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What are Cryptoeconomic Primitives?

Cryptoeconomic Primitives are token-based incentive systems. They are enabled by economic and cryptographic mechanisms and allow the coordination of labor and the allocation of capital to reach shared goals.

Ideally, cryptoeconomic primitives are self-sustaining systems resulting in the predictable coordination of network participants and other actors (such as machines) towards a specified goal or outcome.

Examples of Cryptoeconomic Primitives

Cryptoeconomic primitives can be used in many different ways. Examples include:

  • Curved Bonding: For continuous token models

  • Token Curated Registries (TCRs): Decentrally-curated lists with economic incentives to curate the list’s contents

  • Stablecoins: Incentivized coordination to maintain the value of a coin stable
  • Prediction Markets: Incentivized forecasts of future events
  • Geospatial Markets: Incentivized activities throughout the physical world

The Graph uses Curved Bonding as cryptoeconomic primitive for incentivizing Curators to signal on quality data sources (i.e. high-quality subgraphs). So called “Curation Shares” act as continuous tokens in The Graph’s curation market and are managed by bonding curve contracts.

Cryptoeconomic Primitives & Token Bonding Curves.

An interesting cryptoeconomic primitive that has started to emerge is the application of token bonding curves as incentive systems. Doing so allows the coordination of participants and other actors in a network to accomplish common goals to create robust decentralized networks. As such, the bonding curve acts as a protocol-based incentive system, which is also referenced as “tokenized economic game.”

The shared goals of such tokenized economic games can also include situations in which actors predictably fail or experience limitations.

Summary

Cryptoeconomic primitives can be used to coordinate and allocate capital to achieve the shared goals of a network. They are used for tokenized economic games that result in the predictable coordination of a set of actors.

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