City Research Online

Abstract

This paper presents the first empirical analysis of how diverse token-based reward mechanisms impact platform dynamics and user behaviors. For this, we gather a unique, large-scale dataset from Farcaster. This blockchainbased, decentralized social network incorporates multiple incentive mechanisms spanning platform-native rewards, third-party token programs, and peer-to-peer tipping. Our dataset captures token transactions and social interactions from 574,829 wallet-linked users, representing 64.25% of the platform’s user base. Our socioeconomic analysis reveals how implementation choices (e.g. eligibility criteria, redistribution mechanism) shape varying inclusion rates (7.6%-70% new participants) and wealth concentration patterns (Gini coefficients 0.72-0.94). While tipping exhibits echo chamber tendencies (67%), substantial cross-community transactions (48%) among non-following pairs suggest potential for broader value exchange. Our causal analysis further uncovers several critical trade-offs: (1) while most tokens boost content creation, they often fail to enhance—sometimes undermining—content quality; (2) token rewards increase follower acquisition but show neutral or negative effects on outbound following, suggesting potential asymmetric network growth; (3) repeated algorithmic rewards demonstrate strong cumulative effects that may encourage strategic optimization over authentic engagement. Our findings advance understanding of cryptocurrency integration in social platforms and highlight challenges in aligning economic incentives with authentic social value.

Publication Type:	Conference or Workshop Item (Paper)
Additional Information:	© Authors | ACM 2025. This is the author's version of the work. It is posted here for your personal use. Not for redistribution. The definitive Version of Record is to be published in ACM SIGMETRICS
Publisher Keywords:	Decentralized Social Networks, Blockchain Rewards, Token Incentives, User Behavior Analysis, Causal Inference
Subjects:	H Social Sciences > HN Social history and conditions. Social problems. Social reform Q Science > QA Mathematics > QA75 Electronic computers. Computer science
Departments:	School of Science & Technology School of Science & Technology > Department of Computer Science School of Science & Technology > Department of Computer Science > Software Reliability
SWORD Depositor:	Symplectic Administrator

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