Decentralizing Ethereum Ecosystem Funding w Rodrigo Vasquez & Benjamin Life

Transcript

I think there was a bunch of controversy in December and January and it was swirling around. Who is the EF director? What is the purpose of the EF? Why is Ethereum number not going up? Ethereum's pluralism and the open-endedness and the diversity of the community that's here. I am still bullish on Ethereum even as it hasn't tracked with the rest of the market in certain moments. you know, I haven't given up hope on the potential of what it can be. I think now the EF might be the ninth largest treasury in the ecosystem.

There's definitely a lot of treasuries that are larger than the EF. And while the EF is the ninth largest treasury in the ecosystem, it still funds the majority of the public goods, the allocations didn't always make sense to the community in terms of what the the priorities were that the community sensed were necessary. And I'm saying community a lot here and that's a pretty amorphous phrase. There's actually a lot of different subcultures within Ethereum. And I think it's because of the actual diversity of different types of people who have different kinds of goals and different interests of what they think Ethereum should be. But, you

know, potentially the crowd has has a good sense of, you know, what on a more broad general level should be funded. And so, I think we can layer some of these capital allocation mechanisms. Welcome to the Aloe Capital podcast. If you're just joining us, we are doing season. This season is about summoning Aloe. Capital, a new spin out from Gitcoin that is designed to build the capital allocation layer of the tokenized internet. We think there's big upside here. Capital allocation is a multi-t trillion dollar design space and VCs, governments, and NOS's and Dows all have to allocate capital to accomplish their goals. But capital allocation is also a place where we can start small.

Every time you spend money, you are allocating capital. We are threading a through line partnering with builders, researchers, and funders to figure out what onchain capital allocation will look like and building it onchain. If you want to learn more, you can visit our website at al.cap where you can download the Alo books for free, play with some of our apps, join the telegram, or participate in the DAO. Our guests today are Rodrigo Vasquez and Benjamin Life. Rodrigo is a program manager at the Ethereum Foundation, where he oversees grants, partnerships, and funding initiatives aimed at bolstering Ethereum's long-term resilience. Benjamin Life is co-founder and steward of Open Civics, an organization dedicated to enhancing civic engagement through participatory systems design and research. In addition to his role at Open Civics, Benjamin

contributes to research and intelligence at aloe.cap. Okay, so this episode we are discussing a report that Benjamin and Rodrigo and I collaborated on that's all about decentralizing the Ethereum ecosystem funding. So, the first link in your show notes is a link to the report and you can check it out. It's about 40 pages and it's meant to move the conversation about the Ethereum Foundation's role in the ecosystem and Ethereum success from the destructive forces that guide it on crypto Twitter uh to a more constructive place. And we really did a lot of research about the Ethereum Foundation and its core functions and then also how past internet institutions like the IETF are

set up and how they've been functional in governing the internet in the past. And what we came up with is a report that makes some recommendations for the new EF directors about how the Ethereum Foundation could improve its roles in governance and funding. And we did take a tack in doing what's best for Ethereum here and for ETH holders in this report. Although there is a little bit of onchain capital allocation wedged in in the side in places where we think that it can add value. So, a TLDDR of the report is that we uh recommend that core protocol teams stay at the Ethereum Foundation and non-essential teams find a way to become independent public goods funding moves to more decentralized

onchain models which will allow for more credible neutrality from from the Ethereum Foundation and also for layer 2 and other foundations to fund work that is done in the ecosystem. And then finally that governance adopts more IETF inspired openness and leadership selection. So for those of you who are not familiar IETTF is the internet engineering task force and it is the steward behind many of the protocols and infrastructure that you know and love from the internet. So basically adopting the Ethereum ecosystem to this new era with new executive directors and new focuses is going to be a conversation and this is our volley into the

conversation to try to set a constructive tone for what changes might be viable in an open environment. So these are not backdoor conversations that are happening at the Ethereum Foundation or among whales. These are conversations that we are forefronting and providing access to everyday members of the community. And I think that that's a really important part of open governance is to have these conversations out in the open. So, this was a fun episode to produce. I think that it's an example of what a more constructive conversation about Ethereum's future could look like. It's also an exemplar of Alo. Capital's research function. How are we going to go out there and figure out how to compost capitalism? compost what isn't working in the Ethereum ecosystem and

produce the nutrients that are going to allow new organisms to thrive that are more onchain capital allocation and more importantly how do we make the Ethereum ecosystem successful. So I think that there's a lot of really fun threads in this episode. This was a real page turner for me to go through this report and to reason about what could be done in the future. And I think that Benjamin and Rodrigo are just really amazing co- stewards of this work with me. And I think you're really going to enjoy this episode. [Music] All righty, let's get going. Benjamin,

you want to start us off with an intro? Yeah, great to be here with both of you. Uh, my name is Benjamin Life. I'm a co-founder of a decentralized organization called Open Civics and uh recently started working with Alo Capital on research and intelligence and I really came into the web 3 space because I saw its potential for creating real disruption in a positive sense and at really helping to create systemic leverage points um instead of just trying to fix issues at the symptom. Um, I really see web 3 and Ethereum specifically because of its open-endedness and its plurality um, as a space where we can actually create

systems that really move the needle on society and our economy. Thanks, Benjamin. Rodrigo, over to you. Hey, everyone. Rodrigo, I've been at the Ethereum Foundation for something like three years now. currently running the Ethereum funding initiative team that handles uh a lot of proactive grant rounds and also uh we help ecosystem projects that are public goods or that don't have sources of revenue like dev tools policy initiatives to find funding. been doing different things at the EF, including project management with some of the technical teams for a while, but uh I kind of gotten into this ecosystem by accident. But being from Venezuela, I've I've really seen how

Ethereum stable coins have impacted people's daily lives. And I think while while a lot of people in the US and uh Europe really see this as like a a speculative casino, I've seen some of the really positive impacts that it can have on places that don't have a developed financial system. Thanks Rodrigo. Thanks Benjamin. So, the reason that we're doing this episode today is that we've put together a research report entitled Ethereum's Future: Decentralizing Protocol Governance and Public Goods Funding. And we're going to be unveiling that today on the episode.

And I'm wondering if we could start with the why behind the what. What is the reason that we put together this body of work over the last couple months? And what are you hoping to get out of the conversation? Rodrigo, maybe we'll start with you and then we'll go to Benjamin. Sure. So I mean I think the first thing to note is that all of these are are are my personal opinions in the report really uh isn't my function at the EF to to determine you know the larger strategy but given the conversation that's been happening on Twitter for the last few months. I think a a lot of it has been very critical of the EF, how it functions. And you know, while what I do agree with some of the criticism, I think what's really been lacking is a constructive conversation around what

the EF can do differently, how it can address some of those concerns instead of, you know, having a a a conversation about who the the right person is to lead the EF. I see a lot of the the issues as more of a a structural uh problem and something that can be addressed by changing some of the the the structures in the EF and and how it interacts with the ecosystem as opposed to really being a personal issue of you know who the executive director is. Yeah. And I'll just build off that by saying that I think the culture war despite, you know, how good it is at, you know, getting rage baiting engagement uh on Twitter, um it really

collapses the complexity of the conversation and we end up having, you know, arguments uh that aren't productive as Rodrigo had said. And so I think it was starting to feel like, you know, both sides of this kind of cultural conflict um weren't really hearing each other and weren't really focusing on the kind of systemic solutions that could actually make all of the different parts of the ecosystem feel more supported by the EF. Um, and I think that was really at the core of what was was showing up on the internet was a sense that, you know, if people are moved to, you know, tweet something angry, it's because they really care.

And so this this report was really in in our best attempt to to provide something generative and systemic to address some of those concerns without, you know, pretending like they don't exist, but also not getting caught up in, you know, playing the game of blame or shame around why things are the way that they are. And I think, you know, anyone who's ever really founded an organization, much less an entire blockchain ecosystem, realizes that, you know, often times you're so focused on building the thing that sometimes you aren't able to create the kind of long-term mechanisms that are only necessary once you reach a certain scale

and level of growth. And so I think you know this combination of you know Rodrigo and and his deep knowledge of how the EF operates um and then Kevin and I bringing um various levels of outsider perspective um as as part of the ecosystem was a beautiful combination of of different backgrounds and perspectives to be able to you know see things from a little bit pulled out to be able to you know discern the forest from the trees and to try to to orient towards something that was actually generative and systemic. So just to summarize, I think that there was a bunch of controversy in December and January and it was swirling around

who is the EF director? What is the purpose of the EF? Why is Ethereum why is number not going up? And it was kind of a destructive conversation that was a pretty standard discussion in our contemporary social media environment. And the three of us out of Boulder, Colorado, uh said to each other, "Wow, this conversation does not feel constructive at all. What if we actually put together some constructive ideas about how to push the conversation forward and solve for how do we make Ethereum as effective as possible and maybe draw from some of the learnings of what's happened in the contemporary internet and the governance of contemporary internet protocols?" And so that kind of snowballed for us into this

report on Ethereum's future. And you know, I I'm I'm curious if you could if we can pull that thread a little bit more. And Benjamin, I want to go to you next and just sort of talk about in broad strokes what's in the report. And if we're trying to move the conversation from destructive to constructive, what is our volley at doing that? What are the sort of main pillars of of the report that we put together? Yeah, I think that one of the critiques that could be the most generative um was just a sense that from the ecosystem itself that and maybe this is just frustration with the number not going up and and looking for someone to blame, but I think the to just steelman that argument for a moment, I think what was was

attempting to be communicated there is that there was a sense of a lack of responsiveness from the EF to the needs of the community. And so the first and kind of primary uh part of the the report is really um drawing some inspiration from the early days of the internet which I think has some really important corlaries to how Ethereum has evolved and you know if this is really the the substrate the heart of web 3 looking back at web one I think can be instructive and so you know for those who aren't familiar that the history of the internet you know starting out with CERN and DARPA and these kind of large sort of governmental or or

intergovernmental organizations and then transitioning from, you know, being operated interior to those institutions to having its own self-governing processes. And so this actually was really inspired by some research that was done through a summer of protocols grant on the internet engineering task force. And what makes the internet engineering task force really interesting is that it's a formalized governance process for how updates to the original internet protocols um are held and and facilitated um without creating an institution around those processes. And so the first part is really drawing inspiration from how that

structure is able to support a more open and transparent protocol governance process. And in addition to that, you know, looking at how we could include more community feedback, more community participation because even though protocol governance within Ethereum now is highly transparent and anyone can get involved, often times the the technical barriers to participate in that conversation are such that it's a very small group of people who are really driving the protocol. And I think what happens as a result of that opakquakeness is that there's a handful of players that have an outsized

influence, whether that's, you know, particular institutions or layer 2 or protocols. You there's some big players now who have really large treasuries who can allocate a lot of time and developer capacity to to try to drive forward, you know, their agenda within updates to the protocol. And that's not bad or wrong. The the development of Ethereum should definitely serve those interests. And I think there was a sense that if we allow that process to continue without an additional kind of check and and increasing the transparency and the the responsiveness of that process to the needs of the broader community that we might end up with some of the same

pitfalls that have happened in web 2 where you have, you know, a very small number of monopolies that are really driving the conversation. And so at the core of the proposal is really drawing inspiration from the internet engineering task force and how they've approached protocol governance um with some additional details around how we could you know even go further than that and make that process even more responsive to the needs of the community by really actively inquiring what those needs are and how the development of the protocol can serve the needs of those different parts of the community.

Thanks, Benjamin. Rodrigo would love to go to you next and uh hear an overview of your main takeaways from the report. If you're enjoying this episode, please check out the remainder of the episode on the feed hosted at aloe.cap. You must be a allow. Capitalap patron NFT holder to hear the rest of the episode. Alo. Capital patron NFTs give you access to the Aluminati which is a private community that has access to the Aloda's evolution novel capital allocation intelligence and research like this episode like this podcast and also research reports that we are publishing at alo.cap and early access to builds and other innovations in the Aloe community. Thanks for listening. If you want to hear the rest of the episode,

check it out at aloe.cap. Peace and love. [Music] [Music]