Ethtrader Donuts: What are they? How do you get them?

What are Ethtrader donuts ?

Ethtrader donuts are an experimental feature recently introduced by Reddit. This new system seems meant to test how a community reacts to the tokenization of karma points.

The powers-that-be at Reddit chose ethtrader to serve as a sort-of guinea-pig community for this experiment. Donuts were first introduced to the community in October 2018, but they were called “Community Points.” At the same time, the new (and also experimental) community-poll feature came to ethtrader. In one of the first community polls, ethtrader voted to rename Community Points to “donuts.”

Ethtrader donuts can be used for weighted voting in user-created polls on ethtrader (a vote by a user with more donuts carries more weight). This vote-weighting mechanism makes polls on ethtrader Sybil resistant. Also, ethtrader has implemented a Harberger-tax system that allows users to buy and sell the subreddit’s top banner for donuts.

How do I get donuts?

You get them by engaging with the ethtrader community and earning karma for your comments and posts. The system distributes 2 million new donuts weekly, allocating them to users in proportion to their karma earned each week. Only activity on the ethtrader subreddit counts for donut-allocation purposes.

Users also may give ethtrader donuts to other users in the form of tips or simply by transferring them. The system allows a user to transfer only up to 49% of his or her earned donuts.

You can see your donut balance, the total donut supply, and stats on the next donut emission in the sidebar on the ethtrader home page. Ethtrader donut info only appears in desktop browsers. Also, you can only see the donut info once you’ve upgraded to the new Reddit design.

What is Harberger tax?

Harberger tax is a concept recently popularized in the crypto community by a book called Radical Markets written by Glen Weyl and Eric Posner. The philosophies behind the system and its practical feasibility are the subject of debate, but the basic idea is this:

When a person “owns” an asset, she must assign her own value to that asset. She then must pay a tax on the asset based on the value she chose. Also, that value serves as a standing offer price that any buyer may accept at any time.

Radical Markets discusses this system in the context of real estate. For example, imagine that you own a home. You must decide what your home is worth to you and publicly announce that value. Under this system, you have an incentive to select an honest valuation, because (1) the higher the value you assign, the higher tax you will pay and (2) the lower the value you assign, the higher the likelihood that somebody will buy your house, forcing you to move.

The Harberger tax system is supposed to help avoid the natural monopolies that arise from property ownership. In addition, it seeks to optimize for allocative efficiency (i.e., moving property into the hands of whoever will use it most productively).

What is Sybil Resistance?

A Sybil attack happens when a malicious actor creates multiple false identities and uses them to gain an unfair advantage in a system that relies on reputation or identity. Sybil resistance means what it sounds like – a property that prevents attackers from using multiple fake identities to exploit the system. The term “Sybil” originates from the name of a well-known sufferer of dissociative identity disorder (formerly called “multiple personality disorder”).

As a crude example of a Sybil attack, imagine a promotion offering one free Chic-fil-A biscuit per household. The promoter tries to enforce the one-per-household restriction by requiring each applicant to submit a form with a unique name and mailing address. Now imagine a greedy person filling out many copies of the form, each with a fake name and slight variation on his actual mailing address (e.g., adding a unique fake apartment number to his address on each form). The post office might disregard the fake apartment numbers, but the biscuit-offering system would interpret each as a unique address. This system lacks Sybil resistance. Accordingly, the greedy person would end up receiving a big stack of free-biscuit coupons in his mailbox.

Who is u/shouldbdan?

Shouldbdan is a long-time ethtrader user who has played an instrumental part in the evolution of donut activity. The inaugural buyer of ethtrader’s top banner, shouldbdan graced the community with meme-collages that some called gaudy and others (more accurately) called glorious and representative of ethtrader’s culture.

Ethtrader also can thank shouldbdan for creating the ERC-20-donut bridge.

What is the ERC-20-donut bridge?

Available at donut.dance, the ERC-20-donut bridge allows users to convert ethtrader donuts to freely-tradeable ERC-20 tokens. Currently, DEXes like Uniswap offer some liquidity for ERC-20 donuts. Also, some users recently have offered OTC buys of ERC-20 donuts.

You can find more info about the donut bridge at u/shouldbdan’s post here.