How Bounties Ruined the Prospects of Decentralizing Work (and what’s the solution)
Bounty campaigns seemed like an integral part of the Crypto industry only just a year ago. Now, however, most people can agree that the bear market exposed the major problems associated with bounties. This article will be focused on why bounty campaigns did not work and what was the incentive for projects to use them in the past.
We will also look at it from the perspective of the user, the “Bounty Hunter.”
The Bull Market Successfully Hid Problems with Bounties
During the early phase of the bull market, projects could often easily fulfill their hard caps just by launching huge bounty campaigns and airdrops, as much of the Crypto space was still comprised of the earliest supporters, many of whom had made large gains from the BTC rally.
Once the bull run phased out, the early holders primarily stuck to BTC, but new joiners, seeking BTC-style rallies, sought interest in ICOs. As they deemed coins’ value to be measurable by adoption, the potential for projects was set against a barometer of views, followers, and subscribers. This time-period created a golden era for bounties, with monthly rewards reaching 7 figures. All the news investors that had stormed the Crypto space were mostly judging projects by figures that could easily be faked. The Shill army impact was much bigger than it is today, so by getting hundreds, thousands, or even tens of thousands of people to shill your projects and produce artificial community numbers, ICOs were able to awe-struck investors.
Given how easy it had become to build FOMO through fake figures, projects were willing to set bounty pots worth hundreds of thousands of dollars. Moreover, as this time period was particularly fertile for the worst ICO projects to date, which generated 0.01x coins day after day, project founders who had absolutely no regard for investors were more than happy to give away large portions of token supply as bounty rewards, as long as it fulfilled the hard-cap.
The bull market craze was covering up the money problem, awkward token spending, and investors’ inexperience.
In reality, bounties were just a broken and crude materialization of decentralized value creation for a company, and these campaigns quickly diminished the legitimacy of decentralized projects, as many had built false, transient communities.
After the Bull Run, Bounties Self-Exposed How Broken They Were…
Once novice investors lost their wealth and exited the Crypto space, the surviving few and early-day veterans began to note and criticize dilution of token supply. Naturally, rewarding several percent of the token supply to build fake numbers became an immediate target. Giving large amounts of tokens to someone that has no stake within the projects will just result in a fast dump and no vested interest in delivering quality work. For bounty hunters, the bull run offered a short-lived hustle to participate in every bounty campaign out there, to subsequently dump the rewarded tokens as soon as possible.
According to Topkie.io, the number of campaigns that a typical bounty hunter participated in at any given point was almost 10. Quality and quantity are mutually exclusive and thus, expectedly, the results of bounties, which operated on a pure numbers game, were meaningless. Thus, the bounty system was broken from the start: while it was meant to create a valuable community and incentivize people to work for new projects in the spirit of decentralizing value creation, the terms with which bounties were made created an environment of transient support rather than a bonding process with the associated project or product.
Numbers of campaigns that bounty hunters are participating at the same time (Tokpie.io)
As clarified by the numbers above, a hefty percent of bounty hunters were simultaneously participating in over 100 campaigns. These bounty hunters likely recognized that bounty campaigns would be a short-lived fad and made the most of the opportunity.
This pathetic form of decentralizing work faced a problem: people had nothing at stake. In traditional, centralized means of value-add, as is the case with standard employment, people seek the success of the company because they have sole and full-time commitments to the companies. Their livelihood is tied with the success of the company. This is a vested interest.
On the other hand, bounties were transient contract-like opportunities with little to no oversight on results, thereby fostering a mirage of decentralized work when in reality it was just a fluff generation engine. Decentralized work does exit in the rapidly growing gig economy, but the traditional form of the gig economy, while applying strict results analysis:
- operates on expensive centralized platforms, making them unviable for tokenized startups
- does not involve payments in unminted tokens
Bounties were an attempt to address the problems of the traditional form of decentralized work, ergo the gig economy. They failed.
It was a Broken System.
It is important to recognize that bounty hunters are not at blame. There was a demand for fulfillment of falsified numbers by project founders, that made tens of millions from ICOs, and people took the opportunity to provide the supply.
The blame falls on the broken system as it was designed to have nothing to do with forming a community, generating value for the project, or making a positive and organic buzz around the development.
After Early 2018, Bounties aren’t Even Worth It
According to Topkie.io from July 2018 to June 2019. The average bounty hunter income was $90 per month. While doing their research, Topkie.io discovered that due to weak token performance for projects that utilize bounty, the promised rewards often depreciated in value by 90%, meaning people who had agreed on $900 eventually received $90.
Important notice! This research is not combining bounty campaigns from projects that failed to deliver on token listings. If those are counted, the average depreciation of realized reward would drop below -90% even.
Realized bounty hunters incomes (Topkie.io)
How to Decentralize Value Creation and Work, the Right Way
The incredible opportunity to add value to a rising startup in a field that can disrupt traditional sector, without making a commitment to join its team full-time, is a privilege. It should be available only to supporters, ergo hodlers.
Hodlers have a vested interest, ensuring genuine interest, which leads to value-add on the basis of quality sourced from the community members’ varied unique skillsets, rather than quantity. In order to organize decentralized value add from hodlers, DAO Makers has developed “Social Mining,” a pluggable software solution that allows projects to reward hodlers that contribute to the ecosystem, all while retaining the decentralized and non-custodial nature of blockchain developments.
This proprietary system turns the typically passive community into proactive hodlers that create “moon” for the project. Social Mining allows users to stake their tokens as proof of vested interest, offer value-add to the project, and then validate each other’s work through their personal dashboard. The more a user stakes, the bigger validation power he/she receives since people with greater stakes have the biggest incentive to reward the most quality work. Subsequently, this factor adds a new utility to the token, growing its usage and desirability. Additional factors in validation power, such as consistency in high-value work, diversify validation power in order to give influence to the most talented members of the community that pur their time and swear into the core growth.
Of course, in order to start working on the platform, there is a minimum stake required (amount varies and is decided by each project). The important part is that the longer users hold, the greater the stake’s weight becomes, thereby rewarding long-term hodlers with greater validation power. This builds a dump prevention incentive while also rewarding non-whales who have a long-term interest in the growth of the project, thereby truly capturing the democratization spirit of blockchain.
The ecosystem becomes a growth engine for projects, a type of DAO dedicated to individual developments. All participants that are submitting their value to the platform are judged by other participants and everyone works for a common goal to make the ecosystem more valuable.
User A will promote project X in the local store, as a result of that promotion, the store will start to accept the project X token. He will upload his accomplishments into the platform and other users will evaluate by voting how much value the ecosystem got out of that act.
If you want to know more about the Social Mining platform, join our telegram group!
Thank you for reading
Ben from Dao Maker