In brief
- Vitalik Buterin has argued that the creator coin ecosystem could be improved by the introduction of prediction markets and DAOs.
- The Ethereum co-founder suggests that prediction markets would bet on which creator coins would gain membership into creator DAOs, which would be organised around particular subject areas.
- Buterin and other commentators argue that this would be preferable to the existing state of affairs, which tends to reward celebrity ahead of inherent value.
A combination of prediction market mechanisms and decentralized autonomous organizations may be key to improving the growth and utility of creator coins, according to Ethereum co-founder Vitalik Buterin.
Tweeting one of his characteristic mini-essays on Sunday, Buterin offered his take on how he “would do creator coins,” which he suggested do not currently match Substack in terms of providing meaningful incentives to creators.
He said that Substack is successful in ensuring that “high quality” creators generally become the most popular on its platform, and that for the most part these creators “are people who would not have been elevated without Substack’s presence.”
By contrast, he suggests that the current crop of creator coin platforms, such as Zora, tend to elevate creators who already “have very high social status” and who are notable primarily for reasons unrelated to their content.
A two-track solution
As a solution to this, Buterin suggested a combination of two mechanisms: creator DAOs dedicated to particular subjects and/or types of content; and prediction markets for creator coins.
According to Buterin, the DAOs would be modestly sized (no greater than 200 members) and would anonymously vote for the inclusion of new members (and the exclusion of old ones).
On the other side of the equation, the prediction markets would place bets on which creators would be admitted to which DAOs, doing so presumably by trading the coins of specific creators.
Such markets effectively become a discovery mechanism for creator DAOs, who can look to prediction markets to see which new creators may be deserving of membership.
Conversely, Buterin says that a “portion of […] proceeds” from a given DAO will be used to burn the coins of a creator who is selected for membership, something which would in theory increase the value of their coin by reducing the supply.
The two elements in this system reinforce and support each other, while ensuring that creator coins do not simply become the objects of pure speculation.
“This way, the token speculators are NOT participating in a recursive-speculation attention game backed only by itself,” Buterin wrote. “Instead, they are specifically being predictors of what new creators the high-value creator DAOs will be willing to accept.”
Concluding the post, Buterin says that the “ultimate decider” of which creators/creator coins become prominent will not be speculators, but rather the creators themselves, who produce good enough content to earn admission into a DAO.
Maximizing accountability
In a follow-up tweet, the Ethereum co-founder goes on to describe the prediction market layer as “maximally open” and one that “maximizes accountability,” while he suggests that the DAO layer “maximizes space for intrinsic motivation” (i.e. motivation to create content).
Buterin then suggests that a prediction market is the correct way to organize a “decentralized executive,” since it would provide the highest degree of accountability in a permissionless context.
While his views did draw some skepticism from certain industry figures, including Dogecoin founder Bill Markus (who described creator coins as an “inherently flawed concept”), others see the logic in his suggestions.
“[Buterin] proposes a two-layer system: an inner, non-tokenized DAO of high-quality creators who curate membership based on taste and alignment (like Protocol Guild), and an outer prediction market where speculators trade creator coins whose value is tied to DAO admission,” said Anndy Lian, an intergovernmental blockchain advisor and author, who also replied to Buterin’s initial post.
Speaking to Decrypt, Lian agreed that within this kind of system, token value would be anchored by real revenue, given that final judgements related to membership would reside with creators.
He said, “I think his model thus leverages decentralization without sacrificing curation, recognizing that surfacing quality requires mission-driven, opinionated communities – not neutral, open markets.”
Lian also agrees that creator coins and creator coin platforms remain flawed as they are, since they generally treat attention as synonymous with value, rewarding celebrity or pure speculation instead of serious work.
“Vitalik’s proposal cuts through that by making token economics dependent on curation, not clicks,” he said. “If a creator gets into a high-trust DAO, their token gets backed by real revenue flows.”
Loxley Fernandes, Co-Founder and CEO of prediction market Myriad, called the evolution of social media economics using prediction market mechanics “compelling.”
Fernandes, whose prediction market Myriad is owned by Decrypt‘s parent company Dastan, noted that the technology enables communities to “define values and standards, while markets forecast outcomes within those constraints.” Together, he added, they are “far more robust than letting speculation or follower counts decide who or what matters.”
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