Outlier Ventures Weekly Brief Issue #8|   View Online
Curating The World With Tokens
Be it social media's echo chambers or propaganda distributed by large media houses, the risks of centralisation are high. Although we are close to witnessing the decentralised web take scale, the tools needed to distribute sources of influence are not here yet. Decentralisation isn’t just for consensus on a ledger, for a true Web 3 world to emerge, we need to tackle other centralised parts of the value chain like certificate authorities (Handshake), location data (XYO, FOAM) and particularly interesting: curation. Although there is much wisdom in the crowd, balancing incentives, punishments and verifying stakes in suggestions from large groups of people helps reach relative truth faster. Token curated registries give a way to do this in a distributed fashion with the help of tokens and blockchains. When effective, they could allow marketplaces or simple lists of people, places, products and the like to be curated by a distributed community with a clear mechanism to punish and reward behaviour. We look at how they function in today’s newsletter.

A token curated registry would require a network (eg: Ocean, Adchain), a community of curators holding tokens and actors looking to engage with the network. Individuals looking to add a new suggestion to a list being maintained by the network could add a proposal to the blockchain and pay a fee in the native token of the registry for doing so. This fee, in theory, would keep spammers away from suggesting random additions to the list. It would also help prioritise additions to be made to the list. Curators that currently engage with the network would then sift through the proposals and approve them in a DAO like model. Fees that were paid for the addition to the TCR are offered to the curators as a fee for doing manual checks. If the new suggestion to the list is not accepted by the curators, a refund is not issued to dissuade bad actors. More on how token curated registries work in Mike Goldin's post here

Since the “health” of a network may diminish with too few players providing the bulk of the value over time, existing token holders have an incentive to actively re-adjust how selective they are with accepting new proposals. As is the case with traditional college applications or investment pitches, as the number of entities applying to the list increases, the statistical odds of their acceptance decrease. This is because token holders would re-adjust the parameters required to enter the list. Similarly, if the number of individuals applying to be a part of the network diminishes in quantity and quality, the stakeholders within the network would re-adjust the parameters used to accept an entity into the list. In other words, just like mining difficulty in Bitcoin re-adjusts itself algorithmically to meet the hashing power on the network, individuals curating the list would re-adjust the difficulty of being on the list on basis of frequency and quality of applicants. More on the challenges around implementing a functional TCR in Qiao Wang's post here. 

Image: Implementation of Adchain's Token Curated Registry

Token curated registries are a crypto-economic instrument that is still in their nascent, early stages. A few functional, live models have been launched in the wild. Adchain's publisher registry is currently live and maintains a list of 111 domains here.  Their explainer on how blockchains are being used to curate the list is an interesting read to understand why TCRs will matter for advertisers. Similarly, District0x uses a token curated registry to maintain a list of districts that have been accepted to the district0x network. Our portfolio company Ocean Protocol uses them to maintain a list of good actors that stake on the network. More on the matter in their whitepaper here.   A longer list of startups using blockchains with token curated registries is covered in this post by Ian Edwards 

Although token curated registries are an interesting concept, challenges in user experience and awareness may hinder many from adopting it. 2019 may well witness the first prominent TCR based project come to scale. If implemented effectively, they are one of the ideas that may have a direct impact on consumer-facing businesses. Much like many of the early concepts in web 1.0 (eg: search engine algorithms), they wait upon a product like a Google to take them to prominence. For a complete list of TCR related literature, we suggest Messari's TCR Reading list here.  Explore them over the weekend! 
Interesting Reads For The Weekend
1. Audiobook crowdsourcing with blockchainsLink

2. How Alphazero mastered its game - Link 

3. Video Games: The Addiction -  Link

4. Making money selling personal data -  Link
“The trouble with most of us is that we would rather be ruined by praise than saved by criticism.”
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