VDAO Ep 11 Rethinking Systems: Resilience, Coordination & the Future We’re Building | Raphael

Transcript

Hey Raphael, welcome to the podcast. >> Hey, thanks for having me. It's an honor to be here. >> So, with every uh guest we've had on uh in these conversations on the topic of resilience and network states and anti-fragility, uh I I like to of get a sense of what is their why? And I'd love to to put that question to you, too. So, as a builder in in the space, what is your your why? [clears throat] >> Mhm. Yeah, it's a really good question and and it's it's actually a question that I'm not at the moment not 100% sure I can wholeheartedly answer. Like, I think that the space kind of changed a

lot. I think I know why I joined and I I still think that's very important. So, I'll I'll go with that. And that is when I when I read the Bitcoin white paper, I think that was in like 2013, a friend of mine sent it to me and was like, "Hey, you should read that." And when I read it, just like the way the the incentives were aligned there. So that's kind of trust is is produced in the system like you don't need to manufacture it. It's just like emerging out of the way the incentives are designed because malicious actions are unprofitable short-term and long term.

Um, I think that just like blew my mind because I think that that that it just it just eliminates a kind of rent seeeking behavior that I think is is very common in in human affairs. Like if you look at institutions I think and I think that's pretty well studied at the moment. There's like of course institutions are extremely powerful and necessary, right? Like people get together and they kind of bundle their interests into a common string and so so they have like more leverage and more power which I think is is very understandable and necessary. I don't think there's a world where this is not needed. Um but then very quickly these institutions

get a life of their own. It's really like almost I don't know if you if you're into like gestalt therapy and stuff like that like they they kind of become entities of their own and they have a a a survival drive like they they tend to want to grow and they tend to want to survive and at some point they become so big so unwieldy that they survive at costs of the very force that they were created to serve. And I think we we've seen that with I mean I'm just going to go out on a limb here like we've seen it with the church I think where like spirituality

and and the the the gospel of of Christ are I think like very obvious goods and then all the the things that the Catholic Church did and their role in various parts of human history were is more more checkered I would say to put it mildly. Okay. And uh we've seen it with with nation states. It's actually quite quite interesting to to think about nation states where they came from and stuff like that. But basically, we can go into that later, but I think basically like the the idea to have like a a piece of land that you control, that you protect against um outside forces is completely understandable. And just like bundling

these resources that are necessary to defend that against adversaries is very necessary. But then out of that, I think comes this institution and then this institution to serve this institution and so on and so forth. Finally, I think we we we can notice that at the moment very acutely that you we actually I don't I think at least here in in Europe like we pay more taxes than ever before and at the same time infrastructure is crumbling. Defense is weak. Internal security is weakening. Everything costs extra like you need right you go to a city you want to park on the street that you actually paid for with your taxes extra. You go to the

a registra to like register your new new home address extra. want a new passport extra you so at some point you're like okay so so okay what what am I paying for here >> inflation extra on your shopping [laughter] >> so yeah and this yeah exactly this is actually even more insidious right because like I think inflation always gets like people at least from from it gets kind of promoted as this thing yeah we we we're using this to fund social activities, right?

This is such an easy sale. It's like, yes, we're going to give to the poor and the elderly and the sick. Who who wouldn't want that? And it sounds so good, right? But then you realize that actually these are the very same people that get hurt the most by inflation because everybody who owns assets actually profits from inflation. The house prices are going up only. The stock market is I think like on a 30-year tear or like 25 year tear. No, basically more or less straight up only. Um, and so you realize, okay, this is like the the game is rigged and you start at least I started thinking about, okay, if if that's like is there is there a

way to for people to organize where this dynamic is not introduced or if it's introduced at least dampened? >> Yeah. I I find it fascinating what you said at the beginning there about like how the space is changing and you're kind of reflecting on where on your why at this point. And I I wonder if part of that is is about like when you first discovered crypto back in 2013 with the white paper, it's just like crystal clear that this is now this this is a a paradigm shift in technology and a new way of coordinating within uh between humans uh and in a really uh kind of pristine way. like the way that that

white paper is put together, it's really it it inspired like hundreds of thousands probably millions of people to get involved in this space right uh I mean who knows how many but [laughter] many let's just say many people were very inspired by that white paper uh and you were one of them right but now like what 13 years after you discovered that you're like we've had all this evolution in crypto and you're now like looking at the space thinking Okay. What is what is my why now in this space? Is is it still are we still honoring that uh white paper or have we moved far >> away from absolutely yeah I think that's that's a really good observation. I mean

it's hard to tell in a way right I think like in some ways you see like Vitalik still tweeting about cipher pond values you see an increase especially like in the last years of of like more or less private technologies like privacy pools the Zcash Monero still going pretty strong headstack launching blah blah so so you you you have this kind of okay this intermediation angle and privacy angle and at the same time so many crypto projects just seem to be like extremely happy to just like become basically infrastructure for banks, right? It's like, "Oh, hey, look, like you can save." And then like if you like I think that's that's like in the beginning I was like, "Yeah, actually that's super cool. Like the banks are

using it." But then I was like, "Wait a second. Why are they using it?" [laughter] And then I'm like, oh, oh, they they're actually externalizing their their their infrastructure costs, you know, like the average Ethereum validator, I think, like has no interest in running data centers for uh Black Rockck at the moment like they are doing exactly this, right? Black Rockck has like five tokens and as part of an Ethereum validator, you are funding their transactions stuff. They don't have to pay for the database. They don't have to pay for the upkeep of the network. Nothing. Like everything gets paid for them. This is like such an

obvious sell. But I don't think that's what we actually wanted starting, right? Like >> we we didn't want to just make fintech or finance more efficient. >> Yeah. at >> at our cost of which is exactly the same [laughter] exactly like to the institutions they go like oh look here's a bank and like arguable this is a service right and then it's like well uh then it's like okay so so depositing money is free and then we're going to lend it out to other people and we're going to actually like make money out of the lending and they're like okay I can get that and it's like well actually if you want to deposit it's like5 a month and it's like why okay I guess and And well actually now you're going to pay

for my infrastructure too. And actually we're going to close down all the shops with all the people in there so we can say like >> what am I paying for here is just bizarre you know. >> Yeah. And that's even before we get into fractional reserve banking. But let's not even go let's not go there. Like uh the one thing I'm really curious about uh also as a builder. So, we've heard a bit about your why and your your motivation around the the early Bitcoin vision as it relates to trust. I wonder what your take is on uh the topic of resilience and anti-fragility like what do these terms mean to you?

[clears throat] >> Yeah, excellent. I think they're of course closely related. I think anti-fragility is a very specific term that was co coined by by Nicholas Talip. What he's referring to is basically systems that I think it's two things. I think one is systems that are exposed to very frequent smaller fractures and and and kind of errors and through these actually start to or actually strengthen through failure in a way right like you have like basically I think that that's that's pretty known like if you are physically very active and and you kind of I don't know like you run in the woods and then from time to time like you fall it'll actually

decrease the likelihood that you break your bones when you fall. Whereas a person who's like super sedentary and just like sitting in their chair all the time for like 30 years like they'd go out to ski and just like fall while standing and they'll like break their hip or something because the bones are there's just like no t no strength anymore. The bones are like super weak. They just adapted perfectly adapted to sitting in a chair and not adapted to falling down from even like half a meter or a meter of height. And so I think that's a very powerful concept. What I what I really like about the concept is is that that you start seeing society very differently in the sense of the decisions that it's making. And I think

this is this this then plays into resilience. Like for instance, I think at the moment there's a big push towards electrifying very important parts of the energy supply in the sense that at least in Germany like there's a big push to get houses to use um like heat exchange systems basically air conditioning systems big air conditioner systems to to heat which uses electricity and also to use electricity to to power their cars with battery battery electric vehicles and at this and and so you have this like on the one hand you have this like big push towards

electrification. Then on the other hand which which I think like if you see it as a system it just makes it less resilient to fractures in the electricity supply because so much is then downstream of the electricity supply. If before like people are heating with wood, with oil, with gas, with like whatever, like 100 different things, if electricity goes out the window, there's going to be like I don't know 10, 20, 30, 50, 70% who are still able to heat. Whereas if like 80% 90% are heating with electricity, if the electricity is unavailable, then you have people just like not being able to heat in the winter, >> especially if it's centralized, right?

if it's a centralized utility scale supply like one disruption in that it's like >> yes and no I think that the centralization here is like at least the way I see it is is introduced on a on a very different level I think actually especially in Germany there's a lot of decentralized energy production in the sense that you have lots of houses with solar you have a little bit of wind you have like the these kind of burger energy which is like cooperatives where they like put up I don't know like a couple of megawatts of solar somewhere and that kind of is mostly to power the the the households

that are connected to it but it's all connected right and so like the whole thing actually has to work and at the same time it's not market and evolution driven it's very centralized it's driven by very centralized control which with with radical levers in terms of like deploying incentives towards systems like basically solar and wind had price guarantees. Wind actually still has them I think and is sometimes even paid for not producing.

And so this on the other hand creates a lot of fragility in the energy system because all of a sudden you have a very dependable energy source like you had in Germany with nuclear and and gas and coal is replaced with an unreliable energy source. It relies on on basically natural phenomena to occur, right? Like solar relies on the sun shining in there not being snow on top of the solar panel. Wind relies on the wind blowing and you have more dependency on electricity on the one hand and less dependable in electricity supply on the other hand.

And then all of a sudden you you enter a system that is actually highly fragile and not antifragile at all because it's still all controlled by a single party that has to say like oh uh it could be a little bit much. So maybe we have to shift incentives. Okay, that's a fiveyear process. >> Then you shift the incentives then until the incentives change the behavior that's another three to four years. >> So you're not like you have like an eightyear delay in the system. >> Yeah. It's just brutal. And I think this is very poorly understood. I think the the the current wave of um regulators is extremely blind to second order consequences. I I think that's that's

like in our system like when we think about incentives I think that's completely understandable because they are actually not what's happening in 8 years is completely irrelevant to somebody who got elected for four. It just doesn't matter at the same time like they're constantly bombarded from media from social media from like the constituencies with we need this we need that power. So they're in this constant election process where do where they optimize for very shortterm positioning right like especially in Germany you have like 23 elections over four years >> so there's an election constantly >> interesting

>> and and that yeah I just think this creates a a horrible set of of fragility in the system because it's it actually cannot like that you're you're just very forced to be very reactive in a system that actually needs a lot of leadership. >> I'm curious to to kind of wait, we'll get on to the topic of governance. I want I really want to go there because I know that's your your expertise. Um, but just to to move on to think about how this relates to uh like this network state space cuz I know that uh you've been around in that space for some time and you spent a bit of time I think a month right at HSA.

Oh, have you been there twice for one month? >> Yeah. >> Wow. I I didn't realize that and then Yeah. >> Oh, wow. So you've spent like tons of time in this space uh in real life like basically since the start. So I'm curious to hear a bit about about your experience there and also just like a higher level question around like uh the term network states like what does this term or even expanding out network societies and network nations like what term do you uh feel most drawn to and what does it it mean to you in terms of this emergent space that you've been involved in building since the the start?

Yeah, I think in in terms of terminology, it's probably like intentional communities or like yeah, network cities. I don't think I've been part of like a network state in that sense. Like a state implies a a degree of autonomy that I think the communities that I was a part of like just didn't have, right? like HCD was in in Chiang Mai once and then in in Heatsburg, California the other time when I was there and and both times of course like I think it's it's like it's happen it's it's an it's an event it's an intentional community but very much inside of the and actually very much on purpose inside of the local community

like I think especially HC like always are very mindful of integrating as much as they can of the local culture and local community, getting local people to participate in events and and just like being very um aware of these surroundings. Whereas a true network state I think like maybe like Prosper or Braxis or some like I would say aim to be at least a special economic zone and just like have almost if they can like different set of economic constraints and and um economic conditions than than their host country like almost be a little bit

separate from that. So I think that's very different. I mean I like I loved HCD. I think it attracted a very beautiful kind like set of persons and very open, very intelligent, very uh curious set of people which I think is fantastic. Um I think network states is is going to be a thing. I mean, I just think like like what what we touched on before. I think like in I think in some ways you could argue like what's the big difference between a gated community in Rio de Janeiro and a network state. You

know what I mean? It's like it gets a little bit blurry, right? Like I don't think like at least I don't think I think it's hard to imagine a government in the world coming up and saying like hey yeah here's this piece of land or by the way you don't need to pay us any taxes and who knows right like there are these spaces right like Gibber or but these are usually like they just they were created by force right like Gibbro was basically >> occupied by the UK in Spain and like never given back and at some point this evolved into a kind of understanding.

So if you say well the the idea of like private armies and fighting against governance governments in the world is not palatable then [laughter] I'm having a hard time arriving at the at the end result of having a truly autonomous zone like you would actually have to go and conquer that basically. >> That's a really good point and I wonder if that speaks to two things. one like the complexity of the space just and potential for like uh a kind of naivity around like oh we're here we are building network states but actually it's just a l because we're not like we're not just we're not about to fund an army to like

take a bit of land off a off a state you know I mean [laughter] like yeah I mean maybe there are people out there out there that think like that but I I don't know in the space I have not like that's not really the vibe And I think the other part is like and maybe this is why this is such a kind of spicy area is that it does lead us into those discussions about those things that are are more contested, you know, around like how did this land come to be in ownership of this country in the first place? What's the history there? and how do we if ever like is this land ever going to be autonomous and own governed by this community. So um

difficult questions once you get into that space. But I I can understand why uh coming back to just the basics of like community building and operating within existing state system is a much more um practical pragmatic way to go about building uh to the future. And who knows what happens in the long run. It it's quite possible that the current structure is going to go through some change and evolution anyway. And I guess the groups that are already in the process of thinking about these things will be in a better position to actually offer a vision for what comes next.

>> Yeah, I I have like a a spicy take on that. Like >> like if you think if you I don't know like you you've been living in Germany for some years now. Like I'm sure you heard about these kind of like clan systems in Berlin. uh like old clans or new like modern >> dig they're pretty modern like usually they're from Arabic system like Arabic migration backgrounds and they operate like basically parallel societies like they operate their own shops they take and they sometimes like take law in their own hands and like very recently there was like two businessmen that basically settled the

disputes under the laws of Sharia And it was very interesting in that sense that of course like Sharia is not law in Germany but since they were both businessmen they can actually contractually agree to any kind of set of constraints that they want to and in both of their contracts there was we are going to settle this by the law of Sharia. So this is happens and it's you know and that that's like the legal part and then there's the kind of quasi legal part where a friend of mine just knows from experience it's pretty common for for for like pretty massive kinds of gang violence and abductions and stuff like that. So these are completely

parallel societies that are already existing inside the state of Germany and just interface with it as much as they or as little as they can actually and as much as they need to. I think that's one current example. Or if you go back, I think that's probably a different example that's a little bit more remote. In in Hong Kong in the 60s until I think like 93, there was uh a place that was called Koon W City. And it was basically in Koon, which is like the the mainland part of Hong Kong.

There was like a place that was just off limits. Like the the UK people didn't go there. the Chinese, it kind of belonged to to the Chinese, I think, but it was like surrounded by UK and so the UK didn't go in there and the Chinese couldn't get there and then people failing there and it was just like completely lawless and just like there's it's it's quite interesting because there's pictures and it's like there were for instance there were no housing permitting system. So like people just like build a house and the next guy would just build a house on top of it and the next guy and sometimes these would just like be

out and it's yeah I think that's super interesting. I mean of course like again there like I think people just don't actually ever live in anarchy so like there also there was like a lot of like uh mob control a lot of like um gangs so very kind of impromptu governance and and control systems. Yeah, let's let's move on to think about that then in terms of like as it relates to your work in crypto discussion of governance. Uh so I just yeah I'd like to hear a bit about your journey like into this this space building in

governance and um just like I guess yeah your early experiences maybe and what you've learned and and what you're working on now. Um, and yeah, we'll see where it goes from there. >> Cool. Yeah, I think it it was it was mostly uh by mistake. [laughter] >> No, no, no, not fully. I mean, I've always been somebody who was like who's very interested in organizational developments. And then when the DAO happened in 2016, which was basically like a a crypto crowdfunding mechanism controlled by the community, that kind of made me think, hey, is there a way to to take these principles that are

enshrined in Bitcoin and actually use them to create organizations that basically would work as designs and cannot work differently just because the constraints are the way they are. And I've kind of been thinking about it for a couple of years and uh during that period was um governance research lead at flipsite and then head of governance at stable lab and I think in both got exposed to a lots of different dows but basically where I came to was that I think bitcoin works because the system is so small that the constraints and the incentives are sufficiently descriptive of the

system. So the genius is not just selecting these incentives but delimiting the system in such a way that the incentives and constraints are completely um are sufficiently governing all of the space that's available. And I think like if you look back in history even that was not fully correct because there was a time I think it was in like 2017 or 2018 where like the biggest mining corporation the biggest mining operator in the world which was a Chinese company who kind of I think I don't know like I'll just like who controlled like I think like 30% and they were basically considering an acquisition offer of a

second biggest Chinese company which had like 22% %. So these if they would have merged which was which would have been economically like correct because just like skay right they would have had 52% of the mining power so would have been able to significantly alter the blockchain and at that point like at that the reason they didn't do it was because actually then Bitcoin suddenly would lose one of its most important powerful uh features which is that people don't have to trust anyone entity for what's happening on the blockchain which I think in some ways leads to the

conclusion okay but then bitcoin is worth less so actually it's not economically viable for us to merge so in some ways I think the system works but for organizations the space is so much larger and I haven't found any incentive system that sufficiently uh governs the whole space because the space is just too big. >> And this is why why I actually think that >> programmatic governance is is in my point of view not achievable. >> It's a deeply human problem and I've come more and more to the conclusion that it's actually about um about what we discussed earlier about

resilience and and fragility. It's more it's it's a human issue. It's a it's a consciousness issue really. It's like any governance system will stop working if you have enough malicious or illinformed participants. So pretty interesting. So do you think it like that a lot of the experiments we saw in the Dow space where we're were trying to achieve that objective of like fully autonomous governance that provides incentives and and that that those have failed and we've learned from that or like what is your yeah what's what what led you to to this conclusion?

I think just by like thinking about how big the space actually is and and like if you think about like all the like I did a fair amount of like governance design and then you always like starting about hey okay so what's what's going to happen if that happens and what should we do about when that happens and >> you quickly realize that like you'll never finish this game of whack-a-ole right it's like it's just like >> um that's one thing I think and in terms of like th experimenting with that I think there were some but I think Mostly everybody just com just just like copied compound and basically said like okay token weighted voting one token one vote this is

and and they like I I I think there was some openness to experimentation but not a lot and I think the reason for that was that basically it's of course like kind of scary I think governance is is is basically about control right it's like how do you make decisions And you want to have some like you want to to make sure that you have that certain decisions just can't happen and you have some idea about how decisions will happen. And so that leads to a certain kind of conservative approach and not a lot of risk- takingaking and experimentation which I think is really really sad because in

some ways I think it's highly unlikely that the current form of the corporation is like the the best possible way to organize human enterprise and this would have been a huge or I think still is actually a huge chance to experiment at scale with real takes and learn. >> Yeah, I still I I've I don't know, maybe I'm naively optimistic, but I still think that will happen. I think it the history of the evolution of business and just human interactions is that we'll seek out better solutions. And I agree with you like there's a lot of I mean a

corporation is it works in some ways but there's a lot of downsides and uh there's a lot of benefits that we can get from using the blockchain. But one thing I'm I'm curious about to hear your take on is like this idea of fully automated governance compared to more um subjective or like humanled decision-m because I guess once you have a once you have a fixed governance system like Bitcoin you're kind of constrained by that whereas if you have a human in the system that can just make autonomous decisions then there's there's less conr strains constraints in a way and

I don't I think it might have actually been on your on your profile but I was reading a exchange on Twitter earlier where it was someone was basically saying like there's politics in Dows because of this absence of clear like one person leadership whereas in a startup if you have a startup where there's like just one person or maybe a couple of people that are like, "This is how it is and this is our vision. This is what we're doing and we're taking it in this direction." Then um there's less space for politics because the decisions

are already taken. What is your do you ascribe to that view or like what what's your take on that? >> No, I don't think that's accurate. Like I mean if you think about very highly autocratic systems like I don't know Saddam Hussein's Iraq or um Paul port's uh Cambodia or Maong's uh China was there no politics there I mean I think that's >> yeah I think >> it's not like autocracy or or dictatorship doesn't remove politics.

No, not at all. >> No. >> Yeah. I mean, maybe like they maybe you could you could say that they just took out all their enemies and then that was that [laughter] was a that doesn't really count, right? >> Yeah. I don't know. Like >> we're we're not advocating for that kind of uh crazy And >> did you see death of Stalin more so? I mean, I think that's you just see like the politics just happens on a very different like people then just kind of like, you know, vive for who's closer to the source of power and, you know, it's like I don't know. I think in some ways people are like political animals. I think it's it's just like how they coordinate. I think that's that's fine.

I think that's also good. I think that's also a way to like surface information, right? like people talking and like, hey, no, I want this. And yeah, I really think like what I've what I've kind of really fell in love with in the last year or so is is like optimistic governance in in a way. I think that's kind of the best solution I've seen in a long while if you really think about it because it basically it allows whoever's in charge to just run with their vision. Could you could you talk us through how that would look in in a DAO?

>> Yeah. So basically optimistic governance means that every decision passes auto passes by default unless a certain amount a certain threshold a certain minority vetos the decision. So let's say like we have a D and I say like hey I want to spend like 10 bucks on ice cream. And everybody's like yeah actually ice cream is a good idea. then like we'll buy the ice cream. But if like if there's like one person that's like, "Oh, I actually really hate ice cream and I wish we we would have bought chocolate." Then like they're like, "No." You know, then like I have to address the veto. M >> and >> the beauty about this is that the person

in charge actually doesn't have to go and canvas the electorate to constantly and try to like impress them and be like hey I know I want this and that and this the few vision and actually going to but they they can just execute but at the same time like the populace or the constituency has like ultimate control they can say like no we don't want that they also don't have to come up with like a a different solution ution because I think this happens very often in democratic systems that there's a there's criticism and then people are like so okay what would you do and then I'm like well look I'm paying taxes we have 780 something people in the

Bundesark in Germany alone controlling another I don't know like 3 million fully paid full-time employees in government it is not my job to come up with different solutions. My job is just to say, "This sucks. I don't want it." And then it's your job to come up with a different solution. And you have to repeat that until I'm satisfied. I'm really sorry. This is just the way it is. Yeah. >> Um, and if if if that's not appealing to somebody, then maybe they're in the wrong job. And, you know, I think that that that's how at least how I see it.

And I think that's super democratic. You retain the control of the population and at the same time you allow the people with the time and the information and the expertise to come up with with proposals and they don't have to constantly v for agreement but at the same time it stops them from from like running rough shot over like part of the minority. And in that in that kind of system, would there be like a threshold for the veto to pass or would it just be like one person?

>> No, there needs to be a threshold because otherwise it can be griefed, right? Like like >> Yeah. >> Just like this one ger who's like just hates the world. >> It's like that's what I was wondering. [laughter] >> Yeah. And and actually like I think that's a very very interesting discussion is like how high do you set the threshold? >> And I think like for societies this is like one of the most incredibly amazing tensions is is where on the line between majority majority between like dictatorship of the majority and dictatorship of the

minority do you want to be? like this very um famous quip that like the democracy is is two wolves and the sheep deciding what's for dinner. >> And that's basically what's called majoritarianism, right? You'll always do what the majority wants. And I think there's an argument here. It's like if it's what the majority wants, then it's obviously just in terms of utility always the highest utility, right? because um and then but like then then we've we've kind of gotten away from that where we are like well if like 51% really want this but it'll actually kill 5% then we're not going to do it because like we just don't want to kill people

if we can avoid it and that leads to to to the protection of minorities which I think is a really important topic and really important subject. The question is like how much how much do you want to protect them? And I think if you if you really think about it that's like there's no easy answer here. Is it like every little minority like five people who get together and and they are like hey we we really get super offended if if people don't wear like a uh I don't know like like a salad a bowl on their heads like this just really really offends us.

So everybody now has to wear a salad ball on their head. You'd be like, "Okay, maybe that's too extreme." Okay. Well, if that's too extreme, like where's the line? Where do you draw the line? Super interesting question. And I think this leads to why there can't be no problematic governance because I don't think that I don't think you can there's a hard way to answer that question. This will always be a soft question. It will always be a human question. It will always be a question of empathy, of understanding, of showing up, of being vulnerable, of participating in in the in the suffering of others and so on and so forth. So I think

>> like building consensus rather than like build building human consensus rather than it being like a hard Bitcoin like consensus. Yeah. Um I wonder like I I like this idea of optimistic governance. I can see a lot of use for that inside Dows and I wonder like how how would that fit inside like that organizational structure of a Dow like what's your take on that like in terms of um like like maybe the there's always an early group that forms something or a DAO let's say just give an example there's going to be whether they call themselves founders or not

like there's going to be a group or a couple of people that are like there first and they set they set the scene and then more people join later uh as the thing scales. Like what's your take on the the way to organize that for the best chances of success and also very briefly if you've got any thoughts on like alignment? How do you ensure that there is alignment between this vision that is put out there by the founders and the the kind of growth as the Dal grows that there like the community I guess aligns with that in a in a healthy way.

>> Yeah, it's a great question. I I don't think there's like a one-sizefits-all answer. Like I think it really depends on on your size. I think that size is very important variable here like are you like five people 10 100 thousands a million very different solutions obviously then then the other things like what are you doing like what what's the purpose of the DAO right and then this should at least influence how the thing is governed if you're like I don't know like you have like a land chair and it's like a very kind of soft, you know, like way to to to work with each other.

Then you'd probably want a very different governance system than like if you're a political pressure group that just like you know wants to get like single a piece of legislation passed or a financial dow or like a real estate ownership. So in some ways like how what the purpose is and what the people are has to be reflected and I think that's oh sorry and I think what what people have to fit fit one to the other because certain governance structures will also attract certain people and this leads to the second question is

like how do you create alignment and I think you create alignment by actually permissioning I think that's But a lot of crypto projects have gone gotten very wrong is that they were kind of yeah we're going to I don't know like onboard the next billion users or the next blah blah blah and it was always like more is better which led to not actually turning people away you know like >> yeah more is more it's beautiful but then if you think about Bitcoin early days Bitcoin I think it was just like super cipher punk very hard >> extremely hard to use.

>> Yeah, >> I can still remember I think a very early Bitcoin transaction a friend of mine made and you had to just like format this JSON correctly and send it to the RPC nodes and then you just like pray and you know a bitcoin transaction is like 10 minutes like uh 10 minutes later well did it pass did it not pass um and so this actually had this se selected a certain kind of person to that thing And I think this is what you have to do if you want to build a community. You have to draw boundaries and the boundaries will create the alignment, you know. I think I love that. So you're you're really you're

highlighting the importance of like curation in some way whether it's indirect through the system leading people to self- select or whether it's more of a conscious thing like this is what this is the purpose of our community. This is what we're doing. if you want to join your join, but if you're if you don't vibe with that, this is not for you. And being okay with that rather than like bring everyone in, we need to scale, give everyone an airrop, like we're going to like we're going to the moon together, like that's not going to sustain as we've learned. Uh it's very easy to to understand like I think if you if you are like let's say you're you're a group and you you you're going out to have like a good night night about town and you're like

every person you meet on the street who like looks at you for five seconds you're like hey come join us come join us you know I think this this can quickly get to a point where we're like hey now we're like 60 people it's actually impossible for us to get into any >> [laughter] >> Half of them are already pissed and you know got a half is drunk and yeah I don't know it's like it's getting pretty ugly back there. So what are we doing? You know I mean yeah fully agree.

So just before we we wrap things up, I'm curious to hear more about like your view of what the space needs now and what you're doing at the moment to kind of uh work towards realizing that vision as it relates to to governance and and this this question or this uh potential you see for Dows and onchain governance to really challenge the dominance of the the kind of uh corporation entity as it relates to organizational structure like the the best organizational structure. So what what am I doing at the moment? So I've I've started a a boutique consultancy

that is called anode um where we advise teams on on governance or facilitate governance. Um that's one part. The other part is that I think you and I are both founders of ETH ease which is a conference that's going to happen in July uh 2nd to 4th of July in in Munich Germany at the Dutch Museum as part of festival of the future where we are asking this question is like so okay what is crypto actually good for right like what does it do for me and we like we want a conference that answers that question because we are seeing these use cases I think where I see a I see a lot of really troubling developments especially

in in in Europe. I mean maybe I'm just not as aware in other parts of the world but like we've seen especially I think UK but France as well and Germany like not far behind massive restrictions to free speech especially online in the last years. Um there's an ongoing discussion to basically end to end discrip encryption in private chats which means total surveillance of every chats of pe of of citizens without any kind of judicial process which I think we haven't had since at least like 170 years in like 1848 like they they

opened all the letters right like in Austria and Germany And we we went away from that because it's it sucks. It's not who we are. And we're getting back there. And crypto crypto cryptography is a way for the for the individual to defend itself against government overreach. And this is extremely important, I think. And I that's also I think the only way to justify some of the valuations in crypto. I think you put that out the other day, right? It's like if you want to be the next NASDAQ, you should should not be valued more than NASDAQ because NASDAQ actually exists. It works extremely well. a company that operates I think like three or four top exchanges

is worth I don't know like 80 billion and then you have Solana which is worth 180 billion who wants to be the onchain NASDAQ doesn't make any sense right it should be worth then maybe 10 or 20 because obviously it's nowhere near the volume not a capability so you know and I think that's where where crypto has to go back to its roots and actually say like okay we are this kind of disruptive technology that reduces the need for intermediation, that reduces the possibility of rent extraction, that empowers individuals to uh to interact um in in world but also in business uh

without government government oversight privately. I love this and I think like one thing we haven't touched on and we're almost out of time, but we could definitely riff more on this would be like the topic of uh like where AI fits into this cuz you're talking about privacy and self- sovereignty as being so crucial at this point in history as it relates to government overreach. But there's also just the like overreach by corporations who are now uh now owner like efficient a AI tools that could become super intelligent as as we move

into the next the coming years that may some might say know their users better than the users know themselves in some ways. They know like all their data. they've got all their data. They've got all like that's a that's a really uh could become very dystopian very fast. Uh, and so crypto can counter that. And maybe right now it seems like, oh, it's a lot of work. Who like come on, who really wants to go to that effort for their own privacy? But if it it the costs of losing your privacy are pretty high, right? Maybe they just haven't really sunk in for most people yet. But I think we're tipping points could be

reached. Um, and at that point that's when we need crypto more than ever, right? >> Yeah, I think so. And in terms of AI, I think like private inference, private compute, um, uh, verifiable inference. These are things that I think can be solved cryptographically. And then I think in a more like shortterm um profit focused things. I think like that's actually one of the big drivers for crypto at the moment is that people are using their agents to like shop and then they realize well actually if the agent shops even if I give it its own credit card like it's

still going to send like a a code to my phone. So then I have to go in there put in the phone number which sucks. And then there's like maybe three banking APIs that all suck. and wow I wish there was programmable money and then they're like oh well actually there is programmable money there is all there there have been trillions in transactions and it works it's extremely secure there's libraries for every kind of programming language and yeah >> cool so just to kind of pull things together is there anything you want to add or say like maybe what I'd like to here. Actually, let me

ask you one more question, right? Like what is your optimistic vision for the future? Cuz we've we've spoken a lot about the challenges and and so forth, but like to wrap up like what's your optim optimistic v vision for the future as it relates to Dow governance in a in a ideal scenario and or just governance in general and um yeah, anything else you want to add before we we wrap? Yeah, my optimistic take is that I think we'll we we are quickly arriving at a state where um legacy forms of organizing and institutions are crumbling and I think this in some way is really good. I hope

this gives um people lots of room to experiment quickly, run lots of experiments and then I think we can come up with something where we have no idea how it's going to look yet. like we really don't know. And I think if there's anything that that I would love to see is that we would live inside of this not knowing for as long as we can and hold all the solutions that we find very tentatively. I love that. So you're you're talking about being comfortable with the uncertainty at this point and just letting the solutions emerge over time.

>> Yeah. and being also willing like if a like if the next solution comes then not like oh now we found it but like yeah we found a solution that's awesome >> is there one >> so we're not going to try and like shoehorn the next billion users into Dow's run on compound contracts >> that's certainly hope not >> cool man it's been great to catch up face and yeah, see you soon.