Outlier Ventures deepens partnership with Imperial College for crypto-economic token design

Imperial College has begun a new initiative with Outlier Ventures to support the technical protocol and behavioural economics design ahead of token sales


Outlier Ventures, one of the World’s leading Blockchain and Web 3.0 venture capital firms today announces a new initiative with it’s partner Imperial College’s renowned crypto-currency research and engineering department for crypto-economic design services.

Cryptoeconomics is an area of applied cryptography that takes economic incentives and economic theory into account. It uses cryptography and incentives to build new systems, applications and networks. The concept is fundamental to the construction of Web 3.0 and was pioneered in Bitcoin’s design.

This agreement comes off the back of a broader partnership between Imperial and Outlier Ventures announced at the beginning of the year and follows Outlier’s recent publication of a new framework called CET, Community Token Economies. CETs allow for communities of startups and incumbents to build network effect and economies of scale more quickly via a collectively owned protocol and shared ‘Community Token’. Helping avoid redundancy and competing over scarce technical talent in Blockchain and crypto-economics that would otherwise lead to a tragedy of commons.

The team at Imperial College, comprising Professors and PhD students, will run randomised control trials to experiment with various token design factors. This allows them to identify causal links about the expected behaviour of various parties, ensuring the right economic and behavioural properties are incorporated into the token’s design. Examples include:

Building trust: Testing will focus on various trust-building tools via different reputation creation mechanisms, including: new governance and communication frameworks, new standards for investing, new risk stratification hierarchies for smart contracts, as well as building incentive structures for the governing Blockchain protocols themselves.

Coordination & Cooperation: Experiments will examine the likely network effect and different cooperation mechanisms for the community as well as potential voting structures within a Community Token Economy. For example, ‘should a community token economy should allow for individual app tokens to exist or be all-encompassing?’

Competition & Conflict: Imperial will investigate intra and inter group competition and conflict using game theory techniques to help identify the most effective way to structure a Community Token Economy.

Imperial College will work closely with Eden Dhaliwal, Outlier’s newly appointed Head of Crypto-Economics and its venture portfolio in order to plan and design the incentives inherent to a number of portfolio company tokens. Three of Outlier Ventures’ portfolio companies are already currently planning Community Token Economies, including token sales, to fund continued innovation in areas including open mobility and artificial intelligence.

Dr Catherine Mulligan, Co-Director for Cryptocurrency Research & Engineering at Imperial College commented

“Our teams are looking forward to the chance to thoroughly plan, test and interrogate the various economic incentives that will foster sustainable micro-economies for Outlier’s venture companies and their communities. Running experiments and randomised control trials provides a wealth of data to ensure appropriate token design.”

Eden Dhaliwal, Head of Crypto-Economics, Outlier Ventures added:

“The technical, cryptographic and economic talent amongst Imperial’s professors and PhD students is some of the finest in the world. It’s essential for us that our Community Token Economies are designed thoroughly, we want to create sustainable economies with the wider community in mind from the very outset. All too often today token sales are rushed, without the necessary forethought.”

To download the recently published Community Token Economy whitepaper, please visit: https://outlierventures.io/cte-wp