Are you a developer who views cryptocurrency and web3 projects as unnecessary and unsavory? Bitcoin and other cryptocurrencies are being used more frequently as payment methods, and even as software layers for front-end applications, but the underlying technology is still not widely understood. Blockchain tokens can potentially solve a long-standing problem for open-source builders and maintainers—the problem of how to be rewarded for valuable work.

Proponents of blockchain often evangelize the well-known benefits of the technology—the immutability of distributed ledgers, global accessibility, and the trustless utility of smart contracts. But how can a digital token fundamentally change the manner in which the open-source community operates? 

Keep reading to learn more about how blockchain-based incentive structures can enable open-source developers to capture the value they create. Also dive into the tokenomics of tea, a decentralized protocol that enhances the sustainability and integrity of the software supply chain. 

Blockchain creates a rewards mechanism for OSS 

Blockchain technology creates a rewards mechanism for open-source developers by quantifying the value of open-source software (OSS). A blockchain-supported digital token can automate the flow of value across a variety of tangible and intangible assets—and may assign specific value to a group of assets or intellectual property that was previously difficult to value. Quantifying the value of individual contributions to open-source software and the impact of open-source projects represents fundamental progress for the open-source community. 

How exactly does tokenization on a blockchain enable open-source developers to earn rewards? And why is blockchain technology essential to solving the OS value attribution problem? Let’s examine the aspects of blockchain tech and digital tokens that are most relevant to developer incentives.

Tokenization can incentivize OS contributions

An open-source project whose impact on the open-source ecosystem is quantified may be more likely to attract contributions from a broad range of talented developers. Fungible rewards encourage ongoing engagement, and can be used to motivate builders to innovate and maintainers to sustain the integrity of open-source projects. 

A blockchain protocol can ensure fair rewards

Developers contributing to impactful open-source projects can be assured that the rewards they receive are commensurate with the value of their contributions. 

Digital tokens can align developer, user & investor incentives

A digital token can be utilized to align the objectives and incentives of participants in the open-source ecosystem and augment the rewards that accrue to all stakeholders. 

• Developers are directly rewarded to improve a project's functionality, security, and user base;
• Investors may be more inclined to commit capital on a long-term basis when they can measure the impact that each individual project has on the entire open-source ecosystem; and
• Users can benefit from superior open-source software.

Smart contracts can automate developer payments

Blockchain technology supports smart contracts—code-based contracts that can be programmed to execute automatically when predetermined conditions are met. Smart contracts eliminate the need for centralized entities to process or distribute rewards to open-source software developers, reducing the traditional costs and risk of disputes.

Blockchain technology supports immutable & transparent record-keeping

Blockchain-based distributed ledger technology is well suited to verify rewards distributed to open-source developers and other participants. The immutable nature of a blockchain ensures that token distribution records are securely stored and cannot be retroactively altered or manipulated.

Blockchain tech enables peer-to-peer transactions

Blockchain protocols enable participants in an open-source ecosystem to transact directly—an innovation that may spur many improvements in how open-source developers are rewarded. Low transaction processing fees typical of most blockchains enable developers to receive micro-rewards from their peers easily and cost effectively. 

Anyone can earn rewards for valuable software contributions

Blockchain technology transcends geographic boundaries, enabling open-source projects to reward contributors regardless of where they are located. Traditional limitations associated with localization and legacy systems may be eliminated for many talented developers wishing to contribute to open-source initiatives.

What open-source developers need from a digital token 

The design and economic structure of a digital token—its “tokenomics”—can be highly customized to meet the needs of the token’s users. The study of tokenomics in web3 examines how value is distributed, shared, and moved between different users engaged with a decentralized protocol. Tokenomics are the set of rules or conditions that determine how value flows within a blockchain project. 

Tokenomics determine a token's utility, scarcity, and liquidity, among many other token characteristics. Documentation for a coin’s tokenomics typically specifies how and when coins are created, distributed, and managed—and may include rules that govern how transactions occur. 

What characteristics of a digital token are most important for open-source developers? Let’s take a look.

Contribution rewards that are multi-layered

A cryptocurrency that supports the open-source community should reward developers at all levels of the tech stack based on the importance and impact of their contributions. Even foundational software far removed from the application layer—which tends to be the most visible to the public and attracts most of the interest—should benefit from substantial utilization by the broader open-source ecosystem. Core developers and maintainers, and anyone else who contributes to an open-source project, should be eligible to earn tokens.

What types of contributions to OSS can influence the distribution of rewards? Here’s a non-exhaustive list compiled across a variety of projects:

• Design contributions
• Audit and code reviews
• Documentation
• Security audits
• Community management
• Partnership development

Incentives for user engagement 

A digital token can—and should!—incentivize users of an open-source technology to increase their engagement. A coin’s tokenomics can be structured to provide discounts or other rewards to users who actively participate, contribute, or hold tokens.

Tokenomics for open-source software should consider how users of an open-source project may benefit from a digital token. A cryptocurrency that aligns user incentives with those of a project’s developers can help to ensure the success of an open-source project.

Incentives for long-term commitment

A digital currency for an open-source project should feature mechanisms that strongly incentivize long-term engagement with the project. Tokenomics that incentivize long-term ownership and reward loyalty can help to reduce short-term speculation by token buyers only interested in generating fast cash or a quick return on investment.

How can a cryptocurrency incentivize long-term commitment to OSS? Check out these possibilities: 

• Allocate rewards to token holders who stake their tokens to express support or dissent
• Use unlock periods for token grants to developers 
• Leverage token burns to punish bad actors and encourage good behavior
• Practice token-based governance to make project decisions

Clear utility and value

A digital token should have a clear use case for the ecosystem that it supports. A token for the open-source software community with clear and valuable utility should meet the most important needs of open-source developers.

What functionality can a digital token provide? These are some different types of utility:

• Governance
• Access control
• Data storage 
• Information exchange
• Incentives for good behavior 
• Penalties for malicious actors

Decentralized token ownership 

A token that’s widely held by many owners is generally the most secure. A coin’s tokenomics should include provisions to ensure that the digital token is broadly distributed, both in and adjacent to the open-source community.

Tokenomics designers have plenty of options to ensure that a digital coin is acquired by many people. Some of these alternatives include:

• Sponsoring an initial coin offering (“ICO”)
• Conducting a token airdrop
• Offering rewards for user referrals
• Incentivizing responses to polls and surveys
• Sponsoring developer challenges and competitions

Transparent and auditable tokenomics 

The tokenomics of any digital currency should be transparent and easy to audit. Transparency is integral to blockchain technology, which uses a distributed ledger system to ensure that all participants in a blockchain network have access to the same information at the same time.

Tokenomics that can be easily audited are available to the public in an accessible way. Open-source developers and investors should evaluate many aspects of a digital token—such as its total supply, interoperability, legal compliance, and security measures—before choosing to accept or acquire the digital asset.

A snapshot of TEA tokenomics

TEA is a blockchain-based digital token that’s designed to reward open-source developers for their software contributions. TEA serves as the access key to designated features of the decentralized tea Protocol. The tea Protocol unlocks the open-source economy and creates value for builders, maintainers, and end-users of enterprise software. 

The tea blockchain protocol integrates with software package managers including Homebrew, npm, and pkgx—a new cross-platform package manager created by Max Howell, the founder of Homebrew. 

The value created by the tea Protocol ultimately accrues back to TEA holders. Let’s dig in to the most important tokenomics for TEA:

• Impact ranking & rewards: tea uses Proof of Contribution, a novel algorithm designed to quantify the impact of all projects across all open-source ecosystems. Proof of Contribution assigns a dynamic score—referred to as a project’s teaRank—based on the project’s orientation within, and utilization by, the entire open-source ecosystem. Rewards are distributed to projects based on their teaRank, which fluctuates over time.
• Staking: TEA can be staked to support impactful software projects and earn token rewards.
• Token burns: Mechanisms that periodically burn TEA tokens are used to penalize bad actors and non-compliance with the rules of the protocol.
• Security audits: TEA can be used to conduct security reviews and report bugs and vulnerabilities, enabling TEA holders to contribute to the security of the software supply chain. 
• Governance: Staked TEA (or stTEA) can function as a governance token for individual open-source projects.

TEA’s primary utility is that it serves as the access key to certain aspects and features of the tea Protocol. TEA enables open-source developers to accomplish many functions, including: 

• Register software projects with the tea Protocol:
• Receive long-overdue rewards commensurate with the impact of a software’s contributions;
• Support other open-source software; and 
• Contribute to the security of the software supply chain by challenging projects and conducting reviews to report bugs and vulnerabilities. 

TEA aligns the unique interests of technology users, software developers, and the OSS community—while ensuring that appropriate value is assigned to open-source software projects. As the tea ecosystem grows, developers and maintainers receiving TEA may finally feel that their open-source contributions are being properly recognized.