µniverse and Bharatverse: Web3 Explorations (Part 10)

Web3 to DAO – 2

Kyle Chayka wrote in the New Yorker about an example of a DAO: “F.W.B., for instance, is an online community driven by a currency of the same name, which functions as something of a digital V.I.P. lounge for creatives. In order to join, you have to buy the token. Members chat on Discord, participate in physical meetups, and develop projects together, such as a crypto-ticketing app or a new beverage. The result is a kind of decentralized brand identity. Holders vote on ratifying codes of conduct, approving monthly budgets, and collaborating with other companies. Because the blockchain records are transparent, the results of every vote are public.”

Jeff Kauflin with Isabel Contreras write in Forbes: “By using tokens, DAOs can efficiently allow votes, empower profit sharing and, crucially, supply liquidity, as tokens can be bought and sold.”

Binance writes about the basics of how DAOs work:

1. Rules are created via smart contracts through community voting

DAOs operate using smart contracts, and are decentralized and community-led with no central authority.  These smart contracts lay the foundational rules of how a DAO is to operate. And these rules cannot be changed unless they’re voted upon by the DAO’s core community members. As decisions to the DAO’s operational workflows, governance system, and incentive structures will need to be voted on in order to take effect, smart contracts are essential to creating a sustainable and autonomous DAO.

2. Users can fund DAO’s growth by purchasing the DAO’s native tokens

Once the rules of the smart contract are written onto the blockchain, the next step is to acquire funding. Since smart contracts require the creation and distribution of internal property like native tokens, which can be used for voting or incentivizing certain activities on the protocol.  Individuals or entities interested in participating in the DAO’s growth can purchase the DAO’s native token which are cryptocurrencies tied to certain projects. Token holders are given voting rights proportional to their holdings and are able to own equity in the DAO to help shape the DAO’s future.

3. Receive governance tokens to influence token distribution and treasury management

Once there’s enough funding for a DAO to kick-off, all of its decisions will be made by token holders through a consensus vote. As the DAO’s stakeholders, community members will then work towards the most beneficial outcome for the entire network. Beyond voting rights, members can also work for their DAOs where they can get governance tokens in return, including roles in token distribution and treasury management.

Alexandre Kandelaft discusses how the DAO could revolutionise decision-making in sport: “What if a collective of people could own or at least invest in an organisation and have a say in every decision? Today many sports teams are owned and managed as publicly traded companies so it might be feasible for a group of fans, organised under a DAO, to acquire shares. Teams would have to make a part of their capital available through tokens, created on their own blockchain protocol. Every person buying them would be financially investing in the organisation and the value of each token would be indexed on the club’s financial health. Part of the generated revenues could be stored in a virtual treasury that would serve to further develop the clubs with the development of new projects. The promise of such an initiative is that these tokens would give fans significant advantages (such as club NFTs, membership plans and exclusive promotions) as well as a level of involvement in the daily activities of the organisation that we’ve never seen before.”

Thinks 422

Canalys: “The smartphone market in India achieved a record 162 million shipments in 2021, growing 12% on 2020. After a tough start to the year, due to the second wave of COVID-19, India recovered strongly in the second half. Following a strong comeback in Q3, smartphone vendors shipped 44.5 million devices in Q4 for 2% growth, despite a challenging supply chain. Xiaomi was the leader, shipping 9.3 million units and maintained its 21% market share. Samsung came second with 8.5 million units for 19% share. For the first time realme climbed to third place in India, with a 49% year-on-year increase in volume that reached 7.6 million shipments. Fourth and fifth place were taken by vivo and OPPO, with 5.6 million and 4.9 million units respectively.”

FT: “A lot of contemporary political commentary centres around the same disturbing puzzle — why is authoritarianism making a comeback? Moisés Naím is a US-based commentator who originally hails from Venezuela, which makes him well placed to understand the dangerous interplay between populism and authoritarianism. In “The Revenge of Power”, he skilfully combines reportage with social-science research to identify and analyse the three “P”s driving the global resurgence of authoritarianism: populism, polarisation and “post-truth”.

Rajesh Kumar: “The growing acceptability of income support and other promises being made by political parties, in a way, reflects the system’s inability to create income opportunities at the scale required. As reported elsewhere, compared to five years ago, the total number of people employed in four out of five poll-bound states was lower in December 2021. Even at the national level, India’s employment ratio is one of the lowest in the world. The female labour force participation rate too is one of the lowest, which perhaps explains the idea of promising cash transfers to women. A big risk in the medium term would be that in the absence of a large-scale increase in employment opportunities, the political pressure to provide support in one form or the other would rise significantly. Broad changes in the economy currently underway could also exacerbate the problem…India needs a debate as to what percentage of general government revenue can be used for subsidies and cash transfers.”

µniverse and Bharatverse: Web3 Explorations (Part 9)

Web3 to DAO – 1

The DAO (decentralised autonomous organisation) is an essential construct in Web3.

Nathan Baschez writes in Every: “The first phases of the internet, web1 and web2, were respectively defined by static one-to-many broadcast websites (e.g. Yahoo) and centrally controlled social networks (e.g. Facebook); in the long arc of history they will come to be seen as a fundamentally flawed and transitory technology, like the digital camera and MP3 player were to the smartphone, or how the Articles of Confederation were to the Constitution. To these crypto degens, web3 is the true and final form of the internet … [DAOs] believe “ask the audience” is the winning strategy, and if you set up the right decision-making systems, collective wisdom is greater than individual vision. One way to think about it is the next wave of democratization. First, we devolved power from monarchs and dictators to elected representatives in the management of nations.”

The Economist explains: “DAOs [are] collectives that use automation and crowdsourcing to make decisions. They do not rely on a single central authority, like a boss. Instead members typically use cryptocurrency to buy tokens, granting them voting rights. Jonah Erlich … has likened a DAO to a group chat with a bank account.”

Youssef Faqir-Rhazoui, Javier Arroyo and Samer Hassan write: “A DAO is a blockchain-based system that enables people to coordinate and self-govern themselves mediated by a set of self-executing rules deployed on a public blockchain, and whose governance is decentralized, that is, independent from central control. DAOs are organizations in the sense that they mediate the interactions of a group of people, typically an open community that joins as members. In some DAOs, members are token holders of a certain token that enables DAO participation, similar to corporation shares. DAOs are considered autonomous because, unless its code explicitly says so, they are independent from their creators. Their operations follow the rules embedded in its code, together with the (human) governance of its members. Moreover, being deployed on a public blockchain, they are censorship-resistant, since there is no central controller that may turn off the DAO and its provided service. Thus, as long as there are members willing to execute their code, DAOs will continue operating, e.g. providing services, purchasing/selling resources or hiring people.”

Arianne Flemming and Jelena Djuric provide a historical perspective: “DAOs are en vogue; the promise and ethos of DAOs are novel but not new. Over 200 years before their transfer onto the blockchain in the form of DAOs, cooperatives have solved governance problems in a democratic and accessible way. Globally and historically practiced structures for corporations, largely ignored by Silicon Valley and technology enthusiasts to date, co-ops are an autonomous association of people united voluntarily to meet common economic, social, and cultural aspirations through a jointly-owned and democratically-controlled enterprise … Little of the operational aspects of what we now call a DAO is new. DAOs don’t need to reinvent the wheel; they can improve on the work already done. Existing cooperatives are useful case studies for DAOs and places to draw inspiration and experience, having stood the test of stable time. What is different is the complete digitization of the cooperative organization, now called platform cooperatives, and the application of blockchain for governance, and cryptocurrency for monetary activities. These are the novel aspects and growth accelerants. The relative ease of use and digitization of trust creates a unique kind of organization when properly leveraged. There are long-standing cooperative business models to learn from and build upon.”

Thinks 421

FT: “The fight to dominate the semiconductor industry is rapidly turning into today’s industrial equivalent of the 19th-century Great Game, when rival powers clashed over Central Asia. Now, as then, the strategy is to secure resources and supply chains, pin down allies and deprive rivals of strategic assets. But the modern game is mostly about boosting intellectual capital, strengthening industrial capacity and pioneering the latest technology.”

Niranjan Rajadhyaksha tells the story of India’s economy, as told by budgets since Independence, and compares data points in 1948, 1972, 1977, 2022. His take: “There is also a lesson to be taken from the past 75 years. India’s economy has broken free of many of its old structural constraints. It now faces new constraints. However, one unchanging fiscal fact is that the Indian state continues to be underfunded. The tax/GDP ratio, net of what the Centre shares with states, has barely moved over the past 30 years. Increasing it, so that the state’s growing infrastructure, development, subsidy and welfare commitments are funded, is a looming challenge.”

Praveen Chakravarty: “As per empirical research published in the Lokniti National Election Study, of every 100 Indians who voted in the 2019 national elections, only 35 were committed voters who were sure of which party to vote for before the campaign began. The remaining 65 voters decided who to vote for just in the last few days or weeks before election day. That is, 65% of Indian voters make their voting decisions very close to polling day. How do these large number of voters decide who to vote for at the last minute? Based on ‘hawa’ – the ‘wind’ factor. As per the same study, nearly 30 of these 65 last-minute voters decide who to vote for based on who they feel or think is winning. ‘Which way the wind is blowing’ is a significant determinant of voting behaviour in India. In other words, a significant 30 of every 100 voters vote for the likely winner and so, it is very important for a political party or a candidate to be perceived as the likely winner in an Indian election.”

µniverse and Bharatverse: Web3 Explorations (Part 8)

Web3 Views – 2

Fred Wilson: “It all comes down to the database that sits behind an application. If that database is controlled by a single entity (think company, think big tech), then enormous market power accrues to the owner/administrator of that database. If, on the other hand, the database is an open public database that is not controlled and administered by a single company, but instead is a truly open system available to all, then that kind of market power cannot be built up around a data asset. As Albert says in his post: “It is difficult to overstate how big an innovation this is. We went from not being able to do something at all to having a first working version. Again to be clear, I am not saying this will solve all problems. Of course it won’t. And it will even create new problems of its own. Still, permissionless data was a crucial missing piece – its absence resulted in a vast power concentration. As such Web3 can, if properly developed and with the right kind of regulation, provide a meaningful shift in power back to individuals and communities.””

Moxie Marlinspike: “web3 is a somewhat ambiguous term, which makes it difficult to rigorously evaluate what the ambitions for web3 should be, but the general thesis seems to be that web1 was decentralized, web2 centralized everything into platforms, and that web3 will decentralize everything again. web3 should give us the richness of web2, but decentralized… I have only dipped my toe in the waters of web3. Looking at it through the lens of these small projects, though, I can easily see why so many people find the web3 ecosystem so neat. I don’t think it’s on a trajectory to deliver us from centralized platforms, I don’t think it will fundamentally change our relationship to technology, and I think the privacy story is already below par for the internet (which is a pretty low bar!), but I also understand why nerds like me are excited to build for it. It is, at the very least, something new on the nerd level – and that creates a space for creativity/exploration that is somewhat reminiscent of early internet days. Ironically, part of that creativity probably springs from the constraints that make web3 so clunky. I’m hopeful that the creativity and exploration we’re seeing will have positive outcomes, but I’m not sure if it’s enough to prevent all the same dynamics of the internet from unfolding again.”

Dror Poleg: “Crypto and web3 promise to increase my freedom to switch between the platforms I rely on and my likelihood to survive a hostile action by one of them. This promise is only partly fulfilled at this point, and it might never materialize in full. Unlike some, I do not believe that web3 will be more just or equitable or even more free by default. But I do believe it offers the possibility of increasing our freedom and agency. And, in light of general and personal history, this possibility is enough to pique my curiosity and garner my support. To most users, the freedom to pack up and move your digital assets and identity does not matter. But it might matter one day, and when it does, it will matter a lot.”

Scott Galloway: “Web3 has different-colored hair, but the same DNA as earlier web paradigms, which decentralized services at an unprecedented scale to centralize wealth and influence at an unprecedented scale. Ninety-three percent of intentions and two thirds of decisions are influenced by two firms. Is that a good thing? Pro tip: Ask someone with teen girls. So far, web3 is web2.01.”

Albert Wenger writes: “Web3 can, if properly developed and with the right kind of regulation, provide a meaningful shift in power back to individuals and communities. And if widely adopted Web3/crypto technology will also start to improve along other dimensions. It will become faster and more efficient. It will become easier and safer to use. And much like the PC was a platform for innovation that never happened on mainframes or mini computers, Web3 will be a platform for innovation that would never come from Facebook, Amazon, Google, etc.”

Thinks 420

Casey Newton writes about the 3 things Web3 needs to fix: “Make crypto transactions safe, reliable, and approachable to normal people, make a moderately efficient blockchain “computer”, develop technologies for mitigating harassment and abuse.”

NYT: “When I’m writing a poem, and I get stuck, it’s often because I’ve forgotten this principle: The next line could always be anything. The poem has free will; the future in the poem is not beholden to its past. This is true for any piece of writing, but poetry seems to foreground those choices, those leaps outside logic or predictability, as if the possibilities of what comes next are more infinite in a poem…There are endless ways to write a poem, but this formula is timeless and foolproof — describe your sorrows and desires, of course, but let the poem think, too, and furnish it with Things. The particular mix of objects, ideas and emotions that make up a poem is the readout of all of one’s lyric decisions.”

Daniel Pink argues that ‘No Regrets’ is no way to live: “It’s tempting never to look back, but we’re hard-wired to focus on our mistakes. Rather than deny them, we can lift ourselves up by seeing them in a new light…Regret is not dangerous or abnormal. It is healthy and universal, an integral part of being human. Equally important, regret is valuable. It clarifies. It instructs. Done right, it needn’t drag us down; it can lift us up.”

µniverse and Bharatverse: Web3 Explorations (Part 7)

Web3 Views – 1 

There is a diversity of opinions on Web3. Here are a few:

Chris Dixon:

First, let’s look at the problems with centralized platforms.

Centralized platforms follow a predictable life cycle. At first, they do everything they can to recruit users and third-party complements like creators, developers, and businesses.

They do this to strengthen their network effect. As platforms move up the adoption S-curve, their power over users and third parties steadily grows.

When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. To continue growing requires extracting data from users and competing with (former) partners.

Famous examples of this are Microsoft vs. Netscape, Google vs. Yelp, Facebook vs. Zynga, Twitter vs. its third-party clients, and Epic vs. Apple.

For third parties, the transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have learned to not build on top of centralized platforms. This has stifled innovation.

Now let’s talk about web3. In web3, ownership and control is decentralized. Users and builders can own pieces of internet services by owning tokens, both non-fungible (NFTs) and fungible.

Tokens give users property rights: the ability to own a piece of the internet.

…Tokens align network participants to work together toward a common goal — the growth of the network and the appreciation of the token.

This fixes the core problem of centralized networks, where the value is accumulated by one company, and the company ends up fighting its own users and partners.

Before web3, users and builders had to choose between the limited functionality of web1 or the corporate, centralized model of web2.

Web3 offers a new way that combines the best aspects of the previous eras. It’s very early in this movement and a great time to get involved.

Tim O’Reilly:

I love the idealism of the Web3 vision, but we’ve been there before. During my career, we have gone through several cycles of decentralization and recentralization. The personal computer decentralized computing by providing a commodity PC architecture that anyone could build and that no one controlled. But Microsoft figured out how to recentralize the industry around a proprietary operating system. Open source software, the internet, and the World Wide Web broke the stranglehold of proprietary software with free software and open protocols, but within a few decades, Google, Amazon, and others had built huge new monopolies founded on big data.

Clayton Christensen generalized this pattern as the law of conservation of attractive profits: “When attractive profits disappear at one stage in the value chain because a product becomes modular and commoditized, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage.”

Blockchain developers believe that this time they’ve found a structural answer to recentralization, but I tend to doubt it. An interesting question to ask is what the next locus for centralization and control might be. The rapid consolidation of bitcoin mining into a small number of hands by way of lower energy costs for computation indicates one kind of recentralization. There will be others.

Thinks 419

Economist: “In “The Power Law”, Sebastian Mallaby acknowledges some of the industry’s shortcomings, most notably its shocking lack of diversity. But he zealously defends the overall achievements of the VC industry, which has funded many of the modern world’s most useful inventions (search engines, smartphones, vaccines), disrupted cosy monopolies and generated eye-popping wealth. He even claims that VCs have emerged as a “third great institution of modern capitalism”, combining the organisational strengths of companies with the flexibility of markets. Little surprise that the VC model has now gone global, with particularly striking results in China.”

Shekhar Gupta: “Politics of grievance, we said, had now been replaced by the politics of aspiration. What else could a predominantly young India ask the Gods for? Growth had been brilliant the preceding years, and India was poised to encash its demographic dividend. This was a sentiment that spoke out in the majority given to Narendra Modi in 2014. The young Indians, still riding a wave of optimism, and bitter with UPA-2, bought into his promise of growth, jobs, prosperity. They weren’t just voting against Pakistan, or a new republic where Muslims were to be ‘others’ and ‘allowed to live’ only if they knew their place. Year on year after that, we’ve gone backwards into the angry past…The fate of nations and civilisations, however, isn’t determined by who wins an election or two. It’s defined by what its people, especially its young people, are thinking. Aspirations for the future or moaning over the past?”

George Will: “Today’s Federal Reserve illustrates this axiom: When a government entity cannot, or would rather not, adequately perform its primary function, or when it feels that its primary function is insufficiently grand, the agency will expand its mission, thereby distracting attention from its core inadequacy.”

µniverse and Bharatverse: Web3 Explorations (Part 6)

Dave Peck writes:

“Web3” is the name given to a suite of peer-to-peer technologies — particularly blockchains and distributed filesystems (like IPFS)— that are used to build modern “decentralized apps”, or dApps. Blockchains are databases built from three parts:

  1. A tamper-evident historical log (the “chain” itself)
  2. A trustless distributed consensus protocol
  3. A system of incentives to compensate participants and ensure they play fair

It’s expensive to participate; incentives are necessarily financial. At the same time, blockchains are an ideal data structure for managing trusted ledgers.

…Blockchains are great for maintaining ledgers: simple lists of who owns what.

The “who” is an account. In the case of programmable blockchains, that’s either a person holding a private key, or it’s a smart contract.

The “what” is either a coin or a token. The distinction has somewhat fuzzy boundaries but, roughly speaking, a coin is a blockchain’s intrinsic currency, like Ether, Bitcoin, Sol, or Dogecoin. A token is an asset defined on top of a programmable blockchain.

Nader Dabit writes that Web3 is:

  • Verifiable
  • Trustless
  • Self-governing
  • Permissionless
  • Distributed and robust
  • Stateful
  • Native built-in payments

He lists the characteristics enabled by Web3…

  • Decentralized web infrastructure
  • Ownership (of data, content, and platform)
  • Native digital payments
  • Self-sovereign identity
  • Distributed, trust-less, & robust infrastructure
  • Open, public, composable back ends

…and outlines the Web3 stack:

  • Blockchain
  • Blockchain development environment
  • File storage
  • P2P Databases
  • API (Indexing & querying)
  • Identity
  • Client (frameworks and libraries)
  • Other protocols

Preethi Kasireddy writes about the Web3 architecture: “Unlike Web 2.0 applications like Medium, Web 3.0 eliminates the middle man. There’s no centralized database that stores the application state, and there’s no centralized web server where the backend logic resides. Instead, you can leverage blockchain to build apps on a decentralized state machine that’s maintained by anonymous nodes on the internet. By “state machine,” I mean a machine that maintains some given program state and future states allowed on that machine. Blockchains are state machines that are instantiated with some genesis state and have very strict rules (i.e., consensus) that define how that state can transition. Better yet, no single entity controls this decentralized state machine — it is collectively maintained by everyone in the network.”

Here is a graphic from Preethi that shows what it all looks like:

Thinks 418

Techcrunch: ““At the end of the day, DAOs are a collective technology as opposed to an individual one,” Syndicate co-founder Will Papper tells TechCrunch. “DAOs are kind of the next evolution of the corporation because they encode both voice and exit into their foundations.””

Javier Corrales: “One challenge in the study of democratic backsliding is that, in the early stages, it is not easy for voters, or even analysts, to discern if backsliding is happening or is likely to succeed. Often, the reason for the confusion is that backsliding, like aging, occurs gradually and piecemeal, rather than abruptly or violently. Backsliding executives do not abolish all democratic institutions and freedoms at once. Instead, they eliminate or distort them one piece at a time, often covertly. In addition, backsliding executives sometimes camouflage their assaults on institutions with people-pleasing measures.”

WSJ speaks to the president of the new University of texas in Austin: ““The cost structure of higher education is scandalous,” says Mr. [Pano] Kanelos. He argues that runaway spending on administrators and student amenities like “sushi bars” serve neither students nor universities, which often try to cut corners with “exploitative” contracts with part-time faculty. Armed with lessons from St. John’s and elsewhere, Mr. Kanelos is now working to create a new, sustainable business model for UATX that will make college more affordable and accessible—“within the range of what a public institution might charge out-of-state students.”…A primary reason for creating UATX is to counter the “intellectual asymmetry” Mr. Kanelos observes on American campuses, which he says creates an atmosphere of fear among those who aren’t sufficiently progressive. But he pushes back against concerns that the school will be, as a Politico article put it last fall, an “intra-right-centrist lovefest.” “I have no interest in an anti-woke university, whatever that means,” Mr. Kanelos says. “When we build this institution, there will be people of every intellectual stripe, or we will have failed.””