Earn graphs while X: more than Play to Earn

As long as people are doing work, they are generating value, but the difference in work results in the difference in value conversion rate. Any value can be realized, but the realization rate is uneven. The agreement unifies the input of work and the output of value, which greatly reduces friction and increases the conversion rate.

Some time ago, the explosion of Axie Infinity made the Play-to-Earn model widely discussed, and the Filipinos benefited a lot from it. However, playing is not the only way to make money. In the world of Web3.0, a resource coordination network may make it possible for everything to make money.

This article comes from Collaborative Fund, enumerates and analyzes the different possibilities of X-to-Earn. Rhythm BlockBeats translated the full text:

The author Stephen McKeon is one of the partners of Collab+Currency

“One day you might work for an agreement.”

This is what I said to my students at the end of the crypto economy course. This sentence was the same thing as the students said when I first taught this course in 2017. It was very unreasonable to most of them at the time, but if I say it again today, there may be no one. I thought so.

The crypto economy has begun to change every bit of our future work. They are closely linking the way we entertain, learn, organize activities, socialize, and invent and create with income and ownership. This also means that all aspects of our lives are changing, far beyond the field of work.

I have another article that details the various elements that form this new form of coordination, but in this article, I want to focus on how forward-looking applications convert labor into income in the context of the crypto economy.

Economists Jensen and Meckling wrote a famous article 45 years ago in which they mentioned:

| We should realize that most organizations are nothing more than legal fiction, and are the hub of a series of contractual relationships between people.

Such “hubs” can be enterprises, limited liability companies, non-profit organizations, or governments. They need to coordinate all contracts, especially within the scope of contract terms, to improve the operability of the flow of resources between individuals.

In the crypto economy, the flow of resources in the smart contract hub is enforced by code, rather than through legal intermediaries. In other words, people can now work together to form complex contractual relationships without legal fiction as the coordinator. For group organizations, this means that the rules are changing.

The decentralized autonomous organization (DAO) is one of the mechanisms that form the smart contract hub. We can understand it as a shared treasury among members, in which the payment method of funds is managed by hard-coded rules. Just as the establishment of a limited liability company can pool resources to achieve any number of goals, DAO can also be used in unlimited amounts for collective appeals. I want to use the example of an investment club to compare these two forms of organization.

Suppose 50 friends decide to share their baseball card collections, so they set up a limited liability company, open a bank account, deposit $100 each, and buy baseball cards on eBay. The following are the preparations and guarantees for each of these operations:

To set up a limited liability company: first draft an operating contract and collect the signatures of all 50 members. After that, the filing fee is paid to the state government, and in actual operations, an annual report is also required to be submitted every year.

Opening a bank account: additional paperwork is required, but more importantly, a bank account holder recognized by everyone needs to be appointed.

Deposited funds: If members are distributed in multiple countries, some friction may occur between them. At this time, someone needs to reconcile the deposits so that the deposited funds can be coordinated.

Purchased assets: Members need to trust that bank account holders will abide by the consensus. At the same time, they also need to formulate internal control measures to monitor and strictly control assets.

But when the company has 1,000 people, the problem becomes more complicated. At this time, if you want to build trust in the organizational form of a limited liability company and resolve disputes in a timely manner, you need to rely on the law.

Flamingo DAO is a group of 64 collectors, and I am also a member. Comparing it with the above situation, we can find that we are collecting resources through DAO to establish a shared collection of NFT. The following is the specific situation of its preparation and guarantee work:

Establishment of DAO: We need a software with copy function, and related tools are also being developed, such as Tribute DAO. Once successful, such tools can make it easy to set up a DAO. At the same time, the establishment of DAO does not require filing fees, because it is only stored in the cloud, and all activities are visible in real time on the chain, so there is no need to submit an annual report.

Opening a bank account: No, because the DAO smart contract itself can be used as a digital wallet.

Deposit funds: We need to send ETH to the DAO smart contract, which took me only 30 seconds to complete. It is so fast because under the hard-coded rules of smart contracts, I am not worried about the assets being paid out without consensus.

Purchased assets: We use personal digital wallet signatures to vote on the chain and reach a consensus on the purchase content. Once the purchase is completed, the assets will be held by the DAO smart contract, and it is impossible for anyone to run away. So, although most Flamingo members did not know each other when the DAO was established, this did not pose any problems.

This kind of investment DAO is just an example. DAO can also be used to coordinate almost any activity in a variety of digital environments, and its scope of influence may gradually extend to the real world. Nowadays, some DAOs play the role of non-profit organizations and community development fund organizations, also known as subsidized DAOs. In addition to this type, there are protocol DAOs, which can operate decentralized financial applications. At the same time, there are media-based DAOs that lead the future of news industry and information dissemination, social DAOs that can play the economic value of social networks, and service-based DAOs that are engaged in a variety of tasks that make me unable to exhaust my abilities. DAO, now, or in the future, will be the organization form of many applications I mentioned below.

Compared with traditional organizational forms, DAO has at least three significant advantages. (i) Rapid capital formation (ii) The voting process is open and transparent, easy to implement, and most importantly, (iii) DAO reduces the trust requirements for common assets.

But at the same time, I must also point out that DAO is not without challenges, decentralized governance is still difficult, and free-riding and major shareholder issues still exist. I will talk about these issues in the “Participate to Earn” section below.

It is also worth noting that although smart contracts let us no longer rely on trust between each other, it also means that we need to rely entirely on code. But for this problem, we not only have actual code to solve it, but also a team of super programmers secretly assisting. These people will not be our troubles, on the contrary, they will provide us with help. White hat encryption hackers like Samczsun, Immunofi, IntoTheBlock are playing the role of sentinels, fixing them before someone attacks the code vulnerabilities. Not only can they get non-monetary compensation such as reputation capital, but also monetary rewards such as bug bounty. Any programmer, regardless of ability, can join this team without submitting ID or resume. From them, we can also see what the future job will be like.

Aaron Wright’s journal article and Coopahtroopa’s post on Mirror have done a very in-depth study of DAO. At the same time, if you want to explore DAO further, they also provide other articles in this field for your reference.

Several []-to-earn mode inventory 

As we all know, capital and labor are the key elements in the two major productions. In the encrypted economy, capital or labor input can be profitable.

We are no stranger to the Capital-to-Earn model, because Bitcoin has been born since it was first launched.

In PoW protocols such as Bitcoin and Ethereum, anyone can deploy capital on hardware and electricity to mine blocks and obtain revenue.

In addition, in PoS protocols such as Solana and Avalanche, anyone can deploy capital to native assets and mortgage them to obtain income.

In the near term, people have more and more choices in liquidity mining. They can make money by deploying capital into loan agreements or decentralized trading venues.

These methods have always been the main source of income for people in the crypto economy, and I think they will be further developed in the future. For example, the above method of obtaining income from pledged assets is likely to become the largest category of fixed-income securities in the world in the future, but this is something to be said.

Today I mainly want to introduce the Labor-to-Earn model, which can maximize the use of these new coordination mechanisms and convert human resources into capital, with more attractive effects. This model has never before given more people the opportunity to make money, and reflects the remarkable development of the democratization of economic empowerment.

Let me first reveal in advance that Collab+Currency has invested in many of the projects I mentioned below, so my position is not unbiased, on the contrary, we are actually very purposeful. Because we firmly believe that interpersonal communication will be driven by these economies in the future, and our investment is to promote this future.

Play-to-Earn

Earning while playing games are all the rage this year, and Axie Infinity is one of them. This new type of game is not only very popular in the game market, but also very popular in the entire crypto economy.

The biggest feature of this game is the player’s ownership of the game, including game territory (Lunacia), game characters (Axies), and even new characters created in the game (also called reproduction), as well as in-game currency (SPL and AXS) ). This is not so much a game as it has become an economic model.

Earn graphs while X: more than Play to Earn

The model of players earning game currency through games has existed for many years. However, unlike previous game currencies, the game currency in Axie can be exchanged for real legal currency. But of course, how much you can make depends on your game skills and time invested. For top players, you can make hundreds of dollars a day. In some countries and regions, this game has even become the preferred way to make money. 

But you may ask, where does the money come from? Regarding this question, I would like to say, how are other incomes generated?

The answer is that they come from economic activities invested by capital and labor. 

Take a story that is not in the crypto world as an example: Suppose I bought a cow and a bull. I work to milk the cows and sell the milk to earn income. After that, I can breed more cattle, and these little calves are the newly created value. If someone wants to buy my calves for milk production or breeding, I can sell them to earn a return on capital and labor investment. Although this is just a very simple example, the mechanism of Axies is roughly the same as it, except that in the game, the situation has changed. The capital is the character you buy, and the labor you pay is from the game economy while you play the game. In the process of earning SLP, and you can also use these SLPs to create more value. Therefore, the value of SLP is reflected in the necessary input for cultivating roles, and the value of cultivating roles is reflected in the creation of saleable commodities.

In addition, we also need to figure out that in this mode, various assets in the game exist independently of the game. In other words, game assets are owned by players, not the developers of this game. Developers of other games can also use these game assets to build their own games. This also means that one day my Axies may appear in other kinds of games, and the original Axies gameplay will be further upgraded and expanded.

In the context of the ever-increasing number of users of games like Axie, it is also worth noting that while these games are loved by people, they are not more interesting than games like Fortnite and can attract new ones. For users, it’s enough for users to be more interesting than going to work. Because of this, this type of game is easily accepted by the public, and the number of users will naturally grow rapidly.

Axie’s daily active users have recently surpassed the 1.7 million mark, which is already huge for a cryptocurrency-based game. However, if you put this number in the potential market, it is trivial, because in addition to those countries with an Internet penetration rate of more than 50%, there are a full 1.9 billion Internet users living in some other countries and living a daily salary of less than 20 US dollars. All of them can be our potential users.

This revolution of making money through games is still in its infancy. It will play an important role in the future work of emerging markets and frontier markets, and as the level of financial services continues to improve, this revolution will also gain more room for development.

If you want to learn more about this model, I recommend you to take a look at the research done by Packy McCormick, in which he comprehensively and in-depth analysis of this issue.

Learn-to-Earn

For a long time, paid learning has been the mainstream mode of acquiring knowledge. Under this model, the cost of education is borne by students, taxpayers and donors. Even for skill learning, there is no exception. For example, if you want to obtain the qualification to use Microsoft products, you need to pay a fee to it.

The RabbitHole website is subverting this model, making it possible to make money through learning. The platform agreement will publish a series of tasks and reward new users who complete these tasks.

This is similar to how Adobe gives you a few stocks in order to let you learn how to use Photoshop. However, those platforms are networks, not such centralized software developers.

Although such sites are becoming more valuable due to the increase in the number of users, we should also realize that potential users are still working hard to learn how to use these sites. Therefore, if these potential users can be rewarded and encouraged to learn to use the website, it will be a win-win situation for both parties. Because not only can the website gain more users and enhance its own value, users can also take this opportunity to learn new skills and obtain ownership of the agreement. 

In addition to this direct reward for learning how to use the protocol, you can also build a personal resume on the chain. Since all on-chain activities are publicly visible, any actions you took and when and where will be recorded, and they can all be used as direct proof of the content of your resume. Rabbithole converts these activity experiences into experience points (XP), which determine your “level” in RabbitHole.

Earn graphs while X: more than Play to EarnBefore interviewing an intern, I asked him to send me the wallet address on the chain so that I can check his on-chain resume in advance to decide whether to call him for the interview. Next time, I may be able to directly ask the interviewer’s RabbitHole level, without having to look at his resume.

Create-to-Earn

From the perspective of creators, the ability of digital assets to enjoy property rights is of historical significance to them. this means. The new Renaissance era is approaching, and the grand occasion of people having the ability to earn income through creation will be reproduced.

There is an anecdote that reflects the rapid development of digital creation. In September 2020, when Derek and I wrote, “You are ignoring crypto art,” no crypto artist has sold more than $100,000 in sales. However, we predicted at that time: “The era of million-dollar digital artists is coming.”

After just six months, Beeple’s work was sold at Christie’s for $69 million. Nowadays, million-level auctions have long been commonplace. Every newly released work in the Art Blocks curatorial area can turn artists into millionaires. It is impossible to say that billionaire-level digital artists will appear. 

The same thing is happening in other fields, and creative digital works of music, photography, writing, etc. will also receive more attention. As long as you can create beloved digital works, it is completely feasible to rely on the encryption economy to make a living.

In addition, many of these platforms do not set any permissions, which means you can start creating at any time. For example, you can now add or upload music tracks and make playlists in Audius. Once these works have gained attention, you will be rewarded with AUDIO tokens. Derek and I have written several in-depth research articles in this field. In addition to the above article on the art of encryption, you can also check out these two articles on Audius and blockchain-based media.

Judge-to-Earn 

This way of making money uses the difference between hard and soft information. Hard information is objective and quantifiable. For example, the final score of the New York Knicks game is hard information. The processing of hard information is completed by the oracle machine passed to the smart contract. Of course, we need to trust the data source, but then it is relatively easy to integrate hard information with smart contracts.

However, soft information requires our judgment. This type of information is qualitative rather than quantitative. Taking someone’s participation on the Discord channel as an example, the number of posts is hard information, and whether these posts can add value to the conversation is soft information.

As various organizations continue to transform into smart contract hubs, we will need to introduce soft information into the contract environment. Words like “best effort” are very common in contracts and are essentially soft information, but it is not clear who will judge such information.

 The emergence of “subjective oracles” will solve this problem. Through decentralized agreements, everyone can judge information and get corresponding returns. In this process, they can also build a personal reputation, which directly affects their income and earning opportunities. Wikipedia has proved to us that people are willing to work hard, participate in judgment, and curate just to improve their reputation. If there are more economic incentives, people will be more happy.

Several operation methods and application scenarios for making money by judging:

(i) Decentralized judicial decisions: Early results in this field can be seen in UMA, Aragon Court and Kleros. 

(ii) Subjective evaluation: Upshot is studying peer prediction models for NFT value evaluation.

(iii) Curation : SuperRare and JPG are studying the decentralized curation of encryption art. Not only that, but I am not surprised to see decentralized planning expand to areas like the news industry that use subjective mechanisms to screen the pros and cons.

(iv) Credit: Banks have always been the ultimate authority in credit decision-making. Credit risk control specialists make loan decisions by integrating the hard and soft information of the borrower. DeFi has solved the problem of the mortgage market, but under-collateralized loans are still a major problem. We also need to develop on-chain measures to evaluate the probability of repayment, and these measures also need to deter loan defaults. Although some measures can be done automatically, we are also expected to see the increasing number of decentralized credit risk control specialists, and capital holders will also give these people the power to integrate the soft information of potential borrowers. Smart contracts will still retain asset control rights. In this way, these DeFi credit risk control specialists will not have the authority to control assets and can get a share in loan payments, but this also means that they are subject to the risk of loan default.

Earn by participating

We will participate in decentralized organizations in a variety of ways, and be compensated accordingly. At the same time, community managers, governors, regulators, operators, and developers will also join in. Instead of discussing wages with your superiors, you can apply for token grants directly to the community through the governance process.

The construction of governance process not only requires a lot of manpower input, but also needs to clarify many problems. So what I want to reiterate is that decentralized governance is not simple, even difficult. The governance structure in most organizations adopts a representative system, such as company boards, school boards, or parliaments. When these governance structures were created many years ago, it was theoretically impossible to coordinate voting-related matters on all issues. The emergence of cryptocurrency has solved this problem. People can now use digital wallets to participate in voting simply and quickly.

However, this is not just a coordination issue, it also involves the cost of informed participation. Citizens do not want to vote on every Congress bill, and most shareholders do not want to study and weigh every board resolution. Therefore, we will select some people to serve as our representatives, hoping to let them bear the informed cost and give them compensation. However, this also promoted agency problems, which made the final result fall short of our expectations.

The emergence of encrypted governance is likely to subvert traditional concepts such as elections and fixed terms, and instead adopt a dynamic proxy approach. In other words, I can either hand over the voting power to a representative who I think can represent my own interests, or take it back at any time, or give it back to another person. Logically speaking, this approach is completely feasible in the cryptocurrency network, and it is very simple to operate, but whether it can alleviate the agency problem remains to be considered.

These representatives or agreement politicians will become an important part of the model of making money through participation. At the same time, how to compensate them still needs further discussion. 

At present, the compensation for them is still not clear enough. For example, A16z once stated that the only compensation they can provide is expense reimbursement. If the reputation capital accumulated during the time as a representative can bring them income in the future, then it can be regarded as a good compensation. Like political appointments, their direct income during their tenure will be less than the money they earn after leaving office.

But I personally believe that they should not only get compensation for reputation capital, but the agreement should also use direct means to give them rewards, that is, governance mining, which is similar to payment to network participants such as verification nodes or liquidity providers. compensate. At the same time, the development of these models has just started, and incentive measures need to be further adjusted and improved. However, once they are used on a large scale, they are likely to become a source of motivation for people to make money through participation.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/earn-graphs-while-x-more-than-play-to-earn/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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