10. Workshop: Funding Structures - Bogota 2022

thanks everybody happy to be here I'm going to stand this side and uh for the Keen Observer you'll see that I've I've color matched with my slide deck and also like the [Music] broader no okay um so we're going to talk about funding Dows with super packs and um I can believe that some people don't know what super packs are especially if you're not American I will explain it let's jump in I'm I'm and um what do we do we've been looking at D finance and governance we've got few different things in the space I'm not going to spend too much time on that because this is supposed to be a lightning talk so we'll go fairly quickly um so what do we want to do first of all we want to find DS DS basically deliver public goods we going to keep things really simple so I'm going to run through this stuff but the idea here is we want to fund public goods Who currently builds public goods governments if we're going to think about how we fund public goods we really want to know that we we want to make sure that we can avoid any fail failure modes and so the best place to look is looking at governments and nation states and seeing where they failed and if you look at the state of play we can learn a ton from looking at governments and what we you can't see anything there but that's a map of the world um if you look at Nations you can see that many of them fail for like one like overwhelming reason which is that at some point in time one group is able to run the entire show and extract all profits from everyone else in the whole um in the whole nation and that basically means that are able to uh run unchecked and able to basically take everything they want and this has two real downsides or two real impacts number one if you're someone who's not one of the elites every single thing you do any profit you make will be taken from you right so what does that mean you stop innovating you stop pushing yourself and also if you're one of the elites you just stop all kinds of innovation this is why people try to stop the printing press and things like that so Nations fail typically when the elites are able to create extractive political institutions and and then follow them up with extractive Economic Institutions that sucks we don't want that so what do we have in crypto this is compounds governance lead award this is the top six companies it's polychain Bane a16z the usual the usual cast basically so there basically a small group of companies that own most of crypto so if we're thinking about building these like public good infrastructure most of that is already pretty much captured by like just a few number of companies is that good is it bad I don't know we have the same in ethereum is this from glass node shows the um percent of Supply held by just 1% of the addresses first thing you notice is it ticks up over time it stays up it doesn't go down and it just keeps going up and um it's interesting for a couple of reasons number one if we're thinking about ethereum as a dow and Bitcoin as a DA they they have this problem as well right so they're effectively the same about like over 90% of all tokens are held by just 1% of the addresses like we know what this basically is right um but there's something that's slightly different between ethereum and Bitcoin and dows and governance tokens which is that our governance tokens have voting rights and ethereum and BTC do not and it's important this is actually why Nations have this really nice um kind of like they have this really nice property where if you're a citizen your money doesn't give you voting rights not directly arguably um but you're um you actually do just have like one person one vote and that's why most people feel like the solution to plar is actually one person one vote not sure I completely disagree but um what we do want to have is just like separation of like governance rights and um and like economic rights because it's important to be able to Target them better now a lot of governance tokens are like the same thing we saw in ethereum that's Lio so what we can say is most of crypto and most of dows most of web 3s most of the public goods infrastructure is actually a plutocracy and you might say well V we don't care if it's a plutocracy you probably should right think about Pluto open source software open source software is non-excludable nonrivalrous it's a public good right and um think about Google and it's use use of public goods it has used kubernetes an open source containerization program to actually compete with AWS right so you can you can if you're like the elite and you own everything you can say well I'll make this thing nice and open like free over here meanwhile I like destroy your business over here right and we've seen the same thing with actually uh people think that uh Google used Android to compete with iOS they bought Android and deployed it to actually keep Microsoft out of the mobile market so right plutar pretty dangerous um so imagine we could fund ours right we really want to fund these things imagine we could fund them and we could do it like at any scale without increasing the risk of plutocracy so how might we do that now this is is a uh I'm not going to explain this whole thing right it's ridiculous we can we can talk about it in the workshop but this idea is like fairly simple I'm just going to give you an example so um let's say that you want to try not to get like mesmerized by the coins it's pretty cool but um imagine a contract that's like a financing contract and what you do is you say rather than me just like buying tokens I'm going to put my like some tokens into this contract and this contract will then buy tokens from the Dow right so the Dow sells governance tokens to this contract the contract buys the governance tokens from the Dow and what's really nice about that is then you can issue a new token a derivative token to the to the financers of that contract and these are the blue things over there on the left and those represent the economic rights they can't vote with them and all of the government rights stay in the contract so then the owner of the contract effectively gets the governance rights so what's nice about this is that you've effectively isolated both things you've separated voting rights and economic rights so that means you can keep raising you can keep adding liquidity for DS you can get more and more money into Dows and you can do it without in like increasing the risk of uh of plar and what's really nice about this is that like it's super doable today it's like you don't even need new things these contracts already exist so this is like like we've got like one step and and the reason I'm explaining in this way is this is kind of how we ended up here we didn't start trying to design this we kind of ended up here by like discovering things and um and what we we like ran into is like a few challenges like why would someone LP like why would someone put tokens into this like who would that person be um why would they accept things like maybe like why would you want to do I'm not going to get into challenges we can go to that later because I want to keep moving but the last challenge was like maybe we can even improve upon this design we can take it from Just allowing Dows to raise financing or us to fund public goods without increasing the risk of Ploy but maybe we can do it but we can also increase inclusion and pl and sorry not Ploy and plurality so I we can bring more um more constituencies in like people with different types of beliefs into Dows not just like the same old people being having tokens delegated to them and voting and this is where the idea of a super pack came in and for anyone who doesn't know what a Super PAC is really like Americans understand this and everyone else is like what the hell are you talking about um it's a first of all ignore the word super but political action committees are just group groups of people who come together and put money together to then like give money to a political candidate and a normal pack has some limits around what they can do and a super pack is not limited in how much money they can spend because they don't give the money directly to the candidate right so there's some like they can buy ads and I think if you've like ever watched American TV you've seen those weird ads and you're like who the hell paid for that super packs that's what they're doing so I'm going to like run an example because it makes it easy to understand if anybody's been watching like what's been happening with and like Run's end game like what's really interesting there is like there's R and run is like I think he owns like 52.6% of like all maker something crazy like that and um he's got this idea about where maker should go and then hu is really the only person like another um delegate has come in to kind of counter that and he's bring bringing a whole new set of ideas and so imagine like hu wasn't able to actually acquire he didn't have the wealth to acquire tokens himself he just had really good ideas but he has no voting power imagine like again we really want to have this like check on the power of the whales imagine Hass you could come in and say well how about I just tell you my ideas and then you fund me and then I use the tokens to go buy governance rights right so I buy maker those sit in the contract I can now vote with them and you guys still have exposure to makeer you still have your like your economic rights you can still go out and sell those tokens and make loads of money but now you have this like I call it they're like pre- delegated tokens effectively like I now have them as hassu I can go vote and what's really interesting is you don't need one hassu you can get like multiple hus you can have people competing for funding and pulling together these ideas about how D should vote you can actually get collectivization around completely new ideas I keep thinking about like radical exchange for instance is like trying to like really push into DS and provide their expertise around like tokens and new ideas of like New Economic models and I think this could be like a really interesting pattern for like bringing new ideas and new thoughts and new groups of peoples new constituencies into Dows and the outcome would look something like this you start with like Wales dominating all votes like I don't know if um anybody watched the recent Sushi head chef vote um but uh that was swung by two voters like just two votes two individual votes but there was like 300 individual voters two votes decided that and this is what I mean Wells even though they kind of exercise discretion they pretty much run the Dows right they decide so here you'd have like kind of these groups that had banded together with slightly different preferences who'd come forward and they were funded they've acquired voting rights and most importantly they sit outside the Dow they started from outside the Dow not within the Dow so it means you're able to bring like plurality like loads of different ideas loads of different voting preferences and what's really exciting about this is today if you're a delegate you typically go into the Dow and you get voting um rights delegated to you by people within the Dow with this model you start from outside the Dow and you acquire like like from people from a completely different like point of view completely different ideologies they come to you they give you this voting power and then you have repres resentation in the Dow and you think about this like the market is then creating better delegates who maybe don't have power and bringing constituencies together who don't have representation in the Dow so it's a really nice idea because number one we're funding public goods we're doing it without increasing plutocracy and we're doing it while also actually increasing plurality better ideas better public goods I'm going to keep ranting I sound like a candidate now um but um but there's still a bunch of challenges right like like why would people do this who would be those people like is there arbitration risk when people just like would whales just kind of dump their money into these things um but we think it's a really interesting space and we're like looking at these things in more detail so um that's the conclusion I'm not going to ask you to read it but like super packs offer something really interesting in Dows and um we think they could be a great way of keeping existing governance powers in check so um yeah first of all go read about super packs that's super weird um and then if you're interested in like talking more about it then we'll be on one of those tables I think over there um thanks a lot [Applause]