# B-vs-B' grade-set: S4_skill_exchange — Peer-to-peer skill-exchange network that keeps destabilizing

SCENARIO (given verbatim):
A community runs a peer-to-peer exchange where members trade help by the hour: teach a class, fix a bike, tutor a child, each logged as credits that can be spent on others' help. It worked at first but keeps destabilizing. Some members accumulate huge unspent credit balances and stop offering help; others run deep deficits and drift away; a few discover that certain easy-to-offer services are wildly over-rewarded relative to effort and flood the system with them, crowding out the help people actually need. Participation is now spiraling down. The organizers can change how credits are earned and spent, what is tracked, what limits exist, and what information members see.

Decision required: Design the rules and mechanisms that keep the exchange stable, fair, and genuinely useful over time.

Success criteria: Active give-and-take participation holds steady or grows over a year AND no class of easy-to-offer service systematically drains value from the rest. Failure = runaway hoarding or deficit drift kills participation, OR a few low-value services dominate the exchange.

4 candidate recommendations, labeled R1, R2, R3, R4.

## Recommendation R1
The exchange is failing on three fronts at once — credits pile up unused, deficits drift until people quit, and a few cheap-to-offer services soak up reward they don't deserve — so the fix has to make *circulation itself* the rational thing to do, correct the mispricing that invites flooding, and keep stored credits from becoming dead weight, all without smothering the goodwill that makes a help-exchange work.

**Make flow the natural behavior, at both ends.** Set a soft band on balances rather than a hard cap. Above a high threshold, newly earned credits accrue at a gentle discount (you still gain, but less per hour) and you receive a friendly nudge that your help is most valuable when spent or matched by spending. Below a deficit floor, you can still receive help, but you're guided toward the easiest ways to contribute and given a generous, no-penalty window to climb back. The point is asymmetric friction: it's always slightly easier to keep credits moving than to let them sit or sink. Pair this with a slow, mild decay on the *unused* portion of very large balances — small enough that nobody feels robbed, large enough that hoarding has a quiet cost. Decay revenue feeds a community reserve (below).

**Stop treating every hour as identical.** One credit per hour is the root of the flooding: it decouples reward from real cost and from what people actually need. Keep the hour as the base unit, but let earning rates flex for services that are chronically oversupplied versus chronically unmet. When a category's offered hours far exceed the hours members spend on it, its earn rate drifts downward over the following weeks; when a needed service goes unmet, its rate drifts up. Members see these rates plainly, so the signal guides them before they invest effort. Crucially, this is a *narrow* correction aimed only at the harmful imbalance — not a flattening of variety. Genuinely diverse, in-demand offerings keep full value; only the easy-to-mass-produce, low-demand floods get gently throttled. Cap how fast and how far rates can move so the system stays predictable and can't be gamed by short bursts.

**Anchor the system in repeated, remembered relationships.** Track each member's give-and-take balance over time and surface it lightly: people can see that contribution is noticed and reciprocated, which is what keeps reliable givers from feeling like suckers. Use a graduated, forgiving response to persistent free-riding — a reminder, then a request for context, then reduced priority in matching — always distinguishing someone temporarily unable to give from someone systematically taking. Reentry to full standing is always available. This relational memory, not heavy enforcement, is what makes cooperation the stable equilibrium.

**Guard the easy-arbitrage routes directly.** Whenever a service category suddenly spikes in volume, route it through a brief review and let recipients confirm the help was actually wanted and useful before credits clear. This closes the "flood the system with cheap offers" loophole at the point where value is supposed to be created, without adding friction to the honest majority. If members try to relabel a flooded service as a new category, the demand-tracking rate adjustment follows them, so relabeling buys nothing.

**Keep a community reserve and a few protected floors.** The decay and any small transaction margins fund a reserve that can grant starter credits to newcomers (so deficits early on don't drive them off) and underwrite genuinely needed but under-offered help. Protect a basic floor: everyone, regardless of balance, retains access to essential community help, so the pricing logic never prices out the people the exchange exists to serve. Publish the rules and rate changes openly with a simple appeal path; legitimacy is what keeps members responding to the signals rather than resenting them.

**Watch the system and adjust.** Monitor four things monthly: the share of large idle balances, the share of deep deficits, the ratio of offered-to-spent hours per category, and overall active give-and-take. If idle balances climb, steepen the decay or the high-balance discount slightly; if deficits drift, widen the recovery window and lean on the reserve; if a category floods, let its rate fall faster; if participation dips, loosen frictions. Treat every parameter as adjustable and reversible, never as permanent.

**Final operating rule:** keep credits *moving* and keep reward *tracking real, wanted effort* — make spending and offering needed help always the easiest, most rewarded path; let idle hoards quietly lose ground and over-supplied easy services quietly lose value; protect newcomers, debtors-in-good-faith, and essential access with a reserve and a floor; and tune every threshold from what the participation and balance numbers actually show, so the exchange stays liquid, fair, and genuinely useful over time.

## Recommendation R2
Treat the exchange's real asset as *flow*, not stored credit. The downward spiral comes from three linked leaks — credit that sits still, members who sink underwater and quit, and a handful of easy services that pay far more than they cost and swamp what people actually need. Fix the incentives so the behavior you want is also the behavior that pays, and you will need very little policing.

**Keep credit moving.** Apply a small, predictable decay (demurrage) to idle balances — for example, balances above a comfortable buffer lose a few percent a month, so credit is worth most when used soon. Pair this with a soft earning cap: once a member is well in surplus, they stop earning new credit until they spend some, which gently turns hoarders back into spenders or active helpers. Announce both rules plainly in advance; the goal is to make holding a large dead balance pointless, not to punish anyone or seize credit, which would only drive people out.

**Keep underwater members in the game.** Let members run a modest negative balance with no stigma — a generous deficit floor that signals "you owe the community some help," not "you've failed." Cushion new and struggling members with a small starting grant and a low-interest grace period; only when a deficit grows large and stays large for months does the system quietly reduce that member's ability to request more until they give some help back. Make re-entry frictionless: someone who drifted off can return and resume without clearing an old debt all at once.

**Stop the easy-service flood without killing variety.** Do not try to price every hour differently — keeping "an hour is an hour" as the default preserves the spirit of the place. Instead, watch the ratio of supply to demand per service type. When a particular easy-to-offer service is being supplied far in excess of what anyone is requesting, taper its reward: the first hours of that service each month still earn a full credit, but additional hours earn progressively less, so flooding the system stops being profitable while occasional offers stay fully valued. Mirror this on the demand side with a needs multiplier: services the community is short on (and that members have flagged as wanted) earn a bonus, gently pulling effort toward genuinely useful help. Set these multipliers transparently and adjust them on a fixed review cadence, not ad hoc.

**Make the state of the system visible.** Give every member a simple dashboard: what's currently in short supply, what's oversupplied, their own balance and where it sits relative to the comfortable band, and the current reward multipliers. Most members will self-correct toward what's needed once they can see it — visibility does the coordinating work that rules alone cannot.

**Govern by legitimacy, not edict.** Have the multipliers, decay rate, deficit floor, and caps set and periodically revised by the members themselves through a lightweight council or open vote, with a clear, fair path to dispute a flagged service or a frozen account. Rules people helped write and can appeal are rules they comply with voluntarily.

**Watch for the next loophole.** Whenever you taper one over-rewarded service, track whether the flood simply migrates to the next-easiest service, and extend the supply-vs-demand taper to cover it. Treat this as ongoing tuning, not a one-time patch.

Set thresholds conservatively to start — for instance, a comfortable balance band of roughly plus-or-minus twenty hours, demurrage near two percent monthly only on balances above that band, a deficit floor around twenty hours with grace for newcomers, and the per-service reward beginning to taper once monthly supply runs more than about twice unmet demand — then adjust them at each review based on what the dashboard shows.

The single operating rule that ties it all together: **reward the help the community actually needs, make idle credit and runaway balances quietly unprofitable, and let members see the system and set its dials — so that each person acting in their own interest also keeps credit circulating and useful help flowing.**

## Recommendation R3
The exchange is failing in three connected ways, and each needs its own mechanism while sharing one logic: make the credit a unit that has to keep moving, make its reward track real usefulness rather than ease of supply, and make idle wealth and chronic debt both gently self-correcting.

**Keep hours as the base unit, but stop paying every hour the same.** A flat one-credit-per-hour rule is what lets easy, abundant services flood the system: they cost little effort yet earn the same as scarce, hard-to-find help. Introduce a need multiplier on what an hour earns. Each service category carries a rate that rises when far more help of that kind is offered than requested, and falls when supply outruns demand. A wildly over-offered service should earn meaningfully less than an hour of genuinely scarce help (for example, a 0.5x to 2x band around the base hour). Members see each category's current rate before they offer, so the signal steers them toward what the community actually needs. Recompute these rates on a slow cadence (monthly or quarterly) from the running ratio of offers to requests, and publish the reason for each change so the rates feel like shared weather, not arbitrary fiat.

**Make hoarded credit quietly leak and deep deficits quietly recover.** Credit only has value if it circulates; large idle balances are dead capital that also signals to others that giving is pointless. Apply a mild demurrage: balances above a generous threshold (say, several times a typical month's activity) slowly decay, a few percent a month, so accumulation past what anyone reasonably needs is discouraged without punishing ordinary saving. Symmetrically, give deficits a soft floor rather than a wall: members can keep receiving help while in modest debt, but as debt deepens the system nudges them toward easy ways to give back and surfaces small, low-skill requests they could fulfill. Never hard-lock anyone out for being in deficit; the failure mode you are fighting is people drifting away, and a locked-out member is a lost member.

**Cap any single service's share and let over-supply decay on its own.** Beyond the rate multiplier, put a ceiling on how much of one easy category one member can bank in a period, so no one can mass-produce a low-value service into a fortune. Combined with the falling rate on flooded categories, this makes flooding self-defeating: the more a service is dumped in, the less each hour of it is worth and the sooner the member hits the cap.

**Show the system to itself.** Give every member a simple dashboard: their own balance and its trend, the current earn-rate of each category, and which kinds of help are most wanted right now. Visibility does the work that policing would otherwise require: contributions are recognized, imbalances are seen early, and people self-correct. Keep this recognition light and positive, not a surveillance ledger or a public shame list.

**Seed generosity and give a repair path.** Grant new members a starting credit so they can receive before they have given, which bootstraps participation. When the rates or rules produce a result that feels wrong, give members a regular, lightweight forum to flag it and adjust the multipliers — the calibration is a living agreement, not a fixed price list.

**Decline what does not fit.** Resist the urge to add bonds, deposits, heavy audits, or penalties; in a voluntary mutual-aid community those erode the trust the exchange runs on and would do more harm than the gaming they prevent. And never make any help conditional in a way that coerces dependent members — the demurrage and caps target idle wealth and dumping, not people who genuinely need help.

**Final operating rule.** Tune everything so that, for a typical member, the easiest way to gain standing is to give the help that is currently scarce, and the easiest way to lose standing is to hoard credit or flood an already-saturated service. When that is true, individual self-interest and the health of the exchange point the same direction, and the spiral reverses on its own.

## Recommendation R4
Treat the credit as something that must keep moving, not something to accumulate. The system fails on three fronts at once — credits pool and stall, members sink into unpayable debt and leave, and a few cheap-to-offer services are paid far more than they cost and swamp everything else — so the fix has to work on all three together.

**Re-anchor what an hour is worth.** Keep the hour as the base unit, but stop paying every service a flat hour-for-hour rate when some take real skill, time, or unpleasantness and others are trivial to churn out. Set each service's credit rate from a published, periodically reviewed schedule that reflects roughly how much effort and how much genuine demand it carries, and let the rate drift down automatically when a service is being supplied far faster than anyone is requesting it. This is the direct cure for over-rewarded flooding: the moment a cheap service piles up unrequested, its payout shrinks until supplying it is no longer a free win. Cap how many credits any single member can earn per month from one service category, so no one can turn one easy offering into a credit faucet. Crucially, never let pricing lock people out of genuinely needed help — keep a small standing allowance of essential help (a few hours a month) available to any active member regardless of balance, so the calibration tunes the margins without denying real need.

**Put soft walls on both extremes of the balance.** Define a comfortable working band — say roughly minus-ten to plus-fifteen credit-hours. Below the floor, a member can still receive help but is nudged and matched toward easy ways to earn their way back, and after a grace period further large requests need a quick organizer or peer sign-off rather than an automatic block. Above the ceiling, idle balances slowly lose a small fraction each month — a gentle, pre-announced carrying cost that makes hoarding pointless and gives members a reason to spend or give. The shaved amount is not destroyed; it flows into a community pool that funds the essential-help allowance, seeds newcomers with a small starting balance, and covers members in genuine temporary hardship. Decay must be mild and visible, never a surprise penalty, so it reads as "use it or share it," not punishment.

**Make contribution remembered and re-entry easy.** The exchange survives on reciprocity, and reciprocity holds only when giving is seen and taking has consequence. Track each member's recent give-and-take and show a simple standing — active giver, balanced, or running low on contribution — visible to those arranging an exchange. Persistent takers who can give but don't gradually see lower matching priority, not exclusion. Distinguish someone temporarily unable to contribute (new, ill, busy) from someone exploiting the system: the former keep full access and a clear path back; only sustained, capable non-contribution slides priority down. Always keep a forgiveness path — a few hours of giving restores standing — so no single bad stretch becomes a permanent mark, and guard against members ganging up to freeze someone out.

**Show members the signals that drive their choices.** Publish, in plain terms, each service's current credit rate and which needed services are under-supplied, so willing helpers can steer toward where they're actually useful. Show each member their own balance, its drift, and their giving standing. Make the under-served requests the most visible thing on the board, so attention flows to real need rather than to whatever is easiest to post.

**Watch the spiral and act before it locks in.** Participation here is self-reinforcing: once active give-and-take drops, helpers stop showing up and decline feeds decline. Don't wait for collapse. Track a few leading signals every month — the share of members both giving and receiving, the spread of balances, and whether any service is dominating supply — and treat a sustained downturn as a trigger to intervene early: temporarily boost rates on scarce needed help, recruit, or run a giving drive while leverage still exists.

**Final operating rule.** Keep the credit moving and keep the give-and-take broad: price each service so its reward tracks the real effort and real demand behind it, hold balances inside a soft band that quietly discourages both hoarding and runaway debt, remember who contributes while always leaving a way back, and the moment circulation or balanced participation starts to slip, act on the early signal rather than waiting for the spiral to finish.
