Cryptoeconomics is the term used to refer to this emerging discipline at the nexus of computer science, cryptography and economics. Ultimately, it’s a form of mechanism design; that is, the art and science of crafting systems that produce some desired set of downstream behaviours. Personally, however, I’ve found it more helpful to think of cryptoeconomic systems as a certain kind of game; specifically, Internet-native economic games. While it’s a subtle shift in emphasis, I find it productive in terms of better understanding the nature of the systems already at play in crypto and for speculating on how we might build even more interesting ones moving forward.

The most famous cryptoeconomic game is, of course, Bitcoin. It is, as I’ve previously noted, an awfully simple construct: point some computer power at the network and in turn earn some BTC. As simple as this game is, it’s nonetheless one of the most compelling economic games ever devised, responsible for coordinating -- at the time of writing -- trillions of dollars in economic value and catalysing an entire net-new industry: crypto. What makes Bitcoin such a remarkable system, from the game design perspective, is how radically egalitarian it is/was. Contra to many projects today, when it launched, everyone was on equal footing. So long as you had the necessary hardware, you were afforded the opportunity to earn some BTC. Of course, as the system became increasingly popular, mining became increasingly competitive, conferring an advantage upon those with the capital resources to invest in serious mining operations. While this represents a kind of plutocracy, the fact remains that early adopters of the network were afforded disproportionate rewards for participating in the game and ultimately helping contribute to the success of the game as a whole. And so while you might need immense resources to profitably mine BTC today, if you had the intellectual resources and foresight years ago, you’d be smiling -- and that’s a kind of meritocracy.

Fast-forward to today: while cryptoeconomic systems have become increasingly sophisticated, and the underlying technology increasingly powerful and performant, the overarching game design meta, relative to Bitcoin, remains woefully uninspiring. Where Bitcoin was an egalitarian, open-access game from day 1, the status quo in crypto today is characterised by privileged investors who get the first bite of the apple before the game goes live. Sure, one can claim that this represents a necessary evil, the price of progress, but it is nevertheless a brand of evil all the same. Moreover, with the rise of Proof-of-Stake, all the games are disturbingly similar in nature: buy a coin, then lock it up to earn more.

I can’t help but wonder why there hasn’t been more cryptoeconomic experimentation, why everything seems so derivative. Part of it is human nature, memesis, but there’s also this sense in which tokens -- the most fundamental cryptoeconomic primitive -- are simply underappreciated as a social technology in their own right. People and projects have become enamoured with blockchains and infrastructure -- the technological piece -- and relatively ignorant to the power and potential of the economic side of the equation. Instead of starry-eyed imagination, tokens are issued almost begrudgingly, as an inconvenient necessity if not afterthought. This is an especially curious fact when you consider that the token is precisely what started this whole revolution. Indeed, in the case of Bitcoin, the entire construct is just an elaborate system for distributing a token.

A refreshing exception to the current uninspired meta is the rise of DePin, most notably on Solana. Where Bitcoin leveraged a token to incentivise people to solve computationally expensive puzzles, and thereby secure the network, DePin projects incentivise people to invest in physical hardware to provide some generally useful service -- i.e. cellular coverage. DePin is a perfect exemplar of the unique capacity of crypto to leverage a speculative asset to encourage and reward any arbitrary behaviour. As interesting as DePin is, though, what I’m personally interested in is figuring out how we might leverage intelligent cryptoeconomic design to fundamentally improve the economics of the web as a whole; to replace the surveillance economy with a business model that is both more generative and humane. In order to get there, however, it will require treating tokens -- as the ‘native asset of information networks’ -- as a first-class citizen of cryptoeconomic systems.