Incentivizing Funding for Public Goods

Transcript

you you want to see when we're using them so

the best review you

I think so let's see let's make sure they're any water working all day okay I remember I just put it in this

morning oh yay people are coming in hey guys so I am so I think we are so lucky to live in this aetherium space it's pretty magical okay we get to create economies

that's wild okay we gotta remember a little bit of gratitude for this opportunity I don't think it's ever existed in the world and we're in this very friendly bubble of aetherium right where we're creating happy economies and that's really what this talk is gonna be about really awesome happy economies but I don't know I don't think we asked ourselves enough like what do we use an economy for seriously this is actually an open question you guys can shout out an answer and don't show your project though like like just in general what do we use an economy for anybody

cooperation exactly that's a great that's a great one anybody else what to survive to thrive to pay rent so to maybe did its distribute resources ah that's a good one and anybody else what else do we use an economy for you got to scream it allocate human capital did did you read my like slide oh no no I didn't really I guess that's distribute resources so just to keep this thing going these are some of my ideas right but some some things in this economy some

groups in this economy are deserve scarce resources some people are creating value I mean nonprofits create value yet they're completely missed in our economy it's a huge gaping all right our market-based economy is focused on supplying individuals with whatever they want or need but if you're so creative value for a community you're completely lost in our capitalist economy this is crazy to me it's a it's a gaping hole and we need solutions for

this nonprofits rely on sacrifice everybody who works in a non-profit generally needs to you know give up a higher paying job somewhere else or they're donating or they're volunteering their time in fact if you're a very talented person and you want to be the seat you are a CEO of some large organization making millions of dollars and then you transition to a non-profit you have to take a pay cut and if you don't take a pay cut there's like a cultural taint that goes on your nonprofit and that's that's just weird to me because nonprofits do create value no one wants to see homeless people in the street does when when we clean up

the streets and when we sorry you're not clean up the streets but when we make sure people have good places to sleep like everyone feels better in a for-profit world you have a win-win right that's that's the whole goal that's the goal of an economy to create a win-win but nonprofits in our economy have a lose win you have to lose to create value outside of the economic plane right value that's generally not like quantitative but qualitative value you create that value and you get very little rewards the other big problem with nonprofits that sort of derived from this lose win situation is that decision makers have no skin in the game

if a CEO makes a really good decision and the stock price goes up he actually profits if he makes a bad decision and the stock price goes down he himself is hurt right but in a non-profit or in a government situation especially in the government if a bureaucrat makes a bad decision he collects his salary and if he makes a good decision he collects his salary he has no skin in the game well it's going to get him to make good decisions so there's there's a lot of problems for nonprofits in our economy and yet we still keep trying to bootstrap into this economy because we

care about the value that they produce it's the best we got we have to work within what we got but this is where the common stock comes in our goal is to create sustainable funding incentive alignment and novel coordination techniques yeah shout out to coordination for supporting public goods and really any nonprofit cause we and we don't want to do it just like for one-offs we want to create a foundation of tooling and documentation that will allow creative entrepreneurial pro-social people to design their own economy because we're not going to design the perfect economy for every

community they have to design it themselves and so we want to build the tools that allow them to do that so that they can create an economy not a business model but an economy that respects the value that they create because they do create value so we're basically creating a new system like instead of creating a non-profit or a government program you can create what we call a commons and this commons isn't a business model it's an economy that actually aligns incentives around the production of value that the community is desiring right and we're not making this up this already exists this is the

cool thing we're just copying what Bitcoin and and all the other crypto currencies have already done these are parallel economies who here has heard of prime coin anybody Wow not very many new prime coin is this crazy economy that rewards people for finding prime number like who really cares about prime numbers right but the prime going has found 34 million prime numbers Wow no one cares about prime numbers but yet when you create a scalable economy you can do anything you want you can create an economy around anything you want

the thing about block chains that makes it hard is that they're really focused on computing power shared computing power resources and that's what we're the common stack comes in this is our goal is to actually take the magical incentive alignment tools that are coming out of the crypto economic space and apply them to real world applications so I'm going to use public education as an example here and I came up with this as an example by talking to some French people here I don't know fills an audience I don't see him right but he was saying that sometimes Parisians feel that public schooling is slightly inadequate compared to other other countries and so I went around

Paris and I found somebody a cool guy I want to he wants to keep his name you know more anonymous so I'll give him a pseudonym in him he's he's he's what we call a community steward and he's he's actually famous he's kind of an older I con here so I'll keep him anonymous but I'm gonna call him Pierre he's an economic superhero okay so Pierre is really he wants to see the French people like thrive he wants to see France become the most powerful country in the world and he thinks that the way to do

that is to fix public education and improve it so the way he's already active in the public education community right so he sees what's happening donors and tax payers are putting money into the into the system decision makers decide how to spend that money the best that they can and then the money gets spent on public education so if you if you create a little boundary layer there this is an economy this is like a cause focused economy where money comes in decision makers decide how to spend it and value is produced and that's the key

value is produced so the problem is of course that decision makers they're not incentivized properly they also have very few feedback neck mechanisms to know if their decisions are having an impact they can't really quantify the qualitative value of public education so we create a parallel the way Pierre is going to approach it with a common stack is he's gonna create a parallel education focused circular economy where money can pool inside of the public education economy that he calls scholarly tea powdery Commons my French

is really bad so sorry about that one but within this economy when we pull money there we can actually manage and measure how it's used and we can start getting feedback mechanisms to decision makers and contributors to this crypto economy becomes stakeholders with aligned incentives for creating value within the system that's the key is designing these systems so that when value is created the people who create the value are rewarded we do this by making everyone a token holder why are decision makers decision makers but everyone should be a decision maker this

is the dream of course that takes amazing governance and look like conviction voting just sat down over there hasten but we'll talk about conviction voting in a second the biggest thing is that the decision makers have skin in the game okay a little bit of a backup this this circular economy that we're creating we're gonna use bonding curves and I know bonding curves are scary some of us kind of know what they are some of us really do know what they are but most of the time it's it's it's kind of a novel crypto economic primitive and so I'm going to spend just a little bit of time explaining what a bonding curve is so in our default economy the legacy 2-sided

markets that we use today the price is emergent it's emerging on the total activity of the market the supply and demand that all adds up to specific liquidity in this moment right it's a very intangible difficult thing to predict and if you want to buy a financial asset from someone in a two sided market you have to find someone to buy it from and if you want to sell a financial asset you have to find another human to sell it to this is a lot of friction we don't need it also in so in a bonding curve that's not how it works

it's totally different you can do that but for for our example let's just pretend the tokens in this bonding curve are non-transferable you can't sell it or buy it to sum with someone else it's not even allowed because crypto economics we can actually make these rules so the price is algorithmic the price is determined in advance every token has a price in advance in most simple bonding curves and this what this allows is that anytime you want to buy a token or sell a token you can just create the token you talk to the smart contract and if you demand a token the token is created for you and if you want to sell the token the token is destroyed

for you at a predetermined price so in this way if you design the economy right you can make sure that the supply and demand acts the same way as every other market the price graph is going to look the exact same but what's really cool about bonding curves is work for micro economies a two-sided market only works if there's really good liquidity if there's a lot of people who care if you want to start if you want to sell stock in your in your hotdog stand dude you're screwed you can't use a two sided market but you could actually create a micro economy with a bonding curve the biggest problem with bonding

curves is that they're new and they're very complex so just just to really like bring this home let's make a bonding curve let's see oh man I have a lot of tabs I should close those okay so this is a bonding curve this is a very simple bonding curve you have the the number of tokens this is the token supply so if you have and this is basically a bonding curve where the price is the square root of the token supply so if you're buying xx token the price of that token is four point four seven two whatever your currency is let's say die if you're buying the xxx token it's this is the

price okay what if we want to buy the like sixty seventh token okay that's the price cool let's bring them back now what's really cool is that if you want to just you know make your own bonding curve that's fine you can design your own economy right this is what we're here to do so you can just say uh square root two is cool but you know what I'm just gonna go like this why not it can just go Dada you know it might not be a great accounting curve but that's what I want to do oh yeah you want to get it you know you want to get it past that point that looks good number go up that's

great but you can even do crazy things you could maybe you want to go like this maybe you want to have a little bump see what that does why not it's your bonding curve you can do whatever you want with it so let's see if I can pick the right I thank God okay so what we do with the with the common stack is what we call an Augmented bonding curve so when when Peter comes in and he's like yo let's do this I want to create public education I want to start supporting projects that

are teaching kids math after school and I want to educate refugees and people from that are in France that don't know French and I want to make sure they understand like the French language and the beauty of it well Pierre I well I'll talk about how he starts it later but when this thing is going basically there's two pools there's the normal donation donation pool the funding pool which holds the funds that are the donations these are what are used to actually produce value in the skullery Tea Party Commons so all the projects that are actually you know the after-school math tutoring this is where

that money comes from it comes from the funding pool and so we call it an Augmented bonding curve but from another perspective you could think of it as an Augmented grant program and where we add an economy to a decentralized grant system that you could just think of a bonding curve on top of mullick or meta cartel it's the same thing and so the other pool of funds is the reserve the reserve holds collateral that the bonding curve collects when tokens are created so when people support this economy when people want to donate to after-school programs instead of just sending money to the funding pool they

actually send money to both pools together right this is the internal economy that's wrapped within the bonding curve so when money comes in the money is split between the reserve and the funding pool and that's where the magic comes in and designing your own economy you get to decide how to actually create an incentive alignment and how money flows in and flows out this is why we're here this is why we're in aetherium to design economies at least from my perspective and what's really cool is this tool called CAD CAD I'm giving to CAD CAD workshops tomorrow one at CC you'll have to look at the schedule I think it's at 11:00 and the

next one at dau fest in the evening so if you want to learn how to use this awesome simulation software for creating complex systems just come to my workshop it'll be really fun but these exact dynamics get to be decided by the community who creates it so Pierre and his buddies will work on this once the once the scholar ET pari commons is fully underway if the if it's managed well it will attract more donations which will grow the internal economy and this is kind of the first design the simple design for a Commons is that when the economy grows when the money in the

funding pool and reserve pool grows we make sure that the token price goes up using that bonding curve because we can pre determine how the price reacts this is key it's not normally possible to do this this is crypto economic magic right so when money comes in the economy grows and so the price goes up just like when someone buys Amazon stock and just like when they buy Amazon stock they receive a token in reply and returned right so they put in 100 euros they get a hundred euros back at least in this very simple design and of course the tokens are

created by augmented bonding curve and this what's really cool is because of that we can have a very small value focused economy and we don't have to worry about giant liquidity this is why the sec is like no you can't have your own token right you can't have your own shares because if there's no liquidity there's lots of problems but the bonding curve solves this for us and we can also simulate this economy and do predictive modeling to see if it'll work now to actually fund the funding pool one very simple solution would be to have a tax what we call a tribute in homage to Mallick great Mallick so if a token holder who has already bought tokens wants to leave the

economy oh you know maybe they were making bad decisions maybe he doesn't like pierre pierre can be a little bit chauvinistic sometimes you know so if he wants to exit then he has to pay a tribute to exit this way incentives are aligned he's leaving the economy well let's do a little like economic jiu-jitsu a little Aikido and say okay you want to take money out well first you have to donate to the funding pool so in this example he puts in 100 euros worth of tokens but he only gets 80 euros back and 20 euros worth of value from the reserve will get transferred to the funding pool and the price of course

will go down so the commons is hurt by this action but the children of Paris still win because of that 20 euro donation now this is just one example of a funding stream for the funding pool in the end like I say it's your world this is your bonding curve and you can make it however you want it's all about the designers at the beginning good old Bob Roth I love that guy now of course how do you make decisions in this space I don't want to dive into it if you really want to talk about conviction voting stem is your man right here superstar making it happen on Eragon right now but we use the novel mechanism

called conviction voting which will allow you to just go find your favorite projects give them maybe a star rating right and then walk away for two months and come back and give the favorite projects that you think are are really helping like Pierre and his buddies they'll they'll find the projects that they like because they care about you know the value they're producing for public school public education in Paris and they'll basically vote and then it's like a signal aggregation tool that's generally how will you do our governance system but that's for another talk so the real key is how do we start these systems right initialization of a complex system is incredibly important

and the way that we want to start is first with the people who is going to be a part of this pierre needs to go recruit the experts the people who know how to make good decisions the right people that have experience with public education in Paris and ideally they have a reputation that is also at stake this is not something that you just want to invite any investor to participate in these are decision-makers because they're going to start this system they're going to get a lot of tokens that's just how bounding curves work if there's one thing to know about a bonding curve you want to be the first person to buy in okay it's like a lot of bonding curves so it's kind of a law of

all markets right so you got a Pierre needs to go find the right people to start this start this thing and if they really care about the value that they're trying to produce things will work well this is what this is how I can tell if it's a coin right if I look at the founders and like are you trying to solve a problem or are you just trying to make money if you're just trying to make money then you're probably creating a coin but if you're trying to actually use a block King Network to solve a problem now we're talking now we can actually start doing something right and this is what we've seen in the past these decentralized systems need to start with

a trusted seed a Pierre and his buddies need to actually care about the value they're trying to produce otherwise it's a Ponzi scheme okay but if they actually are creating value and they actually care about the children of Paris then it will work once you have the people now you need the plan it's not gonna you can't just throw up a dow and think it's gonna work out okay you actually need to spend some time aligning your mission and values get a legal strategy right I mean come on there they're basically competing against the government to provide a service but I have a good legal strategy policies procedures I mean this is important in every crypto

economy even like Bitcoin Bitcoin had they're like Satoshi white paper right but that wasn't enough because some people in the community said hey we want a larger block size this is a payment system some people are like no it's a store value we don't need a larger block size if that was planned out in advance and there was a clear documentation of what the values were and the mission statement was it wouldn't have been such a huge thing where we fight for three years and about it and there's a lot of things that we can learn from outside the blockchain space - especially in the cultural build Elinor Ostrom is a goddamn genius okay this she's got eight principles eight rules for governing a commons it's

eight sentences I really hope everyone just goes and finds those eight sentences if nothing else and there's a lot of other experts too and of course we can learn a lot from the blockchain space too especially from other comments and that's the the path the common stack wants to take is we want to have iterative approach right we want to create a commons learn from it create another commons learn from it we're not building a platform we're building or helping communities build their own decentralized systems and then they can all learn from each other okay so once the other people once you have the plan then you can launch the DAO so this is how it will start we call it a hatch

because it's fun and the Hatcher's the people who are starting this system this is a closed thing this is not an open ICO these are trusted people with reputation on the line that that people believe will make good decisions they put their they put a bunch of money into the pot and of course that money has to be converted to die and then it's sent and split between the reserve and the funding pool now this is what we call the hatch tribute it's this is how the common stack is doing it again you can make your own painting Bob Roth style man I always think bob ross do it however you want but this is how we're doing it to start and for example let's say that Pierre and his buddies they raised a

million dollars for public education in Paris and we're going to put 600 K into the economy and 400 K into the funding pool that's that's a straight-up donation 400 K that's going to go to schools - or at least support children education for children and maybe adults even depends on their value statement right the reserve is backing the economy of the specie token the scholar et parise Commons token and the funding pool is funding projects now magic internet money time whoa 2.5 million dollars in tokens is given to the Hatcher's that's one hell of an incentive right they put in a million

dollars and then they get 2.5 million dollars back what my wife don't believe in me no just kidding just kidding this is this is this is actually how bonding curves work it's under collateralized we got an under collateralized ePHI meeting last week last night this is why that happens and it's really because the way that we do prices for tokens and stocks is crazy it's crazy it's not true I call it the market cap illusion the idea that every token every Bitcoin is worth eight thousand seven hundred dollars every

ether is worth two hundred thirty dollars that's a lie that is wrong it's not true they're not all worth that much it's the same with bonding curves so when these Hatcher's put in a million dollars they bought a huge amount of tokens the first tokens that they bought were practically free right and then the last token cost 25 cents this is what algorithmic this was designed in advance and this is just how our crazy markets work okay it's it's it's insane but it does incentivize behavior so when they bought all those tokens the average price was 10 cents

they put in a million dollars they got 10 million tokens now the price for one token is 25 cents that's 2.5 million dollars for every token but it's not this is the crazy thing everyone knows and in a two-sided market it's harder to see right but we all know that if Jeff Bezos sells all of his Amazon stock he's not going to get a hundred and thirty million dollars we all billion sorry we all know this because there's not enough liquidity in the market for him to get that price he says he's the richest man in the world everyone says he's the richest man in the world but really we know he doesn't have a hundred and

thirty billion dollars he couldn't sell it all for that right now and it's the same case here but here it's very transparent cuz we don't know how much money he would actually get right it's impossible to calculate here we know exactly how much money if the Hatcher's were able to sell all their tokens they would only get 600 k it's completely transparent we know exactly how much money they will get and this is why vesting is really important okay vesting and it's not just for bonding curves for everything we do in crypto vesting is really important well you guys helped me out with this

vesting is really important say it with me vesting is really important please yes almost I don't think enough people are saying it do you believe it do you believe vesting is important yes okay say it again vesting is really important oh we're getting there guys I have a lot to talk about you got to help me out here vesting is really important vesting is really important okay one day crypto will agree with me here okay so because all these tokens are vested this is

where things get really wild right they can't sell any of their tokens so the opening price even though there's only 600 K here and they got 2.5 million dollars crazy I know the price can't go down cuz vesting there's a cliff none of them can sell their tokens everyone knows this this is again transparent this is what's so cool about crypto economies everything is so transparent but now the price will not stay at 25 cents because everyone knows the price can't go below there because vesting is really important and the price no one can sell their tokens so now speculators

can come in you keep speculators out of the hatch you need altruistic like experts that know how to despendo well for Paris and public education but after this now we're free right come on in speculators bring it let's support public education economy right and they're going to because they know the price can't go down now okay you know maybe it's a little bit of a stretch to think Pierre is going to start his own decentralized crypto at work right for public education and all the public education people are going to download men and masks and it's all going to be magically

perfect no of course not it's not gonna happen and that's not our strategy our strategy is actually to start with the creation of a token Engineering Commons we want to create a system where people in the crypto economic space can actually start coordinating together and do research projects instead of begging for grants or having to work for clients to do their art and designing these really novel economic systems we want to support them so they have the time the space and the valley.the the reward for their value creation by creating a token engineering Commons also I think they can handle figuring out meta masks so it

might be a stretch but and then we'll probably stay the the common stack strategy is to probably stay in the crypto economic space maybe start with a theorem 2.0 or or or whatever and develop different Commons one at a time we'll start with just introducing one major piece like just the bonding curve for the token engineering Commons and then create add we have four main pieces and we'll add in a new Commons for every piece and it'll be kind of a field test for each piece and so we'll start with the token engineering Commons and then C stack token holders which I'll talk about on a second I'll get to vote for the next Commons and the next Commons in the next Commons and every time that we

iteratively deploy these Commons we will improve the models improve the UX manage the cultural playbooks the technical Avox make sure people understand how to use this tool right but we're not there yet we're not ready to start yet what we really need is that trusted seed we need people in this in the Theorem community and outside the etherium community especially people who are experts in decentralized governance and token engineering to join the common stack to become part of our trusted scene because we really need people who are value driven not profit driven people who are value driven and we need a large group

of them with diverse interests because the goal of the comments that this is a 3040 year project it's not us this is a very ambitious goal changing the way value is created in the nonprofit world right creating a system so that people who create value in the nonprofit space can be rewarded and that's that's wild it's a big goal it's gonna take a lot of years and we need a lot of people and we want to create this large base this huge community of people that understand what the tools are that we're using and then also participate in multiple of these Commons and then that way they can have some expertise and this this group this trusted seed can be

like the experts in Commons management capital see Commons that's our Dallas basically and in return for gaining this expertise they receive governance rights and a common stack and probably more on the reward side in the economic dimension they also have the option to initiate a bunch of bonding curves for all of these different communities not only are five field-test Commons but basically any community that the common stock supports in creating this we will require that they include C stack token holders not because well yes it's also an economic incentive for us to align

incentives for our community to support the creation of this but also because it's a good idea it would be really nice if Pierre had a couple crypto economic experts like in his scholar ET putty Commons right it'd be really nice if he had Geordi just sitting there by a Geordi what do you think is a good governance system maybe like I don't think so man and that's that's what we want to create we want to create this under this this really large pool of people who when they see an opportunity like o public's going in Paris I live in Paris I care about public schooling yeah I would like to donate it to that in fact it's not a donation if I put in you know a thousand dollars then maybe I'll

actually make a profit and support public education in Paris at the same time that's wild right so if this is interesting to you please common stack org slash apply its Commons stack two S's I always was bad bad choice in names dammit oh well but please apply today we are not just taking money from everyone that's not how we do this we're actually we are this is a selection process and if you're a day trader and we don't think that your value aligned with the common stack we're gonna like look you up on Twitter and stuff and I'm like mmm

who is this guy okay yeah right because it's really important that we have a trusted seed of people who care about the value that's being created and are not just trying to create profit make profits if you want to learn more we I don't really talk about it in this talk but like half of the common stack is focused on culture and mechanism design for these economies and dows the other half is really focused on creating and supporting CAD CAD which is a simulation software and open-source simulation software that everyone can use for things way beyond the common stack kind of any kind of crypto economic design so we have our simulations that you can go

check out we also have lots of academic papers on this system we're really going the legitimate route you know slow and steady and getting things peer-reviewed and if you want to join our community right there lots of cool blog posts and I have two talks tomorrow cata workshops I mentioned it before but just to repeat I really hope people can learn how to use simulation software to design economic systems it's a really powerful tool but it would have if we had every Defy project if they each had their own little CAD CAD piece we could have money Legos and then the money Lego simulations that whole flash loan thing went a minute and went it would have

been seen we would have run 10 million simulations when when of a deployed flash loans I mean like o bzx has a problem right this is why valid design validation is so important because we can see these things in advance anyway so I can sit up here and rant all day but what I really want to see is some questions I have so much time for questions who wants to go is the mic on hey I'll trade you this

one works I've been looking into bonding curves for funding like common good projects and so I drew a fee so reason right it's also a pump-and-dump opportunity right you're you have an under collateralized curve it's just like any it's just like any IC o---- right you give a bunch of money to people who just want to like take money out of the system and extract profits then anyone who participates in that system will get screwed you have to actually this is because this is under collateralized you have to trust there is a there's a layer of trust that

applies to the Hatcher's it's not so important afterwards but the layer trust on Hatcher's is really val is really employee and the second is that all you're bonding curve examples were these like concave functions which is very weird so the bonding curves that I studied they make they seem to make a lot more sense when they're convex when they are going like so steeper and steeper so why I kind of I kind of pulled a switch on you guys I mostly use this curve because it's more enjoyable to talk about in the end because it's all about the axes so this

is collateral versus trouble I see you switch the axes yeah okay so well I didn't I switched the bottom axis yeah okay in our bonding curve a very simple bonding curve that we use is token supply my square since now over reserve equals a constant right yes okay and so if this was supply it would actually go like okay okay okay okay those are right two questions thank you great questions thank you so much man from tastic oh you thanks for the great talk I was wondering would you make I mean would it

make sense for you actually to get funded by public institution because you're trying to do their jobs right so would you seek support from them as well yes and no I am interested in working with legal like governments and these sorts of things to a point but in the end we're also trying to replace them right like what's really cool about this public education Commons the scholar ET pari is that they're incentivized to grow unlike public education government programs they're not really incentivized to grow they just got to do the best

that they can to keep everybody happy right bare minimum so that there's not a revolution but this actually you know once they conquer after school programs if they start making really good decisions they start come they start competing with public schooling and the government programs and maybe there's multiple public schooling in Paree in in Paris Commons not just one right and so you can have these competing organizations and maybe government funding would then actually start moving to them like stop doing it yourself just like Paley and pay the private institution this I don't know it's kind of a weird private institution that's

creating a public good right so but now the government could fund them to do the job because they're incentivized actually this this commons is incentivized to get that funds from the government and do that job now I am curious about doing all of this without a blockchain I actually don't think you need a blockchain to do a bonding curve and I would be open to working with a legal entity of like a jurisdiction that would give me a legal sandbox I'd be very open to trying that out and doing the like UX and like an experimentation with money on PayPal right you could totally

do this and I'm really open to it but in the end if we're doing cause focused charitable organizations so those things there's a lot of value in having a global frictionless payment system there's a lot of value in being able to grow beyond a jurisdiction and incentive to do that in this system so I think that there is value in staying in the blockchain space but if somebody wanted to try this out and they said oh yeah I'll give you a legal sandbox I swear no one who you know participates will go to jail for creating the security or something like that I'd be totally down Thanks fantastic yep

yeah yesterday after hear a talk there were some people who had questions well for people who don't know bonding curves that well you said during your talk now again like when the economy grows when the economy grows then the value of the token goes up but at the same time with a bonding curve you can completely set the price of your token is that not contradictory and can you explain a little bit more about that yeah so you can set how the token reacts to behavior that's the really exciting thing about bonding curves is that before we couldn't really simulate economies because we had no idea how behavior

would affect the price that's a key ingredient like people are making decisions based on the price right so if you have an economy where the price is you know totally almost random based on the liquidity of the market on that day is really hard to build an economic simulation but if you have a bonding curve where the price the price isn't predetermined but how the price reacts to behavior is predetermined so maybe I skip that a little bit and just give missed some words because really it's about knowing how interactions with the system will change the price and yeah

so you never know what the price is going to do the price of these looks just like the price of anything on coin market cap it's just that the price action isn't dependent on a two-sided market it's dependent on the smart contract that has an algorithm in it that says what the price action will be I would like to comment on this one because actually I'm in a little bit of a disagreement with you so the bonding curve contract is actually just a trading platform you highlighted the differences between the two-sided market and the bonding curve contract but there are also many many similarities in which way they behave exactly the same and I

actually believe that the actual shape of the bonding curve doesn't actually matter all that much because what happens is that if we're not allowed to trade the token directly we're only allowed to trade through the bonding curve if I buy the same amount of tokens that you sell the price will not move so when we sell when we sell when we trade through the bonding curve and the supply and the demand are roughly matched then the price is adequate Librium and then it behaves exactly like a like like a trading platform like a two sided market and when there's a disbalance meaning that there's either more supply or

there's more demand so the price is not at equilibrium it will move towards the equilibrium just like in a two sided market so it's a alternative price discovery mechanism which is fantastic because in the past 4000 years like this is the second price discovery mechanism that humanity has discovered this is historical stuff but the actual like I think that what you say that the design of the bonding curve matters and that's where you put all your engineering effort I disagree with that actually this the shape of the bonding curve the only thing that it effects is the ratio of the tide of capital to the market cap that's the

only parameter that changes with the with the change of the bonding curve apart from that you can think of the bonding curve contract as an automated market maker on a two-sided market and you will not be far from reality because that's what it is I would I would agree with that to a point 90% of the time the curve doesn't matter so much where it matters is the edge cases especially like when the curve gets low when you get to one side of the curve and very low supply how steep is the drop-off like here's a bonding curve where the drop-off is really steep and most of the time if you don't get to that edge it doesn't matter right like you know because you just have this like curve

and maybe it goes up a little bit it goes down a little bit but I would say that we're building complex systems and it's hard to see how some of these parameters matter especially when we don't have very many experiments to fully understand it and you may be right that it doesn't matter at all or it matters very little and like we'll find that out and I think we'll find that out with determinism if we create simulations before we start launching them so that way we can capture the data that we have and run it through the simulations and see how much it matters what if we take that same data change the curve how will people

react will it be the same launch another one and do some a/b testing and see well this time the curve was just a straight line you know did it matter I mean it's it's hard to know right but like here's an example of okay this is the broadening curve this is again the collateral vs. that the this I think it's collateral versus price yeah and then when you run a simulation this is on our website by the way it's a it's not CAD CAD but it's a what we call it like a narrative display and so you can see this is the actual price action this is price over time this curve is priced over collateral or price over supply this

curve is the actual price over time so if we just run a simulation after simulation you'll see the price kind of who knows it changes every time sometimes it goes up sometimes it goes down sometimes Hatcher's win sometimes they don't any other questions lots thank you for your presentation I'm actually going to give you every light question maybe even with a bit of smile so so you probably know that blockchain started as very libertarian in a sense that people who did the zero on Bitcoin had this libertarian ideas and it does

seem that your talk is a little bit like on the left side so the question I have is your system is it agnostic right versus left if libertarian guys come and say you know these children of Paris when they grow old they have to pay back this money so I use your system agnostic or here's some political flavor and the second question is one question okay I would say that it is as agnostic as any other crypto network right is Bitcoin agnostic is a theorem agnostic in the end it is a free-market tool so it kind of has some free-market flavor but all these tools can be used how you want so

if you I mean the left versus right is just one dimension there's so many dimensions we're so much deeper than that so like if maybe it's you know I would say that it generally leans towards pro-social people right people who care about communities and creating value for communities and less towards like like finance years that are just trying to make a profit but I wouldn't say that you couldn't use it to be you could use it for being pro-life you could use it for being pro-choice right you could use it for any any cause that you want if you compare your ideas to what the italic is preaching with

radical markets and things are there like two different directions on one single thing are there are two different groups in the community like or I see it as very similar same goals different different implementations different focuses like see the clr mechanism and get coin is an amazing governance mechanic about how do you allocate other people's money but it still is other people's money we're not you're not creating an economy on get coin that's rewarding you know good decisions you're actually just like having an altruistic donor throw out a bunch of cash and then everyone's like

oh I'll put a dollar over here because I want money to go there right like it's it's still other people's money but I think it's also a huge governance mechanism and I'm really excited to see conviction voting plus quadratic funding right like that that's really exciting to me it's also on Sims github issues so like if for our conviction voting implementation so is I think it's together but if there was one more yeah cool things so first I love the project I think it's a beautiful idea and I

actually had Elinor Ostrom as a professor in college at one point so she'd be really proud I did want to say though so what is the connection between the actual outcomes right that occur in this school public funding system and the price it seems that this only the price only increases because people have pro-social motivations they want to get into helping children but it does not connect to the actual outcomes of the system and perhaps you obfuscate over that with the voting system I'll let you answer yeah there there's actually a lot

of opportunity here to include kpi changes right if you say hey these test scores will determine the shape of the curve right you could you could do that with with what I'm trying to start with is really modeling these systems and building a clean slate a very simple system right so that we can build a model off of that and then we can start experimenting with all sorts of cool integrations about how do we take the actual value that's being created and have it affects this market in our baseline system do not at all that's not it's too

complicated and there's too many variables we want to cut out as many variables as we can for the first few of these and make it as simple as possible it's already so complex in some ways it's very complex but we want to make sure that there's just one mechanism that we can study at a time when we when we launch our first models and then like like there's so many opportunities for funding streams like using our die or some like lending the collateral in these curves out on compound or our DSR and I'm not gonna do it like I'm gonna say if if I have my way I'm gonna say no we want one funding stream it might be inefficient but I'm looking 30 years down the line if we have a really clean

model it's very simple that we can see how people behave in this model and start building the model up just like the first bridge the first model for the first bridge is horrible and then you see like Tacoma Narrows go crazy right and by the time they had that they had like a complex model around bridges and they just add in wind resonance so like oh we don't want this to fail right so in our first system it's just simply we're basically creating an economy where the future revenue stream is is donations but those donations aren't really donations their impact investments so there's people who are sending money in and getting money in return they lose nothing and it's really

like it's pretty amazing honestly I always forget to mention this a failed Commons is what we have right now a failed Commons is meta cartel or mullick right it's a donation system everyone who puts money in loses money what's cool here is that people are incentivized so we take that as the default where if people donate money and number go down well that's normal donations if if people donate money and number go up well that's impact investing right can I ask quick follow-up I think we may all have to leave in a short moment so at the moment is there any other motivation for someone to buy into

the bonding curve other than gross social other people are buying into it I think the price will go up well the price going up isn't necessarily pro-social right so the we want to make sure that the Hatcher's are very much aligned public people with reputation and that their incentive is to create value but after that it becomes a speculative market right it becomes an opportunity like holy it when there's a lot of these Commons out there will basically have almost a stock exchange for non profit causes right it's like whoa I can't believe how cheap save the Amazon Commons is good that's an opportunity I'm gonna buy save the

Amazon tokens because number go up I mean that's that is greed jiu-jitsu you know and that's that's what the common stock hopes to create and just to end it on a on an example in 2004 I think 2002 or 2004 a Stanford research has created this thing called folding at home it was a application you could run altruistically on your computer in the background and it would fold proteins for cancer research and people were doing this all over the world and there was a distribution of like Stanford researchers were getting free computing resources from altruistic people but

then in 2014 someone made that into the proof of work of a blockchain and they called a cure coin and now ever since they launched right away they were number one on the list of contributors to folding at home and they have never lost their top spot because instead of just doing it altruistic alee the people who mined cure coin are folding proteins for cancer research they are creating real value for researchers and they're also rewarded for doing so so now you have people who are folding proteins and being rewarded but you'll also have people who don't care about curing cancer you have Mineiro miners

that they don't don't care they're just they got hardware they want to use it they see the cure coin price go up and they're like oh I'm going to stop mining to mineiro and I'm gonna start mining cure coin I'm folding proteins for what who cares I'm making money that is cool that is crazy and that's what we the common stack wants to do for a non-profit causes thank you guys [Applause]