📑 [Analysis] Token-curated registries: value proposition and challenges – Qiao Wang

In simple terms, TCRs are incentive systems designed to produce a list. There are three types of participant:

• Applicants submit fees and apply to be included on the list.
• Curators are token holders who may earn tokens by voting to admit or to reject applicants.
• Consumers access information on the curated list for free.

You need a blockchain for TCRs as they have the following benefits:

• Wisdom of the crowd
• Risk mitigation
• Sock-puppet resistance
• Censorship resistance
• Transparency
• Skin in the game
• Anti-spam
• Marketing and R&D budget

However, the value proposition of TCRs is reduced under the following circumstances:

• There already exists a reputed central curator
• The central platform can be trusted
• The three groups of participants don’t want economic transfer, e.g., applicants don’t want to pay to be included on a list

Known problems and practical solutions for TCRs include:

• Chicken-egg problem: TCR developers should being speaking with a few potential applicants who are most likely to support the project and presenting to them a set of compelling reasons for joining the registry while building an incentive structure for early applicants
• Lack of price discovery and stability: let applicants pay in native cryptocurrencies or stablecoins that are interoperable with the TCR and sufficiently liquid
• Economic attacks on and by curators: bake identity into the system, such that curators put not just money, but also reputation, at stake
• Low voter turnout: ensure initial distribution is of high quality, use a vote delegation mechanism, and let votes happen on a regular schedule
• Subjecting Schelling Point: reward all voters, instead of just those who are in the majority bloc or let a central entity curate the registry for the few months or years, and later decentralize themselves over time to set the culture