An homage to Chuck E. Cheese
This post aims to explain an evolution of reduced coordination costs using crypto and the serendipity of how I stumbled upon the evolution of curation economies.
In 2017, Mike Goldin, Ameen Soleimani and I co-authored a whitepaper formalizing a simple staking construction we referred to as a Token Curated Registry (notable feedback from Karl Floersch who was an ETH2.0 researcher at the time). Two years later, Ameen and I along with Arjun Bhuptani, Layne Haber and Rahul Sethuram (the co-founders of Connext) co-authored MolochDAO.
While the TCR construction seemed sound from a mechanism design perspective and upholding the values of permission-less, decentralized and censorship resistant systems— there was no consideration or recommendation on how people would communicate or could coordinate to vote.
With MolochDAO, the permission-less feature was dropped in favor of “ragequit” to avoid capture. It was well received but again, the human element of communication and coordination was never built in to the system.
MetaCartel was different. It was born from a telegram group that started during ETHSF 2018. We were a bunch of user experience enthusiasts that had a shared interest in meta-transactions and crypto usability. There was already an online community. The DAO component was added after the core community had been established.
It seems obvious looking back that this evolution would inevitably lead to Collab.Land. What was impossible to anticipate was $MEME, a project that started out as a joke where the only feature was a Collab.Land powered token permission Telegram chat group.
It was (and still is) fascinating on many levels but $MEME was a bit hard to explain and at first blush seemed somewhat convoluted. You purchase $MEME to stake it to get pineapple points. You use pineapple points to purchase NFTs.
All Hail the Mouse
The analogy I used to explain $MEME was Chuck E. Cheese.
No, I’m not talking about the random shade Chuck E. Cheese throws on crypto , I’m talking the two token currency system that all 80's kids instinctively understand.
For the non-boomers out there, it goes like this :
- You purchase tokens with cash
- You use tokens to play games
- You earn tickets when playing games
- You purchase prizes with tickets
First off, all the prizes were crap. But as a kid, it was fun to come home with prizes from a hard days work doing what you loved, playing games! Chuck E. Cheese was UTOPIA.
Chuck E. Cheese was UTOPIA.
Now you couldn’t purchase prizes with tokens. Chuck was not your average mouse, he knew this would reduce tokens to a medium of exchange and I’d like to assume he knew MoEs pose unique challenges.
The Chuck E. Cheese analogy made sense to most people, they understood how the $MEME game worked.
With my previous experience with TCRs and DAOs, something clicked when I took a step back and examined $MEME.
TCRs never really took off. While the game theory was sound, there wasn’t much consideration towards community building and incentives. You need a community to form around the token to do the work that would accrue to the token. In other words, there was no reason to holdl. Users were incentivized to NOT accumulate, that would make the utility of voting expensive. The mechanism design did not incentivize a curation community to form.
MolochDAO solved the community curation issue by forcing membership to happen via recommendation. Membership only happened through nomination from a current member. It also removed any and all forms of speculation by not having a token. However, there was no way for value to accrue based on the work performed by the members of the DAO. MolochDAO survival depended on new recruits (with no recruitment incentive).
$MEME gave a reason for people to hold the token — farming Pineapple points. Pineapple points became the “medium of exchange” (MoE), allowing $MEME to become a voucher in to the $MEME community. This not only reduced sell pressure, it allowed a community to form around the token. It made sense, looking back, that $MEME should start with token permission communication —group curation requires communication.
This gave the community a purpose. The second order effect is that $MEME holders now are incentivized to pick the best NFT artists. The incentive is to provide the best value for their Pineapple points. (Just imagine if Chuck E. Cheese token holders could token vote for what prizes could be earned with tickets?)
The Lightbulb Moment 💡
NFTs! They are thought of as digital art. However, they define licensing rights and ownership for any digital asset. Digital art is just a vertical that is seeing the most traction at the moment with NFT application. What if the token could also be used as a share in voting? Think Moloch type DAO that also has a “farming” component.
This provides an economic incentive to curate the NFTs that are going to be sold. Again, the NFTs could be anything. Let’s illustrate with an example from advertising (the initial use case that started that kicked off the TCR whitepaper). $ADS could be the token used to curate NFTs that represent ad placement on publisher websites. $ADS are staked in order to farm Publisher points. These publisher points are used to purchase NFTs. Now, $ADS holder can sell the NFT at some market price (either via shards on an AMM using ERC-1155 or via auction). The great thing about NFTs is that revenue share can be embedded within the NFT as well. If you squint hard enough, you can see the parallels with $DONUTS but generalizable to any publisher site.
I leave it up to you dear reader to apply The Curation Economy Model to your specific industry or use case and would love to hear about them in your replies!