Tokens as a Form of Organization and as Commons

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Discussion

A Token is an Organization ... and a Commons!

Rutger van Zuidam:

"A token ecosystem is more than a blockchain or “coins”. It is an information (also value) carrier. An economic structure where multiple parties, often with conflicting interests, coordinate their actions coherently — without any formal organization in the conventional sense of the word. All coordination is literally encoded in the protocol, including the governing and regulatory aspects. Compare it to traffic rules and laws.

This has given rise to a whole new area of economics: token economics; a mix of micro economics, game theory and behavioral economics. Again, the hard work has to be done before the coding starts. What are the goals of the ecosystem, what are the actors involved, what are their motives and goals and what rules and incentives do we need to align all these different actors and interests?

This is not so much about software engineering. This is about engineering complex systems. It’s about creating interconnected collaborative communities. Once launched, a token ecosystem can be a self regulating organization. No one is in charge, and it is owned by itself. We know relatively little of the needs of this kind of organizations. Should it have a specific legal framework? It’s own regulatory framework? What kind of standards will it adopt or reject and why? How will it fund itself? How will it fund its changes? Which changes? The fact that these organizations are digital and (thus) borderless makes answering these questions even more difficult. But that doesn’t mean there is no way forward. On the contrary, there is so much of this in the making right now and we can only find out how it works by actually putting this to work.


Blockchains and Tokens are Part of the Digital Commons

One of the most interesting aspects of open blockchains especially, is that something (code, data, protocols) has come into existence that is not owned by any private or public entity. It is not unique in this respect — there is a long tradition of Public Domain and Open Source software, and there is a large amount of digital content in the Creative Commons. But still, it is relatively rare that valuable resources are created, maintained and upgraded outside the scope of both the state and the private sector. It seems to defeat the economic law that is known as “the tragedy of the commons”.

The commons, of course, refers to the pre-industrial communal meadows that existed throughout Europe. But the commons never really vanished, in Europe. Many institutions, from building unions in Britain to vinicultural co-ops in France to the “waterschappen” (polder and dike authorities) in the Netherlands have strong communal characteristics. One could say that the commons are deeply rooted in European culture.

In the digital domain, the commons have been brought up as an alternative to what has been dubbed data capitalism, platform capitalism or even surveillance capitalism. Because of the strong network effects in the digital economy, markets have a tendency towards monopolies. By putting infrastructure, protocols and certain data in the commons, one can create “fat protocols” (UPDATE: These are more precisely described as Application Layer Protocols, as suggested by sebnem), so that a much larger part of the network value falls to the community — and private companies can offer their services in competition on top of that, without fear of monopolization.

To sum it all up: #commonization

… we have learned that the real value of blockchain and tokens lies in the possibility to “commonize” important parts of the digital infrastructure. At the most fundamental level, we are talking about only a handful of entities: value, identity, maybe two or three more. One level higher, we envision things like a commonized infrastructure for energy, for payment systems, for supply chains, for pension rights, for consent, and many, many more (we can build protocols on top of these protocols). Each new protocol a fresh market with opportunities for business to deliver value. We know, by and large, what we want to build. Ecosystems. Complex systems that are antifragile because of their decentralized nature, that thrive in unpredictable conditions. We take our inspiration from nature itself." (https://medium.com/@rutgervz/blockchain-and-tokenization-beyond-the-hype-8bacd3c43481)


TOKENS AS SYSTEM STATE

Shermin Voshmgir and Michael Zargham:

"Tokens represent a part of the state of any cryptoeconomic system and can be seen as their atomic unit [Voshmgir 2020]. The term state refers to a unique set of data (the ledger) that is collectively managed by all nodes in the network. Tokens are a representation of an individualized state of an economic system, including a specific right to change the system state. The existence of a universal state makes tokens provable and durable, and is a solution to the double spending [Nakamoto 2008] of digital values over the public networks.

While the existence of tokens in general and digital tokens in particular is not new, cryptoeconomic systems provide a public infrastructure that allow the issuance and management of tokens with lower friction [Voshmgir 2019]. The speed with which cryptoeconomic systems and their tokenized applications are being deployed, is an indicator for the pervasiveness of the technology and its applications [Filippova 2019],[Voshmgir 2019]. Tokens can make all socioeconomic activities publicly verifiable, thus visible to all network actors, and could provide the basis for data driven economic modeling with more feedback loops of tokenized socioeconomic activities. However, it is unclear if and when the tokenization of all economic activities will become feasible.

Asset tokens and access-right tokens [Voshmgir 2019] represent business models and governance systems that are mostly well understood, and can be categorized as simple token systems. They can be modeled and steered with existing reductionist tools [Lipset 1980][Ruse 2005]. Such simple token systems require mostly legal engineering, which we define as the intersections of information systems and legal studies and deals with the question of how to make these tokenized use cases regulatory compliant [Voshmgir 2020].

Purpose-Driven Tokens are tokens that are programmed to steer automated collective action of autonomous network actors in a public network towards a collective goal in the absence of intermediaries [Voshmgir 2020]. They represent complex token systems and require complex system approach [Foster and Metcalfe 2012][Kurtz and Snowden 2003] to be modelled. Purpose-driven tokens that enable complex token systems differ from simple token systems in that they close the loop in so far as the system becomes autonomous and is not being steered by single institutions. Complex token systems requires mostly economic systems engineering, which we define on the intersection of information systems and economics including political economy and other related social science domains. Economic systems engineering can build on systems engineering [Sage 1992], [Blanchard and Fabrycky 1990],[Novikov 2016], but deals with research questions that model and steer aggregate agent behaviour, which brings us into the emerging field of complex systems engineering [Bar-Yam 2003] [Rhodes and Hastings 2003] that requires a multi-scale perspective on how to steer these systems."

(https://epub.wu.ac.at/7782/1/Foundations%20of%20Cryptoeconomic%20Systems.pdf)