Decentralised networks like bitcoin and ethereum make it easy to reward participants for contributing their resources, by sending them tokens. But those resources can vary enormously.

People who mine bitcoin or ethereum are rewarded for verifying transactions on the blockchain. Verifying transactions is computationally expensive. So expensive, in fact, that by some estimates bitcoin uses more electricity than Argentina 🇦🇷. This compute power is the resource that miners are rewarded for contributing.

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Clearly the environmental cost of incentivising miners to contribute compute power is unacceptable. Ethereum is trying to move from proof of work - where miners contribute compute resource - to proof of stake - where miners contribute acceptance of risk. Miners will stake an amount of eth, which can be deducted if the miner verifies transactions they shouldn’t. This will be a huge improvement to the environmental impact of ethereum, but it isn’t on mainnet yet.

So what projects are there that incentivise participants to contribute something other than compute power? There are two particularly interesting ones: Helium and NKN. More on those in the next post.