[Short general description]: The nCent blockchain is an open, distributed, cryptographically secured ledger providing a verifiable record of the execution of an incentive program. It records, in particular, every time an electronic token is created, transferred, redeemed, or expires. What’s more, it records the flow of NCNT through the system (as a fungible representation of incentive) as well as exchanges between NCNT and other currencies.
[Main problems tackled]: Our personal and professional networks contain a treasure trove of information about our capabilities, skills, interests and relationships. The Internet of today has no mechanism to properly attribute this value back to users, and therefore does not provide correct incentives. The result of this is inefficient and broken markets. The dream of unlocking the power of crowdwork and the gig economy at scale remains a dream deferred. Furthermore the trusted institutions that have the eyeballs, data and deep pockets to organize crowd work have missed the mark. In many cases trust in them is rapidly fading, they cannot work together trustlessly for our benefit, and they suffer inherent misalignment of incentives with users. What is missing is a way to do this value attribution in a transparent and auditable way that provides the correct incentives, and allows markets to form.
[Main contribution proposal]: nCent introduces a decentralized protocol for incentive networks. Users of nCent are incentivized to form specialized networks to perform valuable work as a group. This work can take the form of solving problems characteristic of search/matching, crowdwork/funding, and social networking. nCent creates incentive networks through a novel blockchain protocol that offers a decentralized design, and unique transparency and auditability properties to establish integrity of the protocol. They present an initial application with focus on customer acquisition markets for highly viral communities such as sports, viral brands, and influencers. nCent also focuses on a recruiting use case for their own internal purposes. This approach can generalize to many forms of crowd-work, and can eventually be used to deconstruct the corporation around incentives.
A protocol for the value attribution required for incentives is the missing link:
- Value attribution - Everyone will reconstruct the same chain of referrals by querying the smart ledger associated with blockchains, so value attribution is unambiguous, transparent and auditable. This is important because people will participate if they believe they will be rewarded accordingly, and blockchain makes this possible.
- Trustless exchange - Blockchain allows the formation of distributed exchange, where sponsoring organizations can participate in markets driving value to a user, without being in a trust relationship with each other.
- Scalability for network effects - Red Balloon networks and recursive incentives to date have not reached internet scale. Part of nCent thesis is that blockchain properties are unique and facilitate a complex contour of trust forming among a spirited community, that facilitates the scaling of these types of networks. They also address certain problems such a Sybil attacks generally, facilitating creation of ad hoc incentive programs that benefit.
Incentives are a core component of the nCent protocol. Separate from the application incentives designed and implemented by nCent’s users, the nCent protocol distributes several types of incentives to promote and maintain the functionality of the nCent network. These incentives are denominated in NCNT and are important channels to bring NCNT into circulation:
- Progress incentives are rewards given to tokens used to recruit new users to join the network (i.e, tokens that are transferred to create new wallets). Intuitively this type of incentive will make up the majority of protocol incentives and will decrease in importance as the nCent network size increases.
- Consensus incentives are the rewards given to the validators of the network for maintaining the validity and security of the network, similar to the coins and transaction fees awarded to the miners in Bitcoin.
nCent is an ecosystem designed to grow the network, so all sponsors and participants in the network can benefit. There are three core components that determine the value of a network such as nCent:
- Number of users - The number of wallets and participants. This is the main driver of network effect: well studied networks properties such as Metcalfe’s law state the value of an network grows proportionally with the square of the users, so the value added by each additional new member increases as the network size increases.
- Transaction velocity - An important indication of how vibrant the network is, both in terms of engagement and utility consumed on the network. Transaction values are core concepts in some models of networks such as Beckstrom’s law.
- Total stamp token value - The cumulative value sponsors endowed on the network. This represents the base economic value anchor of the network, while disregarding other factors such as social utility.