Incentive markets with nCent
In 2009, DARPA hosted the Red Balloon Challenge. The first team to find 10 red balloons scattered across the USA would win a $40,000 prize. Shockingly, the MIT Media Lab organized a team that solved the Challenge in less than 9 hours, with only a few days of preparation. Their solution used recursive incentives to reward all the people who helped recruit balloon finders: If the MIT team won the challenge, $4000 would be allocated to each balloon’s chain of finders & recruiters: $2000 to the person who found it, $1000 to the person who recruited the finder, $500 to the person who recruited the person who recruited the finder, and so on.
In this experiment, the MIT team proposed an answer to the problem of attributing value in social networks: recursive incentives. Recursive incentives reward people not only for doing the work, but also for contributions in the form of connecting the jobs to the worker. This allows influential nodes in a network to earn higher expected payoffs, rewarding them for the higher portion of network value they bring in.
Meta Network
nCent is a generalized protocol. Specific applications and business that leverage incentives can be built on top it. Over time, these application layer networks have the potential to cover significant areas of economic and social activity taking place over the internet today. Users will ultimately come up with novel ways to put nCent’s incentive structures and technological foundation to use.
Sample Application
Cultivating a loyal fan base is an existential challenge for any sports or fan-based brand. A fictitious professional sports team, “The Hometeam”, wants to stay engaged with its existing fan base, acquire and retain new fans, reach the key millennial demographic, and maximize engagement, merchandising & concessions. And do all that cost effectively.
The Hometeam’s ad agency acquires NCNT and stamps them to create FanCents. These FanCents are a novel, nCent-based coupon and engagement program as an application on the nCent network. Hometeam emails FanCent to its fan list. Alice gets a FanCent; she can:
- Redeem it right away for $5 off a team jersey, or
- If Hometeam wins, Alice can use the FanCent to get $10 off a team jersey, or
- If the star player scores, Alice can use the FanCent to get $20 off the his jersey, or
- If Alice is not interested in buying a jersey, Alice can send her FanCent to Bob, who buys a “star” jersey. Bob gets $20 off the jersey; Alice gets $10 for doing the referral. If Bob instead sends the FanCent to Carol, who buys a “star” jersey, then Carol gets $20 off the jersey, Bob gets $10 and Alice gets $5.
The Hometeam knew up front that their discounts/referral fees would total to under $40 and designed the program based on that budget. Unlike coupons, this nCent-based campaign is cost-effective to run (ex-merchandise discounts), can scale in multiple geographies, and speaks to millennials through its viral potential. FanCent boosts fan engagement by incentivizing a vested interest in Hometeam winning. Hometeam can effectively find and acquire new fans, by enlisting an ad hoc recursive affiliate network to sell jerseys. All network users, fans or not, contribute to the Hometeam community.
As an added incentive, the Hometeam drops geo-tagged FanCents onto certain seats in the stadium and TV screens for home viewers at halftime. Then, fans use their augmented-reality (AR) wallet apps to discover and pick up the FanCent. Furthermore, the Hometeam establishes an incentive: if 100 fans buy jerseys during halftime, everyone gets a free hat! The incentive structure can accommodate features such as an expiration date, limit on number of FanCent held by each fan, and different geolocation-dependent redemption policies.
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