The Panvala Token Capacitor
Panvala’s token capacitor is designed with the lessons from our first token capacitor, created and tested during the ConsenSys company retreat in February 2018.
By Niran Babalola — Co-founder, Panvala
Panvala is designed to coordinate cooperation. To mark safer smart contract systems effectively, Panvala will need continuous improvements over time, so we need to make sure that type of work will be rewarded. But our mission is broader than just issuing Panvala marks: we want to coordinate all the cooperation that needs to occur to make Ethereum safer.
Our token capacitor was designed to solve this problem. Instead of distributing all of the tokens up front, half of the tokens will be initialized in the token capacitor’s smart contract that releases tokens at a decreasing rate over time, like the Bitcoin block reward. Token holders set the destination of the tokens that are released, so they can reward any kind of work they choose. Without any intervention, the token capacitor will eventually run out of tokens, and no more rewards will be available to incentivize cooperation.
That’s why the token capacitor is designed to be recharged. Token holders can donate their tokens to the capacitor to charge it back up. The release rate of tokens from the capacitor isn’t just determined by time, it’s determined by the current balance of the capacitor. When you donate tokens to the capacitor, you extend Panvala’s ability to coordinate cooperation. If donated tokens flow into the capacitor at the same rate tokens are being released to reward work, Panvala can coordinate cooperation indefinitely. That is our goal.
But who would donate their tokens to the capacitor? Why would anyone do that?
I believe people will donate to the capacitor because I’ve seen it with my own eyes. Panvala’s token capacitor is the second one we’ll launch. This is the story of the first token capacitor.
ConsenSys held its second company retreat in Albufeira, Portgual this past February. It had been over a year since the last time we all gathered, and since the company had grown to be over five times larger, it was the first time most people met their coworkers in person. It was clearly going to be a valuable time to make new connections, strengthen old ones, and hear ideas worth sharing from other parts of the mesh. It also seemed like a good setup for an experiment.
I’d been trying to explain some ideas about token inflation to coworkers in a series of rough blog posts, but it has always been hard to get these concepts across in writing. Leading up to the retreat, I turned those ideas into a set of rules for a token game to play in person at the retreat. No ERC20 contracts: just poker chips, instructions, and a “validator” to act as the game master.
The mission of our Retreat Token game was to make the retreat great. Anything that made the retreat experience better for our fellow ConsenSys members was fair game. Each individual could choose whether to pursue donating the most value for the cause, doing the most work for the cause, or even making the most money by trading tokens. But the best way for any player to achieve their goals was to get more people to join the game, so their work would make the retreat great too.
To start the Retreat Token game, each initial player could purchase 100 retreat tokens for five dollars. These tokens were represented by poker chips with different denominations: white chips were worth one token, red chips were worth five tokens, and blue chips were worth 25 tokens. But before deciding whether to buy in, the players had some questions.
“What are you going to spend the money on?” they asked. I told them that I was going to put their money in my bank account.
Given the common cause of the game, the idea that I was going to spend the proceeds on myself felt strange. But the goal of this experiment wan’t to see whether we could pool people’s donations to fund good things — that happens all the time. I wanted to see if the players themselves could sustain incentives to cooperate, so their initial payments couldn’t be part of the game.
Skepticism was the dominant mood in the room, but twenty players lined up and purchased tokens to initialize the game anyway. Minutes later, a player went up to the mezzanine, gathered a crowd below him, and performed a physical airdrop of tokens on new players. Game on.
The Retreat Token game was oriented around a nightly donation ceremony where new and existing players gathered each night after doing work that made the retreat great during the day. At the ceremony, each player could donate as many tokens as they want to support the incentives to earn tokens. Donating five dollars worth of tokens earned the minimum status of “Member,” which allowed the player to vote on how to distribute the reward tokens. Symbolic status levels of “Supporter” and “Benefactor” could be obtained with donations of $10 and $25 worth of tokens, respectively. Those status levels didn’t get any privileges within the game except the respect of the other players.
After donating, each member received a ballot that allowed them to influence the allocation of the day’s tokens to miners, the people who did work each day to make the retreat great. As miners did work during the day, they filled out a form describing the work and its value. Each day, the token supply was increased by five percent, and the ballots for each donating member were averaged to distribute the tokens.
The first night’s donation ceremony was the real test that would prove whether this game had any chance of working out. Would people even do work to try to earn these tokens? Miner applications had come in during the day for all sorts of things. One player led a morning hike along the beach for anyone who wanted to join. Another player outsourced the actual work of making the retreat great: she started “Retreat Ventures,” which paid people with tokens to do things, then applied for miner rewards on their behalf. But before anyone could earn tokens, some players needed to donate tokens to become voting members.
“What do I get for donating more tokens than the minimum to vote?”
“Nothing really. Just social status. We’ll all tell people how great you are for making the donations the game relies on to work. If people like the game, we’ll make the people like you.”
Day one had eight “Member” level donors, plus one “Benefactor” who stepped up and donated $25 of tokens instead of the $5 minimum. Even though we inflated the initial 2000 tokens by 5% with 100 new tokens, the token supply at the end of the night was only 2035 as a result of the donations. Even though we added 5% more tokens each day, we didn’t exceed 2035 tokens for the rest of the game. We’d taken the first step toward sustainable incentives for cooperation.
It was hard to ignore the poker chips being traded for cash in the hallways of the retreat, so the game attracted more players on days two and three. The miners kept busy too: more walks on the beach, but also videos to commemorate the retreat experience, a digital token database so ConsenSys members who couldn’t make it to the retreat could still play the game, and balloons. Lots of balloons.
But the most valuable part of the game for me was hearing people describe it. One player described it not as a game she played, but as something that happened to her — as if a novel incentive system got its hooks into the familiar reward machinery in our brains, but used it in a way that felt pleasantly foreign.
That’s why I believe people will donate to token capacitors. I’ve seen it happen. Some people get their kicks from trading tokens. Others get it from mining and doing the work that keeps our decentralized systems going. But there are some who are perfectly happy to contribute indirectly to sustain our systems, and be satisfied with the recognition that their role is necessary too.
It’s our job as a community to make that role well-respected. We have to remind ourselves that Panvala does not run on speculation, good intentions, or an immaculate design. It runs on the sacrifices of the donors who want our miners to be rewarded. If we can find effective ways to honor their sacrifices to recharge the second token capacitor, we will sustain the cooperation that makes Ethereum safer.
Disclaimer: The views expressed by the author above do not necessarily represent the views of Consensys AG. ConsenSys is a decentralized community with ConsenSys Media being a platform for members to freely express their diverse ideas and perspectives. To learn more about ConsenSys and Ethereum, please visit our website.
