The Protocol Canvas is a means of mapping primitives between actors within a decentralized protocol. Derived from the Business Model Canvas, the Protocol Canvas is designed for decentralized systems and is a fully open-sourced effort.
The purpose of creating the Protocol Canvas is to help individuals and organizations capture their protocol design in a standardized way and to contribute towards the newly-realized discipline of Token Engineering.
The Protocol Canvas Template
Download the Protocol Canvas Template.
Protocol Canvas Overview
Designing decentralized systems brings into context some novel areas of research and development, such as crypto-economics, token design, decentralized protocol architecture, and token engineering. However, there are a lack tools for entrepreneurs, engineers, product managers & designers to express and optimize their protocol designs.
The Protocol Canvas is a tool for ‘Protocol Designers’ to help design a new decentralized system. The canvas can also be used to deconstruct existing decentralized systems to identify design gaps and to improve its future development. Whitepapers can efficiently leverage this canvas to clearly communicate their protocol design to a discerning audience of engineers, investors and token holders.
Using The Canvas
Mechanism Design is a sub-discipline of economics dedicated to studying how to design protocols that incentivize rational actors to behave in socially desirable ways.
In game theory, we take the game as a given and analyze its outcomes according to player utilities, whereas mechanism design allows one to start by defining desirable outcomes and work backwards to create a game that incentivizes players towards those outcomes.
The principles of mechanism design is a driving factor in approaching the design of decentralized protocols.
Objectives & Decentralized Protocol Primitives
The primary objective is to capture the participating network Actor mappings to the system’s Decentralized Protocol Primitives (DPPs).
- Identify the network Actors & their roles
- List what their top ‘value adds’ are to the network to define their desired behaviors
- Create incentives to extract the Actors’ desired behaviors
- Lay out deterministic and probabilistic outcomes for pre-defined rulesets
- Identify points of failure as risk factors associated with each actor
- Explore what governance measures (for example, staking or slashing) can be applied to mitigate risks
- Map out the Risks vs Rewards
Some examples for Actors are:
- Miners (Ethereum)
- Makers & Takers (0x)
- Reporter (Augur)
- Curator (TCRs)
Some examples for DPPs are:
- Desired behaviors
- Incentives
- Risk Factors
- Risk Mitigation
- Rewards
- Governance
- Security
- Trust
- Points of failure
Incentives can refer to activities such as block rewards and earning tokens. Staking & slashing can be considered as governance measures.
As more canvases are built and the designs are mapped out, I’ve noticed some interesting observations:
- DApps center around designs that are based on “risk x reward” for actors, while protocols identify risks & actively try to mitigate them through network incentives
- Protocols work on commitment in the future based on performance in the past
- “Risk x Reward” structures keep all actors on edge and accountable
- Block rewards are ideal for proven resource contribution
Putting it all together — Examples
What we end up with is a matrix, or the Protocol Canvas. I have attempted to capture the primitives for some of the well known protocols below in order to give concrete examples.
NOTE — the information below could possibly be outdated or not entirely accurate due to the continually evolving nature of protocol design, and is purely my interpretation at the time of my writing this article. It is not my intention to mislead or improperly characterize the protocols in anyway. For accurate and updated information on the protocols, please read the respective whitepapers and public documentation for each of these projects. I personally am a big fan of these projects.
Dharma
Dharma is a platform for building borderless lending products using programmable, tokenized debt. Read the Dharma Whitepaper.
Dharma’s Protocol Canvas
Ocean
A decentralized data exchange protocol to unlock data for AI. Read Ocean’s Whitepapers.
Ocean’s Protocol Canvas
AirSwap
Swap is the underlying peer-to-peer protocol for Airswaps decentralized exchange. Read the Swap Whitepaper.
AirSwap’s Protocol Canvas
If you find yourself using the Protocol Canvas, please do share with the OSS community your canvas by submitting a PR here. Discussions, ideas and feedback around improving the Protocol Canvas are always welcome. Reach out to me at rahul (at) paperchain (dot) io if you have any comments or questions.
Those of you in New York can join the Token Engineering NYC meetup that we hold monthly.
