Decentralized social discovery

Due to the massive improvements in information technology over recent decades, thenumber and variety of people who can successfully participate in an online institution isfar less often restricted by the objective limits of computers and networks than it is bylimitations of mind and institution that have usually not yet been sufficiently redesignedor further evolved to take advantage of those technological improvements.

Nick Szabo

AbstractThis paper explains how a decentralized crypto-economic protocol can bring about a new era ofinteraction between strangers. When we encounter a stranger in our real-world surrounding, it ishard to determine that person’s interests, compatibility, and trustworthiness. Therefore, we tendnot to communicate with people we do not know even when we share the same physical space.This prevents a lot of opportunities for valuable human exchange. Way Network solves thisproblem. By providing reliable information on strangers within a shared environment, it connectspeople for more meaningful communication and interaction. Way Network is decentralized: Itdoes not depend on a trusted third party and uses smart contracts on the Ethereum blockchainto incentivize an open crowd of curators to perform the required work. This enables the scaleand information depth that is necessary to cover the globe’s public space with one consistentdigital infrastructure for hyperlocal communication.

Table of Contents

Abstract 3

Table of Contents 4

1 Introduction 5

2 A Silent Problem 62.1 Information flows in real-world space 62.2 Why not just talk? 82.3 Solutions of the Web 2.0 8

3 The Way Network 113.1 A personal billboard 113.2 Decentralized Discovery 123.3 Token Curated Communities 143.4 The PRSNC token 163.5 Business Model 183.6 Technological Architecture 183.7 Project Status 20

4 Summary & Conclusion 21

5 References 22

1 IntroductionThe success of modern humans is based on its ability to coordinate large-scale cooperationbetween strangers. The internet connects humans across the globe for the exchange ofservices and information. But when it comes to connecting strangers for personal relationshipsand real-world interaction, the success of information technology has been limited: In moderncities, we are constantly surrounded by large crowds of people. Yet, the social experience ofurban life is often solitary and awkward. In public spaces, we hardly communicate with thepeople around us, because we do not have sufficient information about them: It is impossible toinfer the availability, relevance, trustworthiness and compatibility from a person’s mere physicalappearance.

Way Network solves this problem. It enables trustful communication between individuals whohave never met and do not know each other. It provides an accurate filter that helps usersdetermine whether they stand to benefit from interacting with a stranger in their environment.The work of verifying identities and organizing them into useful categories is performed by agroup of people, that shall be referred to as curators. These curators are incentivized by acrypto-economic mechanism to generate reliable signals about the trustworthiness, expertiseand interests of network participants. As these signals accumulate, users of the network gainaccess to a rich web of trusted information on the strangers in their environment. This willenable entirely new forms of interaction. Using Way Network, people who have never met eachother can spontaneously enter valuable real-world interaction, whenever they find themselves inthe same physical space.

This paper aims to convey a high-level understanding of the fundamental ideas behind WayNetwork. Section 2 specifies the problem we are trying to solve in more detail. Section 3describes the technology and the token-economics of the proposed solution. Section 4concludes.

2 A Silent ProblemHumans are becoming ever more independent, self-determined and mobile. Recent generationsincreasingly build and rely on their own professional and personal networks going beyond theimmediate circle of family and friends. Most of these relationships require real-world encounters,rather than mere online interaction, as a foundation. Professional networking, romantic dating,activity groups, interest communities, just to name a few, all require the coordination of physicalbodies in a designated space and time. Intricate social rituals have evolved to facilitate thiscoordination.

Nevertheless, meeting new people in the real world remains costly. One has to physically go toa place where the likelihood of finding available and compatible strangers is high. One has todiscern interesting and trustworthy individuals, without knowing much about them. And then onehas to get the other person’s attention and start a conversation. Only under rare conditions canall of this happen.

At the same time, in urban centers, we are constantly surrounded by strangers. At publicvenues and in transport we share the same space with them for extended periods of time on aregular basis. Yet, we are largely unable to create meaningful direct interactions with theseindividuals. As a result, we experience many moments of urban life as awkward, wasteful,boring, lonely or even depressing. We stare at the space between people or turn to privateentertainment devices, both of which constantly invade our vacant attention with advertisement.Every day, billions worth of opportunities for human interaction thus remain unrealized in favor ofwasteful and addictive activities.

In this section, we discuss the three factors that have led to this equilibrium: first, the informationasymmetries inherent to the physical world, second, biologically evolved social norms, and third,the misaligned incentives of current social media providers.

2.1 Information flows in real-world spaceThe haptic world is fundamentally restricted in the sense that space is limited and energy isrequired to force information through it in the form of sound or light waves: One cannot perceivemore than what is within a close radius and not obstructed through physical barriers. And evenwithin this radius, the information being emitted by our environment remains superficial.

Every human can only carry a reflecting surface of roughly 2 square meters through space – thesurface of her own body. The essence of fashion is to use this surface to communicate withone's surroundings at all times. But the span of information that can be transmitted throughfashion is limited: One can easily express one’s liking of a rock-band by a T-Shirt. But it would

be hard to also communicate one’s favorite food, career interests, books and philosophicalinclinations all at the same time through a single outfit. It is also usually impossible to infer theethical integrity and trustworthiness of a person based merely on their physical appearance.

Thus, when we find ourselves in a dense urban area, we have very little information about thestrangers in our physical proximity. It is therefore not surprising that we hardly communicate withthem. We simply do not know who in our environment would be valuable to interact with andwhat would be an appropriate form of interaction. In particular we do not even know ifcommunicating with a surrounding stranger could turn out as harmful. I.e. we cannot trust, thatthese unrelated individuals would not exploit any opportunity to enrich themselves at ourexpense. This is the fundamental information asymmetry that Way addresses.

In contrast to people, businesses can clearly communicate their value propositions by installingpermanent structures with visible messages in physical space. Over time, they can also build areputation through repeated exposure to the people who pass by these physical establishments.Hence, interaction in transitory public spaces is usually limited to commercial value exchangewith local businesses. Even if we are not inclined to consume, we are forced to look atomni-present, immutable advertisement billboards which take advantage of our vacant attention.Public space is owned by everyone collectively, but until now it has only made economic sensefor businesses to rent and fill with information. For an individual, building and carrying around abillboard (ideally with a variable display) is too costly relative to its expected return.

Human societies have developed institutions to mitigate the barriers to communication betweenpeople who do not know each other. People go to certain places in order to filter available,trustworthy and compatible strangers: The college campus, the music club (here the filtering isdone by the bouncer), conferences, cafes, and activity groups all serve the purpose ofconnecting with people outside one’s existing social circle. When we happen to physically go tothe same place and engage in similar activities, ideally repeatedly, we have more informationabout the other people who go there. This makes it easier to get to know them. But it severelyrestricts the pool of potential new connections: You will only be able to get to know the peoplewho happen to go to the same institution at the same time as you. For many, that is not enough.1

The aim of Way Network is to construct an information filter and trust-building mechanism that isindependent of physical locations and of centralized institutions. We want to enable a trustfuland interactive social climate across the entire public domain of the planet.

1 Furthermore, these spaces have a strong incentive to maintain their monopoly as a place forspontaneous social interaction and shape the behavior of its visitors in their business interest. Forexample, bars encourage excessive consumption of alcohol because that way they can get in on theaction. Airports aggressively lure passengers into the shopping area, rather than making the commonwaiting areas as enjoyable as possible.

2.2 Why not just talk?We have established that it is hard to infer availability, trustworthiness and compatibility fromsomeone’s mere physical appearance. But clearly humans have instruments to collect moreinformation than what is visible. When we are closely surrounded by strangers in public, we arefree to approach and contact them to further gage the potential value of an interaction. Why isthis so hard? There are two evolutionary explanations:

First, the kind of interaction humans are evolutionarily wired for, is within small, familiar andconform groups. For the longest part of our evolution we lived in bands of hunters andgatherers. Within these groups interaction was highly desirable. Genetic outsiders in contrastwere largely perceived as threats and most of the interaction was violent. A tendency tomaintain physical distance from outsiders evolved. In modern cities we now find ourselves inclose physical proximity of such “outsiders”. We co-exist in short-lived, heterogeneous groupswith little or no history of previous interaction. The human structure on its own is not wellprepared for such a setting. Security is guaranteed so there is no danger of violent conflict andmany are also aware of the benefits of interaction. But nevertheless, our instinctive wiringprevents us from engaging in direct communication with these strangers.

The second reason is linked to another characteristic of our evolutionary psychology: We areprogrammed to seek approval from our social environment. In the absence of information, thereis a significant chance that no value can be created by initiating a social interaction with astranger and that one would therefore get rejected publicly for doing so. Evolution has instilled inus an irrationally strong fear of such rejection. We therefore choose the safest route; Stay silentand keep to ourselves. We turn to our smartphones to escape the dull situation and find thepeople (or computer programs) we trust. We dissociate our mental presence from our physicalbody and lose awareness of our surroundings. This is the social equilibrium we find ourselves inthroughout today’s public sphere.

2.3 Solutions of the Web 2.0The internet has vastly expanded our capabilities for social interaction. We can communicateinstantly with people across the world without having to be in the same physical space andwithout having to move our bodies at all. We can share vast amounts of information and applyhighly individualized filters to get the most relevant slices out of massive data streams. However,these technologies have not made it easier, to the same degree, to connect with unknownpeople in the real world. There are three reasons for this:

First, online social media companies are incentivized to encourage online interaction. Thesecompanies earn money by renting out the space they control: the screen of their respectivesocial media application. Their financial incentive therefore is to make people spend as muchtime as possible paying attention to that screen. This maxim often conflicts with the users’

interests and sometimes even goes at the expense of their psychological health. Users whowould prefer to spend more time offline are lured in with features that are engineered to causeaddictive behavior. In contrast to the virtual real estate, the real world is not owned by socialmedia companies, so there is little incentive for these companies to motivate people to interactoffline. Rather, it is always in their interest to offer new ways of substituting offline with onlineinteraction. Indeed, today the most common path to escape the solitary boredom of publicspaces is to turn to online social media on our smartphones.

The second reason that the current internet has not succeeded in connecting us with ourreal-world environment is that its centralized business models limit the required network effects.Different social media providers compete for market shares and there is no incentive for thesenetworks to cross-share their users’ data, even when the offered services are almost identical.Let us illustrate this by way of example: A user who is looking for a romantic date can choosebetween many similar apps. For instance, Tinder and Bumble both serve the exact samepurpose and follow similar mechanics with only minor differences on the level of the userinterface. To maximize the chances of securing a date, a user would have to set up a profile onboth platforms. She would arguably prefer to be connected to both potential dates on Tinder andpotential dates on Bumble without having to build her identity twice and having to check bothapps for matches. The user does not care much about the brand whose platform they use tofind dates and would much rather have a match on a different platform than no match at all.Nevertheless, Tinder will never connect you with a Bumble user, even when that Bumble user isthe perfect match, nearby and available. Each network collects detailed information on its usersjust to lock it in a proprietary data silo. Companies do not allow users to control their own data,because these data silos are the companies’ main asset. Apart from splitting up the user base,these data silos also pose a security risk since highly private information is saved in a honeypot, deterring users from providing information.2

The third and final reason the internet is failing to connect us with strangers in the real world, isits inherent lack of trust: When you meet a stranger on the internet, perhaps with the help ofmatching algorithms of a dating or networking app, you often have access to a lot of informationabout the other person. However, there is no simple way of verifying the authenticity of thisinformation. Comprehensive social media profiles allow people to gather more information aboutthe personality of newly met strangers and filter those new connections. But this form of scrutinycan only happen after the first contact has already been made, so it does not really help withbuilding trust for the very first interaction. You only get someone’s facebook profile after alreadyhaving established a degree of trust and connection. We cannot trust an acquaintance that wehave only met online through a public profile, because digital avatars can easily be faked. Inpurely online communication, such trust is not absolutely necessary since we can easily controland limit the harm someone can inflict on us through an online channel on our computer screen.You can block a stranger who connected to you on facebook and turned out to be a creep and

2 Studies show that people dont use local social network because they don't feel comfortable giving somecompany their private data - insert references.

never interact with that person again. But meeting a stranger in the real world is much morerisky and requires higher time investment. Traditional online communication infrastructurescannot deliver the level of trust that is required for such interaction. Therefore, current socialdiscovery apps show very meagre results in actually facilitating real-world meetings for the3

average user (with particularly bleak outcomes for the majority of men).

Only within very specific communities does the centralized business model of the Web 2.0succeed in bringing strangers together in the real world: Singles, travelers, and businessdevelopers are the only ones where the need for connecting with unknown people in the samecommunity is strong enough to be served under the current technological paradigm. Thesecommunities are in fact defined by their need for connecting with new people. They are the onlyones who are willing to go through the painful and risky process of planning a meeting with anunvetted stranger.

But humans love to meet new people through communities, hobbies and interests, even whennetwork extension is not the primary purpose of their group membership: When you findyourself with a bunch of strangers in a subway compartment, there might not be someone youwould be interested to date, but maybe there is someone who is into fitness, too, and would behappy to discuss their workout plan. During your lunch break you might not find the perfectbusiness opportunity but you might find someone else who simply prefers a casual chat overeating alone. These are perhaps rather low-value, but also rather low-cost encounters. Andevery day, billions of such interactions are not realized. Now, technology has evolved sufficientlyto cater to this unserved market. Way Network is seizing this opportunity.

3 Include the studies that show how few people actually match and meet on tinder.

3 The Way Network

Way Network is a data infrastructure that allows users to communicate with unknown people intheir environment in order to facilitate real-world interaction. It helps identify valuableopportunities for communication with strangers by providing trustworthy signals about theirphysical presence, expertise, and community affiliation.

Way Network is decentralized and autonomous. Its social graph is not owned by the companyWay UG and it will continue to exist even without the involvement of its creators. Instead ofbeing stored on a central server, user’s social identities are stored and encrypted decentrallyand linked to an anonymous representation on the Ethereum blockchain. This ensures fullself-sovereignty and data privacy. An ecosystem of ERC-20 tokens headed by the PRSNC(‘Presence’) token incentivizes curators to produce reliable signals and organize information intouseful categories. This section explains the envisioned setup in detail.

3.1 A personal billboardIn its essence, Way Network provides access to a geo-localized pin board. Individuals as well asbusinesses can use this local board to display information to their physical environment. In theworld we currently live in, only businesses can advertise their services to passersby. Individualstend not to interact with other individuals because transmitting information through physicalspace and coordinating interaction in the real world is too costly. Way Network levels the playingfield by enabling individuals to carry a virtual billboard, that allows them to communicate withstrangers in the same way that storefronts do.

Not every individual will want to make use of the opportunity to communicate with strangers. Infact many people find it highly annoying to be close to strangers and will always prefer solitudeover interaction. But extensive user research and prototype testing have shown that there is aseizable proportion of individuals who enjoy spontaneous encounters and just lack the means tocreate them. The same research also indicates that many of the people who do not want to talkto strangers at all, in fact only say so because they have not experienced and cannot imagine away to make such interaction valuable.

Way Network is for a specific group of humans that enjoy real-world communication with otherhumans under the right conditions, but currently have no way of creating those conditions. Thisgroup is likely to grow: In the information age, human attention is one of the most valuable andscarce resources. In today’s public space, businesses compete aggressively over this resourcewith omnipresent advertisement. But in the future, individuals will increasingly appreciate itsvalue, too.

However, the vision described above presents an immediate problem: Most urban peoplealready complain about excessive noise through external stimuli . Public space is overloaded4

with information signals from businesses which use it to advertise their products. Whenindividuals start being able to display information to their physical surrounding, too, the amountof available information will increase even further. Our attention is limited, so we are unable toprocess all these opportunities. Therefore, to be useful rather than detrimental, Way Networkneeds to incorporate strong and reliable information filters. Users will not want to see everyone’spersonal billboard but only those which actually add value.

In this respect, digital channels offer a strong advantage over physical displays. Everyone seesthe same billboards and storefronts in a street, even when these are not equally relevant to thepassersby. In contrast, the digital information channels that Way Network puts on top of the realworld can accommodate multiple individualized layers with different interaction opportunities foreach user depending on her preferences.

In traditional social networks, the curation work of filtering valuable information and compilingindividualized feeds with relevant new information for each user is performed and monetized bya central social media company. With the advent of blockchain technology, it is becomingpossible for the first time to decentralize this process. The next section explains the theoreticalprinciples of this new approach.

3.2 Decentralized DiscoveryIn order to deliver targeted content, one needs to collect users’ information, store it in aprivacy-preserving way, and run complex big data algorithms. These are expensive operations.In the current Web 2.0, there are strong incentives for internet companies to perform andoptimize this work: When a platform succeeds in delivering relevant content to each of its users,those users tend to be more engaged and spend longer time spans on their information feed.Advertisers are then willing to pay large sums to the central network provider to have their adsplaced in between user content.

The essence of decentralized information discovery is to allow anyone to participate in the5

curation of information feeds and reap its financial rewards. To coordinate a large number ofparticipants around the shared goal of curating information, a blockchain token is used. Thistoken serves the purpose of ensuring that curators have skin in the game when signalling thevalue of information: It ensures that curators are incentivized to provide valuable signals. Theyearn money from curating information in a valuable way and lose money from organizing it in anunuseful way.

5 as pioneered by Meher Roy, Simon de la Rouviere, Maciej Olpinski and STEEM.4 Study about information overload through advertisement in public real world space

The fundamental mechanism to accomplish this, works as follows: Every user of the networkfirst decides whether they want to be a passive information consumer or an active informationcurator. Information consumers generally use the network just like in the Web 2.0: they pay withtheir attention but otherwise usage is free. Curators, on the other hand, contribute work to thenetwork to produce well-curated information and stand to earn in exchange. In order to becomea curator, however, one has to first purchase a blockchain token and thereby put some capital atstake. This is a utility token that can be locked for a certain time, giving its holder the right to6

evaluate information within the network. Whenever new information is posted by networkparticipants, the curators can vote on whether they find this information valuable or not. Thesevotes are weighted by the voter’s locked token, so the more token you have at stake, the moreyour vote counts in determining the ultimate value of the information.

As the final element of the system, the information consumers now need to agree to actuallypay attention to the content with the highest token-weighted score . Curators can thus direct the7

users attention with their collective voting behavior: Information that is deemed by curators witha lot of tokens to be valuable will be viewed by the network participants. Information that isperceived by token holders as unimportant vanishes.

This setup constitutes an equilibrium if the curators actually rank the value of the information inthe most useful way. If the curators collectively create an information feed that is not considereduseful, consumers will stop paying attention to it. The token will then not be valuable because itgives voting power over a ranking that no one cares about. If on the other hand, the ranking isconsidered appropriate, people will pay attention to it. Whoever wants to get attention will wantto be on top of it. The value of the token then increases because it represents the market valueof having the power to determine who gets this attention. This increases the incentive forcurators to expend effort on evaluating information judiciously. Through this virtuous cycle, tokenholders will be incentivized to produce an information ranking that is actually consideredaccurate.8

But why would one choose this seemingly complicated scheme over centralized curation as it iscurrently practiced by social networks? There are three major advantages:

1. Decentralization of powerInstead of being concentrated in the hands of a few company employees, the power tocurate a network would be spread across an open crowd, possibly with millions of people

8 In the case of Curation Markets this ranking is continuous, in the case of TCRs the ranking has only twosteps: In and Out. TCRs also adds staking to offer more direct incentives for curators to vote badinformation “Out”, but the mechanism still relies on the same fundamental idea that token holderscollectively will the decision that maximizes the quality of the ranking (or whitelist to be precise in the caseof TCRs).

7 This is the reason that Meher Roy refers to such tokens as attention-backed assets.6 The details of where the token comes from will be discussed in section 3.4

contributing their skills. This makes it more difficult for any one group to collude andpursue short-sighted private interests at the expense of the common good. It also meansthat there is open competition instead of monopoly for the power to direct users’attention: If a given group of curators does not perform well, another group of curatorscan issue or fork their own token and earn from providing better curation work.

2. FairnessIn today’s social media networks, curation is already performed to a large extent byusers: Users leave signals by liking, linking, and commenting content. This is of hugevalue because it provides the data that algorithms need in order to categorizeinformation and learn about users’ preferences. But there is currently no monetary costand also no monetary reward for providing these signals. In the traditional social mediabusiness model, all the money goes to the company developing the algorithms, ratherthan to the users producing the signals. The decentralized curation model, in contrast,sees the activity of reviewing, evaluating and contextualizing content as the main work ofa social network and rewards it, if performed well.

3. Serving the long tailThere is a long tail of small heterogeneous groups in society, for which coordinatingcuration has previously been infeasible because the economic incentives for doing soare too low and the transaction costs associated with monetizing it are too high.Decentralized attention networks serve these groups better and therefore reach a muchbigger market. Whenever an individual believes that there is a sizable amount of peopleinterested in a certain kind of information, they can launch a curation market, find othercurators across the world and start monetizing their work. This ability to cover the longtail makes the model particularly attractive for Way Network, because to realize its fullpotential, Way needs to reach a coverage that far exceeds the one that successfulcentralized social discovery networks have been able to achieve.

3.3 Token Curated CommunitiesLet us turn now to see how decentralized curation can be used to help overcomecommunication barriers between strangers. As we have seen above, the main problem is thatwe do not know whether a given stranger is relevant, compatible, and trustworthy enough tojustify the cost of initiating an interaction. Thus, in this use case, what is required is not theevaluation of information, but rather the evaluation of individuals. Way Network uses themechanism described above, but instead of determining the value of information, curatorsevaluate certain characteristics of people. If curators succeed in producing useful signals aboutnetwork participants, these participants can better estimate the value of interacting with eachother and create the encounters which promise to be beneficial. Whenever a user wants tointeract with a stranger, she can turn to Way, find a list of people nearby who are considered bythe network as valuable and trusted interaction partners within a given context, and initiate atrustful interaction.

At this point let us introduce group heterogeneity and acknowledge that the value of interactionwith a given stranger differs highly across people and contexts. The same stranger might be aperfectly valuable conversation partner for one user, and a terrible match for another user.Everyone is different. Nevertheless, there are groups of people who enjoy interacting with eachother and who generally agree on what makes an interaction enjoyable. They share certainvalues or interests and they like to cooperate with other members to pursue them, even whenthey don’t know each other personally. We shall refer to such groups as communities.

On Way Network, each community can deploy its own token and have its own set of curatorsgoverning membership . Thus, Way Network gives communities a tool to identify trusted9

members, where this trusted membership status is determined by the community’s own rules.Every group of people that is large enough to make it economically attractive to have a trustedlist of members will have its own token and its own community curators, to make sure that thelist actually reflects the community’s own values.

The crypto-economic mechanism to create this membership list may differ from community tocommunity. At the moment, two curation mechanisms appear most suited :10

1. ‘Exclusive’ TCR communitiesSome communities may want to remain exclusive and implement a TCR to govern membership.With a TCR, you are either in a community or out. To apply you have to deposit a stake. Tokenholders can counter-stake to challenge an applicant which triggers a vote to decide if theapplicant is admitted. The combined stake is then distributed to the winning party (depending onthe outcome, the challenger and the token holders who voted against OR the applicant and thetoken holders who voted in favor).

2. ‘Inclusive’ Curation Markets communitiesOther communities might have a more inclusive approach. They may allow everyone onto thelist without stake and use a Curation Market to categorize and rank members based on a11

useful characteristic. On the user interface level, a minimum score on the community’s rankingmight be required to be displayed as a member. In this model, in order to attract attention in acertain community, a member needs to either convince token holders to vote for her or buytoken and upvote herself. .12

12 Thus in comparison to the TCR mechanism, the Curation Markets setup allows for more fluid andcontinuous membership making it easier for users to purchase temporary attention. Link to Simon’s TCRvs curation markets article

11 Simon’s white paper

10 With different use cases as explained here:https://medium.com/@simondlr/city-walls-bo-taoshi-exploring-the-power-of-token-curated-registries-588f208c17d5

9 All these community-specific micro-tokens are linked via macro-tokens as will be explained in section3.4

The above mechanisms can also be combined. For example, a particular TCR implementationmight allow token holders not only to vote about the In/Out decision, but also to use the sametoken in a curation markets setup to determine the ordering of accepted entries. The future islikely to produce more variations of the above mechanisms. There are models that introduceinflationary rewards for good curators or fees for every token purchase. We are still in a veryearly phase of experimentation and determining which models are advisable for use within WayNetwork. Once this is tested and well understood, communities will be free to adopt themechanism they find most suitable and enter a market-driven, competitive exploration.

[Insert example use case]

3.4 The PRSNC tokenThe main network token of Way Network is the PRSNC (Presence) token. It is anERC-20/EIP-20 token on the Ethereum blockchain. It will be generated by a bonding curvecontract. This contract accepts ETH, holds it in a reserve pool and mints PRSNC in exchange.The price of 1 PRSNC increases with the outstanding supply of PRSNC according to ahard-coded price curve: The more PRSNC have already been minted, the more expensive itbecomes to mint an additional PRSNC. PRSNC can also be sold back to this contract at theprice determined by the curve, so you can reduce the supply of PRSNC and get ETH back fromthe reserve pool at any time. This guaranteed liquidity is the reason that bonding curvecontracts are also being referred to as automatic market makers. They are particularly useful fortokens which are not traded by many people and therefore illiquid on traditional exchanges.13 14

[Insert bonding curve graphic]

The PRSNC token can be used to curate the overall community of Way users using the‘inclusive’ Curation Markets model: When a new user wants to interact with strangers in herenvironment and does not apply any community filters, she will see a base layer where PRSNCtoken-weighted voting determines the visibility of users.

However, the PRSNC token can also be used to create new communities. It then serves as themacro-token connecting the community-specific micro-tokens: In order to create a newtokenized Way community, the initiator of the community needs to deploy a new bonding curvecontract. The creator of the community can set certain parameters of this contract, e.g. theshape of the price curve and corresponding reserve ratio, inflationary rewards, etc. but certaindefaults and guidelines will be provided (the Way dapp reference implementation will provide aninterface for this). Curators can then deposit PRSNC into this community-curation-contract andreceive the community-specific token. In this way a vast cascade of nested tokens can evolve.

14 The shape of the curve and the reserve ratio are tightly linked as explained here:https://blog.relevant.community/how-to-make-bonding-curves-for-continuous-token-models-3784653f8b17

13 Bancor protocol is based on the same kind of automatic market maker, and there the reserve ratio(reservePool / currentPrice * totalSupply) is set to be constant.

Whenever a community becomes too diverse to be curated by one group of people using thesame values, it can undergo tokenized mitosis and split into two sub-communities. Differentcurators can compete under very low barriers to entry for the power to direct the attention ofinterest groups. The tokens that gain and persist in value are the ones which are used bycurators to organize community members in a way that actually solves the underlying trust andinformation problem for its users.

There are three reasons for generating the tokens of Way Network through bonding curvesrather than by way of an ICO:

1. Decentralized ownership of valueIn an ICO, the network’s entire projected value falls into the hands of a central team ofdevelopers. But the value of the above-described network lies not primarily in thetechnology that the company Way UG is building, but rather in the signalling worksupplied by the curators. PRSNC tokens give the power to direct attention in a publicdigital space. But this space is not owned by Way or any individual entity. Therefore, noentity has the right to sell the power to curate this space. Bonding curves offer a way tocreate tokens without a central intermediary who gets a disproportionate share of acommon good and of the collectively created value.

2. Founder incentivesIn a traditional ICO, founders receive upfront capital without sufficiently strong incentivesto use the funds responsibly and to quickly develop a solution that actually works.Contributors who buy token from a project that fails to deliver on its promises lose theirentire investment to the wasteful wims of founders. With bonding curves, the level ofinvestment reflects the market opinion on the likelihood of success without the artificialpressure of a limited supply and the artificial time restriction of a token sale. When aproject is considered likely to be successful, investors can contribute capital and benefitfrom success, but when the project is expected to fail, investors can pull out again andrecover parts of their investment. The founders might only receive a fee on each tokenissuance , so they face a strong monetary incentive to keep the project successful even15

after the initial token launch. This characteristic is particularly useful forcommunity-specific tokens. A token that is only needed for a certain time because of acertain community’s temporary demand for coordination, can spawn and dissolvenaturally without money getting sunk into a central token creator.16

3. Less speculators, more curatorsThe success of tokenized curation depends crucially on the quality of the suppliedcuration work. Token holders need to actively contribute time and effort to the network forit to become useful. Token sales tend to attract speculators rather than contributors.These speculators bet on the success of projects and benefit from knowing about a

16 For example, a conference organizer might issue her own community and an associated token on WayNetwork for attendees to network effectively during the time of the event. After the conference is over, thetoken will not be needed anymore.

15 Details on how the founding team may receive capital in this model are described in the followingsection 3.5

successful project earlier than others. Curved token bonding is more likely to attractgood curators, who do not just want to benefit from the work of the project’s core teambut rather contribute to the success, while still being rewarded as early adopters.

3.5 Business ModelWith bonding curve tokens one question arises naturally: How does the project finance itself? IfETH is only deposited in the contract and can be withdrawn again by token-holders, where doesthe money come from to fund the development? Two modifications to the generic baselinemodel are possible to address this question:

1. Different buy and sell curvesOne obvious extension is to incorporate a higher price curve for buying and a lower pricecurve for selling tokens in the bonding curve contract . This would mean that the17

contract would hold a higher balance in its reserve than what it would have to pay out ifall token holders sold their token back. The difference can thus be paid out tobeneficiaries: entities that are considered important for the success of the project.18 19

This includes the project initiators who need funds for initial development but later couldalso be a broader list of beneficiaries dynamically determined by token holders through adecentralized governance process. 20

2. Initial Bonded Token SaleThe founding team may lock some of the first tokens of the bonding curve for themselves(without paying the contract for these tokens) and make them not tradable. The price ofminting a new token would still be determined using the total number of tokens, includingthe blocked tokens. When a certain threshold is reached, the initially blocked tokenscould be sold at the current price and converted into regular bonding curve tokens. Sincethe price is now higher, the founding team would only need to put a small proportion ofthe new funds into the pool reserve to close the initial gap, and could keep the rest of themoney for development.

Once there is fundamental demand for the token, there are many ways to channel off asufficient amount for development. The design space is huge and we are currently testing thedifferent possibilities.

20 A more detailed specification of such a beneficiary model can be found with Apiary:https://docs.google.com/document/d/1vYGoOpeZI7FxBrc6J8GRyIOcq0BuGs8uW8WIsDcFkZc/edit#

19 Alternatively, the difference could also be deposited into the contract in order to mint additional tokensfor the beneficiary.

18 With restrictions explained here:https://medium.com/@Vlad_Zamfir/a-safe-token-sale-mechanism-8d73c430ddd1

17 This was the implicit basis of the beneficiary models proposed in the first original draftshttps://media.consensys.net/exploring-continuous-token-models-towards-a-million-networks-of-value-fff153175776

3.6 Technological ArchitectureWay Network has 3 technological components: The protocol layer, the data layer, and the UIlayer. This section describes each layer on its own and explains how they will be linked together.

1. Protocol layerThe protocol layer is situated on the Ethereum blockchain and contains multiple smartcontracts and tokens. Here every user identity is represented by an Ethereum addressthat can hold token balances. The addresses are also used by the community’s smartcontracts to assign membership status to identities. No other private data is available onthis layer, so this layer is entirely anonymous. A single individual can have an arbitrarynumber of identities on this layer and thus untraceably separate different aspects of hersocial identity into different addresses. The smart contract layer serves to transmit onlyone piece of information: Does the person controlling a given Ethereum address belongto a given community and if yes, what is her membership status or reputation in thatcommunity (depending on whether the TCR or Curation Markets model is used). Infuture versions, the smart contract layer could also include a crypto-spatial coordinate21

to display nearby users to each other but for now localization takes place on the datalayer.

2. Data layerHaving a trustworthy signal about the community membership of other users isimmensely helpful in filtering potentially valuable connections. However, there are ofcourse more data points that users will want to consider before engaging in interaction:Location, photos, chat messages and other self-reported status information will mostlikely be exchanged before meeting a stranger in the real world. This data exchangetakes place through a decentralized application, that connects the blockchain identitiesto private data that is stored off-chain. In this layer, a user can always choose whatinformation she wants to share with other participants of the network, beyond theanonymous smart contract information. A user may choose to not share any moreinformation publicly than what is already disclosed on the protocol layer (address, tokenbalances and community affiliations). But generally it will make sense for users to sharesome further information through the data layer, at least with selected user groups.

A user may, for example, not be willing to disclose her photo identity and location with allother users, but only with those who share at least one community or with those who areat most 1 km distant. Once she has the information that there is a relevant and trustedidentity nearby that wants to interact, they can continue the conversation through theoff-chain data layer and gradually shed their anonymity up to the point where they faceeach other in the real world.

21 FOAM Protocol

3. UI LayerThe UI and data layer are separate. Way UG is developing a reference implementationbut anyone may develop a UI to visualize the smart contract information and interactionpossibilities on the data layer. In the UI we are currently envisioning, a user can see ageneral feed of identities nearby (curated by the PRSNC token), and then applycommunity filters to narrow the feed down to current interests.

3.7 Project StatusThis project evolved over various prototypes. The very first instance was called MeetXBerg. Thiswas a web application that allowed strangers to arrange lunch breaks in Berlin Kreuzberg.

The second iteration was called WaitList and it allowed waiting passengers at airports to chatwith each other and arrange spontaneous meetups.

Blockchain technology was introduced in the third iteration and tested with Cryptogeeks.Berlin,a token-curated ranking of blockchain experts in Berlin: www.cryptogeeks.berlin

4 Summary & ConclusionInternet technologies have enabled unprecedented levels of exchange between people who donot know each other. Nevertheless, information asymmetries and trust barriers still obstruct a lotof valuable interaction between strangers: Particularly when dealing in the real, physical world, itis very hard for humans to identify potentially valuable connections among the surroundingstrangers and communicate with them in a trustful way. In most public areas of urban space,communication between strangers is therefore impossible. We are forced to retreat into privatevirtual worlds for entertainment or endure the awkward silence while staring at omnipresentadvertisement billboards. Every day, billions of opportunities for valuable interaction thus remainunrealized.

Way Network solves this problem. It is a decentralized data ecosystem allowing users to obtainreliable information about the people in their physical surroundings and to communicate digitallywith them in order to facilitate valuable real-world interaction. No central third party is requiredfor this coordination. Instead, a cascade of nested blockchain tokens incentivizes an opencrowd of curators to provide the necessary work: They verify identities, categorize them intoextended trust communities and foster a healthy, engaging social climate, so that users caneasily discern trustworthy and relevant individuals. These token-holders stand to benefitfinancially from good curation work and will therefore supply a quantity and quality of signalsunknown to traditional social networks, where all monetary rewards are left to a centralcompany. Tokens are created decentrally through bonded curve contracts allowing communitiesto form and dissolve naturally as the market for social discovery signals demands. All personallyidentifiable information is stored separately using decentralized storage solutions and remainsunder the sole ownership and control of users ensuring full privacy, highest security standardsand data sharing across limited business networks.

Way envisions a future where strangers can exchange digital information with their physicalsurrounding at all times. Soon, this information will not be displayed on our smartphones, but ontop of the real world through augmented reality. When the internet merges with the real world, itwill be all the more important that its most used information layers are curated, owned, andmonetized by open communities, rather than central corporations.