How Blockchain Economies align incentives around the Commons

Don Adams
Commons Stack
Published in
5 min readNov 18, 2019

This article was originally published on Giveth on April 5, 2019. You can find it here.

There are a lot of ways to measure the progress of the blockchain space, and by many metrics, the space is barreling forward at an incredible speed.

But we at Giveth have noticed something: during the early days of blockchain, the focus was on creating new economies. Then, at some point, the emphasis shifted to creating new money. With the end of the ICO boom, we saw an ebb in the number of new cryptocurrencies being launched, but the space’s attention never fully swung back to the task of building self-sustaining economies. If anything, we’ve settled on something in between the two — trying to build autonomous organizations — in place of our original ambition. As our co-founder Griff Green has said, “it’s like the blockchain revolution just stopped.” What will it take to reboot this revolution, and to extend it from the digital realm into the real world?

For a reminder of what the early 2010’s vision entailed, let’s take a stroll through the halls of crypto history.

When Bitcoin launched, people were deeply inspired by the elegant ways that this new system aligned incentives. The idea that actors pursuing their own self-interest (i.e. trying to make money) could end up behaving in ways that contributed to the overall health of the network (e.g. mining) was powerful enough to spawn a movement.

A couple of years later, the world’s first altcoin emerged and built on this innovative approach. Namecoin is a blockchain that supports domain name registration. Its `.bit` domains are relatively censorship-resistant — they can be registered through the network without the permission of any party — but they haven’t been extensively adopted by web users.

Hear this story in Griff’s words

Obviously, no startup with so few users would have lasted this long. However, with miners competing to mine Namecoin blocks and speculators trading the cryptocurrency on exchanges, the system has survived for the better part of a decade. Namecoin’s longevity is possible because it was designed as a self-sustaining economy rather than trying to conform to the economic system already in place.

Not long after the launch of Namecoin, Primecoin burst onto the scene. This network’s consensus mechanism involves identifying previously unknown prime numbers, and to date, Primecoin mining has led to the discovery of nearly 32 million prime numbers! In other words, the architects of this network succeeded in building an economy around the act of finding primes.

As a CPU-mined cryptocurrency, there’s a distinct possibility that most of the mining being done on the Primecoin network is the work of botnets. Simply put, some jerk may have built malware to infect your grandma’s computer and force it to look for prime numbers. With all due respect to grandma, that is pretty awesome from the standpoint of mathematical research! We commend Primecoin on providing an outlet for such productive malfeasance.

Jerk enriching himself at your grandma’s expense… for the advancement of mathematics. Source: Daily Post Nigeria

And of course, this story would be incomplete if we didn’t mention the Folding@home project. Predating the publication of the Bitcoin whitepaper by a full eight years, this incredible effort allows everyday people to contribute spare computing power to medical research that may hold answers to questions about Alzheimer’s, some cancers, and other serious maladies.

At first, participants were asked to donate this computing power out of pure altruism. Later on, however, two teams created cryptocurrencies to reward those who take part in Folding@home: FoldingCoin, a token on the Bitcoin network; and CureCoin, the native asset of a dedicated blockchain.

CureCoin & FoldingCoin successfully built a scalable economic system around an altruistic cause that allows all participants to profit accordingly to the value that they produce, as is typically seen in an efficient for-profit business models.

Folding@home has inspired other distributed computing projects as well. UC Berkeley’s BOINC platform allows computer owners to contribute processing power to a range of efforts, including the search for extraterrestrial life via SETI@home. They can even receive rewards in the form of Gridcoin.

Namecoin, Primecoin, and the coins attached to the @home projects have opened up a very interesting possibility. People who don’t care at all about curing cancer, or finding aliens, or any other underlying cause, may still ‘contribute’ to progress in that field by speculating on a related cryptocurrency, pushing up its price so that other people who aren’t interested in the topic still take notice and start mining it for profit. To put it another way, these projects have successfully created economies in which every participant, acting in their own self-interest, supports a worthy mission.

A still from a graphic representation of a calculation done via Folding@home

So why the history lesson, you ask? Some members of the Giveth team have been working on a toolkit for creating these new economies, a project we call the Commons Stack. We hope to go further than Namecoin, Primecoin and Curecoin, whose economies are basically confined to the digital realm, by using DAOs and the Giveth DApp as a bridge that will allow these new economies to cross over into the real world. The Commons Stack will give users the power to experiment with token bonding curves, token curated registries, and other crypto-economic primitives.

Since 2016, we’ve been working to make the act of giving more accountable, transparent and decentralized, and we remain committed to that mission. Until now, we haven’t taken on the main tragedy-of-the-commons challenge that dogs so many nonprofits: for the sake of the greater good, donors must make the sacrifice of donating. Society as a whole benefits from their generosity, but donors (generally) end up financially worse off.

With the Commons Stack, we hope to address that challenge by building impact economies in which incentives align around solving real-world problems. These would be systems in which “everyone acting in their own best interest propels the commons forward.” That is the next chapter in Giveth’s pioneering experimentation in the field of “win-win-win philanthropy.” It’s going to be an exciting ride.

More is coming very soon, but in the meantime, you can catch up by watching Griff’s EthCC talk, read Kris’ post on why Giveth is building this or Abbey’s ETHDenver update, and keep yourself up-to-date by following us on Twitter. Next to this we are actively looking for more developers to help us build at future hackathons (such as ETHCapeTown) and beyond, so please come join our community via the Social Coding chat and signal your interest.

We hope you will join us on an adventure that has already started and is expanding our Giveth Galaxy, and we invite you to be an active participant in this primordial Ethereum and Giveth-powered Commons that is Building The Future Of Giving. Join us Today.

Until next time,

Giveth & the Commons Stack

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Join Us

👉 By applying to become a Member of the Commons Stack you will help us help you realign our economies to re-prioritize people and the planet. You can do this here: commonsstack.org/apply.

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