March 1, 2025 • 64 mins
In the digital networked age, people’s attention often overlooks local problems in favour of global ones, which don’t necessarily impact them in their daily lives, or over which they don’t have a say due to the skewed Pareto distribution of power in modern day societies. Puja Ohlhaver, in her recent research paper ‘Community currencies’, proposes a dual-currency model that prices attention and influence in each community, with the ultimate goal of creating a Gaussian distribution of power, either locally, or globally through the dynamic interaction of multiple local communities. This model allows community members to stake their currency to earn non-transferable governance rights, creating a substrate for decentralised societal coordination that favours social innovation.
Topics covered in this episode:
- Puja’s background
- Web3 research
- ‘Community currencies’
- Pareto vs. Gaussian distributions
- Global vs. local power distributions
- The community currencies model
- Meritocracy vs. influence
- Quadratic funding
- Governance, bribery and the crisis of legitimacy
- Experimenting with community currencies
Episode links:
Sponsors:
- Gnosis: Gnosis builds decentralized infrastructure for the Ethereum ecosystem, since 2015. This year marks the launch of Gnosis Pay— the world's first Decentralized Payment Network. Get started today at - gnosis.io
- Chorus One: one of the largest node operators worldwide, trusted by 175,000+ accounts across more than 60 networks, Chorus One combines institutional-grade security with the highest yields at - chorus.one
This episode is hosted by Friederike Ernst.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Proof of stake protocols tends to end in like a Pareto
distribution and oligopoly. Proof of personhood protocols,
like my paper on Idina compressed to 0 showed also ends
in an oligopoly and proof of stake you're, you know, it's an
oligopoly in terms of stake and in proof of personhood ends up
being who can control as many accounts as possible.
(00:20):
And so the real challenge is howdo we actually move out of this
like 1, you know, Pareto distribution to something that's
more like a Gaussian distribution of power.
And in in order to do that, you know, my fundamental contention
is that we need to move away from global protocols.
So what we actually need to do is recontextualize human humans
into the different communities and affiliations that
(00:43):
differentiate us. Even if each one of those
communities succumbs to kind of a Pareto distribution, the
interaction between all of them and how they recombine through
diversification and plurality will end up hopefully bring us
to something more like a normal or Gaussian distribution of
power, which is, I think, the best that we can do in terms of
decentralization. Welcome to Epicenter, the show,
(01:05):
which talks about the technologies, projects, and
people driving decentralization and the blockchain revolution.
I'm Federica Ants, and today I'mspeaking with Pooja Olhaber, who
is a researcher and lawyer and innovator.
So very interdisciplinary for sure, and things about using
blockchains and IAI to empower communities and advance
(01:27):
decentralized cooperation. Before I talk with Pooja, let me
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(02:12):
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(02:59):
Gnosis Chain or secure the network with just one GNO and
affordable hardware. Start your decentralization
journey today at gnosis dot IO. Hey Puja, thank you so much for
coming on. Thank you for having me.
It's this podcast has been a long time coming.
(03:19):
We've been trying to schedule this for at least two years.
And kind of like the, the, the subject matter has has changed
multiple times because kind of you keep publishing new things.
So before we dive into the paperthat you put out a few weeks
ago, tell us about kind of yourself and how you came to
(03:43):
find yourself in this kind of like decentralized governance,
you know, space, kind of, you know, among us crypto people.
Sure. Well, I, I consider myself
amongst the crypto people too, but my history, I, I look a lot
younger than I actually am. So I have a quite a long
(04:06):
professional history, starting in public policy and out of
college. I was thinking about questions
of economics and politics, and Itended towards more the
libertarian side of things. And then I went to law school
and at that time we had the financial crisis.
(04:27):
And then I started digging more into how financial systems work,
how monetary policy works. And then after that, I worked in
corporate law and corporate governance in Wall Street, got
bored, started a medical device company, and then was hit with
the pandemic and got pulled backinto public policy and questions
(04:50):
around, you know, managing the pandemic.
And I was, that was my first interaction with Daniel Allen's
group, who I'm now part of. And at the time, she was at the
Harvard S for Center for Ethics.And so I sort of put my public
policy hat back on. And then when the pandemic was
over, I shifted gears to thinking about consensus
(05:14):
protocols and in particular thisproblem with about MEV.
And as I was thinking about that, you know, it kind of I, I
have sort of this intersectionalbackground across law, politics
and economics already. And so it, it, it, it, it
started this now several year investigation into how do we
(05:37):
represent identity in order to actually have functional
governance in these distributed protocols in Daos.
And that is now been, you know, a two year, I think
investigation and several paperswhich we've tried to talk about
a few times. And yeah, that's where we are.
(05:57):
You, you said that can like whenyou first came into this space,
it was kind of in the context ofMEV, how, how did that happen?
Because it's quite a leap from what you did previously, right?
Because MEV, in a way, it's very, it's very technical,
somewhat esoteric thing, especially kind of coming from a
public policy background. Well, so I was watching crypto
(06:24):
for a very long time. So before Ethereum launched, I
was in Palo Alto as an entrepreneur building my company
and my recreational hobby was going to Hacker Dojo and
listening to different protocolstalk.
And that's actually when I met Vitalik Buterin for the first
time before Ethereum even launched.
And my take on block chains thenwas like, this is a really
(06:48):
interesting technology and there's a lot of applications
for actually, you know, coordination around shared goods
and public goods. I saw the applications to
finance as well, but I was less interested in that.
And then I, and then I, but I followed, you know, pretty
closely what was happening over the years.
(07:10):
I mean, in the ICO boom in 2017 and then when the Med crisis
happened, I was following that very carefully too.
And so I just sort of was in small groups talking about it
and I had my own take. And because I've been, you know,
worked on Wall Street and had a securities background, corporate
governance background, I had some thoughts about order flow.
(07:33):
And so that just, I think made me unique.
And, you know, and the ability to kind of frame these problems
or at least conceptualize them, I didn't claim to, I don't claim
to have the answers to these problems, but at least in terms
of appreciating what the challenge was, yeah, I, I had
enough of a background to, to, to engage that conversation.
(07:54):
Cool. Maybe that's kind of gloss over
kind of the papers that you've put out recently kind of in this
space. So kind of, I mean, we'll, we'll
dive into the last one kind of more deeply, but can you take us
through the work you've done? Sure.
So the first paper was a decentralized society paper
(08:16):
finding web three soul and that was written with Glenn Weil and
Vitalik Buterin. And that was just a very
primitive and initial step towards introducing non
transferable primitives and particularly memberships to
social groups which could be possibly revocable.
And they're, you know, thinking about identity.
(08:39):
This seemed like a very basic primitive to have and everything
in crypto is transferable. It's like, OK, what happens when
you introduce something that's non transferable and, and, and
what can you do there? But that that was just sort of a
first step of let's let's see what happens if if we assume
that there are these things, youknow, called memberships to
(08:59):
groups, which we can represent. But that had its limitations.
You know, in particular, your membership to a group is not
binary, right? There are degrees of membership.
It's not either in or out usually.
And then, of course, there's this other problem around
standardization. Identity is not just about your
membership to social groups. It's also about, you know, where
(09:21):
you have economic stakes and economic interests.
And when you try to separate these two things, right, money
and voting, for example, the systems can conflict and it
leads to all kinds of problems like capturing overreach, which
which my current paper talks about.
After the decentralized society paper, I decided to take a look
(09:43):
at a proof of personhood protocol in depth.
And the reason why is we, we hadmade a critique in D sock around
proof of personhood that nobody really took seriously.
And, and I kind of anticipated with the rise of AI that a lot
of AI companies would be relyinglike in particular, open AI
(10:07):
would be relying on protocols like Worldcoin to establish, you
know, rails for democratic governance.
And, and I didn't think this wasgoing to work.
I thought this was going to end in just oligopolistic control
and competition. So I was very fortunate to meet
Misha, the founder of Idina Protocol, and he was willing to
(10:29):
open the hood on his protocol and, you know, analyze it and
see what actually happened and basically validate some of the
critiques that we had made in D Sock while also expanding it as
well. So in that paper, you know, the
the big insight was that when you try to separate humans from
(10:52):
bots with, you know, a global authentication mechanism, even
if you succeed at doing that, which is what Idina did, it
invites this secondary problem, which I call de facto civil
resistance, where you have account consolidation or set of
participants who have a large incentive to informationally
(11:12):
control other accounts and extract rewards from them ending
in ending in oligopoly. So that brings us to the
community currency paper, which which I just released.
And you know, there there's actually a missing paper in
between about sublinear identitystaking, which was like a second
(11:34):
phase in the IDNA protocol. And as I was writing that, the
community currency idea came to me and I thought it was just
more, much more important to getthat out.
And I put that the sublinear identity experiment on the back
burner and that that takes us towhere we are now.
Cool. So the, the, the community
(11:56):
currency paper that you put out has two subtitles.
They are the price of attention and cost of influence in a
networked age or the price of entry and cost of exit in a
networked age. That's quite a mouthful.
Maybe before we dive into kind of like what, what kind of the,
(12:18):
the, the larger problem is and kind of like how, how you think
we can address it, what's the TLDR of the paper?
So a lot of people in crypto particular are interested in
decentralization as a goal. And what are we decentralizing?
We're decentralizing power. And so how do you think about
(12:41):
power? I think about power on 2
dimensions, which are actually literally and figuratively two
different sides of the same coin.
I think about power in terms of information and control.
And this is like kind of a cybernetic view of things.
It's also a view that's kind of encapsulated and like securities
laws as well. And so when you think about
(13:05):
decentralizing power, you have to think about decentralizing
information and control. And you know, what is
information? It's the stuff that we started
taking in process and what we focus our attention on, right?
And what is control? It's the stuff that we're trying
to influence, right? So that is the sort of TLDR high
(13:28):
level view I'm trying to come upwith a framework for
decentralizing not just information control, but by
extension our very scarce human resource of attention, right?
And and influence. OK.
And that kind of leads you to kind of posit this concept of
community currencies to kind of combat this, this balance that
(13:53):
is to be attained, right? Yeah.
So one way to think about it is,you know, proof of stake
protocols, since this is a crypto audience, it tends to end
in like a Pareto distribution, right?
And oligopoly. And you know, proof of
personhood protocols, like my paper on Idina compressed A0
(14:13):
show it also ends in an oligopoly and proof of stake.
You're, you know, it's an oligopoly in terms of stake and
in proof of personhood ends up being who can control as many
accounts as possible, right? And by extension, the stake
which that those accounts hold. And so the real challenge is how
do we actually move out of this like 1, you know, predo
(14:34):
distribution to something that'smore like a Gaussian
distribution of power. And in order to do that, you
know, my fundamental contention is that we need to move away
from global protocols. If everybody is completing on a
global stage, only a handful of actors will will, and they'll
build coalitions, win and build coalitions around that.
(14:54):
And So what we actually need to do is recontextualize human
humans into the different communities and affiliations
that differentiate us and the conversations, right, and
communication that differentiateus and, and represent those as
groups. So like even if each one of
those communities succumbs to kind of a Pareto distribution,
(15:15):
right, the the interaction between all of them and how they
recombine through diversification and plurality
will end up hopefully bring us to something more like a normal
or Gaussian distribution of power, which is I think the best
that we can do in terms of decentralization.
Can you define what a Pareto distribution is and what why you
(15:35):
think it's less less desirable than a Gaussian distribution?
Another way to think about it islike oligopolistic competition.
So we're just where a handful ofactors end up having power,
right? And so it's like a skewed
distribution, right? And whereas a normal
(15:56):
distribution is where, you know,just statistically, you have the
nice natural bell curve, right? And you have some, you know,
tail ends, but it's not, it's not just all right in an
oligopoly with a handful of actors that control it, right?
And, and that's kind of like, ifyou look at like Ethereum, for
(16:17):
example, or Bitcoin, like we have these staking pools that
are gigantic or, or mining pools.
And right, that's not, and there's sort of the struggle to
like, how do we encourage local,local mining or like local
staking and home staking? And there's this, like,
perennial tension about, OK, howdo we actually get more actors
(16:37):
in the system rather than these,you know, gigantic, you know,
oligopolistic coalitions. OK, I, I, I, I see what you're
getting at. If you kind of look at a
collection of kind of net networks of networks, so kind of
like almost kind of like, you know, federation of networks or
(17:01):
something where kind of like there is a Power Distribution in
each network and they're kind oflike coupled much more strongly
within the network than kind of to the other networks.
That's kind of the distribution kind of that that I think you're
you're pushing for. Does that also come with
downsides? Because kind of if, if you kind
(17:22):
of have one big globalised network, isn't it possible that
you can do much more advanced and ambitious projects then kind
of you can undertake if you have1000 smaller networks?
Well, I, I'm actually imagining both.
(17:43):
I'm just trying to actually imagine like I, you do need
global scaled network cooperation, right?
We do need to solve global problems.
We just want to avoid a situation where in solving the
global problems, we empower a set of actors that start, you
know, influencing and controlling the resolution of
(18:03):
local problems, which they have very little information over,
right. And and that that can snowball
into surveillance. So the challenge is to actually
have both local coordination andglobal coordination, but in a
way where, you know, global coordination doesn't just
swallow up, you know, local communities that actually have a
greater stake in the resolution of the problem.
(18:24):
And so a lot of, you know, in the paper, I talk about two key
principles. Plurality is one, but
subsidiarity is the other. And without subsidiarity, we,
we, we end up in, in, in a sort of power competition at a global
scale. And, you know, I think that's
bad for risk management, that's bad for information integration
(18:48):
and, and, and also bad for humanagency.
OK. Can you give us an example of
where you think kind of like this global Power Distribution
has kind of eked out the the, the, the local optimum kind of
that that the stakeholders wouldkind of the local stakeholders
(19:10):
would have achieved but couldn'tbecause there was kind of like
this overlaying global layer? I mean, I think we're seeing
that in real time, right today in politics, right?
So attention is we, we, we all are participants in social
(19:33):
media. And, and my, in the conclusion
of my paper, I talk about how this is actually a tacit global
attention auction. And it's also kind of merging
with financial auctions, right? And that's a kind of the
proliferation of meme coins and so on.
And that's leading to outcomes that are not not just sort of
(19:56):
disconnected from local circumstances, but but
polarized. In a way that is just
disconnected across the issues. So, for example, in democracy,
I'm an American, you know, the, the, the design of American
democracy was there was this presumption that, you know,
representatives could come to Congress and reconcile their
(20:22):
differences and that they would be representing a population
that had distinct interests thatwere localized to their
geography. And what's sort of our
participation in global social media and global attention
channels has done is actually divorced us from our local
circumstances and our local geography and polarized,
(20:42):
polarized us on issues that are really kind of disconnected from
what we care about in our daily lives, right.
And people are just sort of outraged about things that are
really far away from them. And so we're seeing already kind
of the breakdown of, you know, democratic governance and, and,
and places like my country in the United States, because
(21:03):
people are polarized, not, not even on, you know, the basis of
things that matter to them locally, but sort of what
they've been, what, what they'reseeing on social media and what
sort of outrageous them and whatwhat gets the most engagement
right in attention hacking. So that's like a very clear way
(21:26):
in which we have, you know, we're, we're failing to
provision, you know, shared goods and public goods.
You know, the other way, which is the, the, what the paper
talks about is in corporate governance and failures in
corporate governance and corporate capture and corporate
overreach. Our participation in like non,
(21:50):
you know, decontextualized communication and and social
media there is also having an effect on our ability to, you
know, steward corporations and like shareholder governance.
So that's this guy Ezra Klein. And kind of like his he he makes
(22:10):
the point that kind of this polarisation that we're seeing
kind of comes through the decline of local news outlets
and newspapers. And the fact that kind of you
have kind of like if you have one kind of global attention
(22:32):
auction, kind of the things thatthat are most salient end up
being things that are kind of like most reported and kind of
like the local nuance. And they're kind of like, in a
way unpartisan or bipartisan nature that kind of like
newspapers used to have when we were kids that this is kind of
(22:55):
this goes out of the window because kind of it it's just in
a way more fun for people to kind of read outrageous news
rather than kind of like balanced and well reported and
kind of like not all that fun things to to read kind of like
about local politics and so on. Do you think kind of like this
is a symptom that that kind of you guys are describing symptoms
(23:22):
of the same situation in in someway?
Yeah, yeah, I mean, absolutely. I think we're, we, we are all
seeing the same problems and we're trying to come up with
different solutions. My solution in the paper is to
introduce community currencies that actually reflect the groups
(23:45):
and memberships in which you participate to.
And one of the things that I allude to is that we can, this
can unlock things like quadraticfunding for news or plural
funding, which is even richer for news and enable the
provisioning of information and news at many social levels
rather than just sort of at thisexclusively global level, which
(24:09):
ends up becoming, you know, power contest and even like mean
contests, right? Yeah.
I I mean, then maybe let's dive right into the model, right?
Kind of like because you are putting forward a very tangible
way to kind of address this. And it's kind of it's, it's got
this kind of, it's got basicallyit's a dual token system and
(24:32):
kind of there are tokens that are transferable and they are
token that are tokens that are not non transferable.
And kind of like you try to achieve this balance by kind of
having them into play. Why don't you walk us through
kind of like how the model works?
Sure. So any community has a set of
members, right? And each member at their
(24:55):
discretion can irrevocably lock some amount as non transferable
community stake. And the square root of that
determines your voting power andthat can be further attenuated
and the remaining portion remains transferable.
And that's a kind of currency that you have that you can use
to buy attention or enter into other communication channels.
(25:18):
And so whereas today we kind of have a very simple one token,
one vote system where money justbuys both, you know, influence
and attention or, you know, you know, voting power, right?
And your ability to communicate this actually just forces a
trade off between the two where you have to decide, you know, at
(25:40):
every inflation interval or, youknow, community based income
that you receive, whether you'regoing to stake more for greater
influence in that community or whether you're going to keep
more transferable tokens for yourself as a medium of exchange
and use that to communicate withother communities and gain gain
information. So it introduces actually a
trade off space between information control, which is,
(26:02):
as I was saying at the start of this podcast, are like the two
sides of power, right? And basically if if you kind of
sum up both of these parts for every person, are they consent?
Does every person kind of get the same amount of income to
(26:23):
kind of distribute across these two verticals?
Well, each community will be different, right?
And so each community will decide how much inflation it
has. You know, a community is formed
around a shared set of commitments.
There's all kinds of communities, right?
There's churches, there's civil society, there's research
(26:46):
groups, there's artist collectives, right?
And and they're going to have their spectrum of sort of like
non financialized to financialized ways to distribute
tokens even. And so each community will be
different in its policies, but it will at least be transparent,
right? So you can at least see, for
(27:08):
example, if I'm a member of a church and it's kind of a scammy
financialized church, that'll bea little bit more obvious to me
than it say a church that is less financialized and then I
can make a a decision there. So, you know, the model
accommodates like a spectrum. And I think the nice thing about
it is it's like the decision of community members themselves and
(27:34):
how they, you know, whether theydecide to stake or whether they
try to have currency to communicate with other groups
that like that. It enables an expression of like
degrees of membership within thegroup.
And it also enables like, you know, rapid recombination and
evolution of a community with new members along, you know,
partial differentials. So it's not the sort of like in
(27:55):
or out thing. OK, so I I take it I can be a
member of arbitrarily many groups?
Yeah, if you're accepted, right.I mean, again, each community
has like their own sort of criteria.
Some some may be completely open, right?
And some might say, well, you'resort of socially farther from us
(28:20):
and so we're and, and there and we, you have less overlapping
affiliation. So maybe we tax you or maybe we
decide to put a, you know, enforce a bond so we can sort of
protect ourselves. Like every community has a
different level of risk tolerance.
OK. And basically this, this
community currency that I get from that that community, I can
(28:40):
use both kind of like forsaking in the community kind of to to
grow my influence within the thecommunity.
But I can also use it to kind ofkind of you said buy information
in in kind of in the larger society.
How do I picture this kind of like buy information or or
influence that kind of you you talked about?
(29:03):
So when I say you're buying information, I'm saying you're
not your, your transferable set of tokens you use to gain access
to other channels. So other communities will have,
every community has a communication channel, right?
And that's even being in person is a communication channel or
being in a Telegram group is a communication channel, right?
(29:24):
And so when you want to enter that community and join that
conversation, right on a public square like X or blue sky, you
just, anybody can join, right? It's a free for all.
There's no boundaries around communication.
And so these transferable tokensenable you to, you know, buy
(29:47):
access to, you know, that Channel.
And you can even think about it in terms of like, say there's
like a community resource, a pond.
You want to use that pond, but you're not part of the
community, but you just want to access it.
That's like a good analogy. You would have to pay to go use
and like swim in the pond, right?
And the community will like collect that, you know, your
(30:09):
tokens and that goes into like their treasury.
And if you wanted to like, say, influence the pond and how it's
governed, then you would have to, apart from just going in,
you'd have to then pay more or stake irrevocably, right, and
lose those tokens. But then you participate in the
stewardship of that community and then you receive, as you
(30:31):
know, community based income, you know, ACBI as a member and
how they how communities decidedproportion that is another
question. One thing that I suggest is
making it proportional to the square root of your stake.
But communities again will differ on this depending on how
financialized or non financialized they are.
(30:53):
And how's the pricing done? So kind of like, for instance,
say I want to participate in Twitter, kind of like who
decides on kind of like what theentrance fee is?
And can, can it be paid in any community token?
Kind of. I assume every community has
their own token. It's not.
They're not fungible, right? Yeah, so every community has
(31:17):
their own currency. Yeah.
And, and they will trade those currencies, you know, part
members of the community will trade their currency for access
to other right communities and, and their channels and their
resources and the laws of sort of supply and demand work here.
(31:38):
So I'm not setting interest rates.
I'm not saying, specifying even how communities will again, even
apportionate their, their CBI. How they do that depends on
their internal governance. And the model that I propose is
basically square root voting where you're, you know,
influence the in the community is proportional to the square
root of your irrevocable stake or your community stake.
(32:03):
And you know, there's mechanismsthat can come on top of that,
like delegation, right? People can vote proportional to
the square root of their stake to hire a delegate or an agent,
right, to help manage their resources.
But I, I think the key point here is that, you know, your
(32:24):
influence in the community governance is a function of your
irrevocable stake. And you should, you know, I, I,
I strongly encourage a square root on that.
And then even even going furtherwith like bridging bonuses and
correlation discounts, It's a that's a little bit more
complex, but you know that that's that's the fundamental
(32:45):
model. OK, maybe let's make this more
concrete, right? So kind of like let's say kind
of this, this models kind of setup somewhere and I join the
community in you. How do I gain community currency
to stake or spend? I mean, provided the community
will have me, right? So kind of like say I go to my
(33:08):
local Tennis Club and say I would love to be a part of this
community. How?
How? What happens then?
You're kind of alluding to like this cold start problem, like
how do we get this thing off of the ground, right?
So, you know, I think actually areally good place to think about
this is like music, because music is a shared good.
(33:30):
And, and by the way, another point of this paper was to
acknowledge that most goods are not private or public, but in
between and shared amongst groups, right, where people have
different degrees of benefit. And like music is kind of a
classic example of that where it's, it's not just say an
artist that's coming up the music, but it's also the artist
(33:50):
interaction with their, say, their followers and their
audience. And you know, an artist could
say, OK, everybody who comes to the show is going to have this
community currency, these tokens, I'm issuing it.
Everyone can decide. Everyone can stake or not stake,
(34:12):
and other sets of artists can dothe same thing, right?
And then form a kind of alternative economy in music.
And if you stake for influence, for example, with an artist,
that might influence the artists, like where they tour
next or, you know, how they distribute their music or, or
something. And it becomes a sort of shared
asset that everybody has participation in.
(34:34):
You know, an artist collective could do the same thing.
A research group trying to form shared intellectual property can
say, OK, we're a set of people. We all have, you know, research
interests. And as this research community,
everybody is going to get some set number of tokens or they
could even differentiate amongstthemselves somehow and then just
(34:56):
allow for a staking for influence or using it as like a
communication currency to engageother research groups.
But of course, it requires otherresearch groups in place that
are willing to like accept that right as a as a token and see
that as something of value. So, yeah, I mean, I didn't
really go into the paper about the cold start, you know,
(35:17):
chicken egg problem. But I think there are enough
sort of verticals where this could take off where people just
see both Fiat currencies and both say, you know, digital
currencies like Bitcoin and Ethereum, not really, you know,
expressing being a socially expressive or expressing their
(35:39):
value or being extracted for that matter.
How does this kind of tie in with meritocracy?
Because currently kind of like Iunderstand that there's often
kind of oligopolistic kind of power structures at play, but
people who weird disproportionate influence often
(36:01):
also wielded because they're just very put put together and
kind of they have good ideas andthey they make valuable
contributions. So is that somehow reflected in
in this community currency proposal?
Kind of like as someone who's kind of a thought leader in my
(36:25):
community, will I, will I have more influence?
At at one point in the paper, I make this suggestion of
community currencies also serving as prediction
currencies, right? And so say as somebody who in in
(36:45):
the classic cases like say a politician, right?
And you kind of want to be able to let a politician also share
in your upside and downside as acommunity and even like stake
and make a bet, right? And prove that they're actually
better at predicting outcomes, right?
And that's like, that's a meritocratic mechanism, right?
(37:10):
The problem is in, for example, specifically in the case of
prediction, which is where a lotof people who are focused on
meritocracy, you know, that's where they tend to to emphasize
the problem is depending on yourposition in a social network,
right? If you have a lot of money, a
lot of status, a lot of followers, you can actually
influence the outcomes you're predicting.
(37:31):
And so you're not so much predicting something in a
meritocratic clean way, you're actually influencing the
outcomes. And so a lot of social contagion
phenomena are exactly this, right?
When, when shortages or like bank runs that can be started
just by people who have a lot ofinfluence say over the deposits
(37:53):
in a bank and they send an e-mail out to those people.
I mean, we saw us in the SiliconValley Bank run, right?
Any, any bank can go under if, if everybody runs for their
deposits at the same time and especially if AVC sends you an
e-mail and says, hey, you know, this bank is going to go under
that suddenly every goes, runs that it goes under, right.
(38:15):
And so was that was that prediction or was that
influence? And so part of the goal of
community currencies is to enable us to, you know, separate
prediction and end meritocratic contributions from just massive
amounts of influence someone hasaccumulated because they have a
(38:37):
lot of, you know, followers on Xor, you know, a lot of a lot of
money. Does that answer your question?
Yes and no. So to me, it sounds a bit like
you're throwing out the baby with the bathwater, right.
So kind of like you, you're, you're saying, OK, if you kind
of have a very steep kind of distribution of power in a
(39:01):
society, you automatically kind of get worse outcomes than if it
is more equitable. So where I think kind of like it
it, it's possible that this thishappens.
But I think kind of if you look at kind of the amount of power
that kind of like some people have today, it also enables us
(39:23):
to do really cool things, right?Kind of it, it enables us to
kind of do things like travel into space or kind of do things
that kind of like any local community has no chance of kind
of achieving. And in some way kind of you, you
need to, you can't make everyone's crazy ideas come
(39:44):
true, right? Kind of like there needs to be
some sort of mechanism to kind of select.
So, you know, I, I actually think so, I, I think a lot about
innovation because I was an inventor, an entrepreneur too.
And the problem with it, it's not that I'm trying to, my goal
(40:05):
is not egalitarianism or equality, right?
That's, that's one person, one vote.
And that has its own set of problems, which the Idina paper
went into. But in order to, if you, you
think about where innovation comes from, right, it comes
usually at the intersection. Across unique information
streams, it doesn't come. It doesn't arise within the
(40:29):
center of a field, and it doesn't arise within homogeneous
populations. The problem is if you embrace
this sort of, you know, oligopolistic, by the way,
there's 2 problems with the oligopolistic competition. 1 is
that it actually stays oligopolistic and it doesn't
turn into winner take all, right?
The risks of becoming winner take all and monopoly are just
really severe. And I think that's understated.
(40:51):
But even if you assume you have just oligopolistic competition
like you don't, you know, the, the structure of communication
underneath, you know, each of those oligopolies might, you
know, might actually stunt innovation and and stunt
creativity because, you know, there's lots of pressure to to
(41:13):
conform. And you know, this in the paper,
I talk a lot about surveillance and how that, you know, when you
introduce a kind of third party that has a lot of power, people
start paying attention more to that third party with a lot of
power rather than paying attention to their environments.
(41:34):
Or not just local environments, but medium level environments
and even hires, you know, other other higher level environments.
And that's bad for innovation because we sort of all become
informationally the same as we adapt to this thing that has a
lot more power than we do. And us, you know, becoming
informationally the same is, youknow, it's, it's more trending
(41:57):
towards, you know, humans actinglike bots and humans acting like
agents and, you know, agency and, and being informationally
unique, I think is a is a key ingredient to innovation.
So it's seductive to think, OK, well, let's let's just sort of
centralized power and information and some something
(42:18):
that has that's taking us to themoon.
And we haven't been able to, youknow, get to the moon in a long
time. But you know, there's there's
also a third way, which harnesses the collective
intelligence of people that can get us farther than to the moon,
(42:39):
that can get us to Mars, right? Like I also like space
exploration, right? I want to explore the solar
system. I just don't want to get stuck
at Mars, and I think there's a real risk of that happening when
you don't have enough participation and enough, you
know, information differentiation amongst the set
of participants. So I'll stop there and let you
(43:03):
let you challenge me more. Yeah.
So I'm, I'm 100% for participation.
I'm just kind of against giving everyone kind of the same vote
in kind of kind of in these societal endeavours, regardless
(43:23):
of kind of what their actual contributions and skill sets
are. But there's not the same vote.
That's not the model, right? OK, then maybe maybe I haven't
understood it properly. So tell me how kind of the
influence kind of varies from person to person and how kind of
I as a participant would kind ofchoose between kind of staking
(43:48):
my currency and kind of investing it or spending it
elsewhere? So I have a bunch of groups that
I can choose to participate in, right?
And me kind of, and this is kindof where the voice and exit part
comes in, right? Me, you know, just losing
interest in a community and moving to another one.
It doesn't separate me from thatold community.
(44:10):
I still receive CBI just sort ofdeclines over time with
inflation. But I joined a community where
I'm like, OK, this is adding more value to my life.
This is generating goods that I care about more shared goods,
whether it be, you know, nicer rose gardens or whether it be
like moon missions, whatever, right?
And, and people will like self sort into those communities that
(44:30):
are delivering relevance to them.
But this happens also at many scales, right?
You know, I'm there's local communities, there's umbrellas,
there's coalitions, there's NATO, right?
Then there's like planet Earth, right?
And so in, in all of these communities, it really depends
(44:51):
on how much you've staked, right?
And everyone is going to state differently and your stake gets
step one square rooted, but alsoattenuated based off of how
informationally similar you are to everybody else.
And this is where the bridging bonus and correlation discounts
come in, right? So if you know, I have say 16
(45:14):
tokens state my with a square root that's like 4, that's
quadratic staking. I get, you know, four votes.
But if I'm in this community andsurrounded with other people
that are very similar to me informationally, as, you know,
measured by their stakes and they share the same set of
biases, then my influence actually becomes, you know,
(45:36):
declines. It gets a discount because I'm
not actually contributing any new or novel information to the
group. And those people that are, you
know, more novel information, unique, they get a little bit
more influence. And that's how we spur, you
know, information exchange of useful and non obvious
information. So it's it's actually what it's
(45:58):
what it's doing is treating, elevating people who are very
informationally unique in the system and have.
And then when you combine that with, you know, prediction
currencies also with an ability to like predict outcomes.
So it's actually, it's actually like hyper meritocratic.
And the reason why I start the paper about corporate governance
(46:22):
and democratic governance is precisely this point, which is
that they both of these systems,which are the two competing
systems and narratives we have today, right?
The the sort of Mars mission people are like, well, let's
let's turn the world into corporate governance.
Well, no, corporate governance has these major shortcomings,
right, in terms of capture and overreach.
And the same thing is true with democratic governance.
(46:42):
So like can we actually capture the strengths of either of these
systems and compensate for theirweaknesses with with something
that is much richer and and muchmore, you know, like less
chlorotic because both of those systems can become very
sclerotic, right? I can see how both of those
systems kind of, you know, can fail and do fail.
(47:05):
Let's kind of move it back to the Eli 5 level that kind of
clearly I'm on here. So let's say kind of let's come
back to kind of like EUR garden example, right?
So kind of like, say we are bothkind of members of the Rose
Garden Society and you are, you are, you're you're a
horticultural culturalist and kind of like you, you, you are a
(47:28):
world renowned rose expert. And I'm kind of the oh, pretty
flower kind of person. OK.
And and then you go, oh, but that's not actually rose, that's
a pea in you. And I go, yeah, what's that
pretty? So, so kind of clearly in my
view, kind of if the goal of thesociety is kind of two further
(47:50):
kind of, you know, Rose Garden culture in some way, shouldn't
you get more say than me? Yeah, So I, but I, but I can,
right. So I can So if a, a communities
that reward expertise, right anddeliver more roses, if everybody
wants roses, well, well become like large, like have more
(48:15):
participants, they'll have right, They're achieving their
objective. So if, if the if the objective
of the community, it depends with the objective of the
community. So the objective of the
community is we want more rose gardens.
And somebody comes in and they're completely confused
about what's a rose and a Peony,right?
They're probably not going to win, say, quadratic funding to
(48:37):
maximize the set of roses for that community.
And I think a, a key part here maybe that's that's missing is
how do communities fund their their goods?
Yes. I think that's that's kind of
that's exactly what we're missing here, yeah.
Right. And so the, the idea is, is
through quadratic funding, right?
So a community and, and this is actually one of the, there's a
(49:02):
lot of open questions about how this works, but you know, either
through inflation or through thecommunities of applicable stake.
Those can serve as like actual matching fun pools where as you
know, participants in community when they're deciding, well,
what do we want to do next? Right?
And they, everyone put, you know, there's some sort of set
of proposals and community members each put, you know, you
(49:24):
know, their funds and what they think is, are the important
things to fund right in that community.
And then there's like matching funds proportional to the square
root of your individual contributions.
And that's what gets funded. And then there's like the plural
funding, which is a step furtherthan that.
But even under that model, right, the quadratic funding
model, what ends up getting funded are things that are, you
(49:47):
know, there's broad based consensus in the community that
that's what the community wants.And when I say broad based
consensus, I mean, it's, it's not, you know, simple
majoritarianism, right? That's what the square root
does. It corrects against that.
And then if you really want to correct, you know, say you're
living in a Society of bots, right?
(50:07):
And there's a lot of bots in your group, human bots, humans
acting like bots, then you can do a correlation discount based
off of how information unique they are.
And then you arrive at a set of like goods that the community
thinks is valuable. And it's actually more likely to
be a stable configuration or like a stable group set of goods
because very different people within that group think it's
(50:29):
valuable. And and that's like what's key?
And if you don't like that outcome of that stable
configuration of like, OK, this is the broad, you know, set of
goods that most, you know, very different people in this
community agree on our good, then you can, you know, exit, so
to speak and spend your currency, your transferable
tokens elsewhere, but still continue to receive the the CBI,
(50:51):
which diminishes over time. Does this approach kind of
assume that all of these different measures that kind of
you could do that you could taketo kind of improve the state mix
and match so that you can kind of like take any linear
combination and kind of they work.
(51:12):
Because often kind of like maybethis the Rose garden example is
not the best here, but say kind of like certain certain measures
for kind of increasing rose output by kind of sprinkling
with some fancy kind of fertilizer and kind of genetic
tweaking and kind of like putting kind of sunlights over
(51:35):
the over the Rose gardens and soon.
Maybe that, that they, they, they are not cohesive, right?
So kind of maybe they don't forma cohesive strategy.
So kind of like how do you how, how do you account for the fact
that sometimes different solutions cannot be kind of
(51:56):
paired in any combination? So it's the plural community
asset resource exchange. So it's like, I actually really
like this analogy around roses, 'cause there's like sunlight,
there's water, there's fertilizer, there's a lot of
resources that the communities decide how to, how to manage.
One of the features of this model that I'm proposing, which
(52:21):
might not be coming through is how dynamic it is like.
So I expect groups to change their, you know, their goals a
lot and to adapt a lot. It's very, very adaptive based
off of the feedback right of of the set of members who have
staked in what they want, right.So like I imagine in setting the
(52:46):
agenda for a community like there, there's probably a
periodic intervals. OK, We are going to
quadratically fund some things, some projects that enhance value
for our community. Everyone is going to come up
with their set of proposals. Some are going to be like, look,
we need more roses and we can like get so many more roses if
(53:07):
we have better fertilizer or we put in like these, you know,
winter protection guards on the roses.
And then someone's going to be like, you know what I think we
would, I think peonies and rosesare complimentary and they
invite a specific kind of bee that cross pollinates them both.
And we can get more of both if we do peonies, you know, and
they make their case and then somebody else is like, well, you
(53:29):
know, I think we should pay overthe roses and make a parking
lot, right? And so like these different
proposals will get, you know, different funding quadratically,
you know, based off of the set of members.
And, you know, some communities might have charge charters,
which they will never become a parking lot.
(53:51):
And some communities might be open and allow like that
adaptation to happen very quickly.
But it really depends on, you know, what the members of the
community, you know, stake and and vote on right.
So I, it's unspecified. It, it's just a way sort of
(54:13):
it's, it's a way for communitiesto, you know, coordinate and
express themselves. But how they coordinate and what
they, you know, what they coordinate around And the, the
restrictions on that really depends on the community.
And as a person, for example, I'm not, I'm going to probably,
you know, be more interested in the community that has certain
restrictions on like not paving over ever paving over the Rose
Garden with a parking lot, right?
(54:35):
I have so many questions. Yeah, go for it.
So. Now we're now we're rolling.
Now we're rolling. How do you get people to kind of
care about these issues enough, right.
So kind of this is something that kind of we see as a problem
field in Dow govern governance all the time.
So kind of like voting turn out is historically is is really has
(54:59):
been really low and then kind ofnow you make them make people
kind of vote on things like rosegardens.
How do you, how do you make surepeople take this seriously and
don't kind of of kind of rent their vote or delegate their
vote or kind of bribe others or don't don't do or kind of like
(55:20):
don't vote at all? There's like 3 questions asked
in that so I'll try to take eachone one by one.
I don't think delegation is bad,you know, as an actually part of
a lot of the papers spent talking about principal agent
problems and using community currencies to align right better
(55:44):
align your agents with principals in terms of voter
turn out. You know, you can use the set of
participants who do show up to vote with a with a correlation
discount or bridging bonus. You can elevate consensus across
even that set of people who showup that surfaces more likely
(56:05):
surface shared goods and common goods.
So I don't I don't think the voter turn out problem is is a
real problem and neither is delegation in terms of bribing.
Now that is why I have a whole section and actually the, the
section immediately following introduction of the mechanism,
it just goes straight into enforcement because everybody
(56:27):
who's dealt with, you know, a Dow or crypto protocol knows
that this is the hardest problem.
And so, you know, we we can shift gears and talk about that,
you know, so that the bribery problem here specifically
arises, you know, the the the square root, when you have your
(56:48):
influence square rooted based off of your stake, it creates a
very, very strong incentive for people to just, you know, rent
their votes or sell their votes rather than or buy somebody
else's votes, rather than just staking more at a higher cost.
Right. Yeah.
And so there, this requires attention and scrutiny to focus,
(57:14):
you know, on bribes. Importantly, this is also an
attention problem. And in the paper I introduce or
I reintroduce this idea that we introduce in D Sock around
community recovery, which is theidea that every community will
have a kind of computational jury that will, when presented
(57:35):
with evidence, investigate something, right, Whether it's,
you know, to differentiate, is this a bribe or is this
coercion? You know, is this a victim or is
this a perpetrator? And using these computational
juries across multiple perspectives, and this is also
where state comes in cause stakedifferentiates you where where
(57:56):
you have staked as a participantdifferentiates you, you know,
informationally. And that tells you whether
you're you're a good unique perspective in this particular
case, particularly in reference to the allegation of bribery or
coercion. And that computational jury is
leveraged to adjudicate these cases.
(58:16):
The key to making this work is not just harnessing multiple
perspectives and information, unique perspectives.
It's also, you know, subsidiarity and making sure
that, you know, higher stake issues get more attention.
And the, the key here, which I think a lot of people will miss
(58:38):
is the higher stake issues always have to be more local
issues. If the higher stake issues are
always, if, if global currency or global stake is more valuable
right than local currency, then then the sort of game, you know,
game theoretically, it just sortof gobbles up all the local
layers and we end up kind of back in this global oligopoly
(58:59):
situation or winner take all situation, right.
And so, you know, the, the presumption of the assumption of
subsidiarity is key to all of this, which takes me to, I just
want to address your next question, like, why?
Like, why would this ever matter?
How would this ever take off? I think we are in a crisis of
(59:23):
legitimacy, right? We are in a crisis where people
feel not in control, that, you know, politically they feel like
sort of there's too much power at the top that's illegitimate,
that doesn't reflect their interests.
That's, you know, and and in fact, reflecting, you know, a
set of captured elites interestsand you know, I, I don't to turn
(59:47):
this crisis of legitimacy aroundrequires starting where
legitimacy, you know, where legitimacy takes root and
legitimacy takes root in local communities and, and and pro
social interactions between people, family, churches.
And so, you know, this isn't a sexy mechanism for crypto,
right, where everybody's just competing to be like the
(01:00:09):
biggest, largest global whatever.
But if you're a parent, if you have kids and you want your kids
to kind of grow up, you know, inan information environment that
was more like 20 years ago with some sort of sense, you know,
sense making and, and not believe sort of in conspiracy
theories and have their attention curated to what
(01:00:30):
matters most and is relevant. That is tied to actual
predictive outcomes and, you know, measurable benefits in
their life, Then you're going tohave to start thinking about,
well, how do you recontextualizeattention and how do we not just
like auction it off to the highest bidder?
And so I think, you know, peoplewho care about future
generations, care about kids, care about, you know, legitimacy
(01:00:54):
will have a very strong incentive to start experimenting
with this. Do you have any plans of kind of
like putting it into action kindof imminently and where?
I think there are a lot of interesting experiments.
You know, there's a lot that wassaid in the paper, right?
(01:01:14):
I I mean, we haven't even talkedabout the AI and like.
Yeah, it's a very long paper. It's like it's we link to it.
We link to it in the show notes.It's like 50 pages.
It's like 60 pages, 60 should, it should and, and, and by the
way, I just want to comment on that.
Like I threw it out there because I, I want to get this
kind of feedback on like where the gaps are and where I need to
(01:01:36):
communicate because I've just kind of gone 2 down in the
rabbit hole, right? I think, as I said before, I
think music is a is a really interesting starting point
because like, I don't know, I think music is declined and
there's not enough good music and you know, artistic
(01:01:56):
institutions as well, research groups, you know, you know, open
source slash closed source research groups.
I think it's also very interesting starting point.
The nice thing about this mechanism is like, I don't
really have to do anything, right?
I can just throw it out there. And there's so many different
(01:02:17):
communities even within crypto, right?
There's like the Ethereum community, there's a lot of
community, there's a Bitcoin community, right?
At some point they got to start being relevant to local people,
right in their lives who like haven't been lucky enough to
like buy these tokens early, right?
And so if they want to be relevant, they, they, they have
to like help them produce goods that are valuable in, in, in the
(01:02:39):
strictest economic sense, right.So I think, you know, my goal is
to just sort of talk with different groups or whoever is
interested and let them do theseexperiments and, and see where
it goes. I think about, you know, this,
this kind of economic network from the perspective of like,
you know, plant networks and root networks and fungal
(01:03:01):
networks. So it doesn't really matter
where it starts. I think it'll sort of start
everywhere and they'll be lots of different experiments.
And if it doesn't start anywhere, then like, you know,
I, I, I probably, I might start it with, you know, churches or
something, which are, you know, non financialized institutions
and declining in, in participation.
(01:03:24):
But I also think they're very important for social cohesion
and they bring a lot of value. So, you know, I might start with
like parent, parent teacher or not, or parent kid groups, you
know, So yeah, I think there's just so many places, you know,
where it, where it can go and it'll, it'll just be like a lot
more fun, right? And a lot less adversarial and
(01:03:48):
antisocial. It's a pro social mechanism.
So if it's not making people like, you know, joyful and happy
and creating goods and like creating economic shared goods,
then, then yeah, then it then it's failed.
And then I have to think, go back to the drawing board.
So where do we send people who kind of want to send, who want
(01:04:08):
to find out more about this and maybe start their own community
currency? Yeah, they can just reach out to
me on, on X, I'm not really goodat responding.
I, I think I have to reach out to like the Regen communities
and, and talk about it with them.
I probably also have to break the paper up into four different
papers. Probably, yeah.
(01:04:30):
So I have to do that first. Yeah, cool.
Super nice. Thank you so much for coming on
Puja. Thank you.
Thank you for having me.
Proof of stake protocols tends to end in like a Pareto
distribution and oligopoly. Proof of personhood protocols,
like my paper on Idina compressed to 0 showed also ends
in an oligopoly and proof of stake you're, you know, it's an
oligopoly in terms of stake and in proof of personhood ends up
being who can control as many accounts as possible.
(00:20):
And so the real challenge is howdo we actually move out of this
like 1, you know, Pareto distribution to something that's
more like a Gaussian distribution of power.
And in in order to do that, you know, my fundamental contention
is that we need to move away from global protocols.
So what we actually need to do is recontextualize human humans
into the different communities and affiliations that
(00:43):
differentiate us. Even if each one of those
communities succumbs to kind of a Pareto distribution, the
interaction between all of them and how they recombine through
diversification and plurality will end up hopefully bring us
to something more like a normal or Gaussian distribution of
power, which is, I think, the best that we can do in terms of
decentralization. Welcome to Epicenter, the show,
(01:05):
which talks about the technologies, projects, and
people driving decentralization and the blockchain revolution.
I'm Federica Ants, and today I'mspeaking with Pooja Olhaber, who
is a researcher and lawyer and innovator.
So very interdisciplinary for sure, and things about using
blockchains and IAI to empower communities and advance
(01:27):
decentralized cooperation. Before I talk with Pooja, let me
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Gnosis Chain or secure the network with just one GNO and
affordable hardware. Start your decentralization
journey today at gnosis dot IO. Hey Puja, thank you so much for
coming on. Thank you for having me.
It's this podcast has been a long time coming.
(03:19):
We've been trying to schedule this for at least two years.
And kind of like the, the, the subject matter has has changed
multiple times because kind of you keep publishing new things.
So before we dive into the paperthat you put out a few weeks
ago, tell us about kind of yourself and how you came to
(03:43):
find yourself in this kind of like decentralized governance,
you know, space, kind of, you know, among us crypto people.
Sure. Well, I, I consider myself
amongst the crypto people too, but my history, I, I look a lot
younger than I actually am. So I have a quite a long
(04:06):
professional history, starting in public policy and out of
college. I was thinking about questions
of economics and politics, and Itended towards more the
libertarian side of things. And then I went to law school
and at that time we had the financial crisis.
(04:27):
And then I started digging more into how financial systems work,
how monetary policy works. And then after that, I worked in
corporate law and corporate governance in Wall Street, got
bored, started a medical device company, and then was hit with
the pandemic and got pulled backinto public policy and questions
(04:50):
around, you know, managing the pandemic.
And I was, that was my first interaction with Daniel Allen's
group, who I'm now part of. And at the time, she was at the
Harvard S for Center for Ethics.And so I sort of put my public
policy hat back on. And then when the pandemic was
over, I shifted gears to thinking about consensus
(05:14):
protocols and in particular thisproblem with about MEV.
And as I was thinking about that, you know, it kind of I, I
have sort of this intersectionalbackground across law, politics
and economics already. And so it, it, it, it, it
started this now several year investigation into how do we
(05:37):
represent identity in order to actually have functional
governance in these distributed protocols in Daos.
And that is now been, you know, a two year, I think
investigation and several paperswhich we've tried to talk about
a few times. And yeah, that's where we are.
(05:57):
You, you said that can like whenyou first came into this space,
it was kind of in the context ofMEV, how, how did that happen?
Because it's quite a leap from what you did previously, right?
Because MEV, in a way, it's very, it's very technical,
somewhat esoteric thing, especially kind of coming from a
public policy background. Well, so I was watching crypto
(06:24):
for a very long time. So before Ethereum launched, I
was in Palo Alto as an entrepreneur building my company
and my recreational hobby was going to Hacker Dojo and
listening to different protocolstalk.
And that's actually when I met Vitalik Buterin for the first
time before Ethereum even launched.
And my take on block chains thenwas like, this is a really
(06:48):
interesting technology and there's a lot of applications
for actually, you know, coordination around shared goods
and public goods. I saw the applications to
finance as well, but I was less interested in that.
And then I, and then I, but I followed, you know, pretty
closely what was happening over the years.
(07:10):
I mean, in the ICO boom in 2017 and then when the Med crisis
happened, I was following that very carefully too.
And so I just sort of was in small groups talking about it
and I had my own take. And because I've been, you know,
worked on Wall Street and had a securities background, corporate
governance background, I had some thoughts about order flow.
(07:33):
And so that just, I think made me unique.
And, you know, and the ability to kind of frame these problems
or at least conceptualize them, I didn't claim to, I don't claim
to have the answers to these problems, but at least in terms
of appreciating what the challenge was, yeah, I, I had
enough of a background to, to, to engage that conversation.
(07:54):
Cool. Maybe that's kind of gloss over
kind of the papers that you've put out recently kind of in this
space. So kind of, I mean, we'll, we'll
dive into the last one kind of more deeply, but can you take us
through the work you've done? Sure.
So the first paper was a decentralized society paper
(08:16):
finding web three soul and that was written with Glenn Weil and
Vitalik Buterin. And that was just a very
primitive and initial step towards introducing non
transferable primitives and particularly memberships to
social groups which could be possibly revocable.
And they're, you know, thinking about identity.
(08:39):
This seemed like a very basic primitive to have and everything
in crypto is transferable. It's like, OK, what happens when
you introduce something that's non transferable and, and, and
what can you do there? But that that was just sort of a
first step of let's let's see what happens if if we assume
that there are these things, youknow, called memberships to
(08:59):
groups, which we can represent. But that had its limitations.
You know, in particular, your membership to a group is not
binary, right? There are degrees of membership.
It's not either in or out usually.
And then, of course, there's this other problem around
standardization. Identity is not just about your
membership to social groups. It's also about, you know, where
(09:21):
you have economic stakes and economic interests.
And when you try to separate these two things, right, money
and voting, for example, the systems can conflict and it
leads to all kinds of problems like capturing overreach, which
which my current paper talks about.
After the decentralized society paper, I decided to take a look
(09:43):
at a proof of personhood protocol in depth.
And the reason why is we, we hadmade a critique in D sock around
proof of personhood that nobody really took seriously.
And, and I kind of anticipated with the rise of AI that a lot
of AI companies would be relyinglike in particular, open AI
(10:07):
would be relying on protocols like Worldcoin to establish, you
know, rails for democratic governance.
And, and I didn't think this wasgoing to work.
I thought this was going to end in just oligopolistic control
and competition. So I was very fortunate to meet
Misha, the founder of Idina Protocol, and he was willing to
(10:29):
open the hood on his protocol and, you know, analyze it and
see what actually happened and basically validate some of the
critiques that we had made in D Sock while also expanding it as
well. So in that paper, you know, the
the big insight was that when you try to separate humans from
(10:52):
bots with, you know, a global authentication mechanism, even
if you succeed at doing that, which is what Idina did, it
invites this secondary problem, which I call de facto civil
resistance, where you have account consolidation or set of
participants who have a large incentive to informationally
(11:12):
control other accounts and extract rewards from them ending
in ending in oligopoly. So that brings us to the
community currency paper, which which I just released.
And you know, there there's actually a missing paper in
between about sublinear identitystaking, which was like a second
(11:34):
phase in the IDNA protocol. And as I was writing that, the
community currency idea came to me and I thought it was just
more, much more important to getthat out.
And I put that the sublinear identity experiment on the back
burner and that that takes us towhere we are now.
Cool. So the, the, the community
(11:56):
currency paper that you put out has two subtitles.
They are the price of attention and cost of influence in a
networked age or the price of entry and cost of exit in a
networked age. That's quite a mouthful.
Maybe before we dive into kind of like what, what kind of the,
(12:18):
the, the larger problem is and kind of like how, how you think
we can address it, what's the TLDR of the paper?
So a lot of people in crypto particular are interested in
decentralization as a goal. And what are we decentralizing?
We're decentralizing power. And so how do you think about
(12:41):
power? I think about power on 2
dimensions, which are actually literally and figuratively two
different sides of the same coin.
I think about power in terms of information and control.
And this is like kind of a cybernetic view of things.
It's also a view that's kind of encapsulated and like securities
laws as well. And so when you think about
(13:05):
decentralizing power, you have to think about decentralizing
information and control. And you know, what is
information? It's the stuff that we started
taking in process and what we focus our attention on, right?
And what is control? It's the stuff that we're trying
to influence, right? So that is the sort of TLDR high
(13:28):
level view I'm trying to come upwith a framework for
decentralizing not just information control, but by
extension our very scarce human resource of attention, right?
And and influence. OK.
And that kind of leads you to kind of posit this concept of
community currencies to kind of combat this, this balance that
(13:53):
is to be attained, right? Yeah.
So one way to think about it is,you know, proof of stake
protocols, since this is a crypto audience, it tends to end
in like a Pareto distribution, right?
And oligopoly. And you know, proof of
personhood protocols, like my paper on Idina compressed A0
(14:13):
show it also ends in an oligopoly and proof of stake.
You're, you know, it's an oligopoly in terms of stake and
in proof of personhood ends up being who can control as many
accounts as possible, right? And by extension, the stake
which that those accounts hold. And so the real challenge is how
do we actually move out of this like 1, you know, predo
(14:34):
distribution to something that'smore like a Gaussian
distribution of power. And in order to do that, you
know, my fundamental contention is that we need to move away
from global protocols. If everybody is completing on a
global stage, only a handful of actors will will, and they'll
build coalitions, win and build coalitions around that.
(14:54):
And So what we actually need to do is recontextualize human
humans into the different communities and affiliations
that differentiate us and the conversations, right, and
communication that differentiateus and, and represent those as
groups. So like even if each one of
those communities succumbs to kind of a Pareto distribution,
(15:15):
right, the the interaction between all of them and how they
recombine through diversification and plurality
will end up hopefully bring us to something more like a normal
or Gaussian distribution of power, which is I think the best
that we can do in terms of decentralization.
Can you define what a Pareto distribution is and what why you
(15:35):
think it's less less desirable than a Gaussian distribution?
Another way to think about it islike oligopolistic competition.
So we're just where a handful ofactors end up having power,
right? And so it's like a skewed
distribution, right? And whereas a normal
(15:56):
distribution is where, you know,just statistically, you have the
nice natural bell curve, right? And you have some, you know,
tail ends, but it's not, it's not just all right in an
oligopoly with a handful of actors that control it, right?
And, and that's kind of like, ifyou look at like Ethereum, for
(16:17):
example, or Bitcoin, like we have these staking pools that
are gigantic or, or mining pools.
And right, that's not, and there's sort of the struggle to
like, how do we encourage local,local mining or like local
staking and home staking? And there's this, like,
perennial tension about, OK, howdo we actually get more actors
(16:37):
in the system rather than these,you know, gigantic, you know,
oligopolistic coalitions. OK, I, I, I, I see what you're
getting at. If you kind of look at a
collection of kind of net networks of networks, so kind of
like almost kind of like, you know, federation of networks or
(17:01):
something where kind of like there is a Power Distribution in
each network and they're kind oflike coupled much more strongly
within the network than kind of to the other networks.
That's kind of the distribution kind of that that I think you're
you're pushing for. Does that also come with
downsides? Because kind of if, if you kind
(17:22):
of have one big globalised network, isn't it possible that
you can do much more advanced and ambitious projects then kind
of you can undertake if you have1000 smaller networks?
Well, I, I'm actually imagining both.
(17:43):
I'm just trying to actually imagine like I, you do need
global scaled network cooperation, right?
We do need to solve global problems.
We just want to avoid a situation where in solving the
global problems, we empower a set of actors that start, you
know, influencing and controlling the resolution of
(18:03):
local problems, which they have very little information over,
right. And and that that can snowball
into surveillance. So the challenge is to actually
have both local coordination andglobal coordination, but in a
way where, you know, global coordination doesn't just
swallow up, you know, local communities that actually have a
greater stake in the resolution of the problem.
(18:24):
And so a lot of, you know, in the paper, I talk about two key
principles. Plurality is one, but
subsidiarity is the other. And without subsidiarity, we,
we, we end up in, in, in a sort of power competition at a global
scale. And, you know, I think that's
bad for risk management, that's bad for information integration
(18:48):
and, and, and also bad for humanagency.
OK. Can you give us an example of
where you think kind of like this global Power Distribution
has kind of eked out the the, the, the local optimum kind of
that that the stakeholders wouldkind of the local stakeholders
(19:10):
would have achieved but couldn'tbecause there was kind of like
this overlaying global layer? I mean, I think we're seeing
that in real time, right today in politics, right?
So attention is we, we, we all are participants in social
(19:33):
media. And, and my, in the conclusion
of my paper, I talk about how this is actually a tacit global
attention auction. And it's also kind of merging
with financial auctions, right? And that's a kind of the
proliferation of meme coins and so on.
And that's leading to outcomes that are not not just sort of
(19:56):
disconnected from local circumstances, but but
polarized. In a way that is just
disconnected across the issues. So, for example, in democracy,
I'm an American, you know, the, the, the design of American
democracy was there was this presumption that, you know,
representatives could come to Congress and reconcile their
(20:22):
differences and that they would be representing a population
that had distinct interests thatwere localized to their
geography. And what's sort of our
participation in global social media and global attention
channels has done is actually divorced us from our local
circumstances and our local geography and polarized,
(20:42):
polarized us on issues that are really kind of disconnected from
what we care about in our daily lives, right.
And people are just sort of outraged about things that are
really far away from them. And so we're seeing already kind
of the breakdown of, you know, democratic governance and, and,
and places like my country in the United States, because
(21:03):
people are polarized, not, not even on, you know, the basis of
things that matter to them locally, but sort of what
they've been, what, what they'reseeing on social media and what
sort of outrageous them and whatwhat gets the most engagement
right in attention hacking. So that's like a very clear way
(21:26):
in which we have, you know, we're, we're failing to
provision, you know, shared goods and public goods.
You know, the other way, which is the, the, what the paper
talks about is in corporate governance and failures in
corporate governance and corporate capture and corporate
overreach. Our participation in like non,
(21:50):
you know, decontextualized communication and and social
media there is also having an effect on our ability to, you
know, steward corporations and like shareholder governance.
So that's this guy Ezra Klein. And kind of like his he he makes
(22:10):
the point that kind of this polarisation that we're seeing
kind of comes through the decline of local news outlets
and newspapers. And the fact that kind of you
have kind of like if you have one kind of global attention
(22:32):
auction, kind of the things thatthat are most salient end up
being things that are kind of like most reported and kind of
like the local nuance. And they're kind of like, in a
way unpartisan or bipartisan nature that kind of like
newspapers used to have when we were kids that this is kind of
(22:55):
this goes out of the window because kind of it it's just in
a way more fun for people to kind of read outrageous news
rather than kind of like balanced and well reported and
kind of like not all that fun things to to read kind of like
about local politics and so on. Do you think kind of like this
is a symptom that that kind of you guys are describing symptoms
(23:22):
of the same situation in in someway?
Yeah, yeah, I mean, absolutely. I think we're, we, we are all
seeing the same problems and we're trying to come up with
different solutions. My solution in the paper is to
introduce community currencies that actually reflect the groups
(23:45):
and memberships in which you participate to.
And one of the things that I allude to is that we can, this
can unlock things like quadraticfunding for news or plural
funding, which is even richer for news and enable the
provisioning of information and news at many social levels
rather than just sort of at thisexclusively global level, which
(24:09):
ends up becoming, you know, power contest and even like mean
contests, right? Yeah.
I I mean, then maybe let's dive right into the model, right?
Kind of like because you are putting forward a very tangible
way to kind of address this. And it's kind of it's, it's got
this kind of, it's got basicallyit's a dual token system and
(24:32):
kind of there are tokens that are transferable and they are
token that are tokens that are not non transferable.
And kind of like you try to achieve this balance by kind of
having them into play. Why don't you walk us through
kind of like how the model works?
Sure. So any community has a set of
members, right? And each member at their
(24:55):
discretion can irrevocably lock some amount as non transferable
community stake. And the square root of that
determines your voting power andthat can be further attenuated
and the remaining portion remains transferable.
And that's a kind of currency that you have that you can use
to buy attention or enter into other communication channels.
(25:18):
And so whereas today we kind of have a very simple one token,
one vote system where money justbuys both, you know, influence
and attention or, you know, you know, voting power, right?
And your ability to communicate this actually just forces a
trade off between the two where you have to decide, you know, at
(25:40):
every inflation interval or, youknow, community based income
that you receive, whether you'regoing to stake more for greater
influence in that community or whether you're going to keep
more transferable tokens for yourself as a medium of exchange
and use that to communicate withother communities and gain gain
information. So it introduces actually a
trade off space between information control, which is,
(26:02):
as I was saying at the start of this podcast, are like the two
sides of power, right? And basically if if you kind of
sum up both of these parts for every person, are they consent?
Does every person kind of get the same amount of income to
(26:23):
kind of distribute across these two verticals?
Well, each community will be different, right?
And so each community will decide how much inflation it
has. You know, a community is formed
around a shared set of commitments.
There's all kinds of communities, right?
There's churches, there's civil society, there's research
(26:46):
groups, there's artist collectives, right?
And and they're going to have their spectrum of sort of like
non financialized to financialized ways to distribute
tokens even. And so each community will be
different in its policies, but it will at least be transparent,
right? So you can at least see, for
(27:08):
example, if I'm a member of a church and it's kind of a scammy
financialized church, that'll bea little bit more obvious to me
than it say a church that is less financialized and then I
can make a a decision there. So, you know, the model
accommodates like a spectrum. And I think the nice thing about
it is it's like the decision of community members themselves and
(27:34):
how they, you know, whether theydecide to stake or whether they
try to have currency to communicate with other groups
that like that. It enables an expression of like
degrees of membership within thegroup.
And it also enables like, you know, rapid recombination and
evolution of a community with new members along, you know,
partial differentials. So it's not the sort of like in
(27:55):
or out thing. OK, so I I take it I can be a
member of arbitrarily many groups?
Yeah, if you're accepted, right.I mean, again, each community
has like their own sort of criteria.
Some some may be completely open, right?
And some might say, well, you'resort of socially farther from us
(28:20):
and so we're and, and there and we, you have less overlapping
affiliation. So maybe we tax you or maybe we
decide to put a, you know, enforce a bond so we can sort of
protect ourselves. Like every community has a
different level of risk tolerance.
OK. And basically this, this
community currency that I get from that that community, I can
(28:40):
use both kind of like forsaking in the community kind of to to
grow my influence within the thecommunity.
But I can also use it to kind ofkind of you said buy information
in in kind of in the larger society.
How do I picture this kind of like buy information or or
influence that kind of you you talked about?
(29:03):
So when I say you're buying information, I'm saying you're
not your, your transferable set of tokens you use to gain access
to other channels. So other communities will have,
every community has a communication channel, right?
And that's even being in person is a communication channel or
being in a Telegram group is a communication channel, right?
(29:24):
And so when you want to enter that community and join that
conversation, right on a public square like X or blue sky, you
just, anybody can join, right? It's a free for all.
There's no boundaries around communication.
And so these transferable tokensenable you to, you know, buy
(29:47):
access to, you know, that Channel.
And you can even think about it in terms of like, say there's
like a community resource, a pond.
You want to use that pond, but you're not part of the
community, but you just want to access it.
That's like a good analogy. You would have to pay to go use
and like swim in the pond, right?
And the community will like collect that, you know, your
(30:09):
tokens and that goes into like their treasury.
And if you wanted to like, say, influence the pond and how it's
governed, then you would have to, apart from just going in,
you'd have to then pay more or stake irrevocably, right, and
lose those tokens. But then you participate in the
stewardship of that community and then you receive, as you
(30:31):
know, community based income, you know, ACBI as a member and
how they how communities decidedproportion that is another
question. One thing that I suggest is
making it proportional to the square root of your stake.
But communities again will differ on this depending on how
financialized or non financialized they are.
(30:53):
And how's the pricing done? So kind of like, for instance,
say I want to participate in Twitter, kind of like who
decides on kind of like what theentrance fee is?
And can, can it be paid in any community token?
Kind of. I assume every community has
their own token. It's not.
They're not fungible, right? Yeah, so every community has
(31:17):
their own currency. Yeah.
And, and they will trade those currencies, you know, part
members of the community will trade their currency for access
to other right communities and, and their channels and their
resources and the laws of sort of supply and demand work here.
(31:38):
So I'm not setting interest rates.
I'm not saying, specifying even how communities will again, even
apportionate their, their CBI. How they do that depends on
their internal governance. And the model that I propose is
basically square root voting where you're, you know,
influence the in the community is proportional to the square
root of your irrevocable stake or your community stake.
(32:03):
And you know, there's mechanismsthat can come on top of that,
like delegation, right? People can vote proportional to
the square root of their stake to hire a delegate or an agent,
right, to help manage their resources.
But I, I think the key point here is that, you know, your
(32:24):
influence in the community governance is a function of your
irrevocable stake. And you should, you know, I, I,
I strongly encourage a square root on that.
And then even even going furtherwith like bridging bonuses and
correlation discounts, It's a that's a little bit more
complex, but you know that that's that's the fundamental
(32:45):
model. OK, maybe let's make this more
concrete, right? So kind of like let's say kind
of this, this models kind of setup somewhere and I join the
community in you. How do I gain community currency
to stake or spend? I mean, provided the community
will have me, right? So kind of like say I go to my
(33:08):
local Tennis Club and say I would love to be a part of this
community. How?
How? What happens then?
You're kind of alluding to like this cold start problem, like
how do we get this thing off of the ground, right?
So, you know, I think actually areally good place to think about
this is like music, because music is a shared good.
(33:30):
And, and by the way, another point of this paper was to
acknowledge that most goods are not private or public, but in
between and shared amongst groups, right, where people have
different degrees of benefit. And like music is kind of a
classic example of that where it's, it's not just say an
artist that's coming up the music, but it's also the artist
(33:50):
interaction with their, say, their followers and their
audience. And you know, an artist could
say, OK, everybody who comes to the show is going to have this
community currency, these tokens, I'm issuing it.
Everyone can decide. Everyone can stake or not stake,
(34:12):
and other sets of artists can dothe same thing, right?
And then form a kind of alternative economy in music.
And if you stake for influence, for example, with an artist,
that might influence the artists, like where they tour
next or, you know, how they distribute their music or, or
something. And it becomes a sort of shared
asset that everybody has participation in.
(34:34):
You know, an artist collective could do the same thing.
A research group trying to form shared intellectual property can
say, OK, we're a set of people. We all have, you know, research
interests. And as this research community,
everybody is going to get some set number of tokens or they
could even differentiate amongstthemselves somehow and then just
(34:56):
allow for a staking for influence or using it as like a
communication currency to engageother research groups.
But of course, it requires otherresearch groups in place that
are willing to like accept that right as a as a token and see
that as something of value. So, yeah, I mean, I didn't
really go into the paper about the cold start, you know,
(35:17):
chicken egg problem. But I think there are enough
sort of verticals where this could take off where people just
see both Fiat currencies and both say, you know, digital
currencies like Bitcoin and Ethereum, not really, you know,
expressing being a socially expressive or expressing their
(35:39):
value or being extracted for that matter.
How does this kind of tie in with meritocracy?
Because currently kind of like Iunderstand that there's often
kind of oligopolistic kind of power structures at play, but
people who weird disproportionate influence often
(36:01):
also wielded because they're just very put put together and
kind of they have good ideas andthey they make valuable
contributions. So is that somehow reflected in
in this community currency proposal?
Kind of like as someone who's kind of a thought leader in my
(36:25):
community, will I, will I have more influence?
At at one point in the paper, I make this suggestion of
community currencies also serving as prediction
currencies, right? And so say as somebody who in in
(36:45):
the classic cases like say a politician, right?
And you kind of want to be able to let a politician also share
in your upside and downside as acommunity and even like stake
and make a bet, right? And prove that they're actually
better at predicting outcomes, right?
And that's like, that's a meritocratic mechanism, right?
(37:10):
The problem is in, for example, specifically in the case of
prediction, which is where a lotof people who are focused on
meritocracy, you know, that's where they tend to to emphasize
the problem is depending on yourposition in a social network,
right? If you have a lot of money, a
lot of status, a lot of followers, you can actually
influence the outcomes you're predicting.
(37:31):
And so you're not so much predicting something in a
meritocratic clean way, you're actually influencing the
outcomes. And so a lot of social contagion
phenomena are exactly this, right?
When, when shortages or like bank runs that can be started
just by people who have a lot ofinfluence say over the deposits
(37:53):
in a bank and they send an e-mail out to those people.
I mean, we saw us in the SiliconValley Bank run, right?
Any, any bank can go under if, if everybody runs for their
deposits at the same time and especially if AVC sends you an
e-mail and says, hey, you know, this bank is going to go under
that suddenly every goes, runs that it goes under, right.
(38:15):
And so was that was that prediction or was that
influence? And so part of the goal of
community currencies is to enable us to, you know, separate
prediction and end meritocratic contributions from just massive
amounts of influence someone hasaccumulated because they have a
(38:37):
lot of, you know, followers on Xor, you know, a lot of a lot of
money. Does that answer your question?
Yes and no. So to me, it sounds a bit like
you're throwing out the baby with the bathwater, right.
So kind of like you, you're, you're saying, OK, if you kind
of have a very steep kind of distribution of power in a
(39:01):
society, you automatically kind of get worse outcomes than if it
is more equitable. So where I think kind of like it
it, it's possible that this thishappens.
But I think kind of if you look at kind of the amount of power
that kind of like some people have today, it also enables us
(39:23):
to do really cool things, right?Kind of it, it enables us to
kind of do things like travel into space or kind of do things
that kind of like any local community has no chance of kind
of achieving. And in some way kind of you, you
need to, you can't make everyone's crazy ideas come
(39:44):
true, right? Kind of like there needs to be
some sort of mechanism to kind of select.
So, you know, I, I actually think so, I, I think a lot about
innovation because I was an inventor, an entrepreneur too.
And the problem with it, it's not that I'm trying to, my goal
(40:05):
is not egalitarianism or equality, right?
That's, that's one person, one vote.
And that has its own set of problems, which the Idina paper
went into. But in order to, if you, you
think about where innovation comes from, right, it comes
usually at the intersection. Across unique information
streams, it doesn't come. It doesn't arise within the
(40:29):
center of a field, and it doesn't arise within homogeneous
populations. The problem is if you embrace
this sort of, you know, oligopolistic, by the way,
there's 2 problems with the oligopolistic competition. 1 is
that it actually stays oligopolistic and it doesn't
turn into winner take all, right?
The risks of becoming winner take all and monopoly are just
really severe. And I think that's understated.
(40:51):
But even if you assume you have just oligopolistic competition
like you don't, you know, the, the structure of communication
underneath, you know, each of those oligopolies might, you
know, might actually stunt innovation and and stunt
creativity because, you know, there's lots of pressure to to
(41:13):
conform. And you know, this in the paper,
I talk a lot about surveillance and how that, you know, when you
introduce a kind of third party that has a lot of power, people
start paying attention more to that third party with a lot of
power rather than paying attention to their environments.
(41:34):
Or not just local environments, but medium level environments
and even hires, you know, other other higher level environments.
And that's bad for innovation because we sort of all become
informationally the same as we adapt to this thing that has a
lot more power than we do. And us, you know, becoming
informationally the same is, youknow, it's, it's more trending
(41:57):
towards, you know, humans actinglike bots and humans acting like
agents and, you know, agency and, and being informationally
unique, I think is a is a key ingredient to innovation.
So it's seductive to think, OK, well, let's let's just sort of
centralized power and information and some something
(42:18):
that has that's taking us to themoon.
And we haven't been able to, youknow, get to the moon in a long
time. But you know, there's there's
also a third way, which harnesses the collective
intelligence of people that can get us farther than to the moon,
(42:39):
that can get us to Mars, right? Like I also like space
exploration, right? I want to explore the solar
system. I just don't want to get stuck
at Mars, and I think there's a real risk of that happening when
you don't have enough participation and enough, you
know, information differentiation amongst the set
of participants. So I'll stop there and let you
(43:03):
let you challenge me more. Yeah.
So I'm, I'm 100% for participation.
I'm just kind of against giving everyone kind of the same vote
in kind of kind of in these societal endeavours, regardless
(43:23):
of kind of what their actual contributions and skill sets
are. But there's not the same vote.
That's not the model, right? OK, then maybe maybe I haven't
understood it properly. So tell me how kind of the
influence kind of varies from person to person and how kind of
I as a participant would kind ofchoose between kind of staking
(43:48):
my currency and kind of investing it or spending it
elsewhere? So I have a bunch of groups that
I can choose to participate in, right?
And me kind of, and this is kindof where the voice and exit part
comes in, right? Me, you know, just losing
interest in a community and moving to another one.
It doesn't separate me from thatold community.
(44:10):
I still receive CBI just sort ofdeclines over time with
inflation. But I joined a community where
I'm like, OK, this is adding more value to my life.
This is generating goods that I care about more shared goods,
whether it be, you know, nicer rose gardens or whether it be
like moon missions, whatever, right?
And, and people will like self sort into those communities that
(44:30):
are delivering relevance to them.
But this happens also at many scales, right?
You know, I'm there's local communities, there's umbrellas,
there's coalitions, there's NATO, right?
Then there's like planet Earth, right?
And so in, in all of these communities, it really depends
(44:51):
on how much you've staked, right?
And everyone is going to state differently and your stake gets
step one square rooted, but alsoattenuated based off of how
informationally similar you are to everybody else.
And this is where the bridging bonus and correlation discounts
come in, right? So if you know, I have say 16
(45:14):
tokens state my with a square root that's like 4, that's
quadratic staking. I get, you know, four votes.
But if I'm in this community andsurrounded with other people
that are very similar to me informationally, as, you know,
measured by their stakes and they share the same set of
biases, then my influence actually becomes, you know,
(45:36):
declines. It gets a discount because I'm
not actually contributing any new or novel information to the
group. And those people that are, you
know, more novel information, unique, they get a little bit
more influence. And that's how we spur, you
know, information exchange of useful and non obvious
information. So it's it's actually what it's
(45:58):
what it's doing is treating, elevating people who are very
informationally unique in the system and have.
And then when you combine that with, you know, prediction
currencies also with an ability to like predict outcomes.
So it's actually, it's actually like hyper meritocratic.
And the reason why I start the paper about corporate governance
(46:22):
and democratic governance is precisely this point, which is
that they both of these systems,which are the two competing
systems and narratives we have today, right?
The the sort of Mars mission people are like, well, let's
let's turn the world into corporate governance.
Well, no, corporate governance has these major shortcomings,
right, in terms of capture and overreach.
And the same thing is true with democratic governance.
(46:42):
So like can we actually capture the strengths of either of these
systems and compensate for theirweaknesses with with something
that is much richer and and muchmore, you know, like less
chlorotic because both of those systems can become very
sclerotic, right? I can see how both of those
systems kind of, you know, can fail and do fail.
(47:05):
Let's kind of move it back to the Eli 5 level that kind of
clearly I'm on here. So let's say kind of let's come
back to kind of like EUR garden example, right?
So kind of like, say we are bothkind of members of the Rose
Garden Society and you are, you are, you're you're a
horticultural culturalist and kind of like you, you, you are a
(47:28):
world renowned rose expert. And I'm kind of the oh, pretty
flower kind of person. OK.
And and then you go, oh, but that's not actually rose, that's
a pea in you. And I go, yeah, what's that
pretty? So, so kind of clearly in my
view, kind of if the goal of thesociety is kind of two further
(47:50):
kind of, you know, Rose Garden culture in some way, shouldn't
you get more say than me? Yeah, So I, but I, but I can,
right. So I can So if a, a communities
that reward expertise, right anddeliver more roses, if everybody
wants roses, well, well become like large, like have more
(48:15):
participants, they'll have right, They're achieving their
objective. So if, if the if the objective
of the community, it depends with the objective of the
community. So the objective of the
community is we want more rose gardens.
And somebody comes in and they're completely confused
about what's a rose and a Peony,right?
They're probably not going to win, say, quadratic funding to
(48:37):
maximize the set of roses for that community.
And I think a, a key part here maybe that's that's missing is
how do communities fund their their goods?
Yes. I think that's that's kind of
that's exactly what we're missing here, yeah.
Right. And so the, the idea is, is
through quadratic funding, right?
So a community and, and this is actually one of the, there's a
(49:02):
lot of open questions about how this works, but you know, either
through inflation or through thecommunities of applicable stake.
Those can serve as like actual matching fun pools where as you
know, participants in community when they're deciding, well,
what do we want to do next? Right?
And they, everyone put, you know, there's some sort of set
of proposals and community members each put, you know, you
(49:24):
know, their funds and what they think is, are the important
things to fund right in that community.
And then there's like matching funds proportional to the square
root of your individual contributions.
And that's what gets funded. And then there's like the plural
funding, which is a step furtherthan that.
But even under that model, right, the quadratic funding
model, what ends up getting funded are things that are, you
(49:47):
know, there's broad based consensus in the community that
that's what the community wants.And when I say broad based
consensus, I mean, it's, it's not, you know, simple
majoritarianism, right? That's what the square root
does. It corrects against that.
And then if you really want to correct, you know, say you're
living in a Society of bots, right?
(50:07):
And there's a lot of bots in your group, human bots, humans
acting like bots, then you can do a correlation discount based
off of how information unique they are.
And then you arrive at a set of like goods that the community
thinks is valuable. And it's actually more likely to
be a stable configuration or like a stable group set of goods
because very different people within that group think it's
(50:29):
valuable. And and that's like what's key?
And if you don't like that outcome of that stable
configuration of like, OK, this is the broad, you know, set of
goods that most, you know, very different people in this
community agree on our good, then you can, you know, exit, so
to speak and spend your currency, your transferable
tokens elsewhere, but still continue to receive the the CBI,
(50:51):
which diminishes over time. Does this approach kind of
assume that all of these different measures that kind of
you could do that you could taketo kind of improve the state mix
and match so that you can kind of like take any linear
combination and kind of they work.
(51:12):
Because often kind of like maybethis the Rose garden example is
not the best here, but say kind of like certain certain measures
for kind of increasing rose output by kind of sprinkling
with some fancy kind of fertilizer and kind of genetic
tweaking and kind of like putting kind of sunlights over
(51:35):
the over the Rose gardens and soon.
Maybe that, that they, they, they are not cohesive, right?
So kind of maybe they don't forma cohesive strategy.
So kind of like how do you how, how do you account for the fact
that sometimes different solutions cannot be kind of
(51:56):
paired in any combination? So it's the plural community
asset resource exchange. So it's like, I actually really
like this analogy around roses, 'cause there's like sunlight,
there's water, there's fertilizer, there's a lot of
resources that the communities decide how to, how to manage.
One of the features of this model that I'm proposing, which
(52:21):
might not be coming through is how dynamic it is like.
So I expect groups to change their, you know, their goals a
lot and to adapt a lot. It's very, very adaptive based
off of the feedback right of of the set of members who have
staked in what they want, right.So like I imagine in setting the
(52:46):
agenda for a community like there, there's probably a
periodic intervals. OK, We are going to
quadratically fund some things, some projects that enhance value
for our community. Everyone is going to come up
with their set of proposals. Some are going to be like, look,
we need more roses and we can like get so many more roses if
(53:07):
we have better fertilizer or we put in like these, you know,
winter protection guards on the roses.
And then someone's going to be like, you know what I think we
would, I think peonies and rosesare complimentary and they
invite a specific kind of bee that cross pollinates them both.
And we can get more of both if we do peonies, you know, and
they make their case and then somebody else is like, well, you
(53:29):
know, I think we should pay overthe roses and make a parking
lot, right? And so like these different
proposals will get, you know, different funding quadratically,
you know, based off of the set of members.
And, you know, some communities might have charge charters,
which they will never become a parking lot.
(53:51):
And some communities might be open and allow like that
adaptation to happen very quickly.
But it really depends on, you know, what the members of the
community, you know, stake and and vote on right.
So I, it's unspecified. It, it's just a way sort of
(54:13):
it's, it's a way for communitiesto, you know, coordinate and
express themselves. But how they coordinate and what
they, you know, what they coordinate around And the, the
restrictions on that really depends on the community.
And as a person, for example, I'm not, I'm going to probably,
you know, be more interested in the community that has certain
restrictions on like not paving over ever paving over the Rose
Garden with a parking lot, right?
(54:35):
I have so many questions. Yeah, go for it.
So. Now we're now we're rolling.
Now we're rolling. How do you get people to kind of
care about these issues enough, right.
So kind of this is something that kind of we see as a problem
field in Dow govern governance all the time.
So kind of like voting turn out is historically is is really has
(54:59):
been really low and then kind ofnow you make them make people
kind of vote on things like rosegardens.
How do you, how do you make surepeople take this seriously and
don't kind of of kind of rent their vote or delegate their
vote or kind of bribe others or don't don't do or kind of like
(55:20):
don't vote at all? There's like 3 questions asked
in that so I'll try to take eachone one by one.
I don't think delegation is bad,you know, as an actually part of
a lot of the papers spent talking about principal agent
problems and using community currencies to align right better
(55:44):
align your agents with principals in terms of voter
turn out. You know, you can use the set of
participants who do show up to vote with a with a correlation
discount or bridging bonus. You can elevate consensus across
even that set of people who showup that surfaces more likely
(56:05):
surface shared goods and common goods.
So I don't I don't think the voter turn out problem is is a
real problem and neither is delegation in terms of bribing.
Now that is why I have a whole section and actually the, the
section immediately following introduction of the mechanism,
it just goes straight into enforcement because everybody
(56:27):
who's dealt with, you know, a Dow or crypto protocol knows
that this is the hardest problem.
And so, you know, we we can shift gears and talk about that,
you know, so that the bribery problem here specifically
arises, you know, the the the square root, when you have your
(56:48):
influence square rooted based off of your stake, it creates a
very, very strong incentive for people to just, you know, rent
their votes or sell their votes rather than or buy somebody
else's votes, rather than just staking more at a higher cost.
Right. Yeah.
And so there, this requires attention and scrutiny to focus,
(57:14):
you know, on bribes. Importantly, this is also an
attention problem. And in the paper I introduce or
I reintroduce this idea that we introduce in D Sock around
community recovery, which is theidea that every community will
have a kind of computational jury that will, when presented
(57:35):
with evidence, investigate something, right, Whether it's,
you know, to differentiate, is this a bribe or is this
coercion? You know, is this a victim or is
this a perpetrator? And using these computational
juries across multiple perspectives, and this is also
where state comes in cause stakedifferentiates you where where
(57:56):
you have staked as a participantdifferentiates you, you know,
informationally. And that tells you whether
you're you're a good unique perspective in this particular
case, particularly in reference to the allegation of bribery or
coercion. And that computational jury is
leveraged to adjudicate these cases.
(58:16):
The key to making this work is not just harnessing multiple
perspectives and information, unique perspectives.
It's also, you know, subsidiarity and making sure
that, you know, higher stake issues get more attention.
And the, the key here, which I think a lot of people will miss
(58:38):
is the higher stake issues always have to be more local
issues. If the higher stake issues are
always, if, if global currency or global stake is more valuable
right than local currency, then then the sort of game, you know,
game theoretically, it just sortof gobbles up all the local
layers and we end up kind of back in this global oligopoly
(58:59):
situation or winner take all situation, right.
And so, you know, the, the presumption of the assumption of
subsidiarity is key to all of this, which takes me to, I just
want to address your next question, like, why?
Like, why would this ever matter?
How would this ever take off? I think we are in a crisis of
(59:23):
legitimacy, right? We are in a crisis where people
feel not in control, that, you know, politically they feel like
sort of there's too much power at the top that's illegitimate,
that doesn't reflect their interests.
That's, you know, and and in fact, reflecting, you know, a
set of captured elites interestsand you know, I, I don't to turn
(59:47):
this crisis of legitimacy aroundrequires starting where
legitimacy, you know, where legitimacy takes root and
legitimacy takes root in local communities and, and and pro
social interactions between people, family, churches.
And so, you know, this isn't a sexy mechanism for crypto,
right, where everybody's just competing to be like the
(01:00:09):
biggest, largest global whatever.
But if you're a parent, if you have kids and you want your kids
to kind of grow up, you know, inan information environment that
was more like 20 years ago with some sort of sense, you know,
sense making and, and not believe sort of in conspiracy
theories and have their attention curated to what
(01:00:30):
matters most and is relevant. That is tied to actual
predictive outcomes and, you know, measurable benefits in
their life, Then you're going tohave to start thinking about,
well, how do you recontextualizeattention and how do we not just
like auction it off to the highest bidder?
And so I think, you know, peoplewho care about future
generations, care about kids, care about, you know, legitimacy
(01:00:54):
will have a very strong incentive to start experimenting
with this. Do you have any plans of kind of
like putting it into action kindof imminently and where?
I think there are a lot of interesting experiments.
You know, there's a lot that wassaid in the paper, right?
(01:01:14):
I I mean, we haven't even talkedabout the AI and like.
Yeah, it's a very long paper. It's like it's we link to it.
We link to it in the show notes.It's like 50 pages.
It's like 60 pages, 60 should, it should and, and, and by the
way, I just want to comment on that.
Like I threw it out there because I, I want to get this
kind of feedback on like where the gaps are and where I need to
(01:01:36):
communicate because I've just kind of gone 2 down in the
rabbit hole, right? I think, as I said before, I
think music is a is a really interesting starting point
because like, I don't know, I think music is declined and
there's not enough good music and you know, artistic
(01:01:56):
institutions as well, research groups, you know, you know, open
source slash closed source research groups.
I think it's also very interesting starting point.
The nice thing about this mechanism is like, I don't
really have to do anything, right?
I can just throw it out there. And there's so many different
(01:02:17):
communities even within crypto, right?
There's like the Ethereum community, there's a lot of
community, there's a Bitcoin community, right?
At some point they got to start being relevant to local people,
right in their lives who like haven't been lucky enough to
like buy these tokens early, right?
And so if they want to be relevant, they, they, they have
to like help them produce goods that are valuable in, in, in the
(01:02:39):
strictest economic sense, right.So I think, you know, my goal is
to just sort of talk with different groups or whoever is
interested and let them do theseexperiments and, and see where
it goes. I think about, you know, this,
this kind of economic network from the perspective of like,
you know, plant networks and root networks and fungal
(01:03:01):
networks. So it doesn't really matter
where it starts. I think it'll sort of start
everywhere and they'll be lots of different experiments.
And if it doesn't start anywhere, then like, you know,
I, I, I probably, I might start it with, you know, churches or
something, which are, you know, non financialized institutions
and declining in, in participation.
(01:03:24):
But I also think they're very important for social cohesion
and they bring a lot of value. So, you know, I might start with
like parent, parent teacher or not, or parent kid groups, you
know, So yeah, I think there's just so many places, you know,
where it, where it can go and it'll, it'll just be like a lot
more fun, right? And a lot less adversarial and
(01:03:48):
antisocial. It's a pro social mechanism.
So if it's not making people like, you know, joyful and happy
and creating goods and like creating economic shared goods,
then, then yeah, then it then it's failed.
And then I have to think, go back to the drawing board.
So where do we send people who kind of want to send, who want
(01:04:08):
to find out more about this and maybe start their own community
currency? Yeah, they can just reach out to
me on, on X, I'm not really goodat responding.
I, I think I have to reach out to like the Regen communities
and, and talk about it with them.
I probably also have to break the paper up into four different
papers. Probably, yeah.
(01:04:30):
So I have to do that first. Yeah, cool.
Super nice. Thank you so much for coming on
Puja. Thank you.
Thank you for having me.
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