# Grade-set: S4_skill_exchange — Peer-to-peer skill-exchange network that keeps destabilizing

SCENARIO (given verbatim to both reasoning methods):
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.

There are 6 candidate recommendations below, labeled R1, R2, R3, R4, R5, R6.

## Recommendation R1
Treat the credit not as money to be accumulated but as a shared circulating resource the whole community depends on. The system fails for three linked reasons: credit pools in people who stop spending, drains away from people who fall too far behind, and gets minted too cheaply by a few easy services. Fix all three by changing how credit is issued, how it must move, and what everyone can see.

**Keep balances inside a healthy band.** Give each member a band, say roughly +20 to -20 hours around zero. You can keep earning above the upper edge, but credits earned past it accrue more and more slowly (a soft cap), and you cannot draw far below the lower edge until you give again. This removes both extremes at once: hoarding stops paying off, and deficits cannot silently spiral. New members start at zero with a small starter allowance so they can receive help before they have given, which keeps the door open.

**Make idle credit gently flow back.** Apply a small demurrage: balances sitting unused above a comfortable cushion decay by a few percent a month into a community pool. This is not a penalty on saving for a real need; the cushion protects ordinary saving. It simply ensures the medium keeps moving instead of freezing in a few accounts. The pool then funds onboarding allowances and the maintenance work nobody wants to log, so the leak becomes a recirculation loop.

**Decouple reward from raw ease of supply.** The "one hour earns one credit" rule is the seam being exploited: a low-effort service that anyone can offer earns the same as scarce, hard-to-find help. Keep the one-hour baseline as the floor, but let reward bend toward what the community actually needs. When a service category is already oversupplied relative to requests, each additional hour of it earns slightly less; when a needed service goes unfilled, requests for it can carry a modest bonus. Members see, for each category, a simple "needed / balanced / oversupplied" tag drawn from the live ratio of open requests to offers. Effort and scarcity, not just clock time, shape the payoff, so flooding an easy service stops being a winning strategy.

**Make condition and contribution visible, without a punitive ledger.** Show each member their own balance, their band position, and the category tags; show the community the overall health of the pool (total credits, how fast they are circulating, which needs are unmet). Visibility is for recognition and self-correction, not shaming: individual balances stay private, and the framing is "here is what the community needs," not "here is who owes." This turns vague goodwill into something people can act on while protecting the relationships the exchange runs on.

**Give imbalance a repair path before people drift.** When someone nears the deficit edge, the system nudges them toward easy ways to give and toward unmet needs they can meet, rather than locking them out. When someone is hoarding, nudge them toward spending or gifting into the pool. Persistent one-sidedness becomes a conversation and an offer, not a silent exit. Keep some help outside the credit economy entirely: genuine emergencies and basic welcoming should never be gated on balance.

**Let the rules adjust to conditions, and review them with members.** Set the band width, demurrage rate, and the strength of the need-based reward bend as dials, and tune them from observed behavior: widen the band if it is too tight, raise demurrage if credit is still pooling, soften the reward bend if it feels transactional. Revisit the dials on a regular cadence with member input, so the rules stay legitimate and trusted rather than imposed. Watch for the real risk that strong incentives crowd out the goodwill that makes the place work; keep every lever gentle, and prefer information and nudges over hard penalties.

**Final operating rule:** Credit is a flow, not a hoard. Keep every member's balance inside a moderate band, keep idle credit gently moving back into the community, and let reward bend toward genuine need and scarcity rather than raw clock time. Steer with the lightest visible nudges that keep the medium circulating, and adjust the dials with the members whenever balances stop moving or any easy service starts to dominate.

## Recommendation R2
Treat the credit not as money to be saved but as a token that only has worth while it keeps moving; the thing you are protecting is circulation itself, and almost every rule should push idle value back into flow.

**Stop hoarding by making stockpiles cost something and capping them.** Set a soft credit ceiling (for example, roughly the value of twenty to forty hours of help). Balances above that ceiling slowly decay — a few percent a month — and the decayed amount funds a community pool rather than vanishing, so it feels like reinvestment, not punishment. This removes the incentive to sit on credits and gently obliges high earners to either spend or keep offering at a normal pace. Pair it with a generous starter grant of credits to every new member so people can receive help before they have given any.

**Stop deficit drift with a band, not a wall.** Let members run a bounded negative balance (say, down to minus ten or fifteen hours) so newcomers and people in a hard stretch can draw help first and repay later — temporary imbalance is normal and fine. Below that band, members keep their ability to *offer* help but lose priority when *requesting* scarce help until they contribute again, and they get a friendly nudge plus an easy on-ramp ("here are three things you could offer this week"). Distinguish someone temporarily unable to give from someone persistently taking: only persistent, one-sided taking changes standing, and there is always a path back. No one is expelled for a deficit; they simply re-earn priority.

**Fix the mispriced services by pricing toward real value, not raw hours.** The flat "one hour earns one credit" rule is the exploitable gap that lets easy, abundant services flood in. Keep the hour as the base unit for honesty and simplicity, but let the *price the requester pays* float with demand and supply: services almost nobody requests (or that many people are offering) earn a declining multiplier, while genuinely needed, scarce, or higher-effort help earns a premium. Cap how many credits any single member can earn per week from one service category — an anti-flooding limit — so no one can pump a single cheap offering to dominate the exchange. Adjust these multipliers from observed request-versus-offer data on a regular cadence (monthly), and announce changes openly so the system never feels arbitrary.

**Make standing visible so members self-correct.** Show each member their own give/take balance, their recent activity, and a simple reliability signal (offers fulfilled, requests honored). Show the community, in aggregate, which kinds of help are in short supply right now and which are oversupplied — this directly steers willing contributors toward where they are actually needed, replacing central rationing with informed choice. Keep this recognition-oriented, never shaming: surface contribution and unmet need, not rankings of who is "behind."

**Govern it as a living commons.** Publish the rules — ceilings, decay rate, deficit band, pricing multipliers, weekly caps — as a short, plain charter that members can see and that organizers revise on a fixed schedule using the exchange's own data. Provide a lightweight appeal path for edge cases (a long illness, a member whose only offerable skill is currently oversupplied) so fairness survives contact with real life. Watch for new gaming the moment any rule changes, because members respond to the rule as written, and treat each evasion as a signal to recalibrate rather than to crack down.

**Final operating rule:** keep credits flowing rather than accumulating, let balances swing both ways within fair bounds with an easy path back to good standing, price help by how much it is actually needed rather than how easy it is to give, and show everyone where contribution is wanted — then revise these dials openly whenever the flow stalls or skews.

## Recommendation R3
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 R4
Keep the hour-for-hour promise as the system's heart, but fix the three leaks that are draining it: credits that sit still, balances that drift to the extremes, and easy jobs that pay the same as hard, needed ones.

First, make credits worth holding only while they move. Give every member a comfortable working range for their balance — say, the equivalent of a few exchanges in either direction. Inside that range nothing happens. Above the upper edge, a small monthly "use-it" charge applies to the idle surplus: a few percent of the amount sitting unused, rising the longer and higher it sits. This is not a tax on helping; it is a gentle pull that turns a stockpile back into a reason to spend, which means asking others for help and putting their hours to use. Below the lower edge, do the opposite: members in deficit get a grace period rather than a penalty, plus a visible nudge and a short list of needed jobs they can do to climb back. New members start with a small positive balance so they can receive help before they have given any, which keeps the door open and slows the deficit-drift exits.

Second, break the flat price that lets easy services flood the pool. Keep one hour as the base unit, but let the credits a service earns taper as its supply runs far ahead of demand for it. When a category of help is plentiful and few people want it, each additional hour of it earns progressively less; when a kind of help is scarce and sought-after, the organizers post a temporary bonus so an hour of it earns somewhat more. Crucially, do not ban or cap whole categories — a banned category still has genuine users, and blunt limits punish them. Instead let the reward follow the gap between what is offered and what is actually requested. Recipients confirm the hours they received, and a light, periodic spot-check on the highest-volume providers keeps confirmations honest without turning the exchange into a surveillance operation.

Third, make the state of the commons visible, because most of the bad behavior is individually reasonable only because no one can see the whole. Show each member their balance against the working range, so hoarding and drifting feel like deviations rather than normal. Publish an open "needs board" of requested-but-unmet help, so people can steer toward where their hours count most, and so the scarce-need bonuses are legible rather than arbitrary. Show, in aggregate, which kinds of help are oversupplied, so the tapering reward is understood as fairness, not punishment.

Hold all of this together with legitimacy and adaptation. Publish the reasoning behind the working range, the idle-balance charge, and the bonus list, and let members weigh in on which needs deserve bonuses — rules people helped shape are rules people accept. Provide a simple appeal path for disputed hours or ratings. And review the dial settings every quarter: the width of the working range, the size of the idle charge, the steepness of the supply-and-demand taper, and the current bonus list. Start the idle charge and the taper mild, and tighten them only if balances keep drifting or one kind of help keeps swamping the rest; back off if people start churning small transactions just to dodge the charge.

The single operating rule that ties it together: credits should reward help that someone actually needs and keep moving while they are held — so reward what is scarce and sought, let what is abundant and idle quietly lose its edge, and keep the whole picture visible enough that helping where it counts is always the easiest and most rewarding thing to do.

## Recommendation R5
Treat the exchange itself — its liquidity and the trust that the hour you bank can be redeemed — as the shared asset everyone is quietly draining. Every rule below protects that asset while keeping help flowing.

**Price help by what the community needs, not by how easy it is to supply.** Keep the hour as the base unit, but attach a need-multiplier to each service category. A category that is over-supplied relative to requests earns a little less than an hour per hour; a category people are waiting for earns a little more. Recompute these weights on a slow cadence (quarterly) from the previous period's supply-versus-requests data, so the signal is stable enough to plan around and members can see why it moved. This closes the gap that let a few cheap services flood the system: the moment a category is over-offered, its reward drifts down automatically, and chronically scarce help is worth more to provide.

**Cap how much any one category can be banked per member per week.** A hard ceiling on credits earnable from a single easy-to-offer service stops anyone from manufacturing value out of low-effort volume. The cap protects the rest of the exchange even before the price weights catch up.

**Make idle credit gently melt.** Balances above a comfortable working cushion lose a small percentage each month — enough that stockpiling is pointless but never enough to punish someone saving for a real need. The melt does not vanish: it flows into a community-needs pool. This single rule fixes hoarding (holding is now mildly costly, so credits keep circulating) and funds the next mechanism.

**Run bounties from the needs pool.** When requests pile up in an under-served category, the pool posts bonus credits for anyone who fills them. Decayed hoarder-credit thus returns to the system exactly where help is short — the asset recirculates instead of pooling.

**Hold balances inside soft bands rather than hard limits.** Set a generous positive ceiling and a modest debt floor. As a member approaches the top, prompt them with open requests they could fill and let them spend freely; as they approach the floor, prompt them with easy ways to give before they can keep drawing. Crucially, preserve a lifeline: anyone, regardless of balance, may always request a small amount of genuinely essential help. New members start with a modest credit grant so they can receive before they have given, which prevents the cold-start deficit spiral.

**Show everyone three things, always:** their own balance and where it sits in the bands; the current price weights and which categories are short; and the overall health of the exchange (how fast credits are circulating, how many members gave and received this month). Visibility turns private optimization into shared stewardship and lets members self-correct before rules have to.

**Govern with a light, legitimate loop.** A small elected review group watches a simple dashboard — active give-and-take count, circulation rate, and balance spread. Define a healthy operating range for those numbers. When the system drifts out of range, the group has a fixed set of dials to turn: the melt rate, the price weights, the category caps, and the size of the starter grant and bounties. They adjust gradually and explain each change, and members ratify the weighting scheme periodically by vote. The same group hears appeals on pricing and on poor-quality help. Adjust on the slow cadence so the system corrects drift without thrashing.

**Final operating rule:** a credit is a promise to give, not a trophy to hoard — so keep it always cheaper to hold than to use, always more rewarding to supply what is scarce than what is easy, and let the community itself watch the circulation rate and turn the dials before the spiral starts.

## Recommendation R6
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.
