Cryptoeconomics of Handshake


Just read the Handshake paper and it’s lit af :slight_smile:

Originally I was under the impression that it was just a cool way to decentralize CAs and DNS records, and it is… but it’s also so much more. From the paper, and I quote: “Handshake is an experiment in the possibility that the majority of ownership claimed by the FOSS community is a rational and game theoretically superior strategy to traditional models of corporate growth and development for some project types; those where a decentralized blockchain is ideal.”

I too have a hunch that community networks created with intention and enforced with crypto will become dominant forms of organization/cooperation. Highly recommend reading the # Abstract, # Project Summary, and # Coordination to get a feel for the cryptoeconomics of the system.

Right now I have a few questions/takeaways that are burning in my mind:

  • When the paper talks about covenants, is that similar to scriptless scripts in Grin?
  • Currently most economic theories of supply and demand assume a zero-sum market where more supply equals less demand and vice versa. When you’re bootstrapping a cryptoeconomic decentralized network, the script gets flipped and it becomes a positive-sum game because the more valuable players you have participating in the network the more valuable the network is for everyone involved. This means that creating tokens for people and organizations that provide value is actually a winning strategy, and while it might dilute current participants from a traditional zero-sum view of supply/demand, it’s actually positive-sum and increases network value for all participants. This is yuge and I think highly underappreciated in conversations around token supply and cryptoeconomics.
  • Currently the distribution schedule it to create a bunch of tokens, give them away strategically, and then mint new ones to incentivize miners to secure the network right? Well if so, why not allocate a portion of every new block reward (say 10-20%) into a dev/community fund? This could provide ongoing support to FOSS projects, esp those that directly benefit the ecosystem. If desired the community could even ongoing votes as to how those funds are distributed, and as long as the community is healthy/engaged then it wouldn’t be a problem. If however, the community was captured by a large cartel or just plain apathetic, then this system would fail but the project as a whole probably would too ¯_(ツ)_/¯ Curious why I haven’t heard anyone talking about this, ever. Is there a glaringly obvious reason why this isn’t a thing?


Yay! Glad you ended up reading it.

WRT the dev/community fund, it’s actually quite well explored… most projects have a dev/community fund and it hasn’t necessarily worked out well for them… tezos being the first example that comes to mind.

People don’t actually tend to vote, and just because you can vote, doesn’t mean you vote in the interests of the health of the ecosystem at large (not out of malice, perhaps out of misinformation or ignorance).

Handshake’s foundation won’t exist after it gives out all the money - I think that’s how it should be. A large portion of the communities that could make a difference with handshake will already have USD or tokens. A war chest of funds sans leader has, historically, created power vacuums.


That’s fair, it just seemed like since Handshake is prioritizing community > business models maybe it would be different due to more engagement. Probably more risk than reward though so that makes sense :slight_smile: