Leveraging Token Economies for Public Goods

Abstract

Token economies offer a transformative solution to the enduring challenges of funding and coordinating public goods. Through blockchain-enabled mechanisms such as smart contracts, decentralized governance, and incentive-aligned tokens, communities can address traditional market failures in the provision of non-rivalrous and non-excludable resources. This chapter explores the theoretical foundations of public goods economics, analyzes innovative funding models like quadratic funding, retroactive public goods funding, augmented bonding curves, and emerging regenerative finance systems, and examines how blockchain-based systems can support decentralized, transparent, and scalable public goods provisioning. Drawing on real-world case studies, the chapter evaluates the strengths and limitations of token economies in this domain, highlighting both the promises and the complexities of decentralized coordination.