Building a sustainable crypto ecosystem is challenging, especially when it comes to incentivizing contributions over time. Early contributors often receive outsized rewards, which can disincentivize newer members from contributing meaningfully, or even joining. In traditional startups, early team members get substantial equity, with later contributors only gaining stakes when VC rounds dilute those shares. But this model doesn’t translate well to crypto ecosystems or community-driven projects that aim to thrive without relying on venture funding.
A Better Model: Streaming Merit-Based Rewards
Flow State offers a way to reward both early and new contributors fairly through continuous, real-time funding streams. By allocating contributor points for value-added actions—points that gradually decay over time—the ecosystem avoids “early contributor rent-seeking,” where a few early participants hold disproportionate control over rewards. Points decay ensures that rewards are continually adjusted, emphasizing recent and impactful work rather than relying on legacy contributions.
See An Allocation Strategy that Prioritizes Your DAO’s Top Builders: “Contribution Weighting”
The Pitfall of Outweighed Early Rewards
Many projects, such as EOS from 2017 which ultimately contributed very little to crypto innovation, have rewarded founder and early contributors to an extreme, sometimes making them millions or even billions in tokens that often quickly get converted to USD equivalents. Imagine the dilemma for a new contributor: you could bring value to the ecosystem, but you’d be earning a fraction—sometimes 1/1000th—of what early contributors have already secured. Additionally, your efforts would only serve to sustain their wealth without meaningful equity for yourself. This disparity often drives potential contributors to launch their own projects or seek out ecosystems with a more equitable, meritocratic reward system.
Why Ongoing Meritocratic Distribution Matters for Ecosystem Growth and Longevity
Flow State’s merit-based model aligns rewards with ongoing contributions rather than legacy positions, which fosters long-term engagement and prevents the ecosystem from becoming a “cash-out” scheme for early adopters.
As Naval recently noted…
By contrast, Flow State’s approach supports fair, ongoing participation for all contributors, making it easier to grow a resilient, enduring community.
The Flow State way transforms crypto projects from short-lived hype cycles into lasting ecosystems where every contributor has a fair opportunity to participate and grow.