Puja Ohlhaver: Why Community Currencies Are Crucial for Governance in DeSoc. Ep. 588

Transcript

proof of stake protocols tends to end in like a Paro distribution and oligopoly proof of personhood protocols like my paper on idena compressed to zero show also ends in an oligopoly in proof of stake you're you know it's an oligopoly in terms of stake and in Pro of personhood ends up being who can control as many accounts as possible and so the real challenge is how do we actually move out of this like one you know prer distribution to something that's more like a gaussian distribution of power and 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 differentiate us even if each one of those communities succumbs to kind of a Paro 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 which talks about the Technologies projects and people driving decentralization in the blockchain revolution I'm Fred ANS and today I'm speaking with Puja olab who is a researcher and lawyer and um innovator so very interdisciplinary for sure and things about using blockchains and I AI to empower communities and Advance um

decentralized Corporation before I talk with f um let me tell you about our sponsors this week if you're looking to stake your crypto with confidence look no further than course one more than 150,000 delegators including institutions like Bido Penta capital and Ledger trust chus one with their assets they support over 50 blockchains and are leaders in governance or networks like Cosmos ensuring your stake is responsibly managed thanks to their Advanced meev research you can also enjoy the highest staking rewards you can stake directly from your preferred wallet set up a white label note restake your assets on IGA or symbiotic or use the SDK for multi-chain staking in your app learn more at chorus. one and start sing

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for today Deploy on the evm compatible nosis ch chain or secure the network with just one gno and affordable Hardware start your decentralization journey today at nosis doio hey paa uh thank you so much for coming on thank you for having me it's this podcast has been a long time coming we've been trying to schedule this for at least two years and kind of like the the the subject matter has has changed um multiple times because kind of you keep publishing things um so um before we dive into the paper that you put out a few weeks ago um tell

tell us about kind of yourself and how you came to find yourself in this kind of like decentralized governance you know space kind of you know Among Us crypto people sure um well I I consider myself uh amongst the crypto people too um but my hisory I I look a lot younger than I actually am uh so I have a quite a long professional history starting in public policy and uh out of college I was thinking about questions of uh economics and politics and I tended towards more the libertarian side of things uh and

then I went to law school and at that time we had the financial crisis and then I started digging more into how uh Financial systems work how monetary policy Works uh and then after that I worked in corporate law and corporate governance uh in Wall Street got bored uh started a medical device company uh and then was hit with the pandemic and got pulled back into public policy in questions around uh you know managing the pandemic uh and I was that was my first uh interaction with Daniel Allen's group who I'm now part of uh and at the time she was at the Harvard stord Center

for ethics and so I sort of put my public policy hat back on uh and then when the pandemic was over I shifted gears to thinking about uh consensus protocols and in particular this problem with about me and as I was thinking about that you know it kind of I I have sort of this intersectional background across law politics and economics already and so it uh it it it started uh this now several year investigation into how do we represent uh identity uh in order to actually have functional governance in these distributed protocols in Dows and

that has now been you know a two-year I think investigation and several papers which we've tried to talk about a few times uh and yeah that's where we are you you said that kind of like when you first came into this space It was kind of in the context of me how how did that happen because it's quite a leap from what you did previously right because me in a way it's very it's a very technical somewhat esoteric thing especially kind of coming from a public policy background well so I was watching crypto for a very long time so before ethereum launched I was in paloalto as an

entrepreneur building my company and my recreational hobby was going to hacker dojo and listening to different protocols talk and that's actually when I met uh vitalic boering for the first time before ethereum even launched and my take on blockchains then was like this is a really interesting um uh 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 I mean

in the io boom in 2017 um and then when the me 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 uh and because I been you know worked on Wall Street and had uh a Securities background corporate governance background uh I had some thoughts about order flow and so that just I think made me unique uh 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 um yeah I I had enough of a background to to to engage that

conversation cool maybe let'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 we'll dive into the last one um kind of more deeply but uh can you take us through the work you've done sure so the first paper was a decentralized society paper uh finding web3 soul and that was written with Glenn wild and vitalic buan and that was just a very uh primitive and initial step towards introducing non-transferable atives uh in particular memberships to social groups which could be possibly revocable and

there you know thinking about identity this seemed like a very basic uh primitive to have um and everything in crypto is transferable it's like okay what happens when you introduce something that's non-transferable and and what can you do there um 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 you know called memberships to groups which we can represent but that had its limitations um 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 uh and then of course there's this other problem around standardization um identity is not just about your membership to social groups

it's also about you know where you have economic stakes and economic interests and when you try to separate these two things right money and voting for example um these systems can conflict and it leads to all kinds of problems like capture and overreach which which my current paper talks about um after the decentralized society paper I decided to take a look at uh a proof of personhood protocol in depth and the reason why is we we had made a critique uh in Doo around proof of personhood uh that nobody really took seriously and and I kind of anticipated uh with the rise of AI that

a lot of um AI companies would be relying like in particular open AI would be relying on protocols like worldcoin uh to establish you know rails for Democratic governance and and I didn't think this was going to work I thought this was going to end in just oligopolistic control and competition so uh I was very fortunate to uh meet uh Misha the founder of idena protocol and he was willing to uh open the hood on his protocol and you know an analyze it and see what actually happened um and basically validate some of the critiques that we had made in Doo U while also expanding it as well uh so in that paper you know the the big

Insight was that uh when you try to separate humans from Bots with you know a global authentication mechanism um even if you succeed at doing that which is idena did it invites this secondary problem uh which I call deao civil resistance where you have account consolidation or a set of participants who have a large incentive to informationally control other accounts and extract rewards from them uh ending in ending in oligopoly uh so that brings us to the community currency paper uh which which I just released and you know there there's actually a missing paper in

between uh about sublinear identity staking which was like a second phase in the idena protocol and as I was writing that uh the community currency idea uh came to me and I thought it was just more much more important to get that out and I put the the sublinear identity experiment uh on the back burner um and that that takes us to where we are now cool so the the the um Community currency paper that you uh put out um has two subtitles um they are the price of attention and cost of influence in a network age or the price of entry and cost of exit in a network networked AE age um that's quite a mouthful um maybe

before we dive into kind of like what what kind of the the the larger problem is and kind of like how how you think we can address it um what's the tldr of the paper so a lot of people in crypto particular uh are interested in decentralization as a goal and what do we decentralizing we're decentralizing power and so how do you think about power uh I think about power on uh two 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 um

aew that's kind of encapsulated in like Securities laws as well um and so when you think about decentralizing power you have to think about decentralizing information and control and you know what is information it's the stuff that we sort of take in and 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 uh the sort of tldr highle view I'm trying to come up with a framework for decentralizing not just information control but by extension our very scarce re human resource of attention right and and

influence okay and that kind of leads you to kind of posit this concept of community currencies to kind of combat uh this uh this balance that 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 Paro distribution right um and allop and you know proof of personhood protocols like my paper on idena compressed to zero showed also ends in an oligopoly in 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 one you know pedo distribution to something that's more like a gaussian distribution of power and in order to do that you know my fundamental con 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 around win and build coalitions around that 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 differentiate us and and represent those as groups so like even if each one of those communities succumbs to kind of a Paro distribution right the the interaction between all of them and how they recombine uh 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 Pito uh distribution is and why you think it's less um less uh uh desirable than a gaussian distribution another way to think about it is like oligopolistic competition so just where a handful of actors end up uh

having power right and so it's like a skewed distribution right um and whereas a normal distribution is where uh 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 olop with a handful of actors that control it right um and and that's kind of like if you look at like ethereum for example or Bitcoin like we have these staking pools that are gigantic um or or mining pools and right that's not and there's sort of this 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 okay how do we actually get more actors in the system rather than these you know gigantic you know oligopolistic coalitions okay I I I I see what you're getting at if you kind of look at um a um collection of kind of net networks of networks so kind of like almost kind of like you know Federation of networks or something where kind of like there is a power distribution in each Network and they're kind of like coupled um much more strongly within the network than kind of to the other networks um that's kind of the distribut 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 of have one big um globalized Network um isn't it possible that you can do much more um Advanced and uh ambitious projects than kind of you can undertake if you have a thousand smaller networks well I I'm actually imagining both I'm just trying to actually imagine like I you do need Global skilled 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 s that start you know influencing and

controlling the resolution of 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 and Global coordination but in a way where you know Global corination doesn't just swallow up um you know local communities that actually have a greater stake in the resolution of the problem so a lot of you know in the paper I talk about two key principles um plurality is one but subsidiarity is the other and without subsidiarity we we we end up in in in a sort of power competition uh at a global scale uh and you know I think that's bad for risk management that's bad for

information integration and and and also bad for human agency okay um can you give us an example of where you think um kind of like this Global power distribution has kind of Eed out um the the the the local um Optimum kind of that that the stakeholders would kind of the local stakeholders um would have achieved um but couldn't because there was kind of like this overlaying Global layer I mean I think we're seeing that in real time right today and politics right so attention

is uh we we we all are participants in social 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 kind of the purifer of meme coins and so on um and that's leading to outcomes that are uh not not just sort of disconnected from local circumstan but but polarized um in a way that is just disconnected across the issues so for example in democracy I'm an American um you know the the the design of American

democracy was there's this presumption that you know Representatives could uh uh come to Congress and reconcile their differences and that they would be representing a population that had distinct interests that were localized to their geography and what 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 polar polarized us on issues that are really kind of disconnected from what we care about in our daily lives right um and and people are just sort of outraged about things um that are really far away from them and so we're seeing

already kind of the breakdown of you know Democratic governance in in in places like my country in the United States because people are polarized um not not even on you know the basis of things that matter to them locally but sort of what they've been um uh what what they're seeing on social media and what sort of outrages them and what what gets the most engagement right in attention hacking uh so that's like a very clear way um in which we have you know we're we're failing to provision you know shared goods and public goods um you know the other way which is the the what the paper uh talks about is in

corporate governance and failures in corporate governance in corporate capture and cor corporate overreach um our participation in like non you know uh decontextualized communication and in social media there is also having an effect uh on our ability to you know Steward uh corporations and like shareholder governance so this is Guy Ezra Cline and kind of like his um he he makes the point that um kind of this um polarization that we're seeing kind of comes through the decline of local news outlets and newspapers um and the fact

that kind of you have kind of like if you have um one kind of global attention auction kind of the things that um that are most sent uh end up being the things that are kind of like most reported in kind of like the local Nuance um and the kind of like in a way um unartistic um nature that kind of like newspapers used to have when we were kids um that this is kind of this goes out of the window because kind of 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 um things to to read kind of like about local politics and so on um do you think kind of like this is a symptom um that kind of you guys are describing symptoms of the same situation in some way yeah yeah I mean absolutely uh I think we're we we are all seeing the same problems and we're trying to come up with different solutions um my solution in the paper is to introduce Community currencies that actually reflect the groups and memberships which you participate to and one of the things that I allude to is

that we can this can unlock uh things like quadratic funding for news or plural funding which is even richer for news um and enable the provisioning of information and news at many social levels uh rather than just sort of at this exclusively Global level um which ends up becoming you know P power contests um and even like meme 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 um way to kind of address this and it's kind of it's It's got this kind of it's got basically it's a dual token system um and kind of there are um

tokens that are transferable and there are token that are tokens that are not non-transferable and kind of like you try to achieve this balance by kind of um having them into play um 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 discretion can irrevocably lock some of amount uh as non-transferable Community stake and uh the square root of that determines your voting power um and that 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 and so whereas today we kind of have a very simple one token one vote system where money just buys both uh you know influen and attention uh or you know uh 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 um at every inflation interval uh or you know Community Based income that you receive whether you're going 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 um and use that to communicate with other communities and gain gain information so introduces actually a trade-off space

between information control which is as I was saying at the start of this uh podcast are like the two sides of power right and uh basically um if if you kind of sum up both of these parts for every person are they constant does every person kind of get the same um amount of um income to kind of distribute um across these two um vertical well each Community will be different right and so each Community will decide uh how much inflation it has um 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 groups there's artist collectives right and and they're going to have their spectrum of sort of like non-f financialized to financialized um ways to distribute tokens uh even and so each Community will be different in its policies uh but it will at least be transparent right so you can at least see for example if I'm a member of a church and it's kind of a scammy financialized church that'll be a little bit more obvious to me um than it say a church that is less financialized um and then I can make a a decision there um so you know the model accommodates like a spectrum and I think

the nice thing about it is it's the decision of uh community members themselves um and how they you know whether they decide to stake or whether they try to have currency to communicate with other groups that like the It enables an expression of like degrees of membership within the group um and it also enables like you know rapid recombination and evolution of a community uh with new members uh along you know partial differentials so it's not the sort of like in or out thing okay 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 um and some might say well uh you're sort of socially farther from us um and so we're 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 um so we can sort of protect ourselves like every Community has a different level of risk tolerance okay and basically this um this community currency that I get from that that Community I can use both kind of like for staking in the community kind of to um to grow my influence within the the community but I can also use it to kind of kind of you said buy information in in um kind of in the

larger society how do I picture this kind of like by information or or influence that kind of you you talked about so when I say you're buying information I'm saying your non 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 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 tokens enable you to you know buy 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 uh 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 tokens and that goes into like their treasury um 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 know Community Based income uh you know um a CBI uh as a member uh and how they how communities decide to proportion that is another question one thing that I suggest is making it proportional to the square root of your stake um but communities again will differ on this uh depending on how financialized or non-f financialized they are and how is the pricing done so kind of like for instance say I want to particip in Twitter kind of like H who decides on kind of like H um what the entrance Fe

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 uh yeah so every Community has their own currency yeah um and and uh they will trade those currencies you know part members of the community will trade uh their currency for access to other right communities um and their channels and their resources um and the laws of sort of supply and demand work here so I'm not setting interest rates I'm not saying specifying even how communities will again even a porate

their their CBI how they do that depends on their internal governance and the model that I propose is basically square root voting where your you know influence the in the community is tal to the square root of your irrevocable stake or your community stake um and you know there's mechanisms that can come on top of that like delegation right people can uh vote proportional SC of their stake to hire a delegate or an agent right to uh help manage their resources um but I I think the key Point here is that uh you know your 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 further with like bridging bonuses and correlation discounts it's that's a little bit more complex but um you know that that's that's the fundamental model okay may maybe um let's make this more concrete right so kind of like um let's say kind of this this model is kind of set up 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 um my 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 um so you know I think actually a really good place to think about this is like music because music is a shared good 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 um where it it's not just saying an artist that's coming up with music but it's also the artist interaction with their say um their followers and Their audience

and you know an artist could say okay 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 um and other sets of artists can do the same thing right and then form a kind of alternative economy in music um and if you stake for influence for example with an artist that might influence the artists like where they tore 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 um you know an artist Collective could do the same thing um a research group trying to form shared

intellectual property can say okay we're a set of people we all have you know research interests and uh as this research Community everybody is going to get some set number of tokens or they could even differentiate amongst themselves somehow um and then just allow for staking for influence or using it as like a communication currency to engage other research groups but of course it requires other research groups in place that are willing to like accept that right um as a as a token and see that as something of value um so yeah I mean I didn't really go into the paper about the cold start you know chicken egg problem but I think there are enough sort of verticals where this could take

off where people just see both uh Fiat currencies and both say you know digital currencies like Bitcoin and ethereum not really um you know expressing being as socially expressive or expressing their value or being extractive for that matter how does this kind of tie in with meritocracy because currently kind of like I understand that there's often um kind of oligopolistic kind of power structures at play but people who wield um uh disproportional influence often also wielded because they're just very put put together and kind of they have good ideas and um they um they make

valuable contributions so is that somehow reflected in in this community currency proposal kind of like as someone who's kind of um a thought leader in my 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 uh prediction currencies right um and so uh say as somebody who in in the classic Cas is like say a politician right um and you kind of want to be able to let a

politician also share in your upside and downside as a community and even like stake and make a bet right um and prove that they're actually better at predicting outcomes right and that's like a that's a meritocratic mechanism right um the problem uh is in for example specifically in the case of prediction which is where a lot of people who are focused on meritocracy you know that's where they tend to to emphasize the problem is depending on your position in a social network right if you have a lot of lot of money a lot of status a lot of followers you can actually influence the outcomes you're predicting 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 uh shortages or like Bank runs um that can be started just by people who have a lot of influence um say over the deposits uh in a bank and they send an email out to those people I mean we saw in the Silicon Del bank run right um any any bank can go under if if everybody runs for their deposits at the same time um and especially if a VC sends you an email and says hey you know this bank is going to go under then suddenly every goes you know run so that it that it goes under right 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 sep seate uh prediction and and meritocratic contributions from just massive amounts of influence someone is accumulated because they have a lot of you know followers on X or you know a lot of a lot of money um does that answer your question yes and no so it to me it sounds a bit like you're throwing out the baby with the ba bath water right so kind of like you you you're saying okay if you kind of have a very steep kind of distribution of power in a society you

automatically kind of get worse outcomes than if it is more acable so where I think kind of like it it it's possible that this this happens but I think kind of if you look at um kind of the amount um of power that kind of like some people have today it also enables us to do really cool things right kind of it enables us to kind of um do things like uh travel into space or kind of do things that kind of like any local community has no chance of um kind of achieving and in some way kind of you you need to you can't make everyone's crazy ideas come true right

kind of like there needs to be some sort of mechanism to kind of Select so you know I I actually think um so I I think a lot about Innovation um because I was an inventor an entrepreneur too um and the problem with it's not that I'm trying to my goal is not egalitarianism or equality right that's that's one person uh one vote and that has its own set of problems which the idena paper went into um but in order to you you think about where Innovation comes from right it comes usually at the intersection across unique information streams it doesn't come uh it doesn't arise within the

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 two problems with the oligopolistic competition one is that it actually stays oligopolist and it doesn't turn into win or take all right the risks of becoming win or take all and Monopoly are just really severe and I think that's understated but even if you assume you have just alistic competition like you don't you know the the structure of communication underneath um you know each of those oligopolies um might you know might actually stunt Innovation and and stunt creativity because uh you know there's lots of pressure to to conform um 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 or not just local environments but medium level environments and even higher you know other other higher level environments and um 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 um and us you know becoming informationally the same is you know it's it's more are trending towards you

know humans acting like Bots and humans acting like agents and you know agency and and being informationally unique uh I think is a is a key ingredient to Innovation um so it's seductive to think okay well let's uh let's just sort of centralize power and information in some something that has that's taking us to the Moon um and we haven't been able to you know get to the moon uh in a long time but you know there's there's also a third way which um harnesses the collective intelligence of people um that can get us farther than to the Moon 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 um of that happening when you don't have uh enough participation and enough you know uh information differentiation amongst the set of participants um so I'll stop there and let you let you challenge me more yeah so I'm I'm 100% for participation um I'm just kind of against giving everyone kind of the same vote um in kind of kind of in these societal Endeavors um regardless of kind of what their actual contribu

contributions and skill skill sets are but there's not the same vote that's not the model right okay then maybe maybe I haven't understood it properly so tell me how kind of the influence kind of um uh varies from person to person and how kind of i as a participant would kind of choose between kind of um staking um my currency and kind of investing it or spending it elsewhere so I have a bunch of groups that I can choose to participate right and me kind of and this is kind of where the voice and exit part comes in right me you know just losing interest in a community um and moving to another one

it doesn't separate me from that Old Community I still receive CBI just sort of declines over time with inflation but I join a community where I'm like okay 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 are delivering relevance to them but this happens also at many scales right um you know I'm there's local communities there's umbrellas there's coalitions there's NATO right um then there's like planet Earth right and so um in in all of these communities it

really depends on how much you've staked right and everyone is going to stake differently and your stake gets step one square rooted but also attenuated based off of how informationally similar you are to everybody else and this is where the bridgy bonus and correlation discounts come in right so if you know I have say 16 tokens State my with a square root that's like four that's quadratic staking I get you know four votes but if I'm in this community and surrounded 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 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 informationally unique they get a little more influence and that's how we spur you know information exchange uh of useful and non-obvious information so um it's it's actually what it's what it's doing is treating elevating people who are very informationally unique in the system and have uh and then when you combine that with you know prediction currencies also with an ability to like predict outcom so it's actually it's actually like hyper meritocratic um and the reason why I

start the paper about corporate governance 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 we'll know corporate governance has these major shortcomings right in terms of capture and overreach and the same thing is true at Democratic governance so like can we actually capture the strengths of either of these systems and compensate for their weaknesses with with something that is much richer um and and much more you know like less chlorotic because both of the systems can become very sclerotic right I can see how both of those systems kind of you know can fail

and do fail let's kind of move it back to the Eli five level that kind of clearly I'm on here so let's say kind of let's come back to kind of like your rose garden um example right so kind of like say we are both kind of members of the Rose Garden Society um and you are you are um you're you're a Horticultural culturalist and kind of like you you you are a world-renowned rose uh expert and I'm kind of the oh pretty flower kind of person okay and um and then you go oh but that's not actually Rose that's a pan and I go yeah but that pretty so um so kind of clearly in my View kind of um

if the goal of the society is kind of to further 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 Comm communities that reward expertise right and deliver more roses if everybody wants roses well um will become like larger like have more participants they'll have right they're achieving their objectives so if the the objective of the community it depends what the objective of the community so the objective of the community is we want more rose gardens and somebody comes in and their completely confused about what's a rose

and a puny right um they're probably not going to win um uh say quadratic funding uh to maximize a set of roses for that Community um and I think a key part here maybe that that's missing is how do communities uh fund their their goods yes I think that's that's kind of that's exactly what we're missing here yeah and right and so the the idea is is through quadratic funding right so um uh community and and this is actually one of the uh there's a lot of open questions about how this works but you know either through inflation or through uh the communities of reable stake those can serve as like actual matching fund

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 uh each put you know you know their funds on 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 further than that but even under that model right the quadratic funding model what ends up getting funded are things that uh are you know there's broad-based consensus in the community that that's what the community wants um 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 um you know say you're living in a society of bots right um and there's a lot of bots in your group human Bots um humans acting like Bots then you can do a correlation discount based off of how informationally unique they are and then you arrive at a set of like Goods that the community thinks is valuable um and it's actually more likely to be a stable configuration or like a stable gr set of goods because very different people within that group think it's valuable and and that's like what's key and if you don't like that outcome of that stable config figuration of like okay this is the broad you know set of goods

that most you know very different people in this community agree on are good then you can you know uh exit so to speak and spend your currency your transferable tokens elsewhere um but still continue to receive the the CBI which diminishes over time does this approach kind of assume um that all of these different measures that kind of you could do that you could take to kind of improve the state um are mix and match so that you can kind of like take any linear combination and kind of they work because often kind of like um maybe this the Rose Garden example is not the best here but say kind of like certain um certain measures for kind of um

increasing Rose output by kind of um sprinkling with some fancy kind of fertilizer and kind of um genetic tweaking and kind of like putting um kind of sunlights over the over the rose gardens and so on maybe that they they they are not cohesive right so kind of maybe they don't form a cohesive strategy so kind of like how do you um how how do you account for the fact that sometimes um different solutions um cannot be um kind of p in any combination so it's the plural Community Asset resource exchange so it's like I

actually really like this analogy around roses because there's like sunlight there's water there's fertilizer there's a lot of resources that the communities aside how to how to manage one of the features of this model that I'm proposing which might not be coming through is how Dynamic it is like so I expect group 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 and what they want right so like I imagine in setting the agenda for Community like there there's probably a

periodic intervals okay we are going to quadratically fund some 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 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 uh peanes and Roses are complimentary and they invite a specific kind of bee that cross-pollinate them both and we can get more both if we do peonies you know know and they make their case and then somebody else is like well you know I think we should uh pave over the roses and make a parking

lot right and so like these different proposals will get um you know different uh funding uh quadratically you know based off of the set of members and you know some communities might have char Charters which they will never become a parking lot and some communities might be open and allow like that adaptation to happen very quickly um but it really depends on uh you know what the members of the community you know stake and and vote on right um so I it's unspecified it it's just a way sort of it's It's a way for communities to you know coordinate and express

themselves but how they coordinate and what they you know what they coordinate around and the restrictions on that really depends on the community and as a person for example I'm I'm going to probably you know be more interested in a community that has certain restrictions on like not Paving over ever Paving over the Rose Garden with the parking M right I have so many questions um 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 um as a problem field in Dow govern governance all the time so kind of like vote turnout is historically is is really has been really low um and then

kind of now you make them make people kind of vote on things like rose gardens H how do you how do you make sure people take um this seriously and don't kind of um kind of rent their Vote or delegate their Vote or kind of um bribe others or don't don't do or kind of like don't vote at all there was like three questions asked than that um so I'll try to take each one one by one I don't think delegation is bad um you know uh as and actually part of a lot of the paper is spent talking about principal agent problems and using Community currencies to align right your better align your agents with principles

in terms of voter turnout uh you know you can use uh the set of participants who do show up to vote with a with a COR ation discount or bridging bonus you can Elevate consensus across even that set of people who show up um that surface is more likely surface shared goods and common goods so I don't I don't think the voter turnout problem is is a real problem um and neither is delegation in terms of bribing now that is why I have a whole section and actually the the section immediately following um introduction of the mechanism it just goes straight into enforcement because everybody who's dealt with you

know a DA or crypto protocol knows that this is the hardest problem um and so you know we we can shift gears and talk about that you know so the the bribery problem here specifically arises um you know the the square root when you have your influence um square rooted based off of your stake it creates a very very strong incentive for people to uh uh just you know rent their votes or sell their votes rather than or buy somebody else's votes rather than just staking more to higher cost right yeah and so there this requires um attention and scrutiny to focus you know

on bribes importantly this is also an attention problem and uh in the paper I introduce or I reintroduced this idea that we introduced in Doo uh around Community recovery uh which is the idea that um every Community will have uh a kind of computational jury um that will when presented with evidence investigate something right whether it's you know to differentiate is this a bribe uh or is this coercion you know is this a victim or is this a perpetrator um and uh using these computational jurries across multiple perspectives um and this is also where State comes in because stake differentiates you where you have staked as a participant differentiates you you

know uh 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 uh or coercion um and that computational jury is leveraged uh to adjudicate these cases the key to making this work is not just harnessing multiple perspectives um and informationally unique perspectives it's also um 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 is the higher stake issues always have to be more local issues if the higher

stake issues are always Glo if if Global Currency or Global stake is more valuable right than local currency then then the sort of game you know game theoretically um it just sort of gobbles up all the local layers and we end up kind of back in This Global oligopoly situation or winner take all situation right um 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 um why uh like why would this ever matter how would this ever take off I think we are in a crisis of legitimacy right um we are in a

crisis where people feel not in control um that you know politically um 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 interests um and you know I I don't to turn this crisis of legitimacy around requires starting where legitimacy start you know where legitimacy takes root um 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 biggest largest global whatever but if you're a parent if you have kids and you want your kids to kind of grow up um you know in an 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 matters most and is relevant that is tied to actual predictive outcomes and you know measurable benefits in their life then you're going to have to start thinking about well how do you recontextualize attention and how do we not just like auction it off to the highest bidder um and so I think you know people who care

about future Generations care about kids care about um you know legitimacy will have a very strong incent to start experimenting with this do you have any plans of kind of like putting it um into action kind of imminently and where I think there are a lot of interesting experiments you know there's a lot that was said in the paper right I I mean we haven't even talked about the AI and like yeah it's a very long paper it's like we link to it we link to it in the show notes it's like 50 pages it's like it's like 60 Pages it 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 communicate because I've just kind of gone too down in the rabbit hole right um I think um 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 um uh I and you know artistic institutions as well um research groups uh you know you know open source closed Source research groups I think is also a very interesting starting point um I 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 communities even within crypto right there's like the ethereum community there's a salon 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 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 um let them do these experiments and and see where it goes um 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 networks so it doesn't really matter where it starts I think it'll sort of start everywhere and there'll be lots of different experiments and if it doesn't start anywhere then like you know I I probably I might start it with um you know churches or something um which are you know non-f financialized institutions um and declining uh and in participation but I also think they're very important for social cohesion um 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 um so yeah I think there's just so many places you know

where where it can go and it'll it'll just be like a lot more fun right and a lot less um adversarial and antisocial it's a pro-social mechanism so if it's not making people like you know Joy and happy and creating goods and like creating economic shared Goods then then uh 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 to find out more about this and maybe um start their own uh Community currency yeah they can just reach out to me on on X um I'm not really good at 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 have to break the paper up into four different papers probably yeah so I have to do that first um yeah cool super nice thank you so much for coming on Pua thank you thank you for having me