Prysm Group
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Blockchain Incentive Structures: What they are and why they matter

Photo by Jordan Whitfield on Unsplash

What are incentives?

An incentive is any design element of a system that influences the behavior of system participants by changing the relative costs and benefits of choices those participants may make.

Incentives are everywhere

University course grades, for example, provide powerful incentives for students to study hard or even to cheat, all without the university or the course instructor giving the student a dime.

Examples of incentive levers in traditional settings

Why incentives matter for cryptocurrency

I have written before about an experiment at MIT which gave each undergraduate student $100 worth of bitcoin.

Other economic incentive systems in blockchain

There are several fields of economics that focus on how the design of systems influences behavior. Three vital areas are contract theory (which includes the study of pay-for-performance), market design, and the economics of information.

Incentives are the foundation for blockchain platforms

We at Prysm Group utilize these three areas of economics to design platforms for blockchain ventures. These three pieces incorporate both tokenized financial rewards and non-monetary incentives, such as reputation systems, in order to shape the behavior of the community so that the vision of the founders can be realized.



An economic consulting firm specialized in incentive design and token economics for blockchain and DLT implementations.

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Cathy Barrera, PhD

Founding Economist at Prysm Group (, blockchain economics and governance design services