Efficiency in Digital Economies -- A Primer on Tokenomics (2008.02538v2)

Abstract: Cryptographic tokens are a new digital paradigm that can facilitate the establishment of economic incentives in digital ecoystems. Tokens can be leveraged for the coordination, optimization and governance of large networks at scale in a decentralized manner. A key aspect is their programmability, that can reward participants relative to their stage of adoption, according to the value they contribute and the risk they bear. Moreover, this can be done in a transparent and verifiable way, which increases trustworthiness in the emerging systems. This work presents an overview of this new phenomenon and to provide multi-disciplinary arguments on why tokenized ecosystems can drive a huge momentum for positive-sum collaboration in the digital age. We illustrate how certain principles and values that arise from the evolutionary process of digital cooperation can lead to a market economy characterized by economic efficiency of both individuals and the tokenized ecosystem as a whole.