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📈 Module 5 - Tokens & Mechanism Design

What is a token? Simple questions like this raise all sorts of thorny problems. The dictionary informs us that a token is "a thing serving as a visible or tangible representation of a fact." Older uses point to badges or favours worn to indicate allegiance, or a word or object conferring authority or serving to authenticate.

In computing, the word means either "the smallest meaningful unit of information in a sequence of data for a compiler", or "a sequence of bits passed continuously between nodes in a fixed order and enabling a node to transmit information." So, a token is some object, word, or sequence which - when communicated - authenticates knowledge or possession of some fact which grants the holder certain privileges. More succinctly: tokens transmit information about facts.

So, what is a fact? Rich Hickey is the best person to ask about this from a programmer's perspective. Facts are values, and they incorporate time because they are "an event or thing known to have happened or existed". The word comes from a past participle in Latin, factum, meaning "something done". Which fits in nicely with our work because cryptoeconomic tokens on Ethereum are facts about a key value mapping in a shared contract, with a visible trail of the values associated with any key over its entire existence.

In fact, the word "token" shares a root with the Germanic and Dutch words for "teach", which makes sense given that tokens transmit factual information. This is the actual use of tokens, and mechanisms designed around them, in Web 3: they are tools which can be used to teach by creating tangible, verifiable incentives for certain behaviours, both individually and collectively.

Week 5

Now that the definitional challenges are dealt with, we can outline the argument we'll be making this week. We're not interested in the latest DeFi protocol, or specific curves, curation markets, coin offerings and all the other crazes.

We're interested in the unassailable facts instantiated by networks of timestamp servers that challenge regimented political routines. In fact, such networks create an entire universe of distributed trust in which we can implement instant settlement and transfer of ownership, without requiring intermediaries.

We haven't even scratched the surface of possible mechanisms in such a space. It's that vast. Therefore, we'll take a step back and look at the most successful mechanisms designed at the advent of online commerce; consider the incredible power of narrative and how it is used to both shape and challenge the incentive structures which support power; and then dive into computer game design and the latest research on how to do it in a prosocial manner so as to build better relationships and guard against toxicity and loneliness in our social systems.

Fireside Chat with Andy Tudhope