00:00hi everyone welcome to day 6 NZ podcast
00:02I'm sonal today's episode is on
00:05analogies between crypto networks and
00:07cities covering everything from where
00:08the analogy works and where it breaks
00:10down to how communities emerge bottom-up
00:13but also at top-down vision and design
00:15and what happens when we have mass
00:17coordination at unprecedented scale the
00:20discussion is moderated by guest host
00:22Devin's oogle in conversation with
00:24Dennis nazarov Jessi Walden and Ali aya
00:27all of the Asics and Z crypto team
00:29speaking of please note that a 6nz
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01:08a 6 and C cryptic calm slash disclosures
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01:13disclaimers finally you can find this
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01:20hi I'm Devin I am a software engineer
01:23and writer based out of San Francisco
01:25today I'm gonna talk with Dennis Jesse
01:28and Ollie who work at a 16z crypto we're
01:31going to talk about crypto networks and
01:33their evolution and open source and it's
01:35gonna be a fun conversation so for
01:36starters all we recently had a great
01:39tweet about how crypto networks are
01:41similar to cities and not so much like
01:44individuals and firms can you unpack
01:47that for me a bit yeah of course the
01:49tweet was basically drawing an analogy
01:50between crypto networks and cities and
01:53the inspiration for it was that
01:54oftentimes people tend to compare crypto
01:57networks to things like firms or to
02:00things like individual organisms like
02:01individual humans or to things even like
02:03like coral reef which is was a
02:06surprising comparison and I think people
02:08have drawn and and my sense is that
02:11crypto nails are actually much much more
02:13like cities which could be considered a
02:16specific kind of organism than they are
02:19than they are like individual organisms
02:22or firms or coral reefs and the
02:25rationale behind this is that both
02:28cities and Kryptonian networks are in
02:31the case of about Krypton network that
02:33is decentralized like like many of the
02:36other crypto networks that we know and
02:38love are their communities of loosely
02:41affiliated individuals and so there are
02:43communities that come together and
02:44there's consensus about the location in
02:49which they will live and work in the
02:50case of cities and there's consensus
02:52about the protocol that they will run in
02:54the case of crypto networks they also
02:57tend to emerge in a bottom-up way
02:59they're organized in a bottom-up way and
03:02I think this is a trait that's that's
03:05common to a lot of the crypto networks
03:07that are most successful at the etherium
03:09at Bitcoin to a considerable degree
03:12emerged out of communities working
03:14together as a push to necessarily a
03:16top-down monolithic design that's
03:20imposed upon an organization or a group
03:24of people who are working together by a
03:26single person or a small group of people
03:28and similarly the the birth and the
03:32death of cities and the birth and the
03:34death of crypto networks have
03:36interesting similarities because there's
03:38bottoms-up organization it tends to be
03:40the case that the birth of a city occurs
03:43when there's critical mass when people
03:45come together and decide to live in a
03:47particular place and some infrastructure
03:48starts to be built around that place in
03:50the case of cryptic crypto networks is
03:52similar you need a critical mass to
03:53provide enough security and enough
03:55infrastructure for the crypto network
03:56itself all right and similarly with the
03:58death of a city it's it's kind of
04:00telling that when a government is
04:02overthrown that doesn't necessarily mean
04:04that the city dies the city continues to
04:06exist maybe there's a new government
04:07thereafter which is an emergent property
04:10of the fact that the city is is a is
04:13organized in a bottom-up way in the case
04:16of a company for example if the company
04:19if the if the CEO is fired is much more
04:22likely that the company will fail
04:24I mean oftentimes you can replace the
04:25CEO but there's much more
04:26a central point of failure and it's
04:28top-down hierarchy as opposed to
04:29bottom-up and so cities like Krypton
04:33networks may may have this property in
04:36common they tend to live for a very long
04:38time because of their bottom-up nature
04:40that makes them sort of more robust and
04:42more resilient they have fewer central
04:44single points of failure and then
04:46finally if we think about the design of
04:50a city like the role of a city planner
04:53or a city a city designer somewhat
04:55analogous to the role of a crypto
04:57Network protocol designer in that that
05:01person has to keep in mind the
05:04preferences and the roles of a lot of
05:07other different people who are not under
05:08the control of individual actually doing
05:11the designing and so it's a it's a I
05:14think like there is an analogy there to
05:16be drawn to and so far as the
05:18architecture that there is some amount
05:21of top-down design in the case of cities
05:23but it's more of a scaffold and then
05:25that's careful it allows for the
05:26emergence of something greater in a
05:29bottoms-up way and I think it's similar
05:30in the case of crypto networks I love
05:32that analogy I think it's really
05:36interesting to draw the parallel to the
05:37urban planner because there's so much
05:39that is out of their control but there
05:41are also initial conditions that you can
05:43get right what are some things that
05:46aetherium or bitcoin got right early on
05:48or things that maybe resulted in
05:51consequences that the designers didn't
05:53notice at first maybe just a way of sort
05:58of reframing the analogy to cities is to
06:01throw in an element of time so when we
06:06talk about sort of cities being a
06:09scaffold and sort of an emergence
06:11structure for independent parties to you
06:13know agree about you know the location
06:15of their work and go about their
06:16business it's important to talk about
06:19where the scaffold originally emerged
06:21from like what what is the tipping point
06:23you know that creates this this I guess
06:27sort of maximum interestingness for
06:31people to sort of like move in this
06:32direction to converge on the city and I
06:35think in the you know if we talk about a
06:37project like aetherium
06:39for example you know early on there was
06:43this amazing white paper and it
06:44described this profound vision about
06:47what the platform could enable and at
06:49the time you know the code hadn't been
06:51written there was there was there was no
06:53there was no City yet but there was this
06:55grand vision about you know basically
06:58the the the city that we could build and
07:00what it would look like it described
07:01cars auto self-driving cars driving on
07:05roads that where they paved the road by
07:08the meter that they drive and then going
07:10to the you know petrol station and
07:12paying to fill themselves up and paying
07:14a mechanic to fix them and all this
07:16happening happening through automated
07:17smart contracts and this vision was was
07:20very compelling I would say you know it
07:22sort of galvanized a lot of people to
07:24move in this direction to arrive at some
07:27sort of you know rough consensus about
07:29the direction that this technology was
07:32heading and become you know converged in
07:35such a way that they decided to help
07:37build it out and so it was very
07:39important to have this sort of I think
07:40top-down vision and that very early days
07:42about about what the network had become
07:46and then sort of allowed the community
07:48to to finish it and Chris Dixon in his
07:52post on why decentralization matters has
07:54a really interesting framing of this
07:56that the sort of one of the one of the
07:59amazing properties of open-source is
08:00that someone can put an idea out there
08:02and then galvanize developers to finish
08:04the idea and that's that's in fact one
08:06of the features of open-source that you
08:08know you know you get and it gets this
08:09idea that dentists talked about recently
08:11about about about why worse is better
08:15about why getting an idea is sort of
08:16half-baked but but you know compelling
08:18enough to galvanize people is actually a
08:20really good strategy in the space yeah I
08:23think this is a really interesting one
08:25place in which analogies can be useful
08:28is that you can also see where they sort
08:30of break down a little bit with with
08:32cities they usually start because they
08:34happen to be like at a river basin or
08:36like they have a really good port and so
08:38people just naturally start coming there
08:39and then over time this community builds
08:42up and they realize over a thing now or
08:45in San Francisco's case the gold rush
08:46happened people came there for the gold
08:49and then it turned out that like oh I
08:52we have to put in so it systems we have
08:54to put in roads and so I think to
08:57contrast that with crypto networks with
09:01crypto it's you know it's starting in
09:03the ether there's like there's nothing
09:04there and so having that core vision
09:07early on is really critical yeah whether
09:10it'll come there yeah it's like it's
09:11like creating that River out of almost
09:13there's like the idea of proof of work
09:16based consensus exact emotive consensus
09:18could be that River Basin along around
09:20which like people converged communities
09:22emerge and then the development of
09:24etherium is kind of like a except it's
09:26another city that's being established
09:28that's inspired by the first city that
09:30was a Bitcoin and of course I think it's
09:32a very good point to clarify that
09:34analogies only go so far and they're
09:36like a good tool to explore the maze of
09:39ideas but ultimately when we actually
09:41have to make decisions or rigorously
09:44think about something we should think
09:46about those things and from first
09:48principles is when the case have when we
09:50talk about what makes sense for crypto
09:52networks now that we've been to some
09:54extent inspired by the analogy to cities
09:56we can now think okay well in the case
09:58of the development of open-source what
10:02actually is what makes the most sense
10:04and we can talk about things like
10:05modularity versus monolithic design can
10:09you dive into that a little bit the
10:11dichotomy between modularity and more
10:13top-down design yeah I think exclusively
10:15in the world of software we could we
10:17could talk about the the economy that
10:19exists between something like the UNIX
10:21philosophy which is very much about
10:23modularity is very much about bottoms up
10:26and say the Apple philosophy which is
10:28much more about vertical integration and
10:30top-down monolithic design so you have
10:32the UNIX philosophy telling you you
10:34should build software in a way that is
10:36very well scoped it's narrow narrow lis
10:38focused has very clean interfaces and is
10:41optimized for modularity it can be built
10:44around it can be composed with other
10:46pieces other tools that other people may
10:49build and in the case of Apple it's a
10:51it's a very different world it's much
10:53more about I Steve Jobs know what's
10:56right for people and I will design the
10:58phone and twinned and then I will build
11:01it and ship it and it'll and it'll work
11:03and it's interesting to see that
11:05different contexts both strategies have
11:09worked and then there's a question like
11:11how does this apply to to things like
11:13crypto networks and I think we're
11:14already seeing examples of both
11:16strategies like a theory am i think as
11:18sort of jesse was saying is more an
11:21example of the Bottoms Up modular
11:23approach where there's a kernel of an
11:26idea there's that riverbed along which
11:27people people get together but then
11:30there's also a community that's building
11:32all sorts of tools around it and a lot
11:34of those tools or projects in and of
11:35themselves and so there's a certain
11:36amount of modularity they're in and
11:39there are also other project that have a
11:42much more top-down vision for the way
11:45that things should go and spend it's
11:48been a hell of a lot of time building
11:50in-house before releasing something to
11:52the community and you can say that they
11:54are much more opinionated about the way
11:55the system will ultimately look so and
11:57both of these seem to have significant
11:59merits yeah for sure I mean both UNIX
12:01and Apple have been massively successful
12:03in their own ways what are some of the
12:06trade-offs that you make on one side or
12:08the other it's done on the top-down
12:10approach I think we give too much weight
12:13to the beauty of top-down you know we
12:15only see it when it works that there's
12:17the genius there's the genius iPod
12:19product there's a genius iPhone product
12:21but you know how many what how many
12:22hundreds of products that the Apple team
12:24iterate you know whatever the Johnny
12:28Ives office the white box that you have
12:29high clearance to get into what were the
12:32crazy ideas that didn't go to market and
12:34how how efficient can a top-down
12:36organization be in terms of you know
12:39catalyzing you know tons of experiments
12:41to try different ideas and I think
12:43what's amazing about this distributed
12:46approach that you know a theorem laid
12:48down the vision for weather was amazing
12:51about the vision that it was an
12:52unattainable vision you know the
12:53self-driving cars that clearly we
12:55weren't going to be building that on a
12:56theorem in the next few years but this
12:58high mark created this when a wide space
13:01of you know shorter term kind of
13:03improvements that we had to make and
13:06although the theorem is just one example
13:08there's many projects that are you know
13:10maybe competing with aetherium and I
13:12think a great analogy there is that we
13:14can think of them as you know it's a
13:15different city trying to have its own
13:17kind of structure and govern
13:19but ultimately you know you can say
13:21we're contributing to one country that
13:23ultimately there's these are still
13:24parallel experiments where you know
13:26Bitcoin may be the mother project and
13:28where everyone is taking their own
13:30vision you know they think that you know
13:32maybe I don't want to live in the city I
13:33want to start my own City but ultimately
13:35it's still coevolution you know parallel
13:37experiments yeah so then you want one
13:40thing that's interesting to talk about
13:42is sort of when we when we talk about
13:44sort of the evolution of cities in that
13:46volution of Kryptonite networks to talk
13:47about sort of what level of granularity
13:49this is to Dennis's point about you know
13:51the city level versus the country level
13:54you know etherium recently announced a
13:58big sort of pivot they had long planned
14:01to to have to upgrade to a proof of
14:04state consensus Kasper FFG was the name
14:07of the specific consensus mechanism in
14:08fact like when when the protocol
14:10initially launched there was there was
14:12actually a time bomb hard-coded into the
14:14into the protocol that if they didn't
14:17make this change you know like the
14:18system would explode I forget exactly
14:20what the constraints were they removed
14:22it and just about 45 days or so before
14:26Kasper f2 FFG was set to be deployed the
14:32etherium foundation decided that they
14:33were going to they were going to pull
14:35that recommendation to the network in
14:37favor of some sort of a joint update
14:41between Kasper FFG and sharding which is
14:44another project that independent team
14:46was working on and so what's interesting
14:50about this is it sort of yet if
14:55aetherium is a microcosm of the city you
14:58have these independent parties that live
14:59in that ecosystem working in
15:02independently of one another on projects
15:06that they think are the most important
15:07so you have one team working on Kasper
15:08one team working on charting and
15:10independently they arrive at some
15:13convergence that in fact the independent
15:15paths that they're on they share some
15:17some common features that allow you know
15:19the two teams to agree that hey like
15:22there's a there's a better path forward
15:23if if we work together on this you were
15:25talking about how the etherium community
15:29has been able to converge on really a
15:31change changing the entire approach for
15:33Casper some fundamental architecture for
15:38the whole system and yet it's big
15:41decentralized system no one person to
15:43get to make these choices it requires a
15:45lot of consensus to make any of these
15:47shifts can you talk a little bit about
15:49the what about the community enables
15:53them to do that despite not having with
15:54central portal point of control yeah
15:56yeah that's a great question so I think
16:00there's this idea of rough consensus
16:02then and and this was actually a term
16:05coined by the internet Engineering
16:08I II TF I can't remember what the T
16:11stands were internet Engineering Task
16:14Force they first came up with this term
16:16rough consensus and the the idea of
16:18rough consensus has these like four sort
16:19of properties one is that the consensus
16:22can't be constrained by the limited
16:25resources of like one organization or
16:27sort of one sort of top-down vision and
16:29it has to emerge from sort of like a
16:31soup of people individuals potentially
16:35or individual organizations that are
16:37working in their own direction of
16:39whatever they think is is sort of most
16:42interesting and the process of arriving
16:45at this consensus is gonna can appear
16:47very messy and sort of unfocused because
16:49these parties are moving in their own
16:51but what's what serendipitous about it
16:54is when parties independently converge
16:57on the same idea this this rough
16:59consensus sort of is the result and in
17:04order for this to happen of course there
17:05needs to be sort of a philosophy and
17:07operational philosophy of strong views
17:09weekly held so people are opinionated
17:11they're working in their direction and
17:14they're able to you know convince others
17:16that that is the right direction
17:18ideally through working code by the way
17:20when we keep talking about this idea of
17:21rough consensus and sort of the
17:23direction of maximum interests meanness
17:25these ideas actually came from a post
17:26written by Venkatesh Rao in a series
17:30called braking smart and so aetherium
17:32has been able to do this a few times
17:35maybe sort of the most well-known
17:38example is the DAO hard fork or the
17:42community decided that the right
17:44direction to proceed after that
17:46after after all these funds were locked
17:47up was to to fork the state you know the
17:51DAO fork was this sort of cataclysmic
17:54event very very early on in the in the
17:56network's history where lots of a very
18:00large percentage of the the total
18:02aetherium supply got hacked and and
18:06stolen by an attacker and so that the
18:09the the community the wide a theorem
18:11community had to make a choice where
18:13were they going to allow this attacker
18:14to keep the funds or were the game they
18:17going to try to return them for the for
18:20the general health of the ecosystem and
18:23so this was a very contentious decision
18:24because lots of folks felt like well you
18:26know the one rule of smart contracts is
18:28that they're immutable and the code is
18:30the law and another group felt that it
18:33was more important to you know to the
18:35health of an early network to restored
18:39the funds to the rightful owners and
18:40ensure that the attacker did not sort of
18:42ruin the community at the outset and so
18:47you know a proposal was made on how to
18:49how to actually make this change to
18:52return the funds and you know the
18:54foundation and and that sort of
18:56leadership got behind it and the miners
18:59of the network decided to adopt it and
19:02then a minority group decided not to you
19:03and the community forked into two
19:05directions and so I think that's a very
19:07it's a good example of the foundation
19:10and other sort of prominent people in
19:12the community having strong views but
19:14but being willing to adopt them in the
19:16face of new information and and sort of
19:18being able to sense a rough consensus
19:20about what was best for the community
19:21sunderson govt the etherion foundation
19:23has figured out a way of striking a
19:26balance between these two ends of like
19:28top-down monolithic design and imposed
19:30control versus completely bottoms up
19:33anarchy and I mean the Dow is an example
19:36it's like there was some amount of
19:38top-down control but there's also
19:40pushback and it's also a dialogue
19:41there's also an involvement from the
19:43community and so I think I mean that's
19:47crucial really because if we we think
19:50about it crypto Network that goes too
19:52far on one end or the other that you'd
19:54end up with say for example if you go
19:57too far on the under you like bottoms up
20:00direction and you just do everything's
20:01modular everyone just moves in the
20:03direction of maximum interestingness and
20:06to some extent that's the greatest value
20:10the grid is good for people to sort of
20:12feel free and to contribute in whichever
20:14way they want then you might end up with
20:16something that's just simply isn't
20:17coherent is maybe would be akin to a
20:20city that lacks basic infrastructure
20:22that lacks like like some sort of
20:24planning for how the road system should
20:26work or how the plumbing system system
20:28should work or how the electrical system
20:30should work and so that's clearly it was
20:34likely not not to be the best the best
20:36approach but also there you go too far
20:39on the other side then then you don't
20:43have enough participation from the
20:44community and then you don't get to
20:46build the kind of widespread community
20:49that a project like etherium ultimately
20:51succeeds a building and what's important
20:54about having some amount of modularity
20:56and bottoms-up organization is that it
20:58maximizes the surface area for
21:01experimentation like if you build some
21:03component of your system in a way that's
21:04modular and in a way that can be built
21:07upon then other people can be creative
21:09in the ways that they incorporate that
21:12module with whatever it is that they are
21:15building whereas if you have some
21:16top-down vision for how everything
21:18should work then there is very little
21:20flexibility and there's very little
21:22opportunity for experimentation so I
21:25think that that is a some fine balance
21:28that try to to try to strike and I think
21:30that is the challenge that's facing a
21:32lot of these projects yeah looking at
21:34past open-source projects I think is
21:36really interesting again analogy to
21:38crypto as it is today
21:40can you guys dive into some examples of
21:41projects that go more on one side or the
21:44other and what the implications were of
21:45those I think one during one analogy I
21:47keep thinking of is just basically
21:49innovation in general you know startups
21:51in general that there are many many
21:54startups that are forming every year you
21:56know most of them 99% of them will fail
21:59but one of them will succeed or a few of
22:01them will succeed in sort of technology
22:03and innovation with sort and that sort
22:04of the beauty of innovation yeah but in
22:06general innovation always moves toward
22:08you know I think to the city's analogies
22:10in New York if you open a restaurant
22:13competitive businesses probably it will
22:15fail but if you love food there's always
22:17going to be great restaurants in New
22:19York and I think with the technology
22:21analogy the the value broadly goes to
22:25innovation in general but it's not
22:27captured in some base layer but in
22:29competition and open source and in the
22:31blockchain community ultimately everyone
22:33is creating these open transparent
22:35contributions that anyone else can reuse
22:37so I think you can argue there is a
22:39capture of all of the innovation in one
22:42place one way is through the technology
22:45that is created for anyone else to use
22:47but another it could be that you know if
22:48everyone's building on top of the same
22:49blockchain platform it makes that
22:51blockchain platform stronger so I think
22:53it's a very unique feature of the space
22:55that the knowledge sharing isn't siloed
22:57it's open so even though you have the
23:00same you know capital is free market
23:02competition the the fruits of all that
23:05labor are for the public and they do
23:08aggregate in one place some examples
23:11from from the world of open-source maybe
23:14but both all of which have worked maybe
23:17on the like top-down monolithic side is
23:20like Linux it's all an open-source
23:21project but you have like a lot of
23:23top-down control like Linus Torvalds is
23:25the gatekeeper versus something like the
23:29JavaScript like NPM ecosystem where it's
23:31very much bottoms up and there are not a
23:33very large there's a very large number
23:34of open-source projects that are built
23:36by a diversity of people and those get
23:38composed in all sorts of creative ways
23:39and both of them have to some extent
23:41worked and what's interesting is in
23:43either of those two worlds at least
23:46historically beef like pre crypto has
23:48much of the value that those open-source
23:50contribute been captured and to Dennis's
23:52points like how do how does some of the
23:54value that innovation creates get
23:56captured so what's interesting with if
23:59it's brave new crypto world is that now
24:01we can have modular components that are
24:04built in an open-source way that are
24:06granularly incentivized so people can
24:09work on building those modular
24:11components and if there is some crypto
24:14enabled mechanism like a token or
24:17that incentivizes that work then they
24:20can capture some of the value that they
24:21create and this has been historically a
24:23big problem in open-source like for
24:26example in the world
24:27which is generally open source of
24:29example the the heartbleed bug in SSL is
24:33interesting because even though SSL is a
24:35critical piece of infrastructure and is
24:39used by sort of every single person in
24:42the world who connects to the Internet
24:43only a couple of people were really in
24:46charge of maintaining the implementation
24:49of open as a cell and so not enough of
24:52the value that those people were
24:53contributing was captured and as a
24:55result there isn't enough of a strong
24:56incentive for the adequate amount of
25:00resources to be devoted to that one
25:02particular module so something that's
25:03exciting here is that that can change
25:05yeah I mean both cities and open-source
25:07are just a classic example but with both
25:09classic examples of positive
25:11externalities that aren't captured
25:13everyone's everyone benefits from having
25:15a city that works really well you can
25:17thrive much more it gives you this
25:18platform it you can live in
25:20infrastructure to get places but no
25:22individual person like wants to fund
25:24Bart they don't they don't care that
25:27similarly with open source these are
25:29just fundamental protocols that underlie
25:31everything that we do like the internet
25:33wouldn't work without TCP internet
25:35wouldn't work without Ethernet all of
25:37these all of these protocols and yet
25:39most of these come out of like academic
25:43research institutions just people
25:45working on them out of the good of their
25:46hearts so one of the reasons I'm excited
25:48about crypto is it now can like pump
25:51some juice into these and actually you
25:53get all of those positive externalities
25:54but then also some of them are more
25:57captured by people oh yeah exactly I
25:59think your point about about positive
26:00externalities in the case of cities help
26:02people like no one individual once the
26:04fund like a public good so that's that's
26:06super interesting we we often talk about
26:08how what's exciting about this new
26:11technology is that it brings together
26:12two of the most powerful forces in
26:14history there's what makes science tick
26:16and say the free flow of ideas and the
26:19universal freedom for criticism and
26:21discourse about those ideas on one hand
26:23and then there is capitalism and free
26:25markets and economic incentives on the
26:27other hand and those things tend to not
26:28coexist at least they haven't before
26:30before the emergence of this technology
26:32it has been difficult like that the
26:35science aspect is embodied by open
26:37source and historically it's been
26:38difficult to monetize open source
26:40and that's kind of like a public good
26:42people benefit from the existence of
26:43open source and yet no one person wants
26:45to fund development on open source
26:49projects thus only volunteers who
26:51ultimately drive that effort and then
26:54similarly the technology aspect like the
26:56the capitalism aspect tends to only
26:58really be sequestered within technology
27:00companies that have an incentive to keep
27:04their to their secret sauce confidential
27:06and away from from from everyone else as
27:09a as a mode as a form of Defense ability
27:12and so there's no free flow of ideas and
27:15so combining these two in this in this
27:17new world it's powerful because we have
27:20a model for funding public good we're
27:23probably goods in a sense yeah the irony
27:25behind open source is it's supposed to
27:27be this big decentralized thing where
27:29everyone can democratically participate
27:31but because the incentives aren't nicely
27:34tied to the contributions people make
27:35all of the funding ends up coming from
27:37massive companies which is it's
27:40wonderful that they're willing to
27:41contribute but the reason they're
27:42willing to contribute is because they
27:44actually do capture enough of the
27:45externalities that it makes it worth
27:47their while so this results in huge
27:49centralization and the projects that do
27:52get done that do get completed are just
27:55the ones that the really large companies
27:56want or that the government or the NSA
27:59wants which we've done a whole nother
28:01rabbit hole yeah they have very specific
28:03incentives in wanting to do that like
28:06Google funding at the development of
28:08tensorflow the open source machine
28:09learning library it's very strategic
28:11something like you know aetherium is a
28:13great example of of there being a very
28:15strong incentive to to deliver this new
28:18technology there's there's a market
28:19demand for it and and those that worked
28:21on it you know did very well with the
28:23increase in price of that the asset
28:26that's native to the network but there's
28:29also this sort of persistent tragedy the
28:32commons problem where you know now going
28:35forward aetherium needs improvements
28:38like there it's not fully baked when you
28:39know we discussed this earlier where it
28:41still needs the community to to build it
28:45out and so there's this question of you
28:48know who will fund that and and the
28:51answer has been you know this boom of
28:53CEOs like each project starting its its
28:55with its own token and it's you know
28:58raising tons and tons of money and not
29:01every one of these projects necessarily
29:03needs its own token some of these
29:04projects could be just sort of core
29:06infrastructure at the base layer the
29:08protocol but there's not an incentive or
29:11there's at least no mechanism by which
29:13the community can formally decide that
29:17funding should be directed towards
29:19towards this particular module and so it
29:23brings up this really interesting
29:24question of how do we govern these
29:26decisions and you know in cities we have
29:28local governments to decide how to
29:30allocate taxpayer dollars and what
29:32shouldn't be the public goods that are
29:33built and and I think that question is
29:36very much open it and TBD whether sort
29:39of this idea of rough consensus about
29:41the right direction is sufficient or
29:44more top-down approaches is better in
29:47terms of making exponential you know
29:49progress on on public goods and and
29:52better infrastructure yeah the the
29:54incentives seem much better aligned with
29:56networks these days but there's still
29:58some nuances that need to be worked out
29:59like I think the fact that you can get
30:02rich pretty fast by just having a token
30:04sale result in certain parts of court
30:07infrastructure being systemic Lee
30:09undervalued like whenever as I write
30:12solidity smart contracts like the
30:15developer ecosystem is just not there at
30:17all like now there's there's a few
30:20exceptions like consensus has built a
30:22lot of good tooling but besides
30:24consensus like basically no one's
30:27building there's no incentive to build
30:28the tooling the base infrastructure all
30:30the energy is like sucked out big
30:31because everyone who has those skills
30:33just wants to run a token sale but one
30:37way I've been thinking about it is you
30:38know you know the idea of semantic
30:40version and give them the major minor
30:41and patch version you know patches like
30:43various small bug fixes minor you know
30:46there's a non-breaking change and major
30:48is like when you've significantly
30:49changed the protocol and history is
30:52shown that you know if you think of
30:53theorem as an evolution of Bitcoin
30:55Bitcoin is you know boxing at one point
30:57now a theorem is blockchain 2.0 you know
31:00Vitalik was active in the
31:02: community but he realized that to get
31:04consensus from the stakeholders to
31:06significantly improve Bitcoin will be
31:09impossible to go so to go from one point
31:11no 22.0 required basically raising money
31:14and creating a completely new version
31:17that was a fork so we have this tragedy
31:19of the Commons that you know maybe it's
31:21impossible what they would you know
31:23introducing these new economic incentive
31:25to evolve the protocol where we upgraded
31:27the protocol significantly without
31:30independently raising money and
31:32basically creating a fork so you know if
31:34you think of like project affinity and
31:36EOS as 3.0 the the way the incentives
31:39have worked for them is that it's better
31:41for them to raise their own money hire
31:43the best teams and you know realize that
31:45all the upside from creating this
31:48innovation as opposed to you know being
31:49part of the etherium community well one
31:52of the things that I think is super
31:54super exciting is that each of these
31:56projects represents an experiment as to
31:58how governance can work as to how
32:01incentives can be structured so I think
32:02as a result of this space because each
32:04one of them is to some degree
32:07we'll learn a lot about economics we'll
32:10learn a lot about game theory we'll
32:11learn a lot about monetary policy and
32:14political science parallel city
32:16experiments I make you know the country
32:18that is the BOK chain more robust
32:19exactly so to some extent like aetherium
32:21hasn't yet succeeded at incentivizing
32:24core development or development on the
32:26core protocol and has succeeded
32:28massively at incentivizing people
32:30building on top of it developers that is
32:33not users yet and a different experiment
32:35may take like the same ideas that
32:37aetherium has has implemented and maybe
32:39they may extend them a little bit like
32:41for example one idea would be for the
32:43base chain to to some extent charge a
32:47tax from all of the all of the things
32:50that ultimately get built on top of it
32:52as a way of funding core development
32:54work and one one way of doing this could
32:56be the supply of any token that is
33:00issued on top of the etherium blockchain
33:02maybe an inflatable buy the underlying
33:05chain that by the etherium main chain
33:08and then paid either to two miners to
33:11improve security or or distributed to
33:15furs were working on the on the core
33:17protocol and then there's obviously a
33:19whole host of questions as to how do you
33:21decide who that money goes to and that's
33:24a governance question that needs to be
33:25answered but there is a very very large
33:28space of possibilities that we can
33:31explore it will be very exciting to see
33:33what kinds of experiments emerge yeah
33:36well I wonder if we can look to history
33:37at all and and maybe in like ancient
33:39civilizations or city-states and sort of
33:42at what point did governance emerge like
33:44when when did the city get to to a
33:46sufficient point that became so chaotic
33:48that you know leaders needed to be
33:51elected taxes needed to be collected etc
33:53you know because I think well a lot of
33:55what we're talking about here is on the
33:57one end we've talked about through this
33:58idea of rough consensus and people sort
34:00of organically converging on the right
34:01path forward that's not a formal process
34:03on the other hand this what you just
34:06described of collecting taxes in order
34:08to fund public goods on the blockchain
34:09that sounds like a much more formal
34:11process and so like again with the
34:13element of time they may prove to be a
34:15very important factor in it and I just
34:17wonder if there's like historically some
34:18examples of you know critical mass do we
34:21need to implement formal governance
34:22there's there's definitely a lot that we
34:25can learn from history here I think I'm
34:27even more excited about how what
34:29traditional governance can learn from
34:31from blockchain governance for instance
34:34like I mean the last few years we've had
34:36a lot of conversations about the
34:37electoral college how our voting systems
34:39have some flaws or arguably but
34:43innovating on this is really rough like
34:45changing the election system of entire
34:47us is a big very risky thing to do if we
34:51can experiment with the ways we elect
34:53leaders or vote on different proposals
34:57within smaller communities perhaps those
34:59lessons can like bubble up to the real
35:01world as well do you can can you think
35:05of any like specific historical examples
35:07that you think are useful I think well
35:09one one important parameter is probably
35:11scale so I guys as community scale from
35:14just like a family or like a small group
35:16of people like a tribe to a broader
35:19community to eventually like something
35:21like a nation-state to eventually a
35:23global community newer and more
35:25sophisticated mechanisms for
35:27coordination and collaborate
35:28to emerge along alongside and so I think
35:31a lot of the governmental structures
35:32that have emerged through history are
35:34just a response to that need there's no
35:36other way to to coordinate that number
35:39that number of people I think actually
35:40you all know Harare and sapiens does a
35:43great job at articulating this point and
35:45strongly recommend that book yeah and in
35:48the book he talks a little bit about how
35:50people create these shared myths that a
35:52lot of them to coordinate what are some
35:55shared myths that you guys see the
35:57crypto community working towards these
35:59days I think it's a good question about
36:02what what are the shared myths or the
36:06memes that organize crypto networks and
36:08in the case of it is I think the case
36:10that that different projects and to be
36:12organized around different memes and
36:13it's kind of hard to speculate or really
36:15pin down what those memes are but in the
36:17case of Bitcoin or at least that later
36:19the later form of Bitcoin the current
36:22Bitcoin this shared meme seems to be
36:24fixed supply store a value digital gold
36:27in the case of aetherium it's more of a
36:28meme around technology they we're
36:30building a technology is not just a
36:31financial tool and what's interesting
36:35about forking is that that is that an in
36:37and of itself is a mechanism of
36:38governments it's a form by which
36:41communities can decide to run a
36:43different experiment it's a in a sense
36:45if you we go back to the analogy to
36:46cities it's like some of the people
36:48saying we no longer want to live in this
36:50city we want to go build a different
36:52city and we'll do it our own way and
36:54that's I think a very valuable property
36:55it's good that it's expensive because it
36:57is good that it's hard to do that
36:59because it encourages the participants
37:01of a network to try to figure out their
37:03differences but it's also very good that
37:05that always exists as a possibility
37:07because you don't want to be locked in
37:08especially if there really is a very
37:10significant philosophical divide into a
37:13philosophy or set of ideas or memes that
37:16will no longer it will never be
37:19reconcilable yeah it'll be really
37:21exciting to see these myths evolve
37:23alongside the the networks and see how
37:25these stories change over time well
37:27thanks guys it was really fun chatting
37:29today thank you thank you thank you
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