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Earn graphs while doing X: more than just Play to Earn

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In the world of Web3.0, the resource coordination network may be able to make money for everything possible

People, as long as they are doing work, they are generating value, but the difference in work leads to the difference in value conversion rate. Any value can be realized, but the realization rate is uneven. The agreement unifies work input and value output, which greatly reduces friction and improves conversion rate.

Some time ago, the explosion of Axie Infinity made playing while earning The (Play-to-Earn) model is widely discussed and Filipinos have benefited a lot from it. However, playing is not the only way to make money. In the world of Web3.0, the resource coordination network may make it possible for everything to make money.

This article is from Collaborative Fund, which lists the differences of X-to-Earn possibility and analyzed. Rhythm BlockBeats translated the full text:

The author Stephen McKeon is one of the partners of Collab+Currency

"You might work for an agreement someday."

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This is a quote I say to my students at the end of my cryptoeconomics class. This sentence was said to the students when I first taught this course in 2017. At that time, it seemed very unreasonable to most of them, but when I say this sentence again today, there may be no one. Think so.

The crypto economy has already begun to change every bit of our future of work. They are intertwining the way we play, learn, organize, socialize and invent with income and ownership. This also means that all aspects of our lives are changing, far beyond the field of work.

I also have an article detailing the formation of this new alignment elements of each, but in this post I want to focus on how forward-looking applications turn labor into income in the context of the cryptoeconomy.

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Economists Jensen and Meckling famously wrote 45 years ago that:

| We should realize that most organizations are nothing more than legal fictions, the nexus of a series of contractual relationships between people.

This kind of "hub" can Be it a business, limited liability company, non-profit organization, or government, they need to coordinate all contracts, and in particular, be able to improve the operability of the flow of resources between individuals within the scope of the contract terms.

In the encrypted economy, the resource flow in the smart contract hub is controlled by Code enforced, not through legal intermediaries. That is, people can now join forces to form complex contractual relationships without a legal fiction acting as a coordinator. What this means for organizations is that the rules are changing.

Decentralized autonomous organization (DAO) is the hub for forming smart contracts One of the mechanisms of , we can understand it as a shared treasury among members, where the payment method of funds is governed by hard-coded rules. Just as a limited liability company can pool resources to achieve any number of goals, a DAO can be used indefinitely for collective appeals. I would like to contrast these two forms of organization using the example of an investment club.

Suppose 50 friends decide to share their baseball card collection, So they formed an LLC, opened a bank account, deposited $100 each, and bought baseball cards on eBay. Here are the preparations and safeguards for each of these operations:

Forming an LLC: Start by drafting an operating contract and gathering the signatures of all 50 members. After that, the filing fee is paid to the state government, and an annual report is required to be submitted every year in actual operation.

Opening a bank account: Additional paperwork required, but more important It is necessary to designate a bank account holder that everyone agrees with.

Deposit Funds: If members are located in multiple countries, their There may be some friction between them, and someone needs to mediate between them so that the deposited funds can be coordinated.

Buying Assets: Members need to trust that bank account holders will comply At the same time, they also need to develop internal control measures to supervise and strictly control assets.

But when the company has 1000 people, the problem becomes more for complex. At this time, if you want to establish trust in the organizational form of the limited liability company and adjudicate disputes in a timely manner, you need to rely on the law.

Flamingo DAO is a group of 64 collectors, I Also one of the members. Comparing this with the above situation, we can see that we are pooling resources through DAO to build a shared collection of NFT. The following is the specific situation of its preparation and guarantee work:

Setting up DAO: We need a software with replication function, and related tools are also being developed, such as Tribute DAO, once successful, such tools can make it easy to set up a DAO. At the same time, the establishment of a DAO does not require a filing fee, because it is only stored in the cloud, and all activities are visible on the chain in real time, so there is no need to submit an annual report.

Opening a bank account: not required as the DAO smart contract itself Can be used as a digital wallet.

Deposit funds: We need to send ETH to the DAO smart contract, I It only took 30 seconds to complete. This is so fast because under the hard-coded rules of the smart contract, I don't have to worry about assets being paid out without consensus.

Purchasing assets: We use personal digital wallet signatures to vote on the chain , and reach a consensus on what to buy. Once the purchase is completed, the assets will be held by the DAO smart contract, and it is impossible to be swept away by anyone. So, while most of the Flamingo members didn't know each other when the DAO was founded, that didn't pose any problem.

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This investment DAO is just one example, a DAO can be used to coordinate almost any activity in multiple digital environments, and its reach may gradually extend to the real world . Some DAOs today act as nonprofits and community development foundations, also known as grant DAOs. In addition to this type, there are also protocol-type DAOs, which can operate decentralized financial applications. At the same time, there are media DAOs that will lead the news industry and the future of information dissemination, social DAOs that can leverage the economic value of social networks, and service DAOs that do a variety of jobs, so I can’t do my best. DAO is, or will be, the organizational form of many of the applications I mention below.

Compared with traditional organizational forms, DAO has at least three significant advantages. (i) Rapid capital formation (ii) The voting process is transparent, easy to enforce, and most importantly, (iii) The DAO reduces fiduciary requirements for shared assets.

But at the same time I must point out that DAOs are not without challenges, Decentralized governance is still difficult, free riders and major shareholder problems still exist. I address these issues in the “Participate to Earn” section below.

It is also worth noting that although smart contracts free us from relying on It depends on the trust between each other, but it also means that we need to completely rely on the code. However, for this problem, we not only have combat-tested code to solve it, but also a team of super programmers secretly assisting. These people will not become our troubles, on the contrary, they will provide us with help. White hat crypto hackers like Samczsun, Immunofi, IntoTheBlock are acting as sentinels, fixing code vulnerabilities before someone attacks them. They get not only non-monetary compensation like reputational capital, but also monetary rewards like bug bounties. Any programmer, regardless of ability, can join this team without submitting identification or a resume, and from them we can also see what the future of work will look like.

Aaron Wright's journal article and Coopahtroopa's post on Mirror DAOs are extremely well researched, and if you want to delve further into DAOs, they have other articles in the field that you can refer to.

Inventory of several [ ]-to-earn modes

As we all know, capital and labor are the key factors in the two major productions. In the encrypted economy, capital or labor input can obtain benefits.

Our commitment to Capital-to-Earn The pattern is not new, as it has been around since the day Bitcoin was first launched.

In PoW protocols like Bitcoin and Ethereum, anyone Capital can be deployed on hardware and electricity to mine blocks and earn income.

In addition, in PoS protocols like Solana and Avalanche, anyone All can deploy capital to native assets and mortgage them to obtain income.

Recently, people have become more and more active in liquidity mining With more and more options, they can make money by deploying capital into lending protocols or decentralized trading venues.

For a long time, these are the ways people get The biggest source of revenue, and I think they will be further developed in the future. For example, the above-mentioned method of obtaining income from pledged assets is likely to become the largest category of fixed-income securities in the world in the future, but this is another story.

Today I mainly want to introduce the Labor-to-Earn model, which can maximize the use of these new coordination mechanisms and convert human resources into capital, which is more attractive. This model provides unprecedented access to earning opportunities for more people and represents an excellent development in the democratization of economic empowerment.

Let me disclose in advance that Collab+Currency has invested in what I mentioned below Many projects that we have come across, so my position is not unbiased, on the contrary, we are actually very purposeful. Because we firmly believe that the future of human connection will be driven by these economies, and our investments are enabling that future.

Play-to-Earn

Play and earn games are all the rage this year, and Axie Infinity is one of them. This new type of game is very popular not only in the gaming market, but also in the entire crypto economy.

The biggest feature of this game is the player’s ownership of the game, including Game territory (Lunacia), game characters (Axies), even new characters created in the game (also called breeding), and in-game currency (SPL and AXS). It is not so much a game as it has become an economic model.

The model of players earning game currency through games has existed for many years However, unlike previous game currencies, the game currency in Axie can be truly exchanged for real legal currency. But of course, how much you can make depends on your game skills and time investment, and for top players, it can be hundreds of dollars a day. In some countries, the game has even become the preferred way to make money.

But you may ask, where does the money come from ? Regarding this question, I would like to ask, how are other incomes generated?

The answer is that they come from the economic activities of capital and labor input middle.

Use a story that is not in the encryption world as an example: Suppose I buy A cow and a bull. I labor to milk the cows and sell the milk for an income. Later, I can breed more cattle, and these calves are my newly created value. If someone wants to come and buy my calves for milk or breeding, I can sell them and earn a return on capital and labor investment. Although this is just a very simple example, the mechanism of Axies is actually roughly the same as it, except that in the game, the situation becomes that the capital is the character you buy, and the labor you pay is that you get from the game economy while playing the game. In the process of earning SLP, and you can also use these SLP to create more value. Therefore, the value of SLP is reflected in the fact that it is a necessary investment in cultivating characters, and the value of cultivating characters is reflected in the fact that it creates salable commodities.

In addition, we need to figure out that in this mode, Various assets in the game exist independently of the game. That is to say, the game assets are owned by the player, not the developer of this game, and developers of other games can also use these game assets to build their own games. This also means that one day my Axies may appear in various other games, and the original Axies gameplay will be further upgraded and expanded.

In the context of the ever-increasing user scale of games like Axie, there is still It’s worth noting that while these games are loved, they don’t have to be more fun than games like Fortnite to attract new users, they just have to be more fun than going to work up. Because of this, this type of game can easily be accepted by the public, and the number of users can naturally achieve rapid growth.

Axie’s daily active users recently passed the 1.7 million mark, a For a game based on cryptocurrency, this scale is already very large. However, that number is insignificant when you put that number into the addressable market, as a full 1.9 billion internet users live in countries other than those with over 50% internet penetration, living on less than $20 a day. life, they can all be our potential users.

This revolution of earning money through gaming is still in its infancy, it will play a major role in the future of work in emerging and frontier markets, and it will gain more momentum as financial services continue to improve space.

If you want to learn more about this model, I I recommend you to take a look at the research done by Packy McCormick, where he analyzes this issue comprehensively and in depth.

Learn-to-Earn

Paid learning has always been the mainstream mode of acquiring knowledge. In this model, the cost of education is borne by students, taxpayers and donors. Even for skill learning, for example, if you want to obtain the qualification to use Microsoft products, you need to pay a fee to it.

The RabbitHole website is disrupting this model by making it possible to learn to earn money . The platform protocol will issue a series of tasks and reward new users for completing these tasks.

This is a bit similar to how Adobe wants you to learn how to use Photoshop, And give you a few stocks. However, those platforms belong to the network, not this centralized software developer.

While such sites are becoming more valuable as more people use them , but we should also recognize that potential users are still learning how to use these sites. Therefore, if these potential users can be rewarded and encouraged to learn to use the website, it will be a win-win situation for both parties. Because not only can the website gain more users and enhance its own value, but users can also take this opportunity to learn new skills and obtain ownership of the protocol.

In addition to this direct payment for learning how to use the protocol, You can also build a personal profile on-chain. Since all on-chain activity is publicly visible, everything you do, when and where, will be recorded as direct evidence of your resume. Rabbithole converts these activities into experience points (XP), which determine your "level" in RabbitHole.

Before interviewing the last intern, I asked him to put The wallet address on the chain was sent to me, so that I can check his resume on the chain in advance, so as to decide whether to call him for an interview again. Next time I might just ask the interviewer for his RabbitHole rating without looking at his resume.

Create-to-Earn

In the eyes of creators, it is of historical significance for them to enjoy property rights for digital assets. this means. A new renaissance is coming, and people will be able to earn income through creation again.

There is an anecdote that just reflects the rapid development of digital creation. In September 2020, when Derek and I wrote "you're ignoring crypto art," no crypto artist had sold more than $100,000. However, we predicted at the time: "The era of million-dollar digital artists is coming."

After just six months, Beeple’s work is Sold for $69 million at Christie's. Today, million-level auctions are commonplace, and every newly released work in the Art Blocks curatorial area can make an artist a millionaire, and there may be billionaire-level digital artists in the future.

The same thing is happening in other fields, music, photography, writing Other types of creative digital works will also gain more attention. As long as you can create likable digital work, it's perfectly feasible to make a living from the crypto economy.

Furthermore, many of these platforms do not set any permissions, meaning you You can start creating anytime. For example, you can now add or upload music tracks and make playlists in Audius. Once these works gain attention, you will be rewarded with AUDIO tokens. Derek and I have written several in-depth research articles in this area, in addition to the above article on crypto art, you can also check out these two articles on Audius and blockchain-based media generation.

Judge-to-Earn

This way of making money exploits the difference between hard and soft information. Hard information is objective and quantifiable. For example, the final score of the New York Knicks game is hard information. The processing of hard information is done by passing the oracle to the smart contract. Of course, we need to trust the data source, but it is relatively easy to integrate hard information with smart contracts afterwards.

However, soft information requires our judgment. It is qualitative rather than quantitative. Take someone's engagement on a Discord channel, for example. The number of posts is hard information, and whether those posts add value to the conversation is soft information.

As various organizations continue to transform into smart contract hubs, we will Soft information needs to be introduced into the contract environment. Phrases like "best efforts" are common in contracts and are soft in nature, but it's unclear who should judge such information.

The emergence of "subjective oracle" will solve this problem, through With a decentralized protocol, everyone can judge information and get corresponding rewards. In the process, they also build a personal reputation that directly affects their income and earning opportunities. Wikipedia has shown us that people are willing to put in the effort, judgment, and curation just for the sake of reputation, even more so if there are financial incentives to do so.

Several operation methods and application scenarios for making money by judging:

(i) Decentralized Judicial Adjudication: In UMA, Aragon Court and Early results in this area can be seen in Kleros.

(ii) Subjective evaluation: Upshot is studying peers of NFT value evaluation predictive model.

(iii) Curating: SuperRare and JPG are working on crypto art Decentralized curation. Not only that, but I wouldn't be surprised to see decentralized curation expand into fields like the news industry that use subjective mechanisms to sort out the good and the bad.

(iv) Credit: Banks have traditionally made credit decisions The final authority, the credit risk control officer, makes loan decisions by integrating hard and soft information about the borrower. DeFi has solved the problem of the mortgage market, but under-collateralized loans are still a big problem. We also need to develop on-chain measures to assess the probability of repayment, and these measures also need to act as a deterrent to loan defaults. While some measures can be done automatically, we can also expect to see a growing number of decentralized credit risk officers, who will also be empowered by capital holders to integrate soft information on potential borrowers. Smart contracts will still retain asset dominance, so that these DeFi credit risk control specialists have no jurisdiction over assets and can get a share in loan payments, but it also means that they are subject to loan default risk.

Earn by participating

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We will participate in decentralized organizations in various ways and get corresponding compensation. At the same time, community managers, administrators, regulators, operators Authors and developers will also join in. Instead of negotiating salary with your superiors, you can apply directly to the community for token grants through the governance process.

The construction of the governance process not only requires a lot of manpower input, but also needs to clarify Many questions. So what I want to reiterate is that decentralized governance is not easy, and even difficult. Governance structures in most organizations are representative, such as corporate boards, school boards, or Congress. When these governance structures were created many years ago, it was theoretically impossible to coordinate voting related matters on all issues. The emergence of cryptocurrencies has solved this problem, and people can now use digital wallets to participate in voting simply and quickly.

However, this is not just a matter of coordination, it is also about knowing cost of participation. Citizens don't want to vote on every act of Congress, and shareholders mostly don't want to study and weigh every board resolution. Therefore, we will elect some people to serve as our representatives, hoping to let them bear the cost of knowing and give them compensation. However, this also creates an agency problem, which prevents the end result from being what we expected.

The emergence of encrypted governance may subvert traditional concepts such as elections and fixed terms , turn to the way of dynamic proxy. That is to say, I can either give my voting rights to a representative who I think can represent my own interests, or I can take that power back at any time, or give it back to another person. Logically speaking, this approach is completely feasible in cryptocurrency networks, and it is very simple to operate, but whether it can alleviate the agency problem remains to be considered.

These representatives or agreement politicians will be the model for making money by participating important parts of. At the same time, how to compensate them still needs to be further explored.

At present, their compensation is still not clear, for example, A16z once Said that the only compensation they can provide is reimbursement of expenses. Reputational capital built up during their tenure as a representative is well compensated if it earns them income later on. As with political appointments, they will earn less immediately while in office than they would after leaving office.

But I personally don't think they should just get reputation capital For compensation, the protocol should also use direct means to reward them, that is, governance mining, a compensation similar to that paid to network participants such as validators or liquidity providers. At the same time, the development of these models has just started, and the incentives need to be further adjusted and perfected, but once they are used on a large scale, it is likely to become a source of motivation for people to make money through participation.