Can Token Curated Registries Actually Work?

A Token Curated Registry (TCR) is a mechanism to incentivize the creation of high quality lists in a decentralized setting. TCRs are becoming popular in the token space. As part of advisory work on mechanism design for the startup Wireline, I wrote a research note on TCRs. I am not as enthused as many others. Here are some takeaways:

Token Curated Registries can work but there is no guarantee that voters will coordinate on the truth as a Schelling point so care needs to be taken in the design stage to imagine other Schelling points. The less focal or more costly it is to discover the truth, the more vulnerable the mechanism will be to biases and manipulation via coordination or collusion.

To understand whether a TCR will work in practice attention needs to be placed on the information environment. The key practical issues are the cost of acquiring high-quality information and the value to an applicant of getting on the registry. Put simply, TCRs are likely to work when high quality information is available at low cost. Vitalik Buterin’s examples of Schelling points were (wisely) all of this kind. Extensions of the Schelling point model to TCRs which are trying to surface information that is much more uncertain, variable and disputed need to recognize the limitations.

It will often be more important to put effort into lowering the cost of acquiring high quality information than it will be to modify the particulars of the mechanism. If high-quality, low-cost information is available many mechanisms will work tolerably well. If high-quality, low-cost information isn’t available, perhaps none will.

Read the whole thing at Medium.

And do check out Wireline. Wireline isn’t going to Mars but it is creating what could be a significant and very useful protocol to find and connect software services to quickly produce decentralized applications that can scale on demand.

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Here's a story on a crypto millionaire who is using his millions to build a blockchain community in Nevada: https://www.nytimes.com/2018/11/01/technology/nevada-bitcoin-blockchain-society.html

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What? The only reference I saw to this is here: http://tokenengineering.net/tcr (AlexT's article is better)

From what I can tell, it's like a 'public comment period' that all US proposed Federal regulations have to go through. If enough people challenge a proposed regulation in theory it can be withdrawn and rewritten (never happens in practice). So what is AlexT's addition to this thought?

Well, the example give by AlexT at Medium is pretty good, but, if "TCR" is public comments for most federal laws, only lobbyists will apply and if they lose, money will go to the US govt Treasury, but if they win, they get taxpayer money?

> From what I can tell, it's like a 'public comment period' that all US proposed Federal regulations have to go through. [...] If enough people challenge a proposed regulation in theory it can be withdrawn and rewritten (never happens in practice)

That's actually a misconception. While the law mandates a period in which agencies must accept "written data, views, or arguments" , it does not require anything more than "consideration" of those views.

5 U.S.C. § 553 (c)

Which, not to open a can of worms, makes a certain facet the whole net neutrality hysteria more amusing. I don't know if you recall the scandal surrounding the "fake comments" submitted to the FCC (now being investigated!!). Was it the Russians? Did Ajit Pai contract a shadowy Verizon(c) botnet so that he could ensure his corporation loving regulation change would succeed? ...no because none of those comments mattered anyways, most of them were probably generated by people clicking through pages to send form letters, like this one, which represented nearly 3 million comments:

> The FCC's Open Internet Rules (net neutrality rules) are extremely important to me. I urge you to
protect them. [...wall of text follows...]

Sorry I really really hated that chapter in political '''discourse'''

@Erik - thanks, that's interesting. Though the same code you cite says this in section (e): "(e) Each agency shall give an interested person the right to petition for the issuance, amendment, or repeal of a rule." - I'm not a lawyer but I wonder what "interested person" means? I bet it's a high hurdle. I recall Cato or somesuch think tank said there are too many rules that cannot be easily amended or dropped in the Federal Register. Note this graphic: https://www.llsdc.org/assets/sourcebook/fed-reg-pages.pdf which shows an all-time high of 97k pages published in the last year of the Obama administration, dropping to 62k pages in the first year of the Trump administration, which equals a low last achieved in 1990! (54k pp). MAGA! LOL.
Democrats seem to publish more regulations than Republicans (note Carter's 1980 high of 87k pages). I personally would like to see the 1936 level of 2,620 pages published. That said, somebody I was talking to the other day claimed the "Continental" system of published code is more fair than the "Common Law" system (UK/USA law) which relies more on 'caselaw' rather than rules. I guess it's in the eye of the beholder, but I like my chances before a sympathetic judge than a rule-bound bureaucrat however.

Bonus trivia: according to mandiatory sentencing guidelines for certain crimes, many judges cannot reduce your sentence, hence your fate lies in the hands of the prosecutor*. For example, if a US prosecutor decides to bring a money-laundering claim against you because you were late or negligent in filing your annual FATF e-form (which I calendar several times a year to make sure I'm not), then depending on the amount of money you have overseas you get a manditory sentence of X years in Federal jail (they have a table, I once had a copy, I think it's 1 year min for ~100k undeclared, not sure tho). If you're a senile little old lady the prosecutor would never think of prosecuting you, but, if you're a prominent member of the 1%, like I am, for resume purposes, to be able to say "I took down Ray Lopez", it might happen. Prosecutors are always looking for sensational material to boister their resume, it helps when they go to private practice, working for the defense.

* note this article, which states bureaucratic, unelected agencies can make rules that include criminal penalties: https://www.heritage.org/crime-and-justice/report/criminal-law-and-the-administrative-state-the-problem-criminal-regulations ("However, as with federal criminal statutes, regulatory offenses that purport to flesh out and refine the details of those statutes have proliferated to the point that, literally, nobody knows how many federal criminal regulations exist today")

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"The less focal or more costly it is to discover the truth, the more vulnerable the mechanism will be to biases and manipulation via coordination or collusion." - The truth is actually always expensive. The expense (time/cost) is either on the front end to obtain knowingly true information (within the margin of error) or on the back end when false information is acted upon or disseminated.

"If high-quality, low-cost information is available many mechanisms will work tolerably well. If high-quality, low-cost information isn’t available, perhaps none will." - Agreed, but I believe this happens very rarely. High-trust groups are easily destroyed. That said, I've found mechanisms that lack high-quality, low-cost information will reach a sort of terminal velocity where they work poorly, but predictably (low-cost, low-quality). Craigslist is a good example. The high-quality information about craigslist being a low-cost, low-quality listing was actually high-cost (someone else's). Knowing that you are entering a low-trust region in high-quality information gained at a high price.

Yes. I wouldn't say high trust groups are easily destroyed because they do tend to have moats; they are not open and are rigorously discriminating. But I'm just placing the boundary of the system farther out than you. We are seeing the same thing.

In the proposal there is no downside to being a minority voter. And I wonder what is to keep that from being exploited. I can't think of an example of an functioning arrangement such as this where there is no cost to being wrong. Seems perverse.

Perverse incentives for a blockchain app that depends on a networked social community--sounds like a promising future PhD thesis!

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They do get exploited. Within the intelligence community there is a phrase, "make the enemy pay for bad intel." I.E. Not make them pay as in revenge, but rather if you're wrong about something (and you will be...), find a way to make them pay for your mistake.

There is ALWAYS a cost to being wrong, even if that that cost is paid only in wasted time/delays. In this sense nature sets a high-bar for good fortune. It seems perverse because it is. Nature very seldom lets it happen.

Well, there is the opportunity cost of not being a majority bettor, but yeah, I get the same feeling you do, that there is more than just opportunity cost in errors (unless your system's output is only nominally valuable, iow trivial) and the unallocated cost is going to pop up somewhere, assuming the system gets enough momentum to actually run at all. And you only know where when you've identified exploitation, which is programming in failure as necessary to success. We know better. But hey, I encourage these folks. If I'm wrong, I'll get to find out.

From Alex's medium piece: "Verified users, ratings from independent parties, certifications from sources like Consumer Reports and Underwriter’s Laboratory are all important in the market process."

Talk about perversion! UL is a special interest group representing property casualty insurers. They are the reason all your new furniture is pumped full of carcinogens and endocrine dusrupters. They don't give a shit about you, they pay out when your stuff catches fire is all. If they have 'trust' I don't know what to say. It's not like you could buy bare wire extension cords at the hardware store but for them.

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Tyler, why in the world are you asking your readers to check out wireline? You are no technical expert, and there is nothing there innovative, or fixing real problems.

It's so he can pretend to know about these technical matters. Such is the life of the pseudo-intellectual poseur.

> by Alex Tabarrok

not being able to read the byline

>> Such is the life of the pseudo-intellectual poseur.

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I'd like to know who was the graphic artist who designed the stylized "Wireline" logo? Look at it carefully Bob, since you're a good proofreader: the "W" seems like barbed wire, so the logo reads "IRELINE". Ire-line, like anger, or read fast, like Ireland.

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I hope Alex will forgive me for bending this a bit. The investigation into blockchain based networks of computation and knowledge seems useful, but it might also be good to see who is picking up a running start:

Two Million Children Now Using Smart Speakers in the UK

I guess the advantage of traditional cloud computing and centralized design is that it can scale super fast, when it is in the centralized interest.

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Voters need to be incentivized to behave well, but "well" is subjective. One reader might prefer voters reject anonymous sources as evidence and reject any unproven article as not worthwhile to read. Other readers may prefer voters take a " true/innocent until proven false" approach. TCRs should be a platform that allow diverse juries/arbitrators.

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