This post was originally published July 17, 2018 on Medium.
TLDR: The motivations and demographics of the abstract user participating in incentivised systems are hard to pin down. This article attempts to better describe potential Zone operators for the FOAM network.
Crypto has an adoption problem. It has been continuously pointed out by critics, somewhat rightly so. For traditional startups, you either persuade users to adopt your product, or search for more capital — in order to get users. For crypto, suffice it to say that funding and deliverables may work via different mechanisms. It is still Very Early(TM) and many important foundational components are being built. However, that doesn’t mean we can’t speculate on the demographics of future users! Where are the masses? What will they look like when they finally materialise? For any emerging space, there’s a good chance appearances will diverge from initial expectations.
These questions are especially relevant for a project like FOAM: a proposed network of synchronised radio receivers that hopes to provide ‘unspoofable’ geolocation authentication. For this write-up, the focus will be on the active operators of the FOAM protocol, not the parties which are paying for location attestations.
As is the case with every crypto network, motivated parties are integral to co-creation as mechanism maintainers (h/t to Rhys Lindmark). This includes activities such as node running, staking, slashing, relaying, signalling etc. This subset of users facilitates management and expansion of each protocol. Likewise, the FOAM protocol will rely on a network of incentivized actors to initiate and maintain the system of Zones and Zone Anchors for Proof of Location (PoL) services. Find more details about these specific components in the whitepaper.
Similar to PoW networks like Bitcoin and Ethereum, technical knowledge will likely emerge as a precondition and may discourage people from participating (running specialised hardware, comfort learning new software / interfaces). Hardware details are forthcoming but generally it is expected to be the similar to the The Things Network, but using the DASH7 radio protocol.
It’s important to also understand that the final mechanism parameters (e.g. staking thresholds) the team decides on may result in unanticipated effects for future participants. For example, if capital requirements are too high for staking or hardware, smaller players could be pushed out by larger ones.
At first blush, people learning about FOAM may assume Zones will be maintained by independent individuals. However, there are good reasons to believe individuals may end up as a minority within the network; this isn’t necessarily a bad thing. If the mechanisms function as hoped there will be a healthy mix for all types of operators.
The following is a speculation on possible network operators, organised below according to their relative scale.
INDIVIDUALS: The desire for pure decentralisation is an overwhelming theme in crypto. The smaller the party, the less centralised — and a smaller possibility for cascading failures. Private homeowner / operators costs will be limited to hardware acquisition and a bit of person-to-person networking to set up the minimum: four Anchors for a Zone. Individuals simply looking to experiment with the technology might run one zone with family / friends in their city.
Motivations: tech enthusiast, decentralist ideology, anti-Big Brother, profit.
COLLECTIVES: Extrapolating further from individuals, it’s easy to imagine groups forming with the specific objective of coordinating local FOAM coverage. This type of organisation would strike a good balance between the scale of a large company but the local knowledge of individual operators. Local collectives are intrinsically motivated through skin-in-the-game incentives: their efforts directly lead to better Zone coverage in their city. Collectives would likely thrive in niches where municipal bodies are not interested in participating (lack of time, funding) and companies cannot justify the investment into smaller addressable markets.
Looking at other mechanisms within the FOAM ecosystem, also consider the benefits of pooled efforts with regard to curating POIs against malicious challenges, coordinating Zone placement for deployment efficiency, or signalling to maximise mining rewards (h/t Paul Momoh). These are clear benefits that could lead individuals to coordinate.
However, that’s not to say that there aren’t challenges present. Productive coordination layered on top of the base layer protocol incentives would require a form of consensus. Governance, the lurking bugbear of decentralisation, would certainly follow. The difficulty, of course, is to not allow the subsequent petty politics to remove the advantages achieved through coordination. Fortunately, there are many projects building tools for crypto-native strategising, including Aragon (Luis Cuende), Colony, and DAOstack. It’s exciting to imagine possible synergies within the crypto-petri dish.
Motivations: Local civic pride, community growth, profit.
INSTITUTIONAL ZONES: This set includes malls, office parks, university campuses, industrial parks, Special Economic Zones (SEZs)— large expanses of private or limited access space.
One interesting condition here is the possibility for a non-competitive fee market. Imagine a sprawling manufacturing property that accepts sensitive deliveries. Their Zone is the only one accessible at that location, and they require location authentication upon delivery of goods. That is, prices for attestation may become artificially inflated given a monopoly over local nodes. External participants might be able to provide coverage for limited portions of the property edge, but this would only help to a certain extent.
Motivations: May run their own Zones to ensure constituents have access to a well maintained system with superior coverage. Profit / monopolist advantage in the case of single providers + large area.
MUNICIPALITIES: A city or urban area, with the local government running Zones as a public service. Several benefits include use of geographically distributed infrastructure like utility poles, trained workforce to install / maintain a large network at scale, ability to self-fund hardware acquisition through a tax. First responders would have a system more dependable than GPS.
Similar to institutional users, issues could arise from a maladjusted fee market. For example, if a local public network ends up partially subsidised it would disincentivise additional Zones from forming because of artificially depressed fees. Reaching further, if the government contracted out the network to a third party could their contract ban additional independent nodes? Granted, this appears unlikely, given it seems like a potential infringement on freedom of activity given that the protocol operates on an unlicensed radio spectrum.
Motivations: public utility, offered at lower cost to verified city residents perhaps. More dependable geo-location for city services.
**PRIVATE COMPANIES: **It seems this group will be the most impactful in the long-term build-out of the FOAM network (especially the later stages). Advantages emerge at scale which are hard to overstate. These include large hardware contracts, experience dealing with specialised tools and components, the ability to support in-house legal teams, access to pools of capital in order to finance regional expansions, developed synergies in managing network assets, etc.
Several scenarios can be forecasted, possibly interwoven:
Consider the case where a company (Uber, FedEx) sees a particular market where location authentication would be an upsell — they are compelled to operate Zones because they recognise the long-term value it adds to a market.
Similar to a municipal operator, large companies can also eke out a coverage advantage through legal pressures. Consider that these companies may get owners of private property (think dense urban areas with high rises / condos) to sign “non-compete” agreements in exchange for a one time lump-sum or a % of future authentication fees. In effect, this would oblige owners to enforce Zone Anchor bans on their premises. Granted, this condition would ultimately be difficult to implement given the probable range of each Anchor. If actually carried out, it would unfortunately result in a less egalitarian protocol distribution.
Motivations: Profit, adding to an existing service or product as an upsell.
The next few years will be incredibly interesting as networks launch and iterate, verifying the soundness of their incentive theory. There will likely be other types of FOAM operators that haven’t considered and uncertain edges between categories. Variety in operator types would certainly add to the network’s Antifragility(TM).
Hopefully these thoughts will inspire other FOAM enthusiasts to think of more participant types and edge case behavior. I’m looking forward to the FOAM Utility Token Sale and participating in the network when it launches later this year.