Many resource-rich countries fall into the 'resource curse', where the wealth brought by natural resources leads to corruption, inequality, and stagnation. Similarly, in the early stages of crypto projects, whales (large token holders) may also become a form of 'resource curse'—they may use their capital advantage to monopolize key ecological resources (such as nodes and governance rights), stifling innovation and broad participation. How does KITE design to avoid this trap and transform early capital advantages into 'resource blessings'?
Potential 'Whale Curse' Scenario:
Computing Power Node Monopoly: Whales use their financial advantage to deploy a large number of high-end nodes, monopolizing high-value computing tasks and squeezing small and medium nodes out of the market.
Governance power monopoly: Whales dominate all governance votes using their token holdings, making the network development serve their short-term arbitrage or specific interests, harming the overall and long-term interests of the community.
Ecological project 'running ahead' and strangling: Whales use information and capital advantages to intervene on a large scale in high-quality ecological projects early on, seizing most of the profits or copying ideas, suppressing original teams.
Possible design strategies for KITE:
Addressing node monopoly: Introduce 'decentralized proof'
Mechanism: Not only rewards the total computing power, but also rewards the degree of decentralization of computing power. For example, providing additional rewards for nodes controlled by different entities from different geographical areas; or setting a reward decrease curve for the number of nodes controlled by a single entity.
Objective: To incentivize the decentralization of computing power distribution, rather than centralization.
Addressing governance monopoly: Design more complex governance mechanisms
Time-locked Voting: Linking voting weight to the token lock-up period, the longer the lock-up period, the higher the weight. Encouraging long-termism while suppressing the voting influence of short-term speculative capital.
One person, one vote (based on identity) mixed with oligarchic politics: In decisions concerning community culture, introducing a one-person-one-vote mechanism based on decentralized identity (DID), combined with voting based on the amount of tokens held.
Quadratic voting or funding: Making the cost for whales to exercise influence grow quadratically, protecting niche but potentially highly valuable opinions and projects.
Addressing ecological strangulation: Establishing a fair launch platform
Fair launch Grant pool: The allocation of ecological grants adopts anonymous review, community voting, and other mechanisms to reduce the lobbying influence of whales.
Anti-sniping mechanism: During the public sale of ecological project tokens, mechanisms such as 'lottery' and 'contribution-based distribution' are adopted to prevent large whales from bulk purchasing through bots.
Support for 'micro-nodes' and 'proof of contribution': Allowing and even encouraging low-threshold micro-nodes (such as home computers contributing idle computing power) and rewards based on non-capital contributions (code, content, translation) to broaden participation in value capture.
Core philosophy: From 'capital supremacy' to 'diverse contributions'
KITE needs to establish a consensus: The value of the network comes from diverse contributions—including capital, hardware, data, code, knowledge, and community building. The economic model should systematically reward 'diversity of contributions' and 'breadth of participation,' rather than just capital size.
Challenges:
Trade-off between efficiency and fairness: Overly restricting capital efficiency may hinder the speed of resource accumulation in the early stages of the network.
Complexity of mechanisms: Overly complex mechanisms may incur high understanding costs and potential vulnerabilities.
Avoiding the 'whale curse' is an ongoing struggle. KITE's mission is not to eliminate whales, but to guide the power of capital towards constructive purposes through rule design, preventing it from becoming a monopolist and stifler of innovation in the ecosystem. A healthy KITE ecosystem should be both a stage for capital and a starry sky for countless small contributors.
