Credit goes to Mike Goldin for his pioneering work on the subject. Read his original articles here.
Please provide feedback in the comments if there are any corrections or improvements!
Online lists are everywhere. We use them everyday to organize and rank information. Examples include lists of best restaurants, top universities, or even tokens! However they have several inherent issues:
- List Viewers and List Members are forced to trust that the List Owner is acting honestly.
- Centralized lists (like Yelp) can arbitrarily add/remove List Members, they can require payments from List Members, or their ranking methods can be gamed.
- Decentralized lists promise to reflect the wisdom of the crowd but they often fall victim to spam, fraudulent voting, or social engineering. In order to maintain quality, they often appoint semi-centralized List Moderators.
How TCRs address this problem
Token Curated Registries do away with the need for a centralized List Owner, and instead create economic incentives for decentralized list curation.
- Lists are made up of List Entries that contain data. For example, think of a Best Restaurants list where each list entry contains a restaurant name, website address, and street address.
- Each list has a native token that anyone can buy.
- As a Token Holder your incentive is to maintain a popular, high-quality list that attracts List Applicants who want to add their data to your list.
- In order to apply to a list, an Applicant buys the native token and places an application deposit.
- Token Holders may challenge an application if they believe the application does not belong on the list. Challenges require a deposit to initiate.
- When a challenge is initiated, Token Holders may vote to either accept or reject the application. Their vote is proportional to the number of tokens they own.
- If the application is rejected, the deposit is forfeit. The Applicant’s deposit is split between the Challenger and Token Holders who voted to reject.
- If the application is accepted the data is added to the list, and the Applicant keeps their deposit. The Challenger’s deposit is forfeit and split between the Applicant and Token Holders who voted to accept.
And thats the EILI5 of TCRs!
The above overview has only scratched the surface on TCRs! For more detailed discussion, check out the full reading list here: