This is a response to @Scoresby and its article #1443046 referring if we're the only ones doing the homework. Meaning, why are we alone in this journey?

TL;DR: Stacker News plays with incentives and the rest copypaste web2's strategies.

The article per se is truly good but the question the keep looping in my head was

why isn't there a "shitcoin version" of Stacker News?

Just...something like this, no tokens, no rewards, no abstract decentralization, just a good project where money is king. In order to find an answer, let me give you my insights, using something that I'm currently learning a lot: game theory. I finished reading Bruce Bueno de Mesquita's book, Predictive History's channel and also taking the polytical dynamics from Michael Saylor. Both lectures and YT channel gave me a new way to see things.

The answer is not technical, it's the equilibrium problem.

Social media is pure noiseSocial media is pure noise

In order to make this more interesting, let's define social media network as a game in game theory, giving them as follows:

where

• $N$ are the users
• $S_i$ is the strategy set of player $i$
• $U_i$ is the utility function.

So, the strategy space is as follows:

where

• $Q$ is ourhigh-quality content (high effort), something that we find a lot here in SN
• $R$ is the low-quality content (low effort) clickbait article, the noise, threads about price and blablabla...

In the web2 ecosystem, the cost to publish something is zero, so

And the utility is related to your attention, so:

See? I'm not saying anything new but just giving them values in order to understand the critical point. So, the expected return from noise is related or higher than quality. Why? Because algorithms don't care about your quality, they reward viral shit, as discussed here. So:

So, what is the result of most social media experiences?

I want to emphasize that this is not something against moral or taking users as stupid people, it's because the game is parameterized with zero marginal cost. It's the incentive. So, why web3 can't do anything like Stacker News?

Web3 and game theoryWeb3 and game theory

Let's apply the same model that we're discussing. Most crypto projects quoted in the previous article mentioned attempted to merge social network and money, giving them incentives to post for free, and give them credit or not, this is something that changes everything, because the model is:

so, with no cost, the system fills with extractive strategies from the users. Steemit had this exact problem:

• Dual-token architecture
• Priority to holders
• Inflation
• Insider advantage

Formally, if the token experiences inflation $\pi >0$ and the $P_T\to 0$, the real cost is zero because:

Play stupid games, earn stupid prizes. The games returns noise equilibrium.Play stupid games, earn stupid prizes. The games returns noise equilibrium.

The second experience mentioned in the article is Farcaster. This was more promising as it seems because there was onchain identity, decentralized infrastructure and more. But the main problem is the cost of speech which is currently zero. When speech is free, the equilibrium is the same as mentioned earlier.

They failed to find something product-market fit because they tried to change the narrative but the incentives reamins the same.

Here comes Stacker NewsHere comes Stacker News

Stacker News didn't do any radical, narrative shift nor something, @k00b et al introduced something very simple

You pay to post.
Pay to vote.
Pay to comment.

So, the utility function goes to:

where $Z(s)$ is the zapping value, the real money transfer.

So, the model goes as follows:

With:

So, the obvious path is

The difference goes like

$\Delta U=(p_Q-p_R)z$

If $\Delta U>0$, then $Q$ dominates $R$ because that's how the economy works. This is not a case for virtuous users, it's about dominated strategies and the tiny $c$ changes everyting.

Repeat again that?Repeat again that?

Social networks are infinite games, the total utility is messy. So, in this case, SN user's reputation affects future zap probability. This movement changes the equilibria and the ecosystem suddenly becomes sustainable. Most social networks can replicate this but only if:

• Cost is real
• Transfer is real
• Reputation is observable

Web2 lacks cost and inflationary tokens lacks real transfer. This is where Stacker News enforces both criteria.

There's no such thing as free speech. Internet had something that was internalized as a fiction: posting is free but there is a lie over there because, cost always exist. In web2:

where $D_i$ is the hidden cost of use the platform: data extraction, algorithm, manipulation, centralization and a big etc.; users don't internalize $D_i$ but in Stacker News

As you can see, Sn has an explicit cost. And this is somthing of economic behavior, explicit costs feels heavier than hidden ones. From a game theory perspective, internalized cost improves equilibrium outcomes.

Incentives need riskIncentives need risk

Crypto experiments made the same mistake over and over, confusing incentive and discipline because the model was post and earn tokens and they don't require risk anything upfront, creating the same model outcome: extraction. As we see above, when the cost is zero to post, comment, engage or any activity, the rational strategy is to maximize extraction regardless the quality of the post.

It's not because there are shitcoiners or they have a moral issue, it's...economics, incentives so to speak.

In enviroments where users can receive rewards without staking anything, the low-effort multiply faster, because we repeat the same pattern. High-quality post are really difficult to produce, it takes time, reputation, R&D, etc. Low-quality content is your fast food. If both types of participants face the same barrier to entry, low-effort participants has the initial advantage. In the long-term, extractive actors aims to harvest rewards rather than create value. This is classic adverse selection.

The absece of upfront cost removes the filtering that separates signal and noise. Stacker News has this filtering, it's minimum but it exists. You must risk your wealth before you speak. A single constraint changes who participates and how it's gonna be their behavior.

HQ participants are more likely to recover their cost.
LQ participants are more likely to incur losses.

This system is not about virtue, it's about asymmetry.

Please sir, give something to speakPlease sir, give something to speak

What we learned so far is that, social networks can run in two different ways:

Subsidized coodination and self-financed coordination. Subsidized coordination looks free to users but it depends on something else: advertising, venture capital, token, subsidies. As long as the external funding flows keeps running, it's ok. This is how Substack works currently. When funding dries up, the model pivots or worse, collapse because the system is not sustained by its own internal value but rather by capital injections.

Self-coordination works in the opposite. In this model, users fund the system through direct economic interaction for a small cost. Value flows peer-to-peer. This is more stable and don't produce viral things and is less explosive in growth.

The resistance to this model is more psychological rather than technical. People are ok paying indirectly and uncomfortable to paying directly. From a system perspective, direct payments aligns incentives more cleanly. It forces participants to internalize cost, producing more disciplined equilibrium behavior.

The case of Cowboy CreditsThe case of Cowboy Credits

When real monetary is replaced -partially- by internal credits, something subtle happens. Frictions weakens. Barrier lowers and the effective cost approaches to zero, making the system begins to drift back to the original equilibrium, noise.

This is not a critique per se, it's about incentive intensity. If participants require risking real value, users think twice before act but if participants are risking internal credits, the behavior changes and when cost weakens, mixed strategies reappear, using alternative between high-quality and opportunistic posting. The decline is structural, not something apocalyptic. The system that works (proved here) needs to preserve real friction, not gamified, not artificial.

Real cost. And this is why no one wants to replicate us.

There are no second best (SN)

Introducing cost slows early growth, like

$g(N)=\beta N-\gamma c$

If $c>0$, early growth is lower. Keep in mind that most VCs maximizes $\beta$, not marginal signal quality, that's why they always choose platforms with $c=0$.

The real questionThe real question

Money as incentive is weak. Money as cost is discipline. In non-cooperative games, small $c>0$ eliminate sets of extractive strategies. This is the Stacker News approach that altered the equilibrium because they didn't invent a new social media or a new Hacker News, with the alteration, we have three cultural consequences:

1. Speech is not free, pay.
2. Value can be extracted without risk.
3. Coordination can be indefinitely subsidized.

Our real problem is not more technical rather than cultural:

Are we willing to play a game where speaking carries risk? When your opinion becomes an economic bet, the accountability appears, the irresponsability doesn't vanish but declines and become more expensive. This entire article can be resumed in one inequality:

$c>0$

It may be small but when you have non-cooperative games, this is enough to change everything.