Tokenizing creativity in open communities

Abstract:

Open communities, where individuals share and evaluate creative content, often face challenges in maintaining high-quality contributors over the long term. This study examines the effective governance of Decentralized Autonomous Organizations (DAOs), an emerging organizational paradigm that may address this issue. Built on blockchain technology, DAOs operate through decentralized and automated decision-making, using cryptographic tokens to reward contributors transparently. Assuming that transparent and collectively determined reward mechanisms can encourage participation, we develop an agent-based model with reinforcement learning to simulate the long-run implications of diverse DAO governance structures. Our models account for the cumulative process of reward acquisition and behavioral adaptation, shaping the evolution of such communities. We juxtapose three DAO scenarios, each characterized by its approach to distributing engagement rights that shape community evolution: Egalitarian (equitable rights distribution), Merit-based (rights based on reputation), and Property-based (rights contingent on investment). These models are compared with traditional open communities that lack reward mechanisms. Our findings underscore the potential of tokenizing creativity to sustain open communities. Notably, the Merit-based DAO exhibits high engagement rates and weak concentration of governance decisions compared to other governance structures. Meanwhile, the Property-based DAO presents a viable alternative by fostering exploratory learning and inclusive reward distribution for creators, albeit with relatively low engagement.