Allocation Is Not Enough: Why Economies Need Service Ecosystems, Not Just Better Voting
How Overspending of the Treasury Creates Problems — and How It Can Be Mitigated
Date: 13-03-2026
Mechanisms like conviction voting and score voting allow communities to allocate resources more fairly. They enable people to decide collectively which projects, contributors, or public goods should receive funding.
At first glance, this seems like the solution to economic coordination.
But correct allocation alone is not enough.
Even if funds are allocated correctly, a system may overspend the treasury, leading to currency devaluation.
Currency devaluation is not necessarily a problem. In many cases it can be beneficial. Inflationary systems can keep money circulating toward contributors and those who need it most, instead of concentrating wealth in the hands of early holders.
However, inflation creates another challenge.
If people believe a currency will continuously lose value, they will try to store their wealth in stronger currencies. In the crypto world, that often means moving value into deflationary assets like Bitcoin.
When a service currency devalues, people move their wealth into Bitcoin instead of holding it. This accelerates the currency’s decline, creating a feedback loop of devaluation that eventually weakens the treasury to the point where it can no longer provide meaningful services.
This creates a structural tension:
- Inflationary currencies encourage spending and circulation
- Deflationary currencies encourage hoarding and wealth concentration
Bitcoin, by design, rewards holding. While this property can protect against reckless monetary expansion, it can also increase income inequality, because early adopters accumulate disproportionate wealth over time.
So the question becomes:
Is there a way to keep money circulating without forcing people to escape into deflationary assets?
Inflationary Currency Always Needs New Demand
With an inflationary currency, new demand must continually be created to prevent the currency from devaluing.
Quantity theory of money:
$$ (M_i V_i = P_i Q_i) $$
Where:
- \( (M_i) \) = supply of service tokens
- \( (V_i) \) = velocity of the token
- \( (P_i)\) = price of the service in tokens
- \( (Q_i) \) = quantity of services supplied
- \( (Q_i^d)\) = quantity demanded of service (i)
- \( (Q_i^s) \) = quantity supplied of service (i)
But at equilibrium:
$$ Q_i = Q_i^d = Q_i^s $$
The quantity of demand remains roughly constant because the number of people is stable. The velocity of money also tends to remain relatively stable.
To maintain stable prices, the system must include both minting and burning of tokens, not just a minting mechanism where newly created tokens are spent on services.
This keeps the effective money supply nearly constant, or allows it to change slightly over the long run.
People Do Not Want Money — They Want Services
To understand the solution, we must remember a fundamental economic truth:
People do not want money. People want services and goods.
Money is simply a coordination tool.
In a pure Barter Economy, trade requires what economists call the Double Coincidence of Wants.
This means two people must simultaneously want what the other has.
For example:
- A farmer has wheat
- A shoemaker has shoes
Trade can only happen if:
- The farmer wants shoes and
- The shoemaker wants wheat
This requirement makes barter extremely inefficient and severely limits trade.
Money solves this problem by acting as a medium of exchange.
Instead of finding someone with a perfect match of needs, people can:
- Sell their goods for money
- Use that money to buy what they need
This dramatically increases specialization, productivity, and the scale of economic activity.
The Problem With Current Price Discovery
Today, prices are discovered primarily through market interactions between buyers and sellers.
But this process has a major limitation.
It excludes most stakeholders.
Consider goods that produce negative externalities, such as pollution.
You might personally refuse to buy such products. But if others buy them, the negative consequences still affect you.
Yet you have no say in the price discovery process.
Markets only capture the preferences of participants in a transaction, not the broader set of people affected by it.
This is where a new mechanism becomes necessary.
Rational DEX for Stakeholder Price Discovery
A possible solution is what we can call a rational DEX (decentralized exchange).
Instead of discovering prices purely through speculative trading, a rational DEX would allow all stakeholders to participate in price formation.
Prices would emerge through collective consensus, not just through the interaction of buyers and sellers.
This could allow:
- environmental stakeholders to influence prices
- local communities to price externalities
- contributors to influence the value of the services they provide
Such a system moves price discovery from speculation-driven markets to collective coordination systems.
The Real Goal: An Ecosystem of Services
Ultimately, the goal is not to create the perfect currency.
The goal is to build an ecosystem of services.
Imagine an economy where different supply chains issue their own currencies:
- food supply currency
- education supply currency
- journalism supply currency
- healthcare supply currency
Each of these currencies may be inflationary, because they continuously fund contributors within their ecosystem.
But if these currencies can be exchanged efficiently through a rational DEX, people can still obtain the services they need.
For example:
- A farmer earns food tokens
- A teacher earns education tokens
Through the exchange system, both can access the services they require.
In this world, people are less concerned about the long-term storage value of a currency, because what matters is access to services.
When the service ecosystem is strong, there is less incentive to escape into hoarded assets like Bitcoin.
Instead of optimizing for store of value, the system optimizes for continuous service provision.
The Core Idea
Economic systems should not focus solely on money design.
They should focus on service coordination.
If communities can:
- Allocate funds through conviction and score voting
- Discover prices through stakeholder consensus
- Build interconnected service ecosystems
then currency becomes what it was always meant to be:
a tool for coordination, not a vehicle for hoarding wealth.