Citizen's

Economic Leverage

A maximalist vision for aligning

the global market proportionate to its participants.

And solving global warming.

ACHTUNG

I'm a crazy Aussie.

We were convicts originally. 

I love Australia + the world.

I love tech.

And I hate the Australian government.

(to a healthy convict extent)

How I believe the world works.

We have two forms of leverage (our ability to influence):

  1. Democratic (once every 4 years as a vote + protests)
  2. Economic (every single day)

What does this mean?

  1. We invade Iraq, even though we know it's BS.
  2. The government trashes the Great Barrier Reef, even though no-one thinks it's a good idea.
  3. We have climate change, even though it's a problem we all share.

Why?

Government is a market for public policy.

Majority parliament is majority democratic vote.

Price mechanism is votes.

 

But the incentives of the government are not completely aligned with the incentives of the voters.

Forms of value

 

Everything has value.

 

Most things are priced with currency.

 

Some things aren't:

ETHIC: Ethical value (life/property rights)

ENVIRON: Environmental value

SOCIET: Societal value (continued life on Earth)

Incentives & Decisions

 

If you're a government making a decision:

 

invade Iraq ($200M in oil)

or

abide by people's vote ($? in ETHIC) and satisfy democratic quorum (5M votes)

Incentives & Decisions

 

If you're a government making a decision:

 

let big oil tankers tredge through Great Barrier Reef (cost savings for them, $20M)

or

preserve this natural wonder, biodiversity ($X ENVIRON)

Incentives & Decisions

 

If you're a government making a decision:

 

preserve life on this planet ($X SOCIET)

or

continue business as usual (break-even)

It's no-one's fault

Two problems:

 

1. Governments cannot justify the value of the better decision for the commons = because we cannot appraise its value

 

2. Citizens cannot exercise their effective leverage on a collective scale = capitalism works super well, but incentives could be aligned better

 

We don't need an exact theory.

We need a pragmatic solution.

THE CRAZY IDEA

1. We make decentralised forms of value for the commons using tokens.

2. We make every existing good and service into a token.

3. We make economic leverage a real economic purchase

Pieces of the Puzzle

  • Capitalism allows us to distribute decision making and risk using money. (see Dutch VOC)
  • Tokens enable decentralised governance of value (ERC20,721,...).
  • Decentralised exchanges (any ERC20 interface) enable instant liquidity between any token with exchanges.
  • Stablecoins (DAI) bridge the economic markets of pre and post-blockchain world.

 

The missing piece

We need to make tokens for:

Non-tangible: environment

Tangible: milk

 

How the fuck!??:

  • How do we govern a milk token?
  • How do we mint a milk token?
  • How do we constrain people milking the milk token?
  • What happens to the token when my milk is bad

 

 

The bigger picture

These questions are about trusting people to be reputable.

 

We don't need to answer these questions.

The market will answer them.

We need to make the mechanism for answering the questions fair.

 

That mechanism is reputation.

Deep dive

 

People decide on the terms of making the milk token.

The value of the token arises from barter-interactions.

(see further: SNP Platts & how the price of oil evolved).

 

The price mechanism of the token (its value) represents demand in the market. If it's bad milk, price signal of demand goes down.

 

How do we make "if it's bad milk" scalable to the ENTIRE world?

A scalable reputation and trust coordination protocol

 

Also known as "scalable empathy".

📈 💑 

 

 

 

Desired properties

 

  • an immutable log of someone's behaviour. But not for dystopian purposes - only arising from natural need.
  • to establish more trust with people, but not solely based something economic - $$$ as a currency would make trusting people a costly action, which eliminates the benefits.
  • reputation should be universal
    • your negative interactions with one person should directly affect your future interactions with every other person
  • reputation should be normalised:
    • you shouldn't be able to game the system with generating heaps of identities/claims

Thesis

Trust is reliability.

 

Trusting someone is reputable, means you can repeat liability on yourself that they will act reputably.

 

Liability = staking your EMP on someone else.

 

I call it "bonding".

Problems & Solutions

How to mint token?

Basically minted whenever someone stakes their trust.

 

How to know how much we trust someone?

It's an algorithm for transitive trust:

ie. my trust in X is how much my friend trusts X by how much I trust my friend.

 

How do we normalise trust?

see next slide...

The key piece

How do we stop massive mafia networks of trust?

= How do we ensure that I can't falsely inflate my reputation?

 

This is the key piece of the solution.

 

We use PageRank to normalise within the trust network by someone's weight of influence.

The intuition

Part 1: Weights of trust

Think of it like a latin family.

Your grandma has the most weight, even more so than your band of cousins who each trust each other heaps. Because you grandma is trusted by every parent, who in turn every child trusts at least one of.

 

 

The intuition

Part 2: Stopping the mafia

Imagine two groups: the people and the mafia.

The mafia wants to overrule the people.

They generate massive false networks of trust.

They bribe some people so that they begin to look credible.

 

as soon as one bad apple is bribed by the mafia, our transitive trust mechanism FAILS.

 

HOW DO WE SOLVE FOR LOVE!?!?!

The intuition

Part 2: Stopping the mafia

Simple.

We tie everyone's trust to the trust in the network as a whole.

 

We normalise their "bonds" by their relative weight in the entire network (using PageRank).

 

Philosophy is relativist not absolutist.

We construct absolute metrics from relative measures.

Recap so far:

  • Invented a way for anyone to trust anyone based on anything
  • Now we can make milk tokens and if someone reports it's bad, then the worldwide market corrects us.
  • Because it's ERC20, people can OWN their economic leverage
  • We can bridge the existing system RIGHT NOW with stablecoins

The Commons DAO

We represent the environment as a DAICO.

  • People have worldwide leverage and cooridination:
    • They only transact with actors that support climate action
    • They charge more for actors that don't support climate action (incentives - bad approach)
    • They stake their value into the Commons
  • The Commons DAO:
    • People worldwide join the DAO for the environment
    • Stake their tokens, giving the DAO economic leverage aligned to the group's beliefs
    • Acts as an economic vehicle to coordinate world governments

 

Questions?

Retrust

By Liam Zebedee

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