An attempt to establish a similar system to Dash cryptocurrency in 2017

I think on the technical side, there’s a very clear way forward with a few design choices yet to be made.

Before we go there, I’d like to establish what the goal of this partnership is for each stakeholder. Let me sketch my view on it:

Stakeholders

  • DASH ecosystem: aims to reduce early-adopter bonus by (re)distribution of DASH to provably unique humans. This promotes inclusivity and may onboard an entirely new audience
  • Encointer network of local communities: may benefit from additional incentives to start/join/grow communities
  • individual member of an Encointer community: Benefits financially from the DASH dividend - on top of the income issued to them in local community currency.
  • Kusama & Polkadot ecosystem: lending it’s security to the Encointer network (Common-good Parachain): may benefit from collaboration with the DASH ecosystem

Side Effects

While the Encointer association (which I represent here) has no way to prevent anyone form granting DASH dividends to members of Encointer communities, we have to consider the possible undesired impact of such a dividend should we be actively involved. Above, you suggest 4592 DASH for all Encointer community members. This today is more market value (~200k$) than the current market cap of all Encointer communities combined (~40k$). This means we would create a significant incentive to join or create communities where the local community currency is just a byproduct and may get no attention at all (no real value from acceptance points will be backing the currency).

This - by itself is no show stopper as it still contributes to some of our goals, i.e. the basic income/dividend.

One caveat may be that existing communities have no incentive to support new communities (or inviting new members within their own community) because they would have to share the dividend. Such a counterincentive could cripple the Encointer network as a whole. This could be prevented if we could define a per-capita dividend to be distributed instead of a fixed amount.

But more importantly, we need to be very careful about the security assumptions of our sybil-resilience mechanism: We assume the majority of a community to be honest. This assumption is realistic if the pains of cheating are felt and observed within the community itself: A community currency which can be cheated will just lose its value and disappear because the stakeholders can themselves observe the cheating happening and no one will accept that currency for payment. However, with the main driver being a community-external incentive, I’m concerned about this assumption because the giving party (DASH network) can’t really observe the honesty of all receiving communities and their members.

IMO, the proposed setup conflicts with Elinor Ostrom’s rules for managing the commons, specifically these rules:

4. Commons must be monitored. Once rules have been set, communities need a way of checking that people are keeping them. Commons don’t run on good will, but on accountability.
5. Sanctions for those who abuse the commons should be graduated. Ostrom observed that the commons that worked best didn’t just ban people who broke the rules. That tended to create resentment. Instead, they had systems of warnings and fines, as well as informal reputational consequences in the community.

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