The Graph is a Work Token

I wanted to summarize the content found in this article by Jose Maria Macedo. 

In this article Mr. Macedo notes the important difference between the traditional financial system using instruments like stocks to raise capital for running a business, and the idea of a cummunity driven work token. The founders of the graph have often spoken about the importance of aligning incentives and this is one of the main benefits of a work token.

What is a work token in the context of cryptonetworks, and how does it align incentives between stakeholders? What are some examples of work tokens and the resources they provide?

In the context of cryptonetworks, a work token is a token that pays out rewards to network participants who fulfill two conditions: (a) hold or stake the native token and (b) through holding/staking the native token, are entitled to provide/receive one or more types of potentially valuable work/utility (non-capital resource) to/from the network. The reward pool is financed through a fiscal policy that can change over time, such as inflation, transaction fees, percentage of block reward, or other methods.

The specific type of work that particular work tokens enable their holders to provide comprises the resource provisioned by the cryptonetwork. This resource can be extremely diverse and is limited only by the creativity of the cryptoeconomic designer and the ability for that resource to be provided digitally and trustlessly.

Examples of work tokens include DASH, STEEM, Synthetix, Kleros, and FOAM. DASH allows its holders to provide work, in the form of transaction processing and governance, to the network. STEEM allows its holders to provide work, in the form of accurate content creation and curation services, to the network. Synthetix allows holders to emit a debt to the network, providing collateral and liquidity for synthetic assets created on the network. Kleros allows holders to provide judgment on disputes, and FOAM allows holders to serve as "location anchors" and register points of interest on a map.

Work tokens align incentives between stakeholders by encouraging investors to become workers, bootstrapping the resource provided by the network. Passive tokenholders who are not providing work to the network feel the full dilutive effect of inflation on their reduced relative token holdings compared to tokenholders who also provide work. Overall, work tokens enable companies to simultaneously raise funds, build out their supply and demand sides, and align incentives between all stakeholders, accelerating the speed at which these networks propagate and grow.

From the article: "Crucially, the type of “work” these tokens enable their holders to provide corresponds to the resource or utility provisioned by the broader cryptonetwork in question. Effectively, work tokens incentivize the creation of digital, decentralized “co-operatives” with aligned incentives in the sense of networks that are entirely owned and financed by their “worker capitalist” owners. " - Jose Maria Macedo

This is an incredibly powerful concept and one with profound economic implications!