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I-N-C-E-N-T-I-V-I-Z-A-T-I-O-N

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@muratkbesiroglu
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Incentives play a central role in the functioning of crypto ecosystems. Without them, there would be no functioning blockchains.

We can define the word incentivization as the practice of building incentives to motivate the actors within a system. This definition shows that incentives are built for specific actors and are meaningful within a system.

So what motivated me to write this article? When I focused on incentivization @theycallmedan mentioned on the CryptoManiacs podcast, I had many connotations. Since I have been dealing with marketing for a long time, I have thought about this because the marketing department's job is to encourage customers to buy products.

Incentivization is not a crypto-specific concept, but crypto ecosystems offer a conducive infrastructure for implementing incentives.

Incentives of Bitcoin

As we all know, Bitcoin was not the first digital currency. What set Bitcoin apart from previous attempts was the attractive incentives given to the actors involved in the system. The Bitcoin network gives coins to miners who keep operations running safely. There are multiple incentives for customers. The limited number of Bitcoins means that those who join the system early acquire a scarce commodity at a low cost. Also, having a Bitcoin wallet allows for fast and low-cost money transfers anywhere in the world.

Limits of Incentives

During my banking years, I have often been involved in incentives discussions. For example, the bank I worked for gave reward points for credit card purchases in Turkey quite late. Because giving incentives means giving up profits, assuming other things are constant.

There were also objections regarding the plan to give bonuses to employees for sales. Why did we have to give people extra money to do their jobs?

Branch sales targets, their realizations, and the awards that will be given were also the subjects that were discussed a lot. Likewise, everyone had different ideas about what and to what extent they should be encouraged.

Can incentives overshadow the actual benefit a business provides? Or can motivate people to showcase certain behaviors only with monetary incentives?

It would be pointless to turn our back on incentives. On the other hand, incentives, like everything else in life, have limited power. Establishing the optimum balance between the cost incurred and the benefit obtained should be the main problem of the art of incentives.

Incentive Mechanisms of Crypto Ecosystems

One essential feature that distinguishes crypto infrastructures from others is that it allows money supply. Rapid growth is possible when cleverly designed incentive mechanisms accompany the money supply.

Incentive mechanisms in crypto are getting more sophisticated over the years. For example, it was an essential innovation for investors to earn staking income in PoS blockchains. Later, many ways to generate returns on coins emerged under DEFI.

Airdrops are another crypto-specific incentive mechanism. The airdrop economy has become so sophisticated in the Cosmos ecosystem that a tool has been built on the Juno network to support airdrops. Claiming airdrops with this tool is as easy as picking an apple from a small tree.

On the other hand, it is worth remembering that play-to-earn games are based on monetary incentives. The majority of play-to-earn games are played purely for the sake of financial incentives. No game I experienced is as enjoyable as Splinterlands.

SPK Network

The @spknetwork built on Hive is described as "an incentivization layer for web3".

Hive is a network with a robust incentive mechanism, as we all know. Participants who contribute to the network receive various awards. Witnesses earn Hive in exchange for acting as nodes. Bloggers are rewarded with Hive, HBD, and tribe tokens. Likewise, players earn coins for the game they play. In addition, those who run projects on Hive benefit from the decentralized Hive fund.

What if we wanted to adopt such a mechanism to any business on a smaller scale? Building an infrastructure like Hive should not be a job for everyone. Spk Network will allow to set up of mechanisms with incentives on the Hive blockchain.

Conclusion

Incentives for crypto ecosystems are what fuel is to vehicles. We can create liquidity on blockchains. Therefore, we can generate incentive mechanisms for new and promising businesses at a low cost. Crypto infrastructures are also good at securing systems with incentives.

For which use cases other than data storage will it be used when Spk Network is activated? Implementing incentive systems with less development is a strong value proposition. That's why I'm keeping a close eye on what's happening on the Spk Network front.

Thank you for reading.

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