Introduction of a proposed rewards engine for Kin cryptocurrency

1. Kin Rewards Engine
RFC v1.0
oded.noam@kik.comOded Noam kin.kik.com

2. Background
kin.kik.com

3. Why Rewards
• Align ecosystem partners towards a common goal
• Provide alternative* means of monetization
*) alternative to ads

4. Charlie Munger, Vice Chairman, Berkshire Hathaway
Show me the incentives
and I will show you the outcome.

5. What do we incentivize?
• Number of users/interactions? (increasing network effect)
• Time in app? (increasing impact of apps)
• Economic activity? (increasing financial growth)

6. Technical challenges
• Should apply to a variety of apps (not just Kik)
• Resistant to fraud, most notably sybil attacks
• Avoid side-effects

7. What do we incentivize?
• Number of users/interactions? (increasing network effect)
• Time in app? (increasing impact of apps)
• Economic activity? (increasing financial growth)
Not resistant to Sybil attacks
Happens outside blockchain -> opportunity for fraud

8. KRE v1.0
kin.kik.com

9. The Actors
• Users people that use Kin-ecosystem apps
• Capitalists users that hold very large sums of Kin
• Developers create apps in the ecosystem

10. KRE Mechanism
• Users implicitly vote to give the daily rewards to their favorite app
• The favorite app is the one in which the user had the largest Kin
transaction volume
• Each user’s vote is weighted by the amount of Kin she has
• App developers get rewards proportional to the amount of votes they
got

11. How the Magic Works
• Is the daily reward sustainable? How can money be generated?
• Injecting currency into circulation increases supply of money
• Without correlated increase in demand for money, currency is
devalued (inflation)
• Economists call it “inflation tax” - until the 80s it was common for
governments generate income this way
• One can think of Kin as a property-taxes based economy

12. Incentivized Behaviors
• Apps that get their users to send and receive Kin
• Apps that push their users to make ever-larger trades
• Apps that get their users to make transactions, however small, on a
recurring basis

13. Attack Vectors (1)
• Creating large volume of fake transactions:
No advantage over single large transaction; only affects selection of
favorite app
• Creating large number of fake users:
No advantage over single “rich” user; votes are weighted by stake in
Kin so 1m users with 1 Kin each weigh the same as 1 user with 1m Kin
• Creating large number of fake apps:
No advantage over single app; each user votes for one app per day

14. Attack Vectors (2)
• Self-voting
• We don’t think this can be entirely avoided
• The gain for the self-voter is offsetting of the inflation - essentially this
is inflation protection and not really an attack. Reasonable policy for
capitalists, not so much for users
• Only damage to the ecosystem is dilution of the rewards incentives
• Legalization may be better than prohibition
• Needs reasonable balance between users and capitalists

15. Thank You!
oded.noam@kik.comOded Noam kin.kik.com
https://github.com/kinfoundation/kin-rfcs/