Bootstrapping Web3 Networks: The Limitations of Token Incentives

Finally, I want to double-click on a point we touched on earlier – new token issuance used for incentive programs. While we don’t see this on most of the major L1s (e.g., Bitcoin, Ethereum, Solana), we do tend to see this at significant scale on L2s. Unlike L1s using issuance to incentivize token holders to stake rather than hold idly, these incent... See more

Like the time when Braintrust’s token launched on Coinbase and traded up to above $40, and armies of bots “watched” the short videos in the Braintrust Academy library in order to pick up the BTRST tokens Braintrust offered to incentivize people to learn more about the network. When incentives are baked into everything and backed with a token, you n... See more

Tokens align network participants to work together toward a common goal — the growth of the network and the appreciation of the token.  This fixes the core problem of centralized networks, where the value is accumulated by one company, and the company ends up fighting its own users and partners.

-Participatory decision-making and cooperative business models: From this standpoint, crypto tokens represent one of the most promising innovations for enabling ownership to be distributed and transferred on the internet as easily as information.