Kyodo Dapp — incentive tool for DAO crypto economy
As a part of Advanced Cryptoeconomics Fellowship I will publish 10 Medium blog posts. Each of it will refer to a particular topic that is defined by BlockFellows program. My first analysis from the cycle is about the Kyodo Dapp, the observation from the Game Theory and Mechanism Design points of view.
Please note that I am not an expert on mechanism design and would love feedback on this post.
Kyodo
Kyodo Dapp — incentive tool for building crypto economy for DAO based on Impression revenue model.
Impression revenue model — is an incentive mechanism, a framework to generate individual income for members by instant pays off (tipping) for completed tasks.
The workflow that goes through Riot serves as a database for generating tasks for Kyodo. These tasks could be evaluated and tipped accordingly by other members (collaborators). Tips are taken as points, which further will be converted to a community token minted for current working period. The community token (DF in this case) — is an equivalent for a share of Decent.Fund financial assets.
Kyodo is built on the top of Colony network and has four layers: smart-contracts deployed on Ethereum network, riot bot, backend and frontend applications.
- Smart-contracts system includes proper Kyodo smart-contract and integration with ColonyNetwork.
- Frontend dapp serves to join the community, to track activity, to sign transaction and run governance by creating new domains, to voting on funds allocation, funds management, to distribute token to a new members.
Via the Dapp user assigns his Riot and Ethereum address to receive a profit from the activity within DAO as tips and bounty share*. - Riot bot serves to track members’ activity and amount of tips they have earned within the current period. The Bot communicates with backend to keep records of members activity.
- Backend application with mongo database cache layer is built for instant tipping and to reduce transaction cost in the Ethereum network.
Mechanism design
As an example of DAO to demonstrate Kyodo functionality the Decent.Fund is taken.
Type of the governance
Meritocracy. Merit in Kyodo is going to be represented by NFT token. In order to make a decision a member should have NFT token.
Meritocracy is the idea that decisions should be taken by the entities better qualified for it. Xavi Vives
A set of players
Manager — anyone belongs to domain
Worker — author of tipped action
Evaluator — any domain member with a sufficient funds amount
Fields
Are defined as domains in Colony network. So Decent.Fund have chosen four domains related the activity it’s members have: education, coding, fund management, governance.
Payoff
Member gets a bigger stake while participating in the DAO activity.
Member gets access to domains with valuable information and qualified collaborators.
Member gets merit and a power to participate in Governance domain (decision making)
Member became a part of unique community and able to build a project together with the community specialists in a decentralized fashion.
Token usage
NFT token is going to be used as merit. Due to the nature of this type tokens is’s represents the inherent right to make a decision under the certain domain. NFT token is going to be distributed by the members of the Governance domain.
DF token — the certain amount of Decent.Fund token is required to get the access to a domain. By entering into a domain, a member receives the specific points amount which is equivalent to DF token balance of a member. A member can spend point by tipping others, gain points by accomplishing a task. All the earned point will be converted to DF token by the end* of a period and increase the member asset.
Period*- the time line while tips are collecting. By the end of period tips are recalculated into tokens and sent as a bounty to a members.
Non zero sum game
The gain of one member doesn’t come at the expense of other member. On the contrary, member gets a bigger stake if other members of a community are being active and getting more points.
The Nash equilibrium
As the activity generates the pot (Fund), more activity means bigger pot — the optimal strategy is develop the community and incentivise members to participate in tasks. So Kyodo builds a system of incentives that suppose to reconcile social and individual goals — here is the equilibrium takes place.
Incentives
Instant tipping. At the beginning of a period, every member receives a certain amount of tokens so they can reward others. The amount of that tokens is equal to Decent token balance member has at the beginning of a period.
Proof of activity. Final token distribution is defined by the amount of tips received by a member and represents the share of the community fund.
A member receives a share of new-issued tokens within a certain period. The size of a share depends on the amount of earned tokens in a specific domain and a rate of a reward set for a particular domain.
Estimated earnings within domain:
Domain bounty size: * Tips received / (Total tips within period * Tipping compensation coefficient)
