Incentive Model

Today we live in the era of transition towards the Creator Economy. We no longer want to passively observe how the world changes from afar without being a part of it. Instead, we crave to participate, co-create, and leave our mark on something meaningful and innovative: immersion and participation are becoming the new normal. But we also want to benefit from what we self-dedicate to: alongside the possibility of participating, we seek to be the owners of our creation. The more we own, the more effort we are willing to contribute. The concept of incentives (potential gains offered for particular desired behavior patterns) is poised to address all these needs to drive passionate performance in exchange for fair rewards.

Incentives work closely together with motivation, whether intrinsic or extrinsic. Intrinsically motivated behaviors are performed because of the sense of personal satisfaction that they bring: the reward is the pleasure of doing the activity itself. Extrinsically motivated behaviors are performed to receive something from others, or avoid specific adverse outcomes. The extrinsic motivator is always an external factor: a promotion, money, status, gratitude, etc. An ideal incentive design is that one that incorporates both intrinsic and extrinsic motivators altogether.

User acquisition is just the beginning of the story โ€“ once users join, it's essential to retain and encourage users to continuously utilize the protocol for as long as possible to achieve a high user retention rate. Only by retaining users does any business have the chance of survival, and token incentives play a vital role in this industry. When they are appropriately designed in a user-oriented manner and offer a wide range of utilization cases that align with users' needs, why leave the network?

Rockloff et al. (2019) in the Journal of Behavioral Addictions determined that the right incentives drive greater participation in traditional prediction markets, but many founders focus on the outcome of behavior (price, volume, etc) - instead of focusing on creating an ecosystem of incentives and incentivizing the desired behavior itself. Unlike traditional prediction markets (or blockchain projects in general) we donโ€™t intend to drive participation solely to our own end, while reaping all of the benefits like a centralized entity.

Web3, the blockchain ecosystem that shifts power (and value) from centralized entities to the individual, is built on incentives. As a web3 protocol, we want to use incentives to create a productive and profitable economy for users who are rewarded for productive behavior on the protocol through the redistribution of fees, and benefit from protocol growth.

Instead of minting new tokens for rewards, a 5% maintenance fee is imposed on all market participation. This is used to fund a variety of incentives to reward participants and achieve and maintain Protocol Homeostasis: a flywheel of activity that benefits all participants (including the protocol itself). Using FORE as the protocolโ€™s sole currency allows us to reward all participants in our ecosystem for productive activity in a sustainable way: unlike many other projects, this is done without minting tokens for new rewards. FOREโ€™s utility token is hyper-deflationary and new tokens are never minted.

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