Token Curated Registries

As humans we’re social creatures at our core. Part of being social is the act of having groups of people that we have the need to belong to or be accepted — whether it’s being part of the “elite 1%”, the “cool kids at school” or “working at company X”.

In real life it’s relatively simple to exclude people who don’t fit in a group through social, political or economic ways. On the internet this problem is much harder to do.

Let’s take the problem of advertisers trying to find publishers (websites that have advertisements) that are legitimate and not scams (realtrumpnews.com). You might create a company that promises to create a list of verified publishers although how long would it take to get verified? Now let’s say say 1000’s of publishers want to sign up, would you hire more employees to filter through? Why would each employee be incentivised to do a good job, they’ll still get paid their salary regardless of their actions. What if a malicious company bribes an employee to be verified?

As you go down the rabbit hole you suddenly realise it’s almost impossible to create a large, curated, high quality list of anything. That’s where token registries come into play. However before we get into TCRs we need a quick primer on game theory.

What’s Game Theory?

Game theory is “the study of mathematical models of conflict and cooperation between intelligent rational decision-makers” — Wikpedia

In simple english, it’s thinking about how a system will be impacted based on the influence of how people are driven/incentivised. Employee vacation is a perfect example of this. Research from the U.S. Travel Association says 40% of American workers are not using all of their vacation days.

Say a company permits 4 weeks of annual vacation for employees. In a highly competitive environment where everyone’s trying to get ahead of each other, this will eventually lead to some employees only taking 3 weeks of vacation in order to get ahead/look better than their peers who take 4 weeks. This eventually leads to a zero sum game where you have employees taking less and less time off. Some companies have tried to combat this problem by offering “unlimited vacation”. Although what they don’t realise is it’s even more harmful for culture. Suddenly employees think “I’ll take no time off so I look better than Jim who took 1 week off” instead of “I’ll take 3 weeks off rather than 4 weeks to look better than Mary”.

TCRs + Game Theory = Profit

Think of token curated registries as a game in which the aim is to create a high quality list and the reward is for the value of the cryptocurrency-backed token to go up in value. Game theory systems such as TCRs take into account game theory for each party in a system to ensure incentives for individuals align with the larger system. In Bitcoin, the most profitable strategy for a miner is honesty.

Tip: just like Bitcoin, honesty is the most profitable strategy in real life.

Let’s say we have the NYTimes, Wired, Wikipedia, The Onion and Gizmodo as the first 5 publishers in our registry who own 100 tokens valued at $1 each. Now along comes RealiPhones.com who wants to be part of the registry in order to get high quality advertisers paying for ad space. They’ll “stake” 50 tokens in a smart contract for a 2 days. In the mean time, all publishers will be notified that RealiPhones wants to join their little list of publishers. All the publishers check out the website and aren’t convinced it’s a legitimate website. They’ll then vote against having RealiPhones listed and as a result will earn 10 tokens from RealiPhone’s lost 50 token stake 2 days later.

This achieves two things:

• Publishers in the list will check for newcomers since there’s an economic payout if they turn out to be bad
• If they add the malicious actor in the group, the value of the token goes down. This is because advertisers stop trusting that it’s a high quality list.

It gets even more interesting though, let’s say NYTimes starts to publish political news that damages the reputation of the advertisers advertising on the site. Members of the registry can challenge NYTimes to see whether other publishers agree it should stay or be removed from the list.

Eventually you can have a decentralised, curated list that keeps growing without having to create gate keepers who keep people in and out. It’s exciting to think the possibilities this kind of economic game could have.

If you’re interested in learning more I’d recommend reading the AdChain white paper which does exactly what I just described in the example above!

Get Best Software Deals Directly In Your Inbox