Most of the times, these lists are curated by central entities. There is a lack of transparency on how the candidates were made into these lists. Usually, there is a direct financial gain to be on top curated lists.
There could be a better way to create and main high-quality lists.
How can Blockchain solve curated lists?
One of the breakthroughs of blockchain was the introduction of an incentivization layer for a set of decentralized actors. Basically, blockchain creates trust in decentralized environments, specifically environments in which actors have some incentive to behave dishonestly. Blockchains incentivize good behaviour by rewarding network actors with some scarce asset.
Welcome to the world of Token Curated Registries.
Token Curated Registries are decentrally-curated lists with intrinsic economic incentives for token holders to curate the listʼs contents judiciously.
There are three types of participates in TCRs:
Consumers are interested in the content of the lists. For example, high school students are interested to find a list of top rated universities with high graduated rates. An example of this list is Times Higher Education. The content of TCRs should be free for the consumers.
Candidates are the people, firms or entities that want to be on the curated lists. These entities value the curated lists as they usually receive economic benefit from them. For instance, a sushi restaurant in Vancouver benefits financially to be on a TOP 5 Sushi Restaurant in Vancouver.
- Token Holders:
Token holders use their tokens to vote for the candidates in the list. They want to keep the demand for the token high, as this increase its price. Token holders are incentivized to have high quality candidates on the list as more consumers value the list, which push more candidates want to be on the list.
How it works
Candidates have to stake networkʼs intrinsic token to be considered for listing. Token holders have some amount of time to vote for on whether or not the candidate belongs to the list.
There is a clear economic incentive for both the candidate and the token holders to behave honestly. Candidates wonʼt apply to the list if itʼs likely theyʼll lose their deposit. For a basic whitelist where the outcomes are binary, itʼs likely obvious for all parties whether or not something belongs on a list. Token holders will ensure that only quality candidates get accepted to the list in order to keep the list useful. The more that consumers use that list to make decisions, the more demand there is from candidates to be on it.
There are a number of challenges to create and maintain Token Curated Registries.
- An attacker can bribe the token holders with amount > token price. If the amount token holders receive is greater than their total amount of tokens, they are not incentivized to vote for the best actor. However, this issue becomes extremely expensive as the network value grows.
- If high-quality candidates leave the list, the consumers stop paying attention to the lists. This starts a virtuous cycle that causes participates to leave the list.
Iʼm interested to see what sort of Token Curated Registries will be created. I think we will see all sort of decentralized lists popping up in coming months and years.