Many people in the Ethereum community believe it is a path to a better world, and walk the talk. The Ethereum Foundation and Consensys manage to keep finance as the servant rather than the master when building the backbone of a new social system. However, when it comes to developing applications (Dapps), money tends to be in the driver’s seat.

The Initial Coin Offering (ICO) model encourages secret, competitive development focused on megabuck returns, as well as duplication and rush jobs on core parts of the software stack. Failed ventures tend to leave a wreckage rather than a legacy to build on. Meanwhile people and projects that make valuable contributions to ideas and code but fail to put the financially viable package together get, at best, a pat on the back, while other mice chase the big cheese. The ICO is a first generation system for funding development- grafting a venture capital model onto a blockchain world. I am sure we will do better.

The idea I want to explore here is an intellectual contribution (IC) register. This might finance development of code and ideas through the awkward teenage years: the developments that alone will not turn a dollar, but lay the foundation for future commercial ventures; and the early commercial ventures that improve collective knowledge of what might work by trying and failing. This might include decentralised exchanges, social media, or prediction markets. Really most of what is happening in Dapp land at the moment.

It could work something like this. If you have an idea, either a big one like how to decentralised social media or scale blockchains, an incremental improvement, or an early business idea, you release a white paper that specifies your goals: to code a MVP or maybe just write a paper, and propose a token distribution: x% to the founders, y% to the code developers, z% to your mum for rent etc. You release an Ethereum contract that can collect any royalties and distribute them to the token holders. Investors can fund development by purchasing the tokens. As you work you publish your code and documents, and a link to the address for payment if people decide to reward your work. An Ethereum ledger could track the set of contracts.

A key element is to allocate a proportion of tokens to IC that your work builds on. As new versions and projects build on your work, the new developers also recognise this intellectual debt and the IC register forms a chain. Eventually if an application at the end of this chain earns money, payment flows back down the token chain.

So a variation of patents. Promises to share any returns to investors are recorded on a blockchain and without the government charging fees to enforce rights as property. David Wheeler points out the problem with calling ideas property. He favors the term intellectual rights. I never know what calling something a right is supposed to imply, so focus on describing the intellectual contribution since views vary about how to reward it.

Why might developers use it? For someone with an idea that will only form part of a commercial application it may provide a way to keep focusing on your core expertise and interests, without giving up on the promise of financial reward. By selling or keeping tokens, developers can decide between cash now, and speculative returns later. For many, this may be a better option than dropping work at the bench, developing an ICO, and taking on the unfamiliar risks and tasks of building a complete commercial product. For more fundamental work, it is like writing an academic journal article, citing references, laying out your contribution, but with some chance for a financial return down the track if it is used to turn a buck.

Why would developers acknowledge previous IC? If your idea cannot be immediately cashed in, but will likely become part of the Ethereum tool kit, acknowledging other IC is a way to play fair, and create the expectation that others to do so as well. The chain of IC then helps creates a community of expertise with a shared stake in the system.

Would money earning business pay up? Maybe. If the IC that underpins their business is widely shared across the IT community, they risk annoying many possible partners, employees, investors and early adopters. Start-ups also have an incentive to commit to playing fair, so that the value of their IC is acknowledged when the next mouse comes along. Many new blockchain uses will create value, but have a hard time capturing some of it. People may prefer a system that transparently skims a small fraction off transactions to pay for past (as well as ongoing) development over the copycat free riding version.

Why would people invest in tokens? If a commercial Ethereum application needs some code, but it is not core to it’s competitive advantage, then paying a developer by buying their token may be a low risk, low cost way for them to finance it. If the code has widespread application, it may also be a good speculative investment.

The system helps break down investment into smaller well defined task. This increases the chance of success, perhaps offsetting the risk that the product will not be paid for. Invoking Coase, by incentivising cooperation outside of the firm (payment for IC) there is less need for firms to internalise development, with the associated losses from decreased cooperation.

Norms may develop about the share of tokens allocated to previous IC. For a commercial start up, a token sale that commits a certain percentage to previous IC might become expected if they want the support of the development community. While IC shares may be arbitrary, it can self correct as new versions of code come out. Was an early contribution neglected? Tokens can be reassigned, or the developers of the next version can assign them their tokens directly.

Payments need not be linear. Start-up firms competing to become a natural monopoly could promise to pay a fee once their revenue reaches a threshold. Similarly, token owners could promise to pass on an increasing percentage as payments accumulate.

The main aim of such a system is to encourage and fund cooperation. Arguably, the crypto community might be less divided, if say at launch, the Ethereum foundation had allocated a share of ether tokens to Bitcoin holders in recognition of Satoshi’s idea, and the subsequent development work.