Information Systems Research 2023
Token Incentive and Blockchain Developer Contribution
Abstract
Token incentives are the lifeblood of blockchain ventures, motivating diverse contributors to participate, maintain, and expand shared blockchain infrastructure; however, their reliability in markets teeming with speculative activity is not guaranteed. This study examines whether token incentives effectively motivate developer contribution—the core engine of blockchain development—when opportunistic events such as pump-and-dump (P&D) exploit and distort token value. We find that token-based incentives alone cannot sustain ongoing development contributions in either quantity or originality. The damage is more severe in projects with more concentrated token ownership and weaker decentralization, where developers have less influence and face higher risks of self-interested governance. We offer actionable implications for multiple stakeholders. For project leaders and token designers, the message is straightforward: Token rewards should be paired with safeguards that protect incentive value and contributor confidence, alongside governance designs that grant developers credible voice and decision rights. For policymakers and regulators, we outline recommendations to mitigate distorted incentives, reduce token concentration, and promote long-term market stability.
- DOI
- 10.1287/isre.2023.0480
- Sources
- semanticscholar openalex