Task Assignment Governance and Platform Participation: Evidence an Ethereum Natural Experiment

This study examines the influences of task assignment mechanisms on workers’ participation in blockchain organizations. In developing the theory, I highlight the nature of blockchain-based organizations as multisided gig economy platforms, which differ from traditional hierarchical organizations regarding how tasks are assigned among workers. I specifically distinguish two types of task assignment mechanisms in blockchain-based platforms, namely assignments based on workers’ commitment to specific tasks (commitment to tasks), and those based on workers’ pre-existing contribution to the platform (commitment to system). My empirical analysis leverages a natural experiment of the Merge on Ethereum – the change of consensus protocols from Proof-of-Work (PoW) to Proof-of-Stake (PoS), which caused an exogenous shock that switched the assignment mechanism of transaction validation tasks on Ethereum from commitment to tasks to commitment to system. The results based on a difference-in-difference analysis show that, compared with task assignment mechanism of commitment to tasks under PoW, used by the control group of Bitcoin blockchain, commitment to system under PoS incentivizes more active worker participation in transaction validation tasks, thereby increasing the decentralization of tasks among workers on Ethereum. In the discussion section, I elaborate on the implications of the results for blockchain-based organizations and gig economy platforms.