Learn about the Moxie protocol in one article. Farcaster finally has a protocol-level incentive token?

Original Title: Crystal Ball Gazing: Economic Social Incentive Layers

Original Author: zoz.eth

Original Translator: Ismay, BlockBeats

Editor's Note: The Moxie Protocol is a community-managed Farcaster economic engine that supports paid membership, monetization, member-only features and benefits, Farcaster native advertising models, built-in attribution (which can automatically identify and record the source of user behavior and contributions), rewards and revenue sharing, etc. The protocol is an orchestration of multiple smart contracts that can be executed through frames, actions, and apps/clients. With Moxie, anyone can use it to add economic incentives to their Farcaster experience, such as frames or channels that only paying fans can participate in, private groups that only fans can join, and more.

Here is the original text:

Over the past few years, we have begun to see attempts to create decentralized social graphs, and while the implementations may vary, the goal is the same, which is to build a composable social layer that prioritizes users rather than users as products. It is more about providing creators, communities, and fans with a tool to leverage the social graph in ways that were previously impossible, while giving them the opportunity to transfer their social capital rather than becoming vassals of product providers.

We will pragmatically discuss the most ideal solution, both from a user and developer perspective, that may be able to scale to the required user base on a global scale. From the beginning, Farcaster took the approach that blockchain does not provide the best user experience to put all data on chain, nor is it necessary. The Farcaster protocol is designed to be a primitive layer that only provides a small part of the functionality required by the base layer, basically a pure social graph. The on-chain part can be simply described as a registry, while the storage layer is implemented through Hubs, which is decentralized but not on the chain. Creators and contributors describe it as a sufficiently decentralized social network.

But blockchain is very suitable for value transfer

One thing that confuses most crypto industry participants is that many people are used to creating tokens for anything, which is usually a short-sighted approach, and few people will object to this with insightful views, because most participants are incentivized by products in the early stages to make quick money.

It might seem ideal to embed value transfer and economic models at the base layer, but the core team Merkle Manufacturing knew that this was not the path they wanted to take. They took a very different approach, thinking about the protocol from a traditional business perspective and generating revenue in multiple ways, one of which was user registration and annual subscriptions. Today, Farcaster is already very successful and a profitable protocol, which is not something that every blockchain product can do.

This actually leaves room for other products and layers to be built in parallel or on the Farcaster social graph. As an early user, it was clear that this was possible, but it required some background knowledge, deep thinking, and novel mechanism design.

Airstack

Airstack is an AI-driven platform that enables access to on-chain data across projects and blockchains. They played an important role in helping Farcaster grow, helping the team continuously test hypotheses and improve the protocol by providing feedback and participating in multiple early iterations of the product. Notably, Airstack has begun to provide APIs to support developers. They knew early on that to gain an advantage, they needed to invest time and manpower to extract knowledge and gain a first-mover advantage.

Early on, they began building the second client on the protocol, Warpcast (formerly Farcaster), after the Merkle team. They developed Jam, which provided some features not available in Warpcast. This not only allowed them to personally discover defects that needed to be addressed, but also laid the foundation for critical knowledge required for the client to succeed, and Jam was sold to Tako Protocol in 2023.

Airstack was the preferred provider for developers to build Farcaster.

Economic and social incentive layers before blockchain

The history of economic and social incentive layers in social networks dates back to the early 21st century, marked by the rise of platforms such as Facebook and Twitter, which used network effects to drive user engagement and content creation.

Initially, these platforms relied on intrinsic incentives such as social interaction and community building. As the user base grew, the limitations of non-monetary incentives became apparent. This led to the integration of economic incentives, where content creators could generate revenue through advertising revenue, sponsored content, and later, direct user payments. For example, YouTube's Partner Program allows creators to earn revenue based on ad views, while Instagram influencers earn money through brand sponsorships and marketing.

Over time, multiple models have emerged to enhance and diversify these economic incentives. Patreon, launched in 2013, enables creators to receive direct financial support from fans through a subscription model, and provide exclusive content and perks in return. Similarly, Twitch, a live streaming platform focused primarily on gaming, has implemented a system of donations, subscriptions, and ad revenue sharing to incentivize streamers. These models not only provide alternative revenue streams, but also foster close relationships between creators and their audiences.

However, the evolving guidelines and policies of parent companies often render certain products and business models obsolete. For example, the popular short-form video platform Vine faced significant challenges after its parent company Twitter changed its strategic focus, ultimately shutting down in 2017. Similarly, Facebook’s 2018 algorithm adjustment to prioritize content from friends and family over content from Pages and brands significantly impacted the reach and revenue of media companies and content creators who relied on the platform’s organic distribution.

Fragmentation

The decentralized base layer social graph, where developers can design, experiment and create, is a huge step forward, but it also brings subjective opinions, alignment issues with different platforms and tokens. Anyone who has worked in the industry for a few years will quickly realize that while the idea of decentralization is what we need, it brings as many challenges as the problems it solves.

Of particular note is the fragmentation that decentralization brings. What is supposed to be achieved is the network effect, but it requires thoughtful coordination to achieve this goal. While we see some projects aligning with $DEGEN, there are also many projects that adopt their own model or tokens from external ecosystems. The multiple iterations of Jam after its acquisition by Tako are a good example. As an early user, I have mostly abandoned it because the speed of change is too fast and a lot of time is spent on failed attempts.

What developers really need is a plugin solution, and Airstack is particularly suited to this due to its background, knowledge and resources, so Moxie was introduced.

Moxie Protocol

Moxie's North Star goal is to grow Farcaster's GDP.

Brief Description: The Moxie Protocol, developed by Airstack, revolutionizes decentralized social networks by integrating fan tokens and reward systems, enhancing user interaction and enabling the monetization of creator-fan interaction. The protocol provides flexible monetization mechanisms and transparent payment methods, promoting community vitality and the spread of economic benefits.

Moxie Protocol: A Comprehensive Solution to the Missing Problem

Airstack’s innovative solution, Moxie Protocol, takes a significant step forward in the decentralized social graph space by integrating economic incentives and enhancing user engagement through a strong token economics system. Moxie Protocol aims to facilitate direct and meaningful interactions between creators and their communities using fan tokens, rewards, and other incentive mechanisms. It is important to note that in Moxie Protocol, everyone is an owner - users, developers, channels, and the Farcaster Protocol.

The core concept of Moxie Protocol is fan tokens, which enable creators to directly monetize their influence and content. Fans can purchase these tokens to support their favorite creators, get exclusive content, and participate in unique experiences. This model not only diversifies revenue streams for creators, but also strengthens the connection between creators and their audiences by providing substantial value in terms of fan engagement and loyalty.

Active participation is further incentivized by a rewards system within the Moxie Protocol, where users earn rewards by engaging with content, completing challenges, and contributing to community goals. These rewards can be redeemed for a variety of perks, including exclusive merchandise, NFTs, and even personalized interactions with creators. By gamifying the engagement process, the Moxie Protocol enhances user retention and promotes an active, interactive community.

In addition, the Moxie Protocol’s earning mechanism allows users to monetize their activity within the network. By participating in challenges, games, and community-driven projects, users can earn tokens with real-world value. This not only democratizes the economic benefits of the platform, but also encourages a more equitable distribution of wealth among users.

FAN TOKENS

Farcaster members can buy and sell fan tokens through the Moxie smart contract, with three types available at launch: Member, Channel, and Network.

Member Fan Tokens provide exclusive features and benefits to holders, and a portion of all rewards earned by members will accrue to their Fan Token smart contract. Channel Fan Tokens provide similar benefits for specific channels, while Network Fan Tokens target benefits at the network level and accrue rewards in a similar manner.

These Fan Tokens emphasize utility over speculation, allowing holders to access special features integrated into the Farcaster experience. Fan Tokens can only be purchased by Farcaster Members through Moxie contracts and cannot be transferred or sold outside of these contracts, preventing the emergence of a secondary market.

The purchase and sale of fan tokens is conducted through Moxie Fan Token Auctions (FTAs) or Moxie's bonding curve smart contract. Fan Token Auctions (FTAs) use batch auction contracts to achieve fair pricing, while Moxie's bonding curve ensures continuous market liquidity and stability through a logarithmic pricing structure. This approach prioritizes the use value of members and disincentivizes excessive speculation. The proceeds from the batch auction will be distributed to the bonding curve contract, the Moxie protocol, and the member or channel that sold their tokens, aiming to promote a decentralized and fair ecosystem for fan tokens.

Rewards

The Moxie protocol allows anyone to stake MOXIE tokens in the rewards contract to provide POW rewards to Farcaster members.

Members earn rewards by completing actions such as creating quality content, building valuable frames, promoting frames, leading new user registrations, and interacting with ads or products. The protocol verifies these actions and issues rewards based on predefined distribution rules.

To prove the effectiveness of rewards, Moxie has partnered with Airstack to test various reward concepts off-chain since March 2024. At launch, rewards include earning MOXIE tokens by posting high-quality content and replies, using the developer framework, and running API calls through Airstack.

Public rewards support the creation of high-quality content and are managed by the Moxie DAO; third-party rewards allow sponsors to purchase MOXIE and incentivize specific actions.

Airstack facilitates the issuance of rewards by providing frameworks and actions, and organizations can use Airstack's code-free tools, or develop their own reward systems using the Moxie protocol.

Payments

Awards earned will be automatically issued through Moxie smart contracts.

At launch, the rewards will be distributed as follows: 50% to the member who received the reward, 20% to the member's fan token bonding curve smart contract, 20% to the fan token bonding curve smart contract of the channel where the reward is located (if applicable), and 10% to the network's fan token bonding curve smart contract.

This distribution mechanism is designed to increase the price of the next purchase of fan tokens by paying the amount received to the bonding curve and destroying the corresponding number of fan tokens.

$MOXIE

For example, if Farcaster member zoz.eth earns 10 $MOXIE, 5 $MOXIE will go directly to zoz.eth, 2 $MOXIE will be used to purchase and burn fan tokens for the Base channel, 2 $MOXIE will be used to purchase and burn fan tokens for zoz.eth, and 1 $MOXIE will be used to purchase and burn fan tokens for the Farcaster network.

Developers can also program other payment distribution methods based on specific use cases, flexibly distributing rewards between different operations and participants.

For example, users or the community can decide to allocate a portion of the proceeds or rewards to certain charities.

Airstack’s Moxie protocol demonstrates the potential of decentralized technology to transform social networks by prioritizing user rights and economic empowerment. Through its comprehensive suite of features, the protocol not only strengthens the relationship between creators and fans, but also sets a new standard for interactive and rewarding digital experiences.

We believe Airstack has thoughtfully created the additional layers needed to orchestrate Farcaster's growth. Just as Frames drove Farcaster's growth in Q1'24, Moxie will take the baton and drive explosive growth in Q2.

Translator's note: For more information about Moxie, please see: https://build.moxie.xyz/the-moxie-protocol

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