Incentives as a motivating factor that encourages someone to do something. Incentives differ from rewards because rewards are earned while incentives are a motivating factor. This means that one is present and the other is futuristic.
Incentives and rewards are an age-old system. Despite being a significant feature of the decentralized web, it has seen applications in various industries and cooperatives.
In organizational management, a branch of business management deals with planning and controlling resources within an entity to achieve the company’s objectives. To promote altruism from employees, web2 businesses offer shares and stocks in percentage as incentives and rewards, most times to early members of these companies, investors, and founding members.
In the web3 business model, tokens play these roles but in a more dynamic form.
Tokens are the smallest unit of any crypto economy system and represent an individual state of an economic system, including a specific right to change the system.
-Voshmgir, 2020.
In a nutshell, the web3 business model democratizes participation to a larger audience and engineers their participation by promoting altruism with token incentives. We’re (come back here) employees in a heavily decentralized manner who actively participate in the decision-making process, which offers a wider-spread reward in practice in comparison with its centralized counterpart.
This application has resulted in rapid innovation in community development and sub-communities. Humans are goal-driven machines and incentives are what engineer our motives.
** **Show me the incentives and I’ll tell you the outcome.
-Charlie Munger.** **
As interesting as the quote above may sound, it is moot in a broader context when factoring in employee behavior. Organizational behavioral management (OBM) studies and identifies environmental (internal or external) factors that may or may not affect employee performance and participation. Employee Performance and participation are key metrics to measure the health of a company be it decentralized or centralized, and humans are the key factor to keep the organization up and running. ** **Incentives and rewards are essential tools used in any cooperative to get people to perform tasks, but what are the factors that can affect employee performance? Let’s take a look at the NFT grind.
** NFT Grind: Organizational Burnout**
When faced with stress, we tend to evaluate if the rewards are worth the stress involved. Stress is an internal and external force that reduces a task’s performance and participation.
Prolonged stress on an employee leads to burnout which reduces their ability to perform at optimal levels, turnover intention, and reduced career commitment. Turnover intention is the intention of an individual to leave the organization after a certain period of time in a particular organization while career commitment is an emotional attachment of an employee to the organization. Intent and commitment are essential attributes an employee might have or feel towards his/her company.
In previous paragraphs, we’ve successfully equated web3 communities to decentralized organizations cutting across more demographics with the help of the internet. If communities are mini organizations, meaning every member playing an active or passive role is an employee of that community.
NFT(non-fungible tokens, representing ownership of an asset) communities are popular in the web3 ecosystem. They consist of different employees ranging from the artists(musicians, writers, poets, painters, designers), the memers, the shillers (salesmen, marketers), investors, founders (organizational leaders), etc.
Founders usually create the idea of the project. If the founder is not the artist, he hires an artist to create the concept art of the project. Founders curate the project's blueprint and begin recruiting a few loyalists in the community. Then the famous whitelist process begins. The previous meta was referred to as grinding for spots. The process of grinding can be unnervingly tedious and time-consuming. It can take up to months depending on the project's roadmap prior to mint.
Effects: Behavioral Performance and Price Performance
In an interview carried out by Aimee Piercy
“Last time I had FOMO [that] led me to burnout, I was trying to get on the whitelist on one of the new NFT projects that are launching soon,” she told me. “I was logged in their Discord literally 24/7 for a week. I got whitelisted, but the [psychological] price was tremendous. I’m not there anymore because it’s not worth it. My life is not worth wasting on some Discord server to get a presale opportunity I’m not even sure I’ll buy.”
Turnover intention and reduced career commitment have an adverse effect on the price of an NFT due to the sole reason that the health of the community plays an important role in the project’s success. The incentives or rewards from an employee viewpoint are the price impact post-mint. If the community is burnt out during the project's build-up stage there’s a high chance of a heavy decline in the price of the NFT. Despite having high volumes during mint, community participation has reduced resulting in a heavy decline in price.
Below is a chart of projects that have performed poorly due to the tedious NFT grind.
In conclusion,
“These supposed founders need your money to thrive/build whatever they claim to build. So instead of stressing and humiliating myself in a bid to get WL for something I’ll end up using MY OWN MONEY to pay for, why not wait till I’m sure they’re able to deliver on their promise or better still see if whatever they’re proposing is viable and self-sustainable on the long term then get better entry on the secondary.”
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Reference
https://slate.com/technology/2022/05/nft-ecosystem-burnout.html
https://biz.crast.net/killing-the-nft-community/
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4911781/#:~:text=Burnout%20is%20a%20psychological%20syndrome,ineffectiveness%20and%20lack%20of%20accomplishment. https://magiceden.io/marketplace/
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