REGENERATIVE CRYPTOECONOMICS

Blockchain for Public Goods

Image with key terms for using blockchain to sustain public goods

Introduction

I wrote this article an attempt for a prequel to the book Greenpilled. The book by Kevin Owocki is “designed to teach the ethos & game theoretic concepts behind regenerative cryptoeconomics to the next generation of dreamers, builders, and internet citizens”.

If you are new to Web3 and Crypto, I hope this article serves as a stepping stone to then deep dive into the vision Greenpilled has to offer to sustain and thrive our public goods.

What is broken?

Our public goods are withering.

In the context of India, there is a systemic apathy from those who grab power and consistent disinterest from those who have extracted wealth to sustain the infrastructure on which communities thrive.

  • Our public health system and primary care infrastructure in the rural areas is being intentionally dismantled at the behest of lobbying from the private sector. My interview notes from last year with Dr. Sylvia Karpagam on this topic in context of COVID-19 are here.
  • The state-run public education system in India, especially in non-urban areas, leaves a lot to be desired even on the basic attributes of facilities, quality, and rigor, let alone the ability to create the workforce of the future.
  • Our artisan economy supports 200 million people (see the report, Business of Handmade, by 200 Million Artisans). It is, however, one of the most neglected sectors even though it plays such a crucial role in local culture, employment, sustainability, heritage preservation, let alone the role the craft plays as a central piece of democracy, as articulated by Nathan Schneider.

This is just the tip of the iceberg.

The environment we live in, the infrastructure in our cities, social security for the neediest, access to unbiased news, and even the missing library in the neighborhood are all examples of public goods that need a revival.

Why does any of it matter? Because nothing worth being proud of can coexist with the ruins of an inequitable society.

Why the current systems aren’t enough?

Inherent design flaws incentivize individual success at the expense of community harm.

Most complex problems impacting communities at a large scale are a result of coordination failures in sustaining and thriving public goods. These are failures in design, like missing incentives for involved stakeholders to drive a concerted action. These are failures in execution, such as information asymmetry, unchecked corruption, and lack of measures of effectiveness.

In game theory, Schelling point is a solution that people tend to choose by default in the absence of communication. The concept was introduced by the American economist Thomas Schelling in his book The Strategy of Conflict.

Schelling theorized that people often concert their intentions or expectations with others if each knows that the other is trying to do the same, in a cooperative situation, so their action would converge on a focal point which has some kind of prominence compared with the environment.

The current political landscape, welfare structures, financial systems, and philanthropic initiatives have not been able to create a prominent Schelling point to overcome the failures in coordination.

With the current systems, we keep losing the game over and over again.

What can lead to an equitable future?

“There is no reason to believe that bureaucrats and politicians, no matter how well meaning, are better at solving problems than the people on the spot, who have the strongest incentive to get the solution right.”

- Elinor Ostrom

For centuries, we have been designing our social, industrial, and political institutions with a “control-first” mindset. This leads to disenfranchisement at the edges where there is most potential to deliver the greatest impact. The fundamental change to empower those who can solve the problems on the spot needs to start with the dissipation of power from the center to these edges.

Examples where centralized powers have unfair control over those in the edges

There has never been a better time to re-think entrepreneurship as a pursuit to bring change at scale with and for those impacted. We need collaborative ways to work with each other in the form of protocols, infrastructure, and tools for building “transparency-first” organizations.

The decentralized structures designed with careful deliberation can unlock this by dissipating the power to decide how to extract value and where relevant, automating the ability to extract it, thus drastically reducing historically prevalent sources of information asymmetry, corruption, and ineffectiveness.

How can crypto fix any of this?

“With programable money, we can program our values into our money”.

- Greenpilled

There is an entire spectrum of emerging structures with design decisions for governance and financial sustainability unique to the problem they are attempting to solve. Here are some shared characteristics of these cryptoeconomic building blocks.

With programmable money, we can program our values into our money

In other words, Web3 allows the ability to program our values into our money. Blockchain can codify incentive design that encourages action towards socially beneficial outcomes at scale. These incentives drive collective action to overcome common failures of coordination. The atomic unit of this transformation is an Impact DAO — a collective action that has a net positive impact on building and sustaining public goods. Related Impact DAOs stack over each other to replace existing centers of power and build transparent systems of tomorrow.

These structures focus on outcomes that:

  • cultivate regenerative versus extractive economy
  • drive sustainable longitudinal transformation versus short-term wins
  • are designed for shock resilience

What will it take?

Now that we have ways to embed transparency and automation with greater finesse, what do we do about it?

We need more conversation on how we can design institutions and build governance ground up with a transparency-first mindset. Technology alone can’t solve this.

In addition to the technologists, will the builders in the physical world, the community organizers, the coop founders, the bureaucrats shaping government policies, the volunteers on the ground, the creators, the artists, etc. embrace and push for the change? It just feels the technology is overshadowing conversations vis-a-vis the use cases that might make a meaningful difference using decentralization e.g. implications for coops for continuous finding, transparency in government operations, creative ownership, etc. are huge. We need system designers, sociologists, behavioral scientists, community builders, and more to shape this, in addition to technologists.

The conversation we need en-masse isn’t only blockchain or tokens or NFTs. Those are the tools. They will hype, evolve, be embraced, and be replaced. Now that we have ways to embed transparency and automation with greater finesse, what do we do about it?

At a minimum, an Impact DAO will need to crack the trifecta of:

  • building a sustainable community invested for reasons beyond economics
  • using a harmonious blend of culture, organizational design, and decentralized tech
  • to create a regenerative micro-economy

About Greenpilled

Authored by Kevin Owocki, this book is about cryptoeconomic systems that create positive externalities for their neighbors and for the world.

The book explores the intersection of programmable money, game theory, and mechanism design. The concepts introduce powerful new ways to fund, design, develop, and market regenerative web3 era applications and digital assets. Most importantly, the book launches the meme of regenerative cryptoeconomics into the world.

To buy the book, subscribe to the podcast, or join the conversation, check out https://greenpill.party/

What’s after Greenpilled? IMPACTDAOs — A soon-to-be-released book that captures the empirical knowledge on how crypto is regenerating the world, a map of Impact DAOs that complements the theory in Greenpilled.

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Rohit Malekar

Rohit Malekar

Building a digital studio, creating the culture and craft for digital product development, writing on decentralization. More at publish.obsidian.md/rohitmalekar