Enhancing Engagement in Token-Curated Registries via an Inflationary Mechanism

Abstract

Token Curated Registries (TCR) are decentralized recommendation systems that can be implemented using Blockchain smart contracts. They allow participants to vote for or against adding items to a list through a process that involves staking tokens intrinsic to the registry, with winners receiving the staked tokens for each vote. A TCR aims to provide incentives to create a well-curated list. In this work, we consider a challenge for these systems - incentivizing token-holders to actually engage and participate in the voting process. We propose a novel token-inflation mechanism for enhancing engagement, whereby only voting participants see their token supply increased by a pre-defined multiple after each round of voting. To evaluate this proposal, we propose a simple 4-class model of voters that captures all possible combinations of two key dimensions: whether they are engaged (likely to vote at all for a given item) or disengaged, and whether they are informed (likely to vote in a way that increases the quality of the list) or uninformed, and a simple metric to evaluate the quality of the list as a function of the vote outcomes. We conduct simulations using this model of voters and show that implementing token-inflation results in greater wealth accumulation for engaged voters. In particular, when the number of informed voters is sufficiently high, our simulations show that voters that are both informed and engaged see the greatest benefits from participating in the registry when our proposed token-inflation mechanism is employed. We further validate this finding using a simplified mathematical analysis.