Why Token Curated Registries Could Become the Lists of the Future
People have a fetish for lists: frequent versus infrequent; business versus personal. There are grocery lists, to-do lists, bucket lists, Oscar nomination lists, top charts, top movies and top restaurants. By utilizing blockchain technology, token-curated registries (TCRs), that is, decentralized lists created with underlying economic incentives, have the potential to increase the accuracy and governance of any online list.
Online Lists Created by Centralized Companies
In 2018, most public online lists are curated by a centralized company or individual. Public online lists include: Spotify’s “Rap Caviar Playlist,” Lonely Planet’s “Top Locations in Budapest, Hungary,” or Opentable’s “Best Restaurants in Madrid, Spain.” Consumers trust centralized companies to create these lists honestly.
As a result, these companies hold all the power and exert an enormous amount of influence. They can easily remove an item from a list with few repercussions or manipulate a list by including advertisers who pay a price to be included or be listed higher than competitors.
Imagine a hypothetical situation where Spotify decides to cut ties with Katy Perry for her outspoken views and no longer recommends her music in curated pop playlists. Because Spotify owns the pop playlist lists, it can theoretically exercise this sort of complete control and remove popular (or up-and-coming) artists without the Spotify community’s approval. Spotify could also, for example, list other artists who are willing and able to pay a premium price for advertising above those who do not, putting rising talent at a disadvantage.
Online List Created by Individuals:
Lists created by individuals include YouTube playlists, iTunes playlists, polls that create a list based on individuals’ votes and other parameters, and more. These lists are created for a variety of reasons: for organization, clarity, self expression or ranking, or to share content with friends, family and the community at large. Shared online lists created by individuals are beneficial to the community because they can help people find what they are looking for or validate information they have already encountered.
These lists are often ranked and filtered based on likes or some form of human feedback. But they can be manipulated and spammed by online bots.
Token Curated Registries (TCRs)
Unlike traditional lists, TCRs are inherently decentralized, community-dependent and driven by underlying economic incentives. Co-invented by Mike Goldin, James Young, and Ameen Soleimani, TCRs use intrinsic tokens to “assign curation rights proportional to the relative weight of entities holding the token.” In simpler terms, TCRs allow people to stake tokens for or against an item that is proposed to be added to a decentralized list. In this way, these lists are maintained through economic incentives and the Wisdom of the Crowds principle — the idea that large groups of people are collectively smarter than individuals.
How Token-Curated Registries Work
At a high level, each TCR (list) is completely decentralized, meaning it isn’t owned by a single entity. Each requires three kinds of participants: consumers, candidates, and the list’s token holders.
For example, imagine a list called “Best Restaurants in Madrid, Spain.” Consumers in Spain search for this list when looking for the best places to go out for dinner. Candidates (in this case, restaurants in Madrid that think they are “the best”) want to be part of this list. The list’s token holders (those who own tokens in “Best Restaurants in Madrid”) want their tokens to increase in value.
If a hypothetical restaurant candidate — let’s call it Pablo’s Tapas — wants to be listed on the “Best Restaurants in Madrid” TCR, it needs to apply to the TCR by making a deposit denominated in the TCR’s intrinsic token.
If the majority of the TCR’s token-holding community votes to accept Pablo’s Tapas as a “best” restaurant in Madrid, then the restaurant will appear on the list, get to keep the tokens it deposited, and be able withdraw the tokens anytime they want to leave the TCR and de-list.
If the TCR’s token-holding community doesn’t think that Pablo’s Tapas should belist on the “best” restaurants list, they can challenge the restaurant’s application. If the majority of the community votes to deny Pablo’s Tapas, it gets rejected from listing and must forfeit its deposit to the TCR. The deposit is then divided as a reward among token holders who participated in the challenge.
Candidates and token holders continue this process, until all candidates either receive a spot on the list or are rejected.
In this idealized scenario, consumers searching for “best restaurants in Madrid” can now enjoy a Wisdom-of-the-Crowds driven, economically-incentivized final product that isn’t owned (and therefore isn’t manipulated) by any single party. Theoretically, a TCR should be more accurate than a traditional list because people are willing to stake economic value for an entry they strongly believe belongs on the list.
Current State of TCRs
Although TCRs promise an economically-driven way to crowdsource lists, they are far from ready for the average consumer.
For starters, TCRs are currently limited to binary lists — either the item is listed or it is not. In the future, TCRs could evolve to support ranking. For example, a concert-goer could stake a larger amount of tokens on the artist’s setlist TCR so that the artist plays the concert-goer’s favorite song and not another song.
Furthermore, it’s uncertain if economically-curated lists that pay other list-members for their actions could be considered gambling under U.S. law. There has never been any legal action regarding TCRs, so no precedent has been set.
Other unanswered questions include: Will TCRs lead to polarized lists, in which groups of like-minded people will continue to only pay attention to lists they are contributors to? Will TCRs create echo-chambers? Could non-blockchain companies implement the TCR concept using traditional software and micropayments in fiat currency? What kind of attacks are TCRs susceptible to, and how will they protect themselves?
Nevertheless, TCRs are a fascinating, practical application of blockchain technology that have the potential to create next-generation platforms for online list curation.