Why Cryptoeconomics Matters

Cryptoeconomics gives us the tools to build and share frameworks for self governance. A group of people can decide to join a form of shared governance that is both well understood and trustless—the organization's  success is not based on the trust of a single individual or external organization. The rules are defined in advance, are transparent, and are resilient to ill-considered changes. 

While a goal shared by many groups, the initial barriers to entry are significant. The efforts of local unions and workers to self-organize provides one example of a simple form of governance that could be learned from, copied, tweaked, and iterated upon. In theory, we could imagine groups of workers coming together to co-own their local place of work, be that a cafe or factory. In practice, there are significant challenges to this process, challenges not just in design of the shared system of rules, but also the rule system’s effectiveness and functional dynamics.

We could drastically lower the barriers to entry for groups to self organize if templates were available, with a clear set of rules for the governance of simple local business, as well as the shared cultural understanding of how this model has been deployed for other groups. Furthermore, these well understood and templated deployments could allow for the easy and trustless support of the endeavor from third party individuals. These same concepts, of known, accessible and proven templates can be applied far beyond local production from insurance collectives to the sharing of local resources. 

DAOs provide us with the basic canvas, but in their current form they are little more than a starting place. DAOs in and of themselves are not effective forms of governance any more than a “blockchain” is an effective form of technology. With a recognition that we are at the earliest stages of experimentation and development of effective forms of governance, we can establish an effective mindset of exploration, iteration and implementation of the lessons that each generation of rulesets provide.To date our systems of governance typically start with whatever system will stop bloodshed and then move forward as a series of compromises building upon itself. However we can now intentionally craft governance systems and learn from each generation or implementation to further refine, develop and evolve these systems.

The task of designing a system of governance, at any scale, is daunting. This challenge is greatly increased by the complexity of the tasks and the size of the population affected and participating. Cryptoeconomic design allows us to design solutions at the community level with an innate ability to scale. Cryptoeconomics presents the opportunity for communities to develop fitting and effective rulesets, whether they be rules for sharing of community resources such as power or vehicles, or health care, or insurance. When other communities facing similar governance goals can simply adopt the same proven models, cryptoeconomics will have realized its potential to scale self governance alternatives. 

Further, due to the trustless nature of these systems, communities that share the same rulesets can band together into meta-structures that provide the effective benefits of scale. Individuals opt-in to community level governance structures that best suit them, and then these communities can opt-in to collections of communities that share the same rules. With this bottom-up approach to governance, we can develop complex, large-scale networks of collaboration that would be near impossible to implement from a top-down approach given the lack of a central coordinating authority.  

Independence becomes critically important where these disintermediations or alternatives threaten existing systems or even exist alongside them as viable options —new rulesets communities rely on need to be built to survive. (Although generally it will be quite difficult to put the genie of decentralization back in the bottle, with full censorship of knowledge harder than ever before). Independence is one of the fundamental reasons why the philosophy of decentralized and distributed systems cannot be cut short by centralized actors. As capital has flowed into the industry, the shining lights of the casino have blinded far too many to the reasons why this industry emerged in the first place: as an alternative to centralized structures that will eventually threaten the existence of alternatives. The bold and powerful effects of the new forms of governance we can build only work if the entire stack of technologies that they rest upon are not just decentralized but also distributed and truly resilient.

Cryptoeconomics by its very nature is a humbling pursuit. There is perhaps nothing that has been so consistently unsolved in the history of human society than our own self-governance. However, we now have the tools by which to build, in an iterative way, better systems and to share those insights with the world.

Distributed systems give us the ability to design and build trustless governance, for these systems of governance to be resilient enough to survive and provide lessons and insights, and then for these systems to form meta-systems at scale that can challenge traditional systems. It’s a process that involves iterative, step-by-step research, development and experimentation, but it’s a process that makes what was once impossible attainable. 

We believe our path to greatest impact is to build what we can, and to share the insights, lessons and knowledge that come from this work as widely as possible. In the earliest days of computers (only a few decades ago) the first systems were electronic gates strung together to perform simple binary math. As crude as this was, each new insight provided another building block for more complex systems. With each passing year the complexity, and the complexity it enabled, rapidly increased until we ended up with systems that would seem magical to the originators and which have fundamentally reshaped the world and society. 

We are on a similar trajectory with Cryptoeconomics. Each new insight adds to the puzzle, and each new practitioner has the potential to go on to build a system that will inspire countless more designs, modifications and innovations.  

Through the discovery, exploration and documentation of this field of knowledge we, as individuals, can amplify our impact to help build a better world.  While our tools and understanding at this point may be crude, they are the first components of a complex and rich language that we can use to create the world that we want to be a part of. 

Cryptoeconomics matters because it presents some of the most fundamentally powerful opportunities to change the world for the better.