Web3’s mission is almost a hyper-idealistic one: to free humanity not only from the domination of big tech companies, but from exploitative capitalism itself, and to do it purely through code.
This new movement wants to free us from Big Tech and exploitative capitalism – using only blockchain, game theory and code. What will it go wrong?
It was getting late on a Saturday afternoon in Denver, and I was leaning back in my chair, feeling the weirdness of what I was doing. In a windowless room, I sat at a long plastic folding table against the wall with Discord open on my laptop.Pizza crumbs and empty potato chips bags piled up around me, a testament to the hours I spent feverishly working on a project with three blockchain developers. I’m not a programmer, just a journalist with a law degree. However, somehow I’ve put my heart and soul into creating my own DAO, a favorite concept of Web3 fanatics, and it should launch tomorrow.
No doubt you have questions to ask. Me too. It’s like: what’s wrong with me? Three days ago, I was a crypto skeptic and barely knew how to buy ETH. Now, I can fully say what multi-signature and quadratic voting are. The developers have integrated our site with some Web3 wallets, and I just bought a domain name in ENS for $85, even though it has no clear purpose. Instead of being angry or confused, I seemed to feel the same excitement, albeit fleeting, as everyone around me did.
A few days ago, I was one of an estimated 10,000 people in Colorado for this year’s ETHDenver conference. The ETHDenver conference is the largest and oldest event in the Ethereum and Web3 space. Most people come here to mingle with like-minded people. I’m also here to try to understand them. Finally, I figured it out.
You may or may not have noticed that the term Web3, which was unknown last year, has made a name for itself this year, thanks to rising cryptocurrency prices and shrewd marketing by venture capitalists. Web3 is hard to define. On social media and Twitter, Web3 has become the catchphrase for everything related to blockchain and cryptocurrencies: people spend tens of thousands of dollars on digital collectibles called NFTs that have neither practical nor aesthetic value, Then sell them at a higher price. “Play to Earn” games lure players into fragile virtual worlds with promises of riches. Many stars trade cryptocurrencies during the Super Bowl. There are also endless scams, hacks and runaways.
But for true believers, Web3 is different from neon-lit crypto casinos and flashy excesses. If cryptocurrencies were originally about decentralized assets, Web3 is all about decentralized…everything. Its mission is almost a hyper-idealistic one: to free humanity not only from the domination of big tech companies, but from exploitative capitalism itself, and to do it purely through code.
Bitcoin, the original blockchain-based cryptocurrency, created a way to send and receive digital money without the need for bank approval. In theory, a carefully crafted set of incentives would replace regulators and law enforcement, allowing everyone to act in the best interests of all bitcoin users. The goal of Web3 is to apply the concepts of decentralization and game theory to all digital life. The primary vehicle for this is Ethereum, which borrows some key features from Bitcoin while adding a major innovation: it has its own programming language that enables developers to run applications on it and ultimately build a A new decentralized digital infrastructure.
If Bitcoin attracts anarcho-capitalists who want to topple central bankers, the culture around Ethereum and Web3 is more progressive. When I walked into the Denver Sports Castle, the first panel discussion topic I saw was the use of blockchain to build “public goods.” Denver Sports Castle is an event venue converted from a large sports store and the main venue for ETHDenver.
Another panel’s theme: “Navigating the Web3 Workforce as BIPOC (People of Color), Gay, Marginalized Individuals” (the group is heavily white and male). Aesthetically, ETHDenver embraced a collaborative spirit, and there was a lot of talk about Bufficorn, a cartoon buffalo and unicorn hybrid that was the event’s NFT mascot (a fusion of unicorn magic). and buffalo power). People use various memes to communicate there: GM, which means good morning, can be used at any time as a general greeting; wagmi means “we all make it.”
In the opening ceremony, the conference organizers emphasized the idealism of Web3. “It’s not about the money, we don’t care about that,” said John Paller, founder of ETHDenver, explaining that the theme of the conference was “building.” This term, which everyone reads as “biddling,” is a parody of the crypto meme “HODLing,” of holding onto your assets no matter how grim the market looks to express confidence in their long-term value. In the crypto world, as in internet culture, typos are a rich source of memes. “BUIDL stands for Bufficorn’s rallying cry,” Paller said.
What the hell are they BUIDLing? There are a lot of brilliant, idealistic, experienced technologists out there who think Web3 is pure nonsense. But there are also many who say it has real value and is humanity’s best chance to deliver on all the promises of the internet.
One way to look at Web3 is by its name: it’s the successor to Web 2.0, an era that was supposed to democratize the Internet but is actually dominated by a handful of big platforms like Google and Facebook. Web3 is about the decentralization of the web again.
From its earliest days funded by the U.S. Department of Defense, the Internet was designed to be decentralized. This has a very practical Cold War-era purpose: the computer networks that spread across the country won’t be completely destroyed in a single nuclear explosion. Early zealots also saw an inherent liberating tendencies in this distributed structure, a spirit embodied in John Gilmore’s famous 1993 quote, “The web interprets censorship as damaging and circumventing it. pass it.”
However, as the 1990s became history, the dream of decentralization gradually shattered. In what came to be known as Web 1.0, the typical Internet user, while theoretically authorized to create web pages, had virtually no rights other than to browse web pages made by others. As the economic development around the Internet matured, some powerful companies began to centralize control over their open protocols. For example, Microsoft used its operating system monopoly to dominate the browser market through Internet Explorer. Then, the dot-com bubble burst, and people began to question whether the Internet had ever lived up to its full potential.
This hope resurfaced in the mid-2000s, when new platforms and technologies allowed ordinary users to create and upload content, and it could reach thousands or even millions of people. If Web 1.0 was the mass passively consuming publisher-created media, in Web 2.0 the mass becomes the creator: Wikipedia entries, Amazon product reviews, blog posts, YouTube videos, crowdfunding campaigns. Time magazine captured the essence of the moment with its 2006 Person of the Year: “You.”
As these companies take over more and more of the web, it’s clear that for these companies, users are not so much a creative partner as an inexhaustible source of raw material. It is very difficult for users to escape. Meta can control your access to Facebook and Instagram photos, including your friends list. Want to give up on Twitter or find an alternative to YouTube? You cannot leave with your subscribers. If the platform chooses to suspend or cancel your account, you have little recourse.
In hindsight, there is no shortage of explanations for why Web 2.0 failed to deliver on its early promises. Network effects, the unforeseen power of big data, corporate greed, none of this is going away. So why should we expect anything new from Web3? For its believers, the answer is simple: blockchains are different.
Gavin Wood, a British computer scientist who helped program Ethereum, coined the term Web3 in 2014, the same year Ethereum launched. He originally called it Web 3.0, but then the “.0” was simplified. In his view, the fatal flaw of Web 2.0 is trust. In this online world, everyone has to trust that the biggest platforms will not abuse their power as they grow. Few people seem to have noticed that Google’s famous early motto “Don’t be evil” implies that being evil is also an option. For Wood, Web3 is about building a system that doesn’t rely on trusting individuals, corporations, or governments to make moral choices, but instead makes wicked choices impossible. Blockchain is the key technology to achieve this. Brewster Kahle, creator of the Internet Archive and Wayback Machine, describes the goal as “locking the web open.” Or, as Chris Dixon, general partner at Andreessen Horowitz Crypto Fund and Web3 facilitator, put it, “Can’t be evil > don’t be evil”.
A blockchain is a database that runs across a network of computers rather than on a single server, and is not owned by no individual or organization. Every computer or node stores a complete record of every transaction, so no one can control or disrupt the network unless it can take over a majority of nodes. This makes it impossible for anyone to manipulate the database, such as allocating more tokens to themselves. Among them, every change and transaction is recorded on the chain and can be seen by the whole world. There is no central authority that has to be trusted to enforce these rules.
So, how exactly should the blockchain implement an open network? Currently, platforms like Instagram and TikTok own the data you generate while using them and store it on their servers, making it difficult or impossible to extract that data.In theory, in a Web3 world, your data would be stored on the blockchain, not in a central server. Instead of owning a platform, you control access to your personal data through private keys that only you own. If you get tired of one service, you can take your data to another app. Also, the platform cannot put a wall around your data in an attempt to change the game because it doesn’t own it in the first place.
Countless Web3 startups are trying to apply this theory by creating blockchain-based alternatives to any platform you can name: Spotify, Twitter, Instagram, Google Docs. Liberal billionaire Frank McCourt has committed $25 million to develop a protocol for putting your social graph on the blockchain. A company called Sapien intends to build a complete Web3 Metaverse.
Believing in blockchain infrastructure as a decentralised enforcement mechanism was Web3’s first creed. There are other principles, which we will discuss later.
On the second day of ETHDenver, the toilet was broken. The sewers here are not ready for so many people. Ethereum has a similar problem. Like Sports Castle, it cannot handle the transaction load through its pipeline.
Like Bitcoin, Ethereum runs on a system known as “Proof of Work (PoW).” Computers in the network first solve complex math problems and earn a floating “gas fee” for validating transactions on the blockchain, thereby “mining” new coins.The greater the demand on the network, the higher the gas fee. After Ethereum became very popular, its gas fees were sometimes prohibitively high. Interactions rocketed past $55 per transaction during a wild spike late last year. The computation of these math problems also requires a lot of electricity. It is estimated that if the countries of the world are ranked according to the indicator of energy consumption, the combined energy consumption of Bitcoin and Ethereum will be located between Italy and the United Kingdom (as of 2020 data, France and Britain are ranked 9th and 10th in the world respectively).
It seems that three out of every ten people at ETHDenver are trying to solve these kinds of problems. Ethereum’s core developers have long been working on a transition to “Proof of Stake (PoS),” a greener (but possibly less secure) alternative to Proof of Work, expected to launch this year . There are also competing blockchains that do not use proof-of-work and therefore do not incur Ethereum-like environmental costs or gas fees. Then there are “layer 2” blockchains, which do most of the work on their own network and then record the computations in bulk on Ethereum to reduce the cost of each transaction.
Bandwidth issues aside, ETHDenver attendees generally agreed that the technology was too difficult to use. Doing anything in Web3 is incredibly confusing. When I check in at the hotel, I need help to redeem my crypto lunch tokens. If you’re not a programmer and want to get anything done, you just hit “OK” on a bunch of prompts you don’t understand.This is a great way to get ripped off. During the conference, it was revealed that OpenSea had been hit by a phishing attack and nearly $2 million worth of NFTs had been stolen. The episode was so common that the news barely garnered attention.
The user-unfriendliness of Crypto puts a lot of pressure on the entire ecosystem to do something it shouldn’t: centralize. In January, Moxie Marlinspike, a cryptographer and creator of the open-source encrypted instant messaging app Signal, wrote an article on his personal blog that provided an incisive dissection of the fundamental premise of Web3. Marlinspike believes that centralized services always end up imposing themselves on decentralized technology, as most people crave convenience. He writes that in the early days of Web 1.0, some people believed that “we should all have our own web server, our own website, our own mail server to handle our own mail. However, I think this point can’t be emphasized enough. But that’s not what people want, and people don’t want to run their own servers.
Marlinspike pointed out that this pattern has been repeated in Web3. It is rather cumbersome, if not impossible, for an app on a phone to directly interact with the blockchain. Therefore, almost all Web3 applications rely on one of two companies, Infura and Alchemy, to do this. The same goes for the digital wallets that most people use to store their crypto assets. In other words, almost every Web3 product relies on a middleman explaining what happens on the blockchain. For a system designed to make trust obsolete, this requires a great deal of trust.
This situation is even more centralized than MarlinSpike revealed, as Consensys owns both InFura and MetaMask. Yes, your data is forever stored somewhere on the blockchain, but in reality, any Web3 application you use is likely to rely on these centralized services to access it. As an illustration, Marlinspike wrote that when an NFT he created was delisted from OpenSea, it also disappeared from his MetaMask wallet, even though it still existed on the blockchain.
Marlinspike noted that Web3 defenders tend to respond to criticism by insisting that “it’s still early days.” Vitalik Buterin spent the whole day proving his point. Responding to Marlinspike on Reddit, Buterin wrote, “I am impressed by many of Marlinspike’s points as they make right critiques of the current state of the ecosystem, but ignore where the blockchain ecosystem is headed.”
A small faction in Web3 circles believes that blockchain is getting more attention than it deserves, and that decentralization has become a medium that hinders the dissemination of correct information. “I’m very adamant that Web3 is not synonymous with blockchain,” said Jeromy Johnson, an engineer at Protocol Labs, a research and development organization at Web3. Johnson works on blockchain projects, but he also helped write the InterPlanetary File System, a hypertext transfer A peer-to-peer alternative to the protocol (the “http://” bit in front of each URL). Using IPFS prevents website content from disappearing from the web just because a URL has expired or changed. This is an example of a non-blockchain decentralized technology.
“A lot of the things people are trying to do with blockchain don’t actually need a blockchain,” Johnson said. “People are trying to build social networks on blockchain, and they take every tweet, or whatever they say, and every A ‘like’ is put on the blockchain. My reaction to this is, what are you doing? This is stupid!”
Johnson worries that blockchain has become a fetish for some people. But I came to Denver wondering if the same could be said about decentralization itself, as the Web3 folks understand it. Because the biggest obstacle to decentralization may not have anything to do with technology at all.
Centralization is a vague term. One of the original goals of cryptocurrencies was to remove intermediaries like banks from financial transactions. So it is attractive among certain liberals, criminals and, more recently, Russian oligarchs. This is one way of thinking about centralization: a bank is at the center of transactions between two or more entities. But centralization and decentralization can also be seen as a matter of choice: how many choices do you have? Is there only one merchant in this market, or can you shop around? By this standard, banking is fairly decentralized. There are thousands of banks operating in the US alone.
A decentralized technology does not guarantee a decentralized marketplace. Take email for example. Email is a decentralized protocol. In theory, anyone could set up their own email server, but as Marlinspike points out, very few actually do. Instead, people use email clients, and the market is largely focused on a handful of providers, especially Gmail.Even if you personally choose to give up using Gmail, you send an email and the person on the other end is likely to be using it, meaning a copy of your email lives on Google’s servers whether you want to or not.
Centralization is one way; integration is a better way. Consolidation is not for the characteristics of the technology, but the characteristics of the market. There is an older protocol than Web3 used to deal with consolidated markets, and that is antitrust law. But government policy is not integrated into the Web3 blueprint.
The morning the toilet broke, I moderated a panel on “Why Decentralization Matters.” One of the panelists, Fuel Labs engineer Nick Dodson, noted at one point that “traditional fintech, personal finance applications that don’t use blockchain or encryption, is arguably more decentralized than Web3,” because honestly, there are more companies are doing this. “
I said, you know what, the fintech industry exists largely thanks to a piece of federal legislation. In the aftermath of the financial crisis, the Dodd-Frank Act, passed in 2010, contained a section requiring U.S. banks to allow customers to access their account data in a format readable by computer applications. You can thank this provision for the ability to sync your data with personal finance apps like Betterment and Mint. After that, I turned to another panelist, Frankie Pangilinan, an accomplished blockchain programmer. Given the daunting technical challenges facing Web3, I asked, wouldn’t it be an easier path to decentralization if Congress passed laws mandating data portability and interoperability? Wouldn’t it be easier than trying to eliminate the problems in all this complicated, clunky technology?
“Government moves much slower than software,” she said with a skeptical smile. “It’s essentially an outdated system, and we’re replacing it.”
Pangilinan is leading the mainstream view in the Web3 movement. Her skepticism is understandable. The Internet economy emerged during a period of loose regulation and historically lax antitrust enforcement. The U.S. government, in particular, has yet to prove itself capable of passing a major law regulating Silicon Valley or winning a major lawsuit against platform giants. Objectively speaking, Congress is an antiquated system.
Yet despite the law’s flaws, it remains the most effective technology ever devised to prevent individuals and corporations from abusing their power and forcing them to share it. Even in the tech industry, government intervention has a long history of spurring innovation and increasing user choice. Sometimes this is achieved through dramatic legal confrontations. In the 1950s, antitrust pressure from the federal government forced AT&T and its subsidiary Bell Labs to license thousands of patents, one of which was for something called a transistor. At other times, the government’s role in decentralizing markets is invisible. Thanks to a little-known FCC rule, for example, Americans can keep their cell phone numbers when they switch carriers.
But even members of the advanced Web3 community have essentially zero interest in using their powerful resources to influence public policy. Instead, as Pangilinan puts it, they tend to think that the government is designed around the problem and is just another institution, like Google or Facebook, that needs our trust rather than earning it.
Later, I chatted in the background with a third panelist, a former Ethereum core developer named Lane Rettig. He is frank about the downsides of encryption and Web3. But he strongly agrees with Pangilinan that government regulation is futile.Rettig is developing a blockchain called Spacemesh. Unlike Bitcoin or Ethereum, which require huge computing power, anyone can mine Spacemesh coins using the idle computing power of a laptop or smartphone by simply downloading a simple-looking app. This means the network can be distributed among millions of participants instead of the tens of thousands of people running Bitcoin or Ethereum nodes.
This sounded interesting, so I pulled out my iPhone. So can I download it directly? No, says Rettig; unfortunately, Space-Mesh isn’t available on phones yet. The mobile app hasn’t been developed yet, but even if it did, Apple would block most encryption-related apps from its app store. Revisiting my “regulatory is good” routine, I joked that the Open App Markets Act would help with that. The bill, which has bipartisan support in Congress, would force Apple to allow downloads of apps not available in its App Store. Rettig’s eyes widened. “Is this a bill?” he enthused. “It’s a big deal, and I can see it having a big impact. It’s
entirely true that people in crypto are totally uninterested in regulation. According to a recent According to a report, the amount spent on crypto lobbying has quadrupled since 2018. But the effort is not designed to use regulation to achieve the goal of decentralised markets or data portability. It is mostly to ensure the state does not get in the way interests of the cryptosphere.
DeFi, short for “decentralized finance,” is essentially a crypto betting marketplace that offers investors options, derivatives, and other financial products to gamble on cryptocurrencies. A common method is “yield farming,” which essentially refers to lending your cryptocurrency in exchange for interest. DeFi is big business. The ETHDenver conference may be a noble and ideal event, but it is basically sponsored by DeFi companies. Almost all of the most popular Ethereum applications at any given time are some form of DeFi platform or exchange. Unlike traditional finance, these institutions are largely unregulated. If someone steals your money, the bank doesn’t have to pay you back because there is no bank. This is by no means an insignificant question. An analysis found that more than $10 billion will be stolen from DeFi platforms in 2021 alone.
On my first night in Denver, I attended an event sponsored by Uma, which bills itself as “a fast, flexible, and secure way to create decentralized financial products.” The event was packed with DeFi circle of people, each of them assured me that their product promises super high returns with minimal risk. Former investment banker Arisa Toyota osaki told me about a startup she founded called Cega. With Cega, crypto holders will be able to invest in exotic crypto derivatives and generate decent returns, she explained. And, she assured me, unless the market fell more than 50%, it was almost impossible to lose money.
how can that be?
“I used to do this sort of thing in an investment bank,” Toyosaki said, adding that the DeFi derivatives market is “exploding in the second half of 2021.” This is the first time that enough crypto products can be split into derivatives. To do this, Toyosaki explained, you need a quantitative team capable of building advanced statistical models of the market. This is apparently intended to reassure in case the parallels to the eve of the 2008 financial crisis are too subtle. My next stop was a performance by Dutch DJ Tiësto, hosted by Bacon Coin, a crypto-token startup backed by mortgages.
“If we don’t exercise our voice, the only things that can be built are things that are immediately profitable,” he told TIME recently. “And those are often far from what’s really best for the world.”
While Defi dominates the sponsorship and party schedule, many Web3 faithful scorn it. Rows of tables where crypto companies pitch their products are marked as “Shill Zones” on the official conference map. One day, as I was leaving a coffee shop, I overheard two people sitting at a table outside, one said, “I’m not interested in Defi,” “Oh,” the other said, “You’re not Pang. Economist?” Vitalik Buterin was sitting at the next table, and from the look on his face he was boldly asking others to sell his business to him. Even Buterin is openly concerned about money grabbing in the ethereum universe he created. “If we don’t exercise our voices, the only thing we can build is something that’s immediately profitable, and that’s often far from what’s best for the world,” he said in a recent interview with Time magazine.
But there is a paradox here. While the Web3 visionaries may shun crypto casinos, the fact remains that cryptocurrency is the driving force behind their attempts to build it all. This is where game theory and other high-level principles of Web3 come into play. This is also where the Web3 movement broke with the economic innocence of past waves of internet utopianism.
Going back to the open source movement in the early days of Web 2.0, the idealists of that era were guided by a possibly naive belief that people were willing to voluntarily contribute their energy and talents for the greater good. Linux diehards believe that software should be free, but hold back because of the profit motive. Platforms born in this era live in that spirit, trumpeting the slogan of making the world a better, more open, and more connected world, while quietly building global surveillance operations behind the scenes to spy on users for the benefit of advertisers.
Julien Genestoux is a veteran of the open source movement who created the Unlock Protocol, which aims to bring memberships and subscriptions onto the blockchain. He said: “A lot of people who use the open web, open source, always think that money made that way is not clean. One of the things Crypto has been doing is putting money where it counts. By doing so, it eliminates The ability of corporate actors to capture value from others without our knowledge. Make it more explicit, which is something we are all focused on, and make it impossible for those who want to take it away from others. “
At its most basic level, Web3’s financial incentives are a clever way to address the adoption of new technologies. Let’s say you make a new decentralized platform built on the blockchain that works so well that people don’t need a PhD in cryptography to use it. Users are in control of their data and everything is open source. The problem is, these average users may not care too much about data ownership or immutable public ledgers, they care about convenience and fun. So how do you get them to use your new Web3 application?
The answer is token economics. Almost every proposed business model for a Web3 platform entails distributing tokens to everyone involved, incentivizing them to use and improve the platform in order for those tokens to increase in value. In Web3, this is called “aligning the incentives”. The concept is rooted in Bitcoin, and Satoshi Nakamoto devised a set of rules to prevent a conflict between an individual’s self-interest and Bitcoin’s. Using game theory principles, Bitcoin can incentivize everyone to act for the collective good. Even if someone controlled enough of the network to be able to rewrite its history and make them rich, they would have a strong reason not to do so: this betrayal would kill people’s confidence in Bitcoin, leaving their own holdings Asset values shrink.
Many people view Bitcoin and other cryptocurrencies as pyramid schemes because their value is purely driven by the demand that others want to buy. But at least in theory, token economics can play a useful role in the real world. Take Web3 search engine Presearch as an example. Presearch is distributed in a network of nodes that anyone can set up on their computer or virtual private server. Your search term is passed to one of the nodes, which queries a range of sources before returning a response. Those who run nodes are rewarded in the form of Presearch’s PRE tokens. Users can also earn small token rewards for performing searches. As the platform becomes more popular, the token should become more valuable. There is a realistic point of reference for this value: advertisers must buy tokens to appear above search results.Does this work? Maybe not. But this is not a Ponzi scheme.
Web3 apps promise not only to pay users, but to give them a say in how the platform works. For example, the PreSearch token will grant users ownership of the platform and some kind of governance power. In theory, this distributed structure should prevent anyone from pushing PreSearch in any questionable or exploitative direction. “Why don’t we end up like Google?” said Colin Pape, founder of PreSearch, referring to the search giant’s well-documented privacy concerns.”Because we have everyone around this unit of value, if we try to extract too much value from users and they get irritated, the token value will drop.”
This sounds plausible in theory, but it raises all sorts of practical questions. How do you stop someone from buying enough tokens to exert unilateral control? How do you know the crypto account holding the tokens belongs to a different person?If you were truly decentralized, how would you move fast enough to compete with traditional businesses that don’t have to put every decision to a vote?
The answer is all speculative, as these governance aspects are not actually live yet. Decentralized control remains PreSearch’s aspiration, Pape admits. The reality is that this company, or Pape, controls the search engine just as Alphabet controls Google. This is somewhat of a theme in the Web3 world. Everyone has a white paper detailing how their new platform will be governed by the “community”…Eventually, eventually, at some as-yet-undetermined point in the future, once a whole bunch of other issues are resolved, the platform When it gets big enough to remove the training wheel.Community: Oh Lord, give me decentralized control. Platform: Not yet.
If the vision of collectively operating large platforms sounds out of reach, Web3’s creed is in some ways even more ambitious. Using blockchain technology and token economics to get people to buy into a set of decentralized applications? This is just the beginning. For some Web3 celebrities, the real goal is to use cryptocurrency to lock humanity into a more cooperative, less self-destructive society. I didn’t fully understand this until I met Kevin Owocki.
Few have worked harder to turn Web3’s idealism into reality than Owocki. Originally from Boulder County near Denver, Owocki is the founder of GitCoin, a platform for funding open-source Web3 projects that has raised and distributed around $60 million so far. Of the many Coloradoans at ETHDenver, he was the most handsome, with long hair, shawls, a neatly trimmed beard, and an athletic build.
Owocki was a rock star at conferences. He is credited with coining the term BUIDL in 2017. Admirers kept coming to him to talk, show their support, or ask for copies of his publication GreenPilled: How Crypto Can Regenerate the World, which was a hit at the convention and sold out of 400 copies. Owocki is a far cry from the gamblers you find in the cryptocurrency world. In several of his presentations, Owocki told everyone that since research shows that money doesn’t increase happiness after making about $100,000 a year, the founders of Web3 should invest the extra money in public places that everyone can enjoy. products to maximize their well-being. He told me: “Cypherpunk is about privacy, decentralization: hardcore libertarian trash. I’m more of a leftist. I’m more of a “solarpunk,” which is, How do we address contemporary issues around sustainability and fair economic systems? It’s a different set of values.”
He explained that the Internet made it possible to transfer information between computers. This revolutionized communication.
Blockchain makes it possible to transfer units of value between computers. Owocki believes this can revolutionize the way humans interact through what he calls “regenerative cryptoeconomics.” He wrote in GreenPill that cryptoeconomics “is the use of blockchain-based incentives to design new types of systems, applications or networks.” Regenerating cryptoeconomics means doing it in a way that makes the world a better place this matter. The goal is to break the zero-sum capitalist model of the rich getting richer. Owocki believes that the right cryptoeconomic structure can help address collective behavioral issues such as climate change, misinformation, and underfunded digital infrastructure.
A key tool to achieve this is a decentralized autonomous organization. In theory, DAOs use cryptocurrencies to facilitate collective behavior. Typically, members join by purchasing a certain amount of custom tokens issued by the DAO. This entitles them to take ownership of the DAO itself. Member owners vote on what the DAO should do, mostly about where its funds go, since blockchain-based entities can’t do much more than move funds from one address to another.
This young concept already has a tortuous history. The first DAO, simply named “The DAO”, disbanded in 2016 after someone exploited a bug in its code to siphoned off about $50 million worth of ETH at the time. After that, various failure modes followed. Still, DAOs remain popular on ETHDenver, where attendees trumpet their world-changing potential.Elon’s younger brother, Kimbal Musk, is photogenic as he talks about his Big Green DAO, a food-related charity. He insists that giving money through a DAO removes all the painful bureaucracy of charitable nonprofits. “It’s much better,” he said, though he conceded that “there are many ways to fail, and this one can fail badly.”
Unlike the Kickstarter page, the charity says: The DAO frees humanity from collective behavioral problems that could destroy species. According to Owocki, it’s the ability to write code in a way that corrects the incentive structure. In this sense, the first DAO can be said to be Bitcoin itself. “Our weapon of choice is a novel mechanism design, based on sound game theory, deployed as transparent open-source code to a decentralized blockchain network,” he wrote in GreenPilled.In fact, the book says very little about the technology itself and more about various game theory concepts. These include things you learned in an undergraduate economics class, “Public goods are non-excludable and non-rival”, and things that wouldn’t be obtrusive in science fiction: “Community Inclusive Money,” “The Fractal DAO Protocol,” ” Retroactive Public Goods Funding”.
According to Owocki, one of the most powerful incentive design techniques is a technique called quadratic voting.Standing on the edge of Shill Zone, Owocki turned and showed me the back of his purple baseball jacket, which read “Quadratic Lands.” Quadratic land, Owocki explained, is a mythical place where the laws of economics are re-engineered to produce public goods. “It’s just a meme,” he said. “I don’t want to tell you it already exists.”
In a quadratic voting system, you can allocate your budget among different options. Let’s assume it’s US dollars. The more money you allocate to a particular choice, the more important your vote for it will be. But there’s an important caveat: Every marginal dollar you commit for the same option is worth less than the dollar before it. Technically, the “cost” of your vote increases squarely, not linearly. This makes it harder for the wealthiest people in a group to control the vote. GitCoin uses an adaptation called quadratic funding, which awards funds to Web3 projects. The number of people who contribute to a project is greater than the amount they contribute. This rewards an idea supported by the majority, not the richest: regenerative cryptoeconomics in action.
Glen Weyl, the Microsoft researcher who proposed quadratic voting, was far more cautious than Owocki about the technology’s applicability to blockchain. In the foreword to Owocki’s book, he wrote, “I am deeply ambivalent about Web3.” He positions himself as a sort of internal critic of the movement, who supports its decentralization and digital public goods , but question its confidence in the potential of the current state of blockchain and cryptocurrencies.
Weyl introduced me to the disadvantages of using quadratic voting in DAOs. A major problem is the Sybil attack, where one person creates 1,000 “sock puppet” accounts and uses them to control voting. Even if you figured out a solution to the ID problem, someone could have someone in the simulated world create an account for them.
Owocki believed he and his co-revolutionaries could solve these problems. He asked me if I had heard of the Matthew effect, and he explained that it was how economists refer to the fact that the rich tend to get richer. “It’s a fundamental law of economics,” he said, but that doesn’t mean it’s invincible. Conquering the laws of nature is what technology is for “A plane that subverts gravity; what if you could build an economy that subverts the Matthew effect? Man, it’s quadratic voting.”
All of this is kind of exciting to me. Regardless of where Owocki’s theory spills over, it was hard enough for me to understand how a DAO should work, so when I was in Denver, I decided to create a DAO.
My friend Jacksón Smith works for a nonprofit called the Learning Economy Foundation that studies the use of blockchain in education. He attended the meeting and agreed to help me create the DAO. We settled on an admittedly low-stakes idea: our DAO would try to win The New Yorker’s weekly comic caption contest, in which readers compete to provide the funniest laugh for an uncaptured comic point. Each week, DAO members will vote on each other’s submissions and submit internal winners to the actual competition. We call it lmaoDAO.
I spent a lot of time on DAOs over the weekend, but not as much as Jackón and a few of his colleagues who actually knew how to program and generously volunteered their time to build DAOs, which I half-jokingly started calling them “my cores” Developer”. I should say, go build it. We are BUIDLers, and in the spirit of ETHDenver, have officially developed a Web3 application. I was amazed that people in meetings were always unwaveringly supportive of me when I explained what I was doing. I initially thought they might object to journalists creating a DAO, but looking at the whole situation, we did come up with a clever idea.
As we created the DAO, two things became very clear. First, the DAO is nothing more than a group that requires crypto tokens to become a member. For us, LMAO tokens are also minted out of thin air. Like most DAOs, our DAO organization is also on Discord. Our DAO isn’t really decentralized; we control Discord, Jackón controls the voting site, and I manually submit the feed to NewYorker.com. We promise in principle to build decentralized governance, but who knows when that will happen. At the same time, everyone has to believe that what we say is true.
The second thing that became clear is that BUIDLing is really fun. Setting up a DAO is a bit like designing a video game.You have to create incentives and rules to keep people playing and not be easily exploited. In fact, it feels like a game within a game, as Web3 itself is no different from an immersive RPG, an alternate reality with its own rules, customs, and language. Play long enough and you won’t need to read the instructions anymore. Various circles of jargon also began to be used. Switch your wallet from the Ethereum mainnet to Gnosis Chain to get your LMAO tokens and sync with the Collab.land discord bot to prove you are a community member to access Discord locked channels.
The real fun of BUIDLing is problem solving. For example, how are we going to get people to join? Nathan, one of my developers, came up with an idea: he could grab every crypto wallet holding Bufficorn NFT or ETHDenver tokens and use it as a proxy for attendees. We can then “airdrop” our tokens to everyone on the list. The most exciting thing is that this all happens in a relatively closed system. Few of these decisions require us to think about the chaotic world outside the DAO’s confines. It all helped me understand the appeal of Web3.
Today, the sense of moral heroism that once accompanied Web 2.0 work is hard to find. Whatever Web3 is, it’s an area where programmers and techies can relive the joys of hacking, where they can once again be happy about working in tech. Jackón actually made complex board games as a hobby, and he told me that escapism was one of the appeals of Web3. But the question is whether this escape door leads to a real place or a fantasy world.
As those pizza crumbs and empty snack bags piled up, it dawned on me that it was Saturday night and dinner time was coming up. Rumor has it that Snoop Dogg, who recently announced his intention to turn Death Row Records into an NFT music label, is throwing a party somewhere. But my plan is to meet my childhood friend Dave, who lives in Denver.
When Dave and I had dinner, I was feeling a little bit of a jerk, and it was hard to explain what I’d been doing: Web3, cryptoeconomics, building a DAO. I’m a bit like Dorothy from the Return of Oz. Gradually, the conversation turned to normal things: his family, my job, the trip we had been planning. That night, I slept in Dave’s basement, and I was woken early on Sunday morning by the footsteps of his two-year-old daughter. The people who attended the conference seemed to genuinely believe they were building a better world for her, and in the morning, it was hard to take the idea that her future depended on a bunch of incentives from blockchain membership organizations. It all felt like I had unplugged this game.
Then my phone buzzed. Need my help before DAO is officially launched. I didn’t think much of it, and plugged it back in again.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/wired-reporter-how-three-days-in-denver-changed-me-from-crypto-skeptic-to-dao-creation/
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