverse. As a counterforce, decentralized autonomous organizations broadly apply mechanism design through economic incentives or social norms to achieve rough consensus and running orgs. Headles... See more