The Enterprise Ethereum Alliance (EEA), the consortium charged with creating standards for businesses to build applications using the ethereum blockchain, has created a system of reward tokens to incentivize groups of companies. The system is backed by Microsoft and Intel.

Showcased Tuesday at Devcon 5, the annual ethereum developers conference being held in Osaka, Japan, the so-called trusted reward token is a way of accruing and calculating rewards for active participation in a consortium.

Michael Reed, who manages the blockchain program within Intel’s software and solutions group, explained there are three types of tokens used to motivate participation: a reward token, a reputation token, and a penalty token.

Reed told CoinDesk:

“It really can be applied to any consortium to incentivize teamwork. The example we are using is a software development consortium like EEA, where we are trying to motivate activities like editing and contributing to specifications, developing and adding code. Then, of course, you could apply penalties for negatives, such as lack of contribution, lack of review, missing deadlines and so on.”

The idea of using tokens to align companies continues a long-standing strain of thought within the ethereum community. Manifested in early experiments with decentralized autonomous organizations and chief scientist Vitalik Buterin’s interest in concepts like futarchy, this sort of tokenization lets organizations use economic bets and voting to guide decision-making.

The trusted reward token is the first use case to emerge from the Token Taxonomy Initiative (TTI), born within Microsoft to establish a common framework for tokenizing value across a range of blockchain networks, not just within the EEA or on ethereum. (Also involved in the build were: ConsenSys Solutions, PegaSys, and Kaleido; Envision Blockchain; and iExec.)

The TTI operates rather like a workshop where firms can decide what features they require from a token, such as being fungible or non-fungible; transferable or non-transferable; and which networks they might using, be that Hyperledger, R3 Corda or ethereum.

Carrot and stick

In the same way that the ERC-20 standard has been ascribed to various networks and use cases, the trusted reward token can be attached to any unit of value the consortium agrees upon. Describing the rewards process as “grant contracts,” Marley Gray, principal architect at Microsoft, said: “Really we have the ability to tag it anything.”

To effectively incentivize participants requires not only a carrot but also a stick, said Gray, noting that all the penalty tokens a participant accumulates (demerits, essentially) have to be factored in before rewards tokens can be redeemed.

“One of the problems you have is people making large commitments but never following through,” he said. “This is almost more damaging than not stepping up at all because it leads to long delays when people are thinking things are happening and they are not.”

It’s perhaps not surprising a tokenized rewards system has been born out of the EEA, where 250-plus member companies have been herded together to work out a set of common interoperable specs and standards, a difficult job which has been driven by executive director Ron Resnick.

“Devcon 5 will be where attendees will experience how ethereum – enabled by EEA member-driven standards – delivers real-world value through tokenized enterprise solutions,” said Resnick.

Marley Gray image via CoinDesk archives.