Abstract

Traditional marketplaces tend to be rent-seeking, charging asymmetric fees relative to the value of the services they provide. These networks create negative externalities on society, reduce economic efficiency, prevent emerging markets, and fail to adequately fill incentive gaps in markets.

Over time, marketplaces accumulate power and trend towards rents that are equal to the margins of their suppliers. As the platform grows, fees to buyers increase and earnings for sellers decrease. Marketplaces are therefore economically sub-optimal and fail to meet the demands of modern markets.

A decentralized, permissionless network leverages the local knowledge of a broader group of participants and effectively fills more incentive gaps in a broader range of markets. Such a network represents a paradigm shift in how commercial markets function.

A programmable open and extensible architecture allows for the creation of a wide range of specialized marketplaces that cater to specific markets and use cases. The protocol enables the emergence of novel services and composable markets that were previously infeasible due to trust limitations and coordination costs.

A self-optimizing transaction graph distributes tokens to participants, creating a user-owned network. An arbitration protocol provides service-guarantees and a resolution mechanism in the case of a dispute without requiring a trusted intermediary.