A field report from someone who just realized he’s rooting for contradictory futures
The Uncomfortable Bit at the Start
Right, so I’ve been staring at this problem for a while now, and I think I’m seeing something mildly uncomfortable about how we’ve arranged the incentives in proof-of-stake systems.
Here’s the thing: if I hold tokens, I want the price to go up. Nice and simple. My bags get fatter. Everyone cheers at conferences.
But if I’m actually participating in governance—if I’m the one with skin in the game, voting on protocol parameters, deciding what the system rewards should be—then I’m incentivized for the price to go down.
Lower price = more tokens I can acquire = more voting power per unit of effort = more leverage to reshape the system according to my particular vision of what’s good and true.
It’s like being asked to simultaneously root for the home team and the visiting team. Or wanting both your coffee hot and your ice cream frozen. The physics doesn’t hate you personally; the physics just thinks you’re funny.
The Actual Problem Nobody’s Solving
Most tokenomics discussion dodges this like Rincewind dodges responsibility. We talk about sustainability and viability and community engagement like these things emerge naturally if we just get the numbers right.
They don’t.
What we’re actually building are equilibrium systems—little pocket universes of incentives where validators and users bang around until they settle into some stable state. And here’s the uncomfortable bit: the equilibrium you end up in depends entirely on how you’ve wired the reward mechanisms and token supply dynamics.
You can have:
- Viability (the system keeps people showing up, not just for the money)
- Decentralization (multiple validators actually invested, not just One Big Boy with the AWS servers)
- Skin in the game (people have something to lose, so they actually care)
- Stability (the price doesn’t do the chartist wiggle dance every Tuesday)
Pick any three. Usually you’ll mess up the fourth.
Single-token systems? They’re particularly cursed. Here’s why: when validators earn their rewards in the same token users spend to transact, you’ve got a structural tension. The system either prints tokens steadily (good for validators, bad for stability), or it doesn’t (good for stability, bad for validator incentives). There’s no diplomatic compromise that works everywhere.
It’s like trying to build a cathedral using only doorknobs and optimism.
Quantitative Rewarding: A Debugging Approach
After poking at this long enough, I think I’m seeing the shape of a mechanism that might actually untangle this.
Call it Quantitative Rewarding (QR for people who like their mysticism abbreviated).
The basic move: instead of trying to make one token do all the jobs—store of value, payment medium, validator incentive—you separate concerns. Two tokens. One for users. One for the folks maintaining the plumbing.
This is not a new idea in practice (Cosmos, Polkadot variants, etc.), but I think the design principle here matters more than the implementation.
When you separate these concerns, you can tune each token’s supply dynamics independently. Users care about transaction cost stability? That’s their token’s problem to solve. Validators need reliable long-term rewards? That’s what their token handles.
You’re not trying to build a universal solvent anymore. You’re building two specialized tools that don’t have to argue about what they’re for.
Why This Matters (Or Why I’m Writing This Instead of Doing Literally Anything Else)
The two-token setup lets you implement QR in a way that actually works:
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You can maintain equilibria with all four desirable properties simultaneously. Viability, decentralization, skin-in-the-game, and stability. Not as a lucky accident. As an engineered feature.
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You avoid the fiat-reserve trap. No need for smart contracts that require maintaining on-chain reserves or doing exotic bookkeeping on exponentially growing token supplies. It’s clean. Auditable. The kind of thing that doesn’t make your smart contract auditor weep quietly into their debugging logs.
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You actually solve that initial problem I mentioned. The validator who wants low price for governance power? They still exist. But now the system can accommodate them without destroying the entire edifice for token holders who want stability and value preservation.
It’s not perfect—nothing with human incentives ever is. But it’s debuggable.
The Self-Conscious Caveat
Look, I’m not going to sit here and tell you this is how it should be done. I’m not even sure this is how Cardano should do it. The model works in the math. Whether it works when real people start acting like real people is a separate question entirely.
What I’m reasonably confident about: single-token PoS systems have structural limitations that no amount of clever parameter-tuning fixes. And two-token systems, when designed around proper separation of concerns, can achieve equilibria that one-token systems can’t reach.
Whether you want to pay the coordination overhead of managing two tokens is between you and your sleep schedule.
What I’m Actually Looking At
If you’ve thought about this differently—if you’ve seen equilibria I’m missing or incentive conflicts I haven’t noticed—I’d actually like to know.
The floor is open. Make me wrong about something. It’s usually the fastest way to figure out what’s actually true.
— alexeusgr, temporarily escaping back to the library before reality catches up again
Source:
Single-token vs Two-token Blockchain Tokenomics by IOG, translated into laypeople talk by Claude AI.