S7 Ep. 8 - EigenGov and the Evolution of DAOs: A Conversation W/ Tracheopteryx

Transcript

it sounds like a crazy idea you know tight tight yeah I now live in San Francisco and you know everyone is working on their like unicorn and then there is a guy who's just like giving it away like everything like over 10 days all right we're going to make a lot of money but you don't want it to be totally decentralized either cuz totally decentralized is the heat depth of the universe you know it's like uh all these black holes in space outside of each other's light cones you know like single points of nothing that's that's decentralization what we need to make good decisions is not something totally decentralized there is interesting statistic like it's easier to become a

billionaire these days than a millionaire some problems are caused by control structures where it's like I want to have total control over this thing and have ownership over this thing and then that creates a u big boundary adversar relationship with others then they are buying all the startups so basically you cannot grow your own startup because like you will be bought by the big guys uh at some point there is no way out out competing them at the heart of this governance system is small teams of people because small teams are actually the best decision-making system that we have on the planet the data side is there and people are creating more and more data more reputational

artifacts badges nfts marks but but the perspective side needs a lot of work so one of the things it needs is decentralized identity and it needs this large social graph even more scary it's like the nation states where also like people got the ultimate power and even if they had good intentions at the beginning the power is so addictive that they cannot you know leave damn man welcome to the green pill. Network podcast if you're just joining us we're building a coordination a network Society of thousands of hackers dreamers and doers using crypto to bring positive some digital systems to the world this podcast features the

people who are doing it and we publish a season of five to 10 episodes every couple months this season is about how to Dow I releasing a book with my co-author H Carr who is also a dow native person and we are really excited about helping people find prosperity and to help them thrive in the frontier for time in Memorial people have gone to the frontier in order to find new prosperity new opportunities and our generation's Frontier is the internet we want to teach people about the future of DS the future of Internet coordination and this season of how to Da is all about how do we do that how do we Dow how do we find more prosperity in the internet Frontier and this guest season of 5 to 10

episodes is going to be about how to Dow um the next vo is that that you'll hear will be myself or my guest co-host punar talking about how to Dow hope you enjoy this season see you peace welcome to how to Da a movement we started with a book that uh Kevin and I CED which will be published by penguin Random House on January 21st today I'm excited to chat with Drake a key figure in Dow governance he has played a significant role in shaping some of the most impactful Dows in the web 3 space including year Finance founding cordin AE and his current work at aen layer we will explore the evolution of dows his

vision for improved governance systems and what the future holds for the Dow space as such Drake it's great to have you here good to be here thank you so thank you for coming here and uh I think it will be nice to know for our audience like how your Journey started uh with Ds like you know how you got into year Finance what maybe LED you there and then we go from there so it started before I got into crypto and that I was I founded different companies and when I was leading companies I always felt like uh very limited by the types of

organizational technologies that were available like the the normal command and control structure felt too narrow and not sensitive or intelligent enough for me so I tried experimented with different things like taking pieces of hrac or sociocracy or other organizational structures and I went pretty deep into teal organizations which is a concept and I you know with limited success in normal businesses like corporations and then when I got into crypto I um was really drawn in by the Dows like I'd been interested in blockchain was interested in defi you all of these aspects in money but I'm

much more interested in how humans coordinate together directly and so as I saw decentralized governance and Dows really start to be real I was super captivated in doid so basically you've been interested in Dow before it was actually a dow uh a lot of ant you know but yeah and then uh basically like it materialized with the introduction of uh blockchain yeah I mean I I um I was reading I remember in 2016 2017 I was reading some of the early Dow papers and like Jack D Ro's writing on colony and and others and I was so inspired but at

that time there really weren't Dows operating there was uh you know the da which didn't really become a DA it got hack too soon then there was yo like but by the time I started really tuning in in 2020 like maker was functioning synthetics was functioning compound was functioning like there were real Dows there and year was just the most exciting thing to me because it didn't start as a centralized organization at all it was like decentralized from the start so for those that aren't familiar was a project started by a developer Andre CR and he created a yield aggregation protocol which allowed you to deposit an asset and earn you know percentage interest on it just by leaving it there and it was quite

popular and by the time you know and there was like hundreds of millions of dollars staked in it and rather than turn it into his own centralized organization he created a governance token the yfi token and gave it away over 10 days all of it 100% of it with no teams allocation no VC allocation no pre nothing just a complete gift to the community based on of the people that were using the protocol in different ways and then he was like okay you guys are in charge and so I was like one of those people you know in that in that early group and like it was like okay well what do we do how like there was like a very simple governance system where you could do proposals and and it was wild it was so fascinating to try and figure out how to organize it sounds

like a crazy idea you know because like I now live in San Francisco and you know everyone is working on their like unicorn and then there is a guy who's just like giving it away like everything like over 10 days but you know it's uh great to see this actually happening literally empowering the people and give two people to like run it not just talking about it but actually doing it I always appreciate uh those people because then when you have some of the billionaires which are like talking about empowering people but most of the our funds going back to them it's not the not the same and if I'm not mistaken year uh still operates so it's still

working protocol so it was like very success experiment yeah they're still using versions of the of the governance system that I designed back then nice and like I think uh you know a lot of people feels like Dows are something what it's like when you decentralize it it just stop working and like you know it will eventually like kind of die uh because they cannot move anywhere like year it's like the example where you totally decentralize it and now it's like four years later and we are still operating and we have still pretty high ddl and I still have my savings there so I still use it uh so hopefully it will go uh go up so what you said you

designed the governance uh back in the year like what type of governance you actually designed uh at the time like what was like you know the things you consider maybe and like why you decided going uh the way you went yeah so like when I first started working at urine and and the way I started working at urine is I hired myself for no pay to work full-time in the community but I literally decided that one day I was like this is incredible I'm just going to work for it along with various others and I became part of the kind of core group of people the core team that were doing that because none of us were getting paid we had no mechanism to pay ourselves back then you know we didn't know how to make decisions for the group like we had a so governance then was

onchain Voting with a um proposal system which I call a single channel the governance system there's like make a proposal yes no one channel of of governance it's all you can do and we like but this wasn't normally like for a dow like Unis swap for instance um it can only do two things it can spend money or it could it could push a button it's got a token it so the button is where to direct the fees to like you know you know can you move the fees to the unique token or or that's the one button they can press or they can spend money you know so you can say yes no to to financial expenses or to this one feature and then you've got Unis swap

Labs which is building stuff and other developers and things building stuff but with urine so in that situation with uniso you can have a single Channel governance system and it works works quite well um because you have a very limited scope of governance uh at urine we had everything was possible you know so people were putting through proposals like Andre should go on this podcast you know uh it's like well what was Within the scope of governance we didn't even know Andre was just like here you're in charge you know so who you know how do we we going to decide everything through just like a sequence of decisions which is basically what we did and um we figured out kind of through discussion what needed to be done and how to do it but that limited system wasn't enough

for us because Ur was kind of unique and that the entire creative team like all everything was needed to be governed in a decentralized way not just you know you you can think of we're familiar with the corporate model where you have an executive team and you have employees and you have a board of directors so you can think of like operations here and oversight here the board of directors and the shareholders and then the executives and the employees and mo almost all Dows are just working over here the board of directors and the shareholders uh and it's not the same as a corporation it's the best one of the better metaphors that we have but we were we were trying to decentralize all of it so how do you do everything and we created so Gabe shapir and I along with

a lot of the early contributors at year came up with this uh system we call constrain delegation where token holders retain uh control over ultimate Authority through this one jail of voting but they give discrete powers to teams so there's like a budget team that has the authority to make decisions about certain budgets and then there's the security team that has this authority to make decisions about certain security but then if token holders were unhappy with them they could vote to pull the power back and that was a pretty effective system that you know actually led to a lot of changes in in Dows and is is flourished many many Dows now use the system nice so uh and that's

basically what you did at year progress like from that one channel towards like more like this uh delegated power to like groups which actually have a the contact uh basically and the knowledge of it yeah and that you know that reminds me like uh well well when I started in Dow like I started similar way I just like enter the Discord and I'm like I can do this you don't need to pay me I just do it and eventually you know I figure out my way in uh and it was at gitcoin and then they paid me a little bit for something and I was still working there so they paid me a little more to stay longer uh but yeah I just started out of uh fion but like also like you know how

I see it like when you have this one channel governance it's super hard uh for delegates to actually know everything what can be done and like you know have all the context of like all this you know different parts of the organization especially if it's large Like Ur or you know Mak AOW like I feel like there like you just cannot be in in the context of uh everything so from that perspective do you think like every Dow should kind of move towards the direction is this like the right model for like every single da or it Dow is a big space you know I think this is

probably the right model for most Dows but I don't think it's right for all of them like some Dows depends on a few different factors like there's different dimensions to Dows how many participants are there how what is the scope of of governance surface so if it's a I mean go government surface is like how many buttons and levers do you have to operate you know if you think about like a um a company like Apple computer like they have in all the decisions that need to be made within Apple computer that's many many many different things you couldn't do all of that through one channel of governance like you need something that's more like constraint delegation for operating at creative doing creative work and operations um if

you're just doing oversight like it's easier to keep a simpler you know single Channel or dual Channel sometimes they a lot of a lot of dows might be you know you have this one channel or proposals but then you've got two or three special councils that have special powers you know and that's all you that can that can work for a long return that's still more on the kind of oversight side of things if you're trying to do the execution side of things too which frankly almost nobody nobody does um but I think we'll see a lot more of that in the future then you need something more like constraint delegation yeah and definit like align with like your vision that like you should Empower people within the organization kind of thing but I also see a lot of people are you know kind of saying like that's not

decentralized enough like you are basically creating this pockets of centralization because you are actually giving power to you know groups of people pick maybe by the token holders but still like you know you are giving them the like centralized power to do something like what do you say on this kind of feedback or you know criticism I think it's actually like very profound space to think about so let's first just kind of find the map so the why do we want to be decentralized or centralized like and what is a DA so a DA is um there's a lot of ways to describe it but a simple way is like it's an organization operating on

blockchain using smart contracts where there isn't a single centralized Authority that's maybe one way we could describe it there's a lot of other things but you know simply it needs to be autonomous means need to be free from external pressures to a certain extent you know it needs to be an organization has to have a boundary that defines it and then decentralized you know you don't want to have like an author single Authority making all decisions even if that's a group of people of biocracy or others but you don't want it to be totally decentralized either because totally decentralized is the heat depth of the universe you know it's like uh all these black holes in space outside of each other's light cones you know like single points of nothing I mean that's that's decentralization you can't do much with

that so there's decentralization has a function then the function is to keep the organization free of centralized capture you know so um and capture what does that even what does capture even mean um what are we talking about with capture like that really what we're worried about is people departing too far from the goals of the organization from the from the um the overall direction consensus of the group into their own individual uh desires that's like kind of the thing we're about with capture with capture can be thought about this is very sprawling by

the way this becomes quite philosophical so I don't know how much we want to go on this role but capture can be thought about in a lot of ways you could have a very decentralized group of people that are captured by immedia ideology you know maybe they're making all these decisions using a decentralized token in a onchain system but their information space has been captured by some ideology that's a form of capture too uh it's not so simple right and when I think about it I think what we what we need to make good decisions is not something totally be centralized good decisions need to have like if you look into biology which is a reference that I use a lot you you've got bottom up and top down signals and everything else you know so you want this heterogenous

diverse system of of actors coming together to make decisions and we need centralization for certain things and decentralization for others you need hormones for some things you need neurons from another um you need all different stuff but the challenge and I think going to the harder your question is the critique is that it's you know not decentralized something like constrain delegation you're giving power to a small group of people and the devil's really in the details like uh how transparent is that small is that counts talk about councils as a small group of people that are empowered to make decisions for the whole so this can be captured in one state and it can be not in another it can be really effective Servants of the whole in the

other because we can't do everything the idea so we talk about principal agian problems in Dallas which is another way to talk about this that you have this this small Council and they're the agents and the token holders are the principles the token holders are giving author to make decisions to their agents but if those agents incentives depart too far from the principles you've got this problem but I think it's better to reframe this or it's useful to reframe this as the principal agents solution because the alternative is that each person has to make all decisions for themselves and in a world where most of us don't file our own taxes it's kind of ridiculous to think that um we should

each be totally responsible for every decision in a large multi-billion dollar organiz iation makes so it used to be some delegation of responsibility and the secret is and that we're trying to figure out and that what we're doing at Ian layer is how to make those councils those agents you know securely aligned with the whole in enough checks and balances and enough transparency accountability and Alignment that it really is decentralized with centralized actors I see your point definitely and like the word decentralization in th I feel like we are we maybe like shooting ourselves in the foot in a sense because like some people are like like really

going deep on that bir itself and what that means without actually looking at the big picture but I I agree with you like we need to have the right check and balances and like someone is just closer to the problem and you know I'm not a doctor so I would probably not be like voting on my diagnosis uh but we have like group of experts which can kind of you know see like the symptoms and everything and they can actually decide the best treatment you know and we are totally fine with it because we know that they make better decisions than than us and I think we need to think about it the similar way uh in a sense with IND Dow like some are more technical people and

they need to work on the protocol and some are more organization like probably us uh which is more working uh on the governance I think the interesting thing uh to look at from like the real world perspective or like a nation state perspective it's like Switzerland so I recently spent some time in uh with in Switzerland with swis people kind of studying the direct democracy uh there and it's actually you know how we saying people cannot make all the decisions or in the United States or even like when I from like originally Czech Republic like people won't bother to make like decisions on every sing thing but in Switzerland it become like part of their

life they talk about it uh they like meet they discuss the the issues uh and then they vote vote on it it's not you know too frequent so it's not bothering them that much and they are already used to it and they like the discourse my point is like do you think we can get into the point where you know people would be kind of you know we will get from like hundreds of decisions per month to like the important ones and actually people will have like that kind of discourse about the the organizations they are part of and really be focusing on like what's the right decision for the organization like do you think we are heading that direction that people

are getting more associated with Ds and more involved in kind of like you know how to frame it or is it like the other way around people are just like I put my money here I put my money there I don't really care what is going on there I think it's the future is all of that and more you know it's really about it's about sovereignty you know so some cultures like that's a beautiful example from Switz I I'd love to learn more about that in some cultures and in societies it might be more appropriate or more more natural for people to take more of that individual direct power because there are social structures that allow for interesting level of discourse I think what we'll see is a kind of marketplace of these different cultures

and Designs emerging and we'll see lots and lots of different types but then there's going to people that don't care you know that it's a little different when it's your neighborhood and it's like discussing about you know whether they're going to spray glyphosate on your sidewalk or they're G to install a new park for your kids then if you know it's a defi protocol that might adjust an obscure variable by 0 2% you know because in that case you know you might just want number to go up and you don't care about that you know but when you're living the community you know there's a certain set of of governance features that are pretty common to everyone's mutual interest and their capacity to reason about I think if um I'm not sure but in

Switzerland if they are talking about you know really opaque like mathematical financial decisions you know in those conversations or not but in any case yeah I think lots and lots of different shapes will emerge so you said like it's all about uh sovereignty like can you a little bit more elaborate on that like what's maybe Sovereign about Dow or like participating in him one of the beautiful things about about you know blockchain is it provides for this kind of sovereignty and I think as as a collective we're always negotiating these this tension between sovereignty and Synergy you know how can I as an individual have freedom also while in relationship with others with security

and you know and safety so I want freedom you want freedom but I want to if if you have freedom That's Not Safe For Me Maybe you know so we use these different coordinating systems to uh solve this problem of sovereignty and Synergy and we have them in nation states like constitutions and Juris Prudence in administrations and in blockchain we have the blockchain we have cryptoeconomic security and that provides a kind of trustless security that we've never really had in the planet before and so you can have total sovereignty within that framework like I can I can put my tokens wherever I want and nobody can stop me and nobody can take them there's asteris is there but basically without those ases

it's it's very highly Sovereign and so well now we're talking about um organizations that are on blockchain with that same level of sovereignty Dows you have to take all these Sovereign actors and compress their incent their agency into a group agent agency and you do that through governance you do that through both the kind of underlying coordination infrastructure of that organization whatever like smart contracts it's using and then you also do it through the governance system which aligns its direction and in general those are much more highly

Sovereign than in more centralized Legacy governments which put more constraints on what's appropriate what's acceptable what's allowed what's what's legal that makes sense maybe like that would be very simple question like do you think Dow could have existed without blockchain no well this is kind of a technical answer no because I think blockchain's a uh you know it's a topology it's like um Dow defined by blockchain but if we just if we remove that technicality yes like I think things that are very similar to Dows have existed without blockchain for a while like uh cooperatives in all of the world in different ways but what's different is the um that coordination

layer is that when you are building an organization an organization is only really as strong as its foundation you can and it's the same thing like a building you know like you build a skyscrape you need a very strong foundation and and it we weren't able to build skyscrapers for many years because we didn't have building materials that were strong enough to support their height but then you know with the introduction of um different types of Steel structures and steel construction we're able to do skyscrapers and so same with blockchain like before blockchain the strongest kind of coordinating fictions that we had are text documents law and and constitutions and and the history of that's really fascinating too because after the printing press and

then the the you know the publication of novels and books the theories that that's when human rights were kind of invented and then that led to things like the rights of men and the Magna Carta and the Bill of Rights and that created the last the beginning of the last of this civilization's foundational coordination layer or nation states but those have to be guarded and uh and maintained by trusted thirdparty individuals which as we've seen in in in governments they become corrupt uh there's a lot of principal agent problems there too they they go directions that that that the community doesn't like and and that creates less predictability for Investments as individual Sovereign agents so I'm a sovereign agent in America let's say and

I want to uh invest my time and resources into an Endeavor that I want to grow I want to be able to build it I can only as much as I can trust the the law system of law and the rules is as far as I can go there and and the future like the the the the Winds of economy and trade things that might change on blockchain you have a stronger Foundation because it's um you know it's simpler like in the blockchain world we we don't have a substrate that can hold the vastness of of human potential that's available in Legacy governments but we will but for now for within the narrow band that we can operate in the foundation is much much stronger because

there's no trusted third party there's no person that you have to to bribe or might change the rules I mean with governance actually it becomes a little bit more gray which just with blockchain the potential is for it to be extremely extremely secure and build buildings larger than we've ever built before I I think there a great example with the printing press like I think that kind of brought the kind of sovereignty you know to people because like there was the Freedom of Information basically like sharing information like yeah we maybe say it was with internet and it was you know getting the real time information but printing press was like maybe even more impactful in the way that that was like when you actually can share common

knowledge and like get people educated like really like kind of grown up and now I as I see it like and you said it like we are bringing a new printing press now there's like Sovereign platform to Share value and that's why Dows kind of run run on it it's like stronger Foundation because now we have the Sovereign Financial system basically under need and nobody can as you said with estx but nobody can really take our money uh you know we can create our new economic systems uh and Share value basically globally you know unheard of in a sense uh and it's super super cool and you think about it from

like really basic perspective like who you think should be considering Dows for their Endeavors and you can take it from perspective of like entrepreneur like building newu startup new venture or from like employee you know 9 to5 job feeling like you know midlife crisis figuring out like what are the kind of aspects they should like be looking for or like when they're feeling like that the Dows are the right tools yeah so I'm pretty conservative on this like I think a lot of people look at Dows and they think oh wow this is going to solve all of our problems and I agree it will but it's not there yet so for instance

taking Dow technology and trying to go use it in a u you know in a country a struggling country or something like that I think is a mistake right now I think in some way like we could certainly use voting technology to improve like the voting stack in different countries but as a system of governance replacement not yet um so I think if you want to if you if your business goal is to launch a decentralized protocol then you should look into Dows otherwise there's few other options like or a you if you're a you know group of friends that want to make crypto Investments together you can you know create a mop Dow or a new Colony V3 Dow or you know a multisig

wallet that's a kind of a dow so you can you can use those and there might be some other cases but that's most of it yeah so if you say decentralized protocol does it mean just like a defi type of thing or you know can you elaborate a little bit on that any like an L1 a new chain a rollup a a defi protocol any any app that is uh settling on blockchain you know that you that needs governance if you if it can't be fully governance minimized then you know so right there's some typ of protocols that don't need any governance because they're totally immutable and very simple um but most of them do need some level of governance and so then you

you a dow can be effective you know there's also another interes difference here which is like so let's assume that the legal environment totally changed you know and that we didn't need to do Dows uh for some to do things in certain jurisdictions like we could do whatever we wanted in a centralized way we could launch centralized tokens things like that then it's the question is like well do you still you need Dows then which is an interesting question and and I think the answer is definitely yes but it's for different reasons than people have thought so so what a what a dow gives you beyond just you know the ability to do certain certain things in like legal Arbitrage basically is it empowers a community uh in ways that we've never been able to do work because you're

really getting ownership to a community powerfully and that means you can use their skills and and and and their gifts to support the product and if you're but that takes a certain type of entrepreneur that wants to give away control and wants to do it in Synergy and not just in control of everything and that's to me actually that's by far are what's going to out compete in the future but not everybody's ready for that well it's basically a paradigm shift like that now people won't be like aiming for the Unicorn or become a billionaire but actually like creating an impact more and like there is interesting statistic like it's easier to become a billionaire these days than a millionaire because it's just like

that's either or or like you either make it and then you are billionaire or you basically stay where you are uh in a sense so so kind of a bad statistic as I see it because then it's just making like the bigger like difference between like rich and poor uh and the Gap it's just like increasing and I hope Dows can a little bit improve on that statistics because like they can actually Empower people to do something together so there is no one billionaire but there is you know many millionaires just working together kind of thing Lucy like the same like that it can have the same this kind of impact in the future it's a little bit of a different philosophy of

how to be in the world you know like what's our goal what are we trying to do and some problems are caused by otherness you know some what problems are caused by control structures where it's like I want to have total control over this thing and have ownership over this thing and and then that creates a u big boundary and and like a adversarial relationship with others and that's normal in many ways but you know it also creates inefficiencies in markets and in ideas and communities there's like if we look at a lot of Corporations now and corporations I think are the highest technology that we have on the planet

for Collective they tend to be you know they follow certain logic like the logic of firm nature of the firm and they get really big and vertically integrated and extracted and they lock things down they try and kill any other plants that come and get sunlight near them and um that's like one way to go but that becomes pretty distended from the live reality of many of the people the commoners walking among them and we need I think a different philosophy is more you know holistic more ecological system where there's work still being done and value flowing but it's not going into these giant like conglomerates but people are coming together to make a product and

then the money flows in and then they break apart and they you know you're not trying to create and lock down an area you're more just trying to like be of service and be rewarded um it's just because mostly that's what each of us wants we want to be able to be of service and to be rewarded it's pretty simple but then we're in these Nash equilibria that result in certain strategies that have particular shapes and those shapes tend to be these giant vertically integrated thing because it's the best economic game that we found right now but new games are opening all the time as we develop and expand our capacity for intelligence and love and connectedness and the new game is the game of dows which is a future of work which is very different and people don't

need to you know create these huge treasuries they can they can flow a little bit more freely yeah like uh I'm very much sympathized with that and it's why I am in crypto you know um because I figure out this can be the revolution for like small and medium uh size businesses like to get the on the same level with the big guys you know the same treatment the same access to funding same access to resources and as you are describing it like yeah now the big guys have all the power all the funding all the advantages like you know VC won't be funding

anything which is not going to be a unicorn uh these days which basically they just support that kind of Direction like lock things down conquer the market there is just one or two companies actually operating on it and that's the best economical game for them but yes as I see it and I think that's what you also said like it would be so nice to just have it like kind of flattish and just like a network of companies which are like they're profitable they Revenue generating but like you know they flow around kind of and as as something it's needed uh it's there um I like that I really like that and from you know uh some other kind of comments on Dow that

like Dow needs to be flat organizations like I also read uh some of comments like that's not probably true that like we need to just create flat organization and that's a dow but I feel like the flat Network would be actually nice conclusion when Dows are taking over like is that something like you kind of like Envision as well for the future yeah so I think the the problem with flat organizations is it's um it's beautiful in a way but it's also limited and uh it it really results in a certain kind of postmodern way of thinking where it's kind of obsessed with power relationships and fear of of domination and so because hierarchies

are really useful you know like like if I'm on a sailboat uh I've been on sailboats before but I am not a captain I would much prefer there be a seasoned Captain there that tells me what the to do you know uh and so hierarchies are great I'm not going to need I don't need to pretend that I'm as good a sailor as some other dude I'm good at my things right like I'm not good at that you take the lead and there's a really beautiful kind of thing that happens with hierarchies where we're used to we're scared of these hierarchies because a lot of hierarchies have been horrible they've been these horrible Dominator hierarchies where people get power and then they never let you lead they always lead no matter what they know what they're doing or not that the these hierarchies it's like me but

when I'm on the because I think I'm such a big deal I get in the sailboat I'm like I'm in charge and now we bre we syn the because I don't know what I'm talking about right those type of hierarchies are bad but when you learn to both lead and follow and you can do a dance with other people of giving up power and taking power and when you know what you're doing those types of hierarchies are really beautiful and and they're much better than flat organizations much smarter much more intelligent it's like the question of decentralized and centralized actually and um so but when you're talking about a flat Network so what I was talking about is the disadvantages of a flat organization you want hierarchy but you want this kind of flexible hierarchy in a in a flat Network that's interesting question I'm not um sure I think um

there'll be certain things that'll be flatten certain things that are pyramids you know and trees and every other shape too you know I think the thing that really excites me about just thinking about this is that like we've had a very limited capacity to hold shapes and what I mean it's like every different shape of every human being has like a unique gift that they can offer to the world really this is the foundation of what I'm interested in like how do we get each of these unique human gifts out into a market that has enough liquidity to support them because previously we've been limited by our soot technical economic regime and that the markets compressed human gifts into certain flavors and then people that are often

Psychopaths rise to the top of these of these silos to own that shape and then other shapes that don't fit like maybe I've got some weird shape doesn't fit in any in any hole they just get squish these other silos and that's really boring but now with blockchain and with with AI and with all this like the bandwidth the nature of the firm argues that you know it's the centralized services and the scale the the logic of scale Network effect that makes large vertically integrated companies outperform but that's all changed like we have way more supporting Technologies way more High barwidth connections way more capacity connect with each other if we Sol we're at the precipice of solving a couple key things

which is like the structure of governance actually and uh and like really robust foundational smart contract systems like once we solve those two things it's a Tipping Point that allows for like liquidity of human gifts to be like exponentially larger more capacious no like this is a very like nice concept I would say and as I said like the VC is now funding just the unicorns type of stuff but you know I like what you are saying like everyone has a gift and like if I want to pursue like what I'm good at there would be a way to get enough Capital to at least try it out even if it's not a unicorn

maybe it will be just you know break even type of thing and people would support that uh because you know everyone will be better off uh eventually this is really like why I'm here as well in the space uh and you know I see the point of people like what they are making like the centralization like or the hierarchy sorry the hierarchy was problematic in the in the past um you know one things is like the like domination on the on the market you know and then they are buying all the startups so basically you cannot grow your own startup because like you will be bought by the big guys uh at some point uh there is no way out out competing them but the other part which

I think is even more scary it's like the nation states where also like people got the ultimate power and even if they had good intentions at the beginning the power is so addictive that they cannot you know leave every recently uh read the book Randa Incorporated and it's basically about Randa and they had some bad history and I don't want to go into details but you know there was like the new president um who was like you know really elected democratically and he was like yeah after two elections I leave I want to give it back to people I think it's his like fifth term right now uh it's just because like you know he's in power and

it's like uh maybe I won't leave uh and it was like great intentions at the beginning but then like it just like gets into the head of people and I I think like we need to avoid it a little bit with you know the check and balances uh you mention uh at the beginning like that they're always needs to be checked because there is human nature which is kind of power grabbing and maybe to shift a little bit uh I also want to learn a little bit more what you actually doing right now I know you just announced like kind of the first part of the igen layer governance I read that uh it's a kind of like I would say evolution of what you did at year Finance maybe like if you can compare

like what what's the evolution and like how we are planning actually grow uh the igen or evolve the igen uh governance yeah so it is a a evolution of the confr delegation idea at we call it igen go we learned a lot from every everybody has been doing so so many incredible experiments and projects and and governance over the past almost 10 years now that there's been a lot to learn and iing of is the result of a lot of these lessons and it's based in small groups so one of the things that many of us feel is kind of a sad state of of dows is that you can either be kind of decentralized or effective like it's hard to be both and actually almost nobody is both because we don't really

know how to do that yet because most of the decentralized systems that we we've deployed the decision making in them is pretty questionable uh so I would call that low Effectiveness learning right we've decided in OV to not sacrifice on decision-making quality so to start with an effective design but one that we believe can really be decentralized uh in you know a number of years we're not so we're we're starting out with something that is not a dowo really it's not um fully decentralized it's not well what does that mean but I I wouldn't call it a DA yet it's it starts quite centralized and then it it gives power this idea of progressive decentralization we call it incubation

because the heart of this governance system is small teams of people because small teams are actually the best decision-making system that we have on the planet the only super intelligence that we have on the planet the only intelligence that is greater than a humans is a group of about seven people that really have high trust and compatible skills like that group makes the best decisions that we know of so we start with that that's the core of ion go the best possible decision making and then we decentralize that and so you have these councils and um token holders then create these checks and balances and we think about so many of the different ways rambling a little bit

because I there's such a large scope there but let me take a step back for a second we also thought about you got this whole community you've got all these different people like in igen Lay there's token holders there's abss operators all these different pieces of the market um we want it the belief is that all of them have something of value to offer and so we need to give the governance system that gives the right job to the right people and so token holders have a really critical job in D go and that is to be the kind of emotional um the kind of parasym the sympathetic nervous system of the of the or organism which is to respond to threats and so this type of Mind a dispersed decentralized

group of token holders is not great at making certain types of decisions but it's great at making some other types of decisions like like no this is D too dangerous basically is is because they already have a lever that they can pull which is to sell their token so give them something to do before that and you know there's there's thinking around well again there's thinking about com backs and comp decisions but in our model this is the best job for token holders and then you've got these high trust teams that making the critical decisions but then the token holders are also staking their tokens to create reputation that then leads to people being on these teams and those are the basics of the checks and balances of the

system yeah I know I I I feel like uh this is you know the right approach and you already prove it uh with the year and now we are kind of upgrading on it and also for our listeners I will include in the footnotes like the article from vitalic about the concave and convex uh decisions so they can learn more about that and then we can go deeper maybe uh next time but yeah like uh on the small groups perspective how you realize this is the right size uh of the group like is that like kind of based on some research or you know because like is it opinion based because like there is these kind of tests where like you take the 100 people to kind of make a ision

and they usually get to the right decision as a collective or like the majority so what what kind of uh why you did that size of group for you there's some research around uh collective intelligence in group sizes and it's found that um you know after about seven people like collective intelligence basically goes up until about seven people and then dos by about 10% for each additional person after that but also we these are stud not that many studies and they've done they've been done in you know Lin context it's a little bit different when you're remote there's some other studies to say for remote work groups of like 20 or 25 people or make the best decisions um then there's dumb Bar's number which

we're familiar with which is 150 people but he also had five to 15 people for small groups and there's work by um I think it's really interesting related work around strong and weak ties by people like sociologist Mark granovetter that looked at like how many strong ties can you support in a community and not that many when you think about family structures also it's like about seven people you know this is hardwired into us in a certain way now is it appropriate for remote part-time work there's not much research to say whe how accurate that is or not but so some of this is based on opinion for sure there's also this convex and concave idea so the wisdom of the crowd so what

can large groups of people decide better than small groups of people and there's some evidence to say that certain types of decisions that require more of like an average um are better decided by the crb but then other decisions which were like yes no are better decided by small groups and I think that there's some truth there but one of the things that uh is really apparent when you're actually working in these systems you know seeing these theories and practice is that decisions don't happen in a vacuum and so maybe a large group is really good at estimating certain type to decisions better in the small groups they're not good at holding the accountability in the relationships in the high context required for everything

that doesn't fit into that little neat box of the estimation problem and that's why small groups of people that can establish relationship connections and be responsible and have something at stake in my view are going to be better decision makers provided you can keep those containers transparent um and accountable to the Token orders and free from capture yeah I I it makes sense to me and you know I used to work like in like product management and we used all the agile methodology and you have kind of similar size of the team and you know the famous two Pizza uh team and it's as you said it it's about coordination and also

context kind of holding like it needs to be the same people kind of holding the context from one decision to another uh because if it would be just random seven it might get lost a little bit because you know everyone is coming from a different perspective it makes sense to me uh from that perspective as you said like you have a lot of stakeholders uh in igen layer how are you kind of dealing with that because like some of the Dows are considering basically just token holders and coure team which is like two but you have way more like how you interconnected the governance so nobody's feeling like left off uh and everyone is making the right kind of

decisions or can chime in when needed yeah so we're this is active area of research to think about some of these potential mechanisms more but to start the token holders have the power and we have some mechanisms to spread that power to the best people we think so the nice thing about tokens having all the powers and you know anybody can buy the tokens and the uh ecosystem participants will have a lot of those tokens but we want to do more than that because there there's this problem in allot Dows the principal agent problem again but where people that are really good at governance let's say you get a lot of power and become delegates but they're not really incentive aligned with the protocol as much as they might be should

be and we want the people that have the governance power within Igan lir to be the ones that are building on top of igen Lair law term and senal line like the abss and operators and so well of course they can buy tokens we have this new role it's called a curator and so when token holders can delegate the one call assign their voting power to curators and then the curators make endorsements which are endorses for specific skills which then align to certain councils of contributors in the community but those caters um will need to say what their strategy is for um for assigning their tokens and to start they're going to be

permission so we're going to have a smaller group of curators with very clear strategies and you know the ethos is the Govern should govern that the you know the community will eventually be able to decide but we think people will be pretty aligned with this idea and the curators will say look work I'm going to be donate I'm going to be assigning my tokens to the people that are most incentive a line the ABS is and operators CC and so when you delegate to when you assign to me that's where the power go so the curators kind of direct that power into the ecosystem participants that should maybe most have it and now it does create this other power concentration in the curators themselves but then that becomes

permissionless and open in in near time so anybody can become a curator which is just the same thing as anybody can be you know tukal or a delegate and then once we have things like credible commitments and the curator can put a million dollars on the line and say look I only de delate I only assign token power to people with X Y and Z criteria and if not then I get slashed you can really trust you'll be able to really trust these systems far more than you can now I like that so basically like you know empowering people which has some like uh skills and reputation uh in the space and I think uh you mentioned uh in your uh last talk at defco like that the reputation is actually like

kind of big piece uh to the Future um of governance so maybe is a last topic for today discussion like can you elaborate AIT bit more like how you see uh de working uh you know how people can actually get uh any reputations and how maybe blockchain can be beneficial for it yeah so I realized when I talk about reputation I'm talking about something a little different than most people when they think about reputation so let me first start there you think about reputation like um in crypto we think like how many commits have you made to GitHub or you know or or what nfts maybe are spts or like what artifacts have you collected and and marks have you made to support a certain type of reputation

like being a good software developer or something like that that's one kind of reputation but what really makes unlocks reputation is is perspective so it's not just what skills you have it's how aligned you are with with me or how aligned you are with a different agent that's what makes it like supercharged so we need both a mechanism of in reputation of understanding what skills and capacities people have and then another one of understanding trust and Alignment between different agents and so once you have that then you can do things like delegate power to a s a group agent automatically because

you have a reputation system that knows like okay prar you're you're an expert in governance and you're super aligned to GitHub based on like really clear trusted mechanisms which we can asteris right then it's like okay we don't need a vote you're just on the council you're on the council already you're top of the stack and this and this you're on that Council um and what that allows for is much faster movement and much and more trust so like how do we construct that reputation reputation runs everything already it's just an centralized substrate you know and the in the in the which means it's limited in its capacity for intelligence in in in this model right so the hosting providers

reputation the the mentors of reputation are mostly small entrenched Powers universities most successful companies other things like this but there's me much much more space for reputation than that it's the market that hasn't been filled um once we have better mechanisms for creating trust reputation will see this much much this explosion of this stuff and everything starts to move faster and and Dows can be more effective I know maybe last comment on that like I know there was couple reputation capturing tools like most of them failed uh as far as I know uh you know they were trying to capture like

scales like uh who you know or what school uh you went to what do you think needs to change to actually we are starting like we have this trusted like mentors of reputation and then we can share it so I can have you know onchain that under the governance expert and you know and this and this and that so I can automatically be maybe like suggested uh for some console yeah so I call it Universal decentralized reputation that's what we need and Universal does not mean one single score that's centralized reputation that's Black

Mirror that's that's dystopia Universal means like all reputation can fit in the same substrate so what we need is things like what unlock the power of LM llms like translation we need trans Transformers that can take one type of reputation and and and maybe it's just the Transformers actually they already there we'll do this and so that we can have like a universal substrate of of reputation all these anybody canm reputation it can all be in there that anybody else can interpret it and read it in different ways that's that's one of the key pieces that we need but then beyond that we need systems that make that reputation we have to we have to trust it you know like so anybody can

just Spam reputation and have it on the universal substrate it's just going to be all noise so how do we get perspective in there so like there's it's again the two pieces it's like the um the data like how do we get all the data in in in one substrate and then how do we get perspective within that substrate and the perspective part's probably harder it's like how do you create trusted reliable reputation from a specific perspective and there's a lot of really interesting things that we're working on to get to that nice uh from our side we are actually kind of working on it as well more I think more the old fashion way like the badges and certification so you know if you bought the book uh you Meed the membership you

already interested in the Dow that's a sign uh that's a signal I would say you know and then we have course uh we have like fundamentals course but we will have more Deep dive courses and you will get badge when you like successfully finish it like that you go all the exercises and like it can help you uh maybe start it and like we are still like very centralized in the sense but I believe we can like empower the community to do it more like you know people just grow uh the move mement and then it will become more decentralized uh over time but one thing what I found like um even more powerful in this sense it's like when it's like cohor based learning like those people

kind of stick together and they kind of Empower each other but also refer uh each other so they I know like uh yeah like Drake I was with you at the six week course and like we hang out and you had such a great points on governance like and now someone need help with the you know governance structure I'm like yeah I know a guy uh and like you don't need a badge per se but because I might be trusted in this ecosystem and uh you know you are my trusted uh kind of peer I can just refer you and they trust you because of the web of trust I think what you said it's like the but it's like centralized and it's not like effective because we keep it in our heads uh in a

sense uh but probably we just need to like expand that information from our heads uh towards uh something more reusable well we need we need the substrate to support it so like like on that perspective side the the data side is there and people are creating more and more data and more reputational artifacts badges nfts marks but but the perspective side needs a lot of work so one of the things it needs is decentralized identity and it needs this a large social graph right because we need to be in relationship with each other we need to have transitive trust transitive reputation that can translate reputation that's then transformed to different you know semantics across this

vast graph and we don't have any of that yet so that centralized piece is not it's a limitation of the substrate too it's like how can we transport reputation that you've created within a cohort to another cohort in China that you've never met like right now that can only be done through human trust relationships that are not actually really well inscribed in any media but once we have some of these pieces like decentralized identity and social graphs then it'll actually be able to translate automatically and much more quickly uh through these different systems I I totally agree and I'm looking forward for the future where we just like you know as we said during this uh chat like

Empower more people to doing what they actually want to do and get the capital uh for it it will be so bright future ahead of us uh I hope uh is there anything like would we forget uh you would like to mention no nothing nothing coming up I think we covered a lot of good territory any other questions that uh you can get to uh maybe the last thing like uh where like our listeners can learn more about your journey uh what you are up to or maybe the I layer governance you can follow me on Twitter at uh trach opter who's looking the show that's for how to spell that and um the and .xyz and you can read uh at the igen foundation our recent blog post on um OV

if you Google OV EIG g go you'll be able to find everything that we've we've put out so far as not so much uh as well as if you watch my recent decod talk the Next Generation and decentralized governance and it's a good talk so I recommend uh everyone uh to uh watch it and if you want to start with d uh I recommend to buy our book uh which is going to be published by penguin Random House January 21st uh it's already in pre-orders on Amazon and uh other retailers and there are some special editions with nfts and actually our partners materials at how to Dow do XYZ well Drake it was great conversation I

really enjoy it I Le T and you know I wish you a bright future in the Dow governance thanks man thanks for having me I really appreciate it yeah thank you for tuning into how to Dow if you're excited about the future of dows as we are don't forget to check our book how toow available on Amazon and for those looking for something special visit howto dow. XYZ to grab a limited partner Edition version with an NFD that unlocks some very exclusive perks and if you want to dive even deeper we just launched our six week course on Dows back with actionable insight and expert guidance so get a

book follow us on social media join our community and we will guide you through the fascinating world of decentralized autonomous organizations until next time keep building keep d he