About the authors and disclaimer

We are professionals currently working in the IT and energy industries. We have a mixed background in Economics, Law, IT, Product Management and Tech Start-Ups. We hope to leverage our knowledge, experience and interest to deliver quality content. We are not financial or investment advisors. The information contained here is not intended as legal, financial or investment advice and should not be construed or relied on as such. We do not warrant the accuracy, adequacy or completeness of any material below.

Gems - ICO Highlight

An ICO highlight is a quick snapshot of a promising ICO that merits further research. Here we focus on the ICO’s concept. A more detailed review will take a look at token metrics, the team, the concept in more detail and other pertinent information. Please note that this is not financial advice and you should always do your own research.

Today’s project is Gems “a decentralised Mechanical Turk powered by Ethereum.” Blockchain projects that are looking to decentralise an existing service or marketplace are often worth further research and this is what we have in the form of Gems. We have used micro tasking services (as a requestor) in our professional lives and so have taken an interest in this project. The project’s website is: https://gems.org/ they also have a great Youtube video that sumarises their project.

An overview of Microtasking

Microtasks (or micro jobs) are small tasks that are typically completed online by workers, often as a part of a bigger project. For example, a business might require audio transcription of interviews for a project, or require duplicates to be removed from a dataset. The business would typically go to a centralised market place (such as Amazon Mechanical Turk) to request workers to complete the microtask. Workers list themselves on the platform, effectively creating what Amazon describes as an on-demand workforce. Microtasks and microtask marketplaces, such as Amazon Mechanical Turk, have become increasingly popular in the business world over the past few years. With the growing role of artificial intelligence in the economy it is expected that there will be more demand for digital work that requires human input, and that a lot of this work will be delivered through microtasks. This article over at The Economist provides more information on microtasks and human digital services and is well worth a read: https://www.economist.com/news/business/21727093-humans-will-supply-digital-services-complement-ai-artificial-intelligence-will-create-new

What is Gems?

In the words of its creators, Gems is “a decentralized, open-sourced, human task crowdsourcing protocol built on top of the Ethereum blockchain.” The Gems protocol will allow requestors (typically businesses), miners (workers) and verifiers (who verify the work of miners) to come together in a decentralized microtasking marketplace. The decentralized nature of the protocol aims to address inefficiencies in existing solutions in the microtasking space and improve participation both from requestors and workers. Gems is attempting to decentralise the growing marketplace for microtasks which is currently delivered through centralised platforms such as Amazon’s Mechanical Turk and Crowdflower.

What are the problems Gems is attempting to solve with existing micro tasking solutions?

Fees

Reducing fees by cutting out the middleman is one of the major benefits from using blockchain. The prospect of reducing or eliminating fees in the microtasking space is a big part of what makes this project interesting.

The current centralised marketplaces for micro jobs charge fees to “requestors” (typically businesses) for using their services to hire workers. Fees, which are transaction costs, affect the efficient allocation of resources in the economy. We can see this at play in the microtasks market as the requestors will attempt to recover the cost of the fees through the wages that they offer to workers i.e. by offering lower wages. For example, if labour supply is abundant, these fees put downward pressure on the wages earned by workers as businesses will attempt to recover the cost of fees through paying workers less. These lower wages will deter some workers from participating in the marketplace which will result in a lower than economically optimal level of participation, supply and demand. If labour supply is scarce (there is more competition for workers) businesses’ ability to recover the fee costs through offering lower payments to workers is reduced. As a consequence the cost of using workers increases and business’s demand for workers will decrease – resulting in a less than optimal level of activity in the market.

Read up on Coase Theorem and if you’re interested in more technical description of how this works. Transaction theory stipulates that the growth of firms (firms like PayPal, Uber and Amazon for example) is a consequence of the economic desire to reduce transactions - we think the same can be said for the growth of blockchain technologies!

The Gems solution to the fee problem is simple – they do not plan to charge any fees and the only cost on the Gems platform is gas used on the Ethereum network. Products, services or technology that successfully reduce transaction costs for a certain sector of the economy tend to be revolutionary for that sector. Microtask markets are themselves a transaction cost reducing mechanism for the labour market and Gems is looking to further reduce those costs within the microtasking market itself.

Participation

Gems has identified participation by workers in the microtask marketplace as a major issue. They largely put this down to the approval process and in particular the identification requirements that are needed to join the current microtask platforms as a worker. The Gems solution for this problem is also simple – no verification is required to complete tasks. Instead Gems proposes to use a staking mechanism to make the network “less susceptible to malicious actors”. It is best to read the whitepaper to get a detailed description of how this mechanism works. At a high level the Gems staking mechanism requires miners (workers), requesters and verifiers (those with a high gems trust score) to a stake token in order to participate. The staking of these tokens provides the participants with an incentive to not behave in a malicious way (otherwise they are penalised tokens). A more detailed explanation of how this works (how it is explained in the whitepaper), is below but we would advise reading the whitepaper itself for an accurate and more thorough explanation.

Staking and Trust

Miners (workers): Stake a token effectively as insurance against them completing the task successfully. If the miner successfully completes the task they receive their stake back (as well as the agreed reward for task completion)

Verifiers: Those with a high Gem Trust Score and their role in the network is to verify tasks. They stake a smaller portion of a token on their verification of a task’s completion. If other verifiers or requestors overturn their verification they lose the stake that they have put up, if they do not overturn the verification then the verifier is returned their stake as well as a verification reward.

Requestors: Stake the total task reward and verification reward for their tasks effectively locking up the funds for these tasks. If a requestor denies a task as being correct then that task will be given to other miners or verifiers to complete the task.

The Gems Trust Score: Is supposed to be an indicator of the reliability of an individual operating in the network. According to Gems, completing tasks accurately and consistently increases one’s trust score and those with high scores are eligible to work as verifiers. More details on the Gem Trust Score are provided in the whitepaper. Gems mention in whitepaper that verification protocols will be able to be built on the Gems platform and could be used by miners (workers) to voluntarily verify themselves. Bloom is cited as an example of a decentralised verification protocol.

Verification on tasks does not happen on every single task but instead a random audit mechanism called the Gems Random Auditor Method, or GRAM, is used. Again, it is worth reading through the whitepaper to better understand how this mechanism works and how it interacts with the fee structure to deliver a verification system.

Consensus by redundancy

Another issue that Gems have identified is what they call consensus by redundancy. In the current microtasking marketplace, businesses face real challenges in verifying the accuracy of results from workers performing microtasks. To mitigate against inaccuracies or (even cheating) from workers, businesses will typically pay multiple workers to perform the same task to determine a valid output (typically the output of the majority of workers). This is a clearly inefficient outcome and a waste of economic resources, and having used microtasking services before we can validate that this does actually happen! The trust and staking mechanism described above is intended to address this issue. The lower costs from not requiring this redundancy should encourage lower costs tasks to be posted to the platform.

Payments

Gems comment that current platforms (in particular Mturk) are not suitable for the unbanked as they require workers to have a bank account in order to be paid. Given the large number of unbanked people (particularly in developing countries) banking requirements are inhibiting participation in the microtasking market. The Gems solution to this is of course to pay miners (workers) in the form Gem tokens (which are ERC20 tokens). Gem tokens do not require a bank account but simply an Ethereum address, which as we know anyone can create easily without verification or cost.

Usability

Gems claim that the interfaces for existing markets are dated and can be improved. They cite the numerous browser extensions that exist for Mturk as evidence of the market attempting to fill the holes in Amazon’s current UX. The Gems solution to this is develop an Open Sourced UI/UX Module.

Conclusion

It is exciting to see a project that provides a real-world use case for blockchain technology in a sector of the economy that is rapidly expanding. We have used microtasking services in our professional lives and so we are familiar with some of the limitations that are present in existing centralised services, and we are certainly intrigued by what Gems could bring to this space. The Gems protocol is one to watch and definitely merits further research into the team, token metrics (which are yet to be published) and the concept itself. Keep your eye on this one and we look forward to posting more on ICOs shortly!