We are facing two fundamental problems in our economy that lead to all the crises we see today, from an impending AI dystopia to the crisis of trust in media and institutions, the climate crisis, social and political turmoil, and so on.
What are these fundamental problems? While there is a strong incentive in the market to produce consumer products and services, there is a disincentive to work on the public interest or produce public goods. That is because doing so consumes resources, but there is no exchange value for public goods in the marketplace.
At the same time, producers have an incentive to reduce production costs by shifting these onto the public; this is known as producing negative externalities.
When the interests of individuals in the marketplace don’t align with what’s good for society as a whole, that’s when we run into big problems. It’s this disconnect that’s responsible for all the major crises we’re dealing with today.
How does Abundance Protocol propose to solve such a tremendous problem in our economy? By introducing a mechanism that creates a new market paradigm for public goods, aligns people’s interests with the public interest, while disincentivizing negative externalities.
Since, by definition, public goods do not diminish when people use them and people cannot be excluded from using them, they have no exchange value in the marketplace. And yet they provide incredible value to society.
Abundance Protocol proposes a mechanism that builds on the work of protocols such as Bitcoin and Ethereum. It values (and rewards) common and public goods through Consensus Value as an alternative to the market’s Exchange Value.
Blockchain protocols such as Bitcoin or Ethereum have distributed nearly a trillion dollars worth of rewards to miners/validators for providing the public good of network security.
Abundance Protocol proposes a consensus mechanism that generalizes the reward to all common and public goods. It is based on the concept that it is in the interest of everyone in an ecosystem to maximize the growth of the ecosystem while maintaining the value of the currency.
The production of public goods results in economic growth for the ecosystem, which drives demand for the currency. Since the growth of the ecosystem provides the most economic opportunity for all, it is in everyone’s interest to incentivize maximal public goods production.
Undervaluing public goods will result in contributors going to other ecosystems. Overvaluing public goods, on the other hand, will lead to currency depreciation, which will result in users going to other ecosystems. When the reward to contributors is equal to the value of the economic impact the public goods produced, contributors are rewarded optimally while all users benefit from an ecosystem with the most economic potential. It is therefore in everyone’s interest to accurately value the economic impact of every public good on the ecosystem.
Based on this framework, Abundance Protocol proposes a Proof-of-Impact Consensus Mechanism where public goods contributors are rewarded after a rigorous and verifiable validation process that involves subject matter experts, ecosystem-wide stakeholders, and permissionless challengers to the results. Funds are released to contributors once the impact on the ecosystem could be observed and trustlessly verified (see the Abundance Protocol Whitepaper for more).
The result is a new market paradigm; contributors produce public goods for the ecosystem in exchange for funds based on the Consensus Value of the goods they produced. Contributors are incentivized to maximize their impact, while everyone in the ecosystem benefits from greater economic opportunity and economic abundance.
Users also have a strong incentive to not create negative externalities, as these are figured into the economic impact of their work as well. And since participating in the Consensus Mechanism is meritocratic (based on contribution to the public good, rather than on having a monetary stake), producing negative externalities diminishes a user’s ability to have any influence in the ecosystem and therefore greatly discouraged.
Thus Abundance Protocol solves two fundamental problems in our economy. It creates strong feedback looks that incentivize public good production and disincentivize producing negative externalities. It also aligns the interests of individuals with the public interest, as it creates a system where people can prosper by living a life of purpose and maximizing their impact on the world.