Funding the Commons | Juan Benet | Founder & CEO of Protocol Labs
In this insightful talk, Juan Benet, founder & CEO of Protocol Labs, shares his thoughts on breakthroughs in computing that can help solve the next generation’s problems.
He sets the stage with a focus on why this year, this decade and this century are particularly crucial in collaborating to solve the world’s most pressing issues. As we iterate and develop new technological tools, solutions will emerge if we work together for the greater good.
Read on to learn his views on the power of cryptoeconomics and new models for sustainable public goods fundings.
Thank you so much for that introduction. This is the third event in the Funding the Commons (opens new window) series. It's really great to see the community come together.
I'm here to talk about priorities for public goods builders in 2022. This is going to be a really critical year for public goods generation, starting from now through the end of 2022 and the beginning of 2023.
In this talk, I'm going to go through:
- A case for why this year and this decade really matter in this century
- Cryptoeconomics for solving planetary problems
- How Funding the Commons got started and our impact so far
- Goals for next year, including different mechanisms for builders
I'll conclude with some advice and thoughts for public goods builders that are trying to experiment with a lot of the tooling. Hopefully, this can be useful in generating a whole wave of new things, ideas and solutions.
# An extremely critical century for breakthroughs in computing – 1:42 (opens new window)
This is an extremely critical century. We are leading on several centuries of extreme improvement in terms of all our global development, against most measures for human well-being that we know to track. We're just getting this broad-based improvement worldwide. Of course, all kinds of problems still exist in the world and there are regressions along the way. Many things are getting worse, but for most indicators of human well-being, the world is on a great trajectory and the last few centuries have been a great direction.
# ‘Public Bads’ that present major world challenges - 2:30 (opens new window)
However, we're now confronted with a series of x-risks, or how one of our researchers likes to put it: ‘public bads.’ Extreme public bads that we have to really avoid – especially the ones that are human-caused – present extreme challenges for us to get through. We control the speed at which we'll hit these, but especially things like nuclear war and engineered pandemics and unaligned AI: we're speeding well into those risks and it's extremely critical that we coordinate our species to solve these.
# The large scale transition to the next phase of computing - 3:08 (opens new window)
On top of that, there's this large-scale phase transition that we're going through, as we invented computing. And as that computing has evolved and developed over the decades, we've gotten to a point where we're starting to blend and merge with our computing systems in the next few decades.
“When we look ahead to the next 80 years for the rest of the century, we're going to see the introduction of things like large-scale robotic swarms, augmented reality systems, virtual reality systems, brain computer interfaces that will break through the barrier between these screens and the internet and our brains.”
Then we will make AI systems that will be progressively and successfully more and more intelligent to the point where we're very likely to discover AGI in this century.
Many people are now estimating that this might actually happen in the next decade or two, which is extremely alarming in terms of the degree of a problem to solve here. Now, to make matters a little trickier, the large-scale microsystems that we've been building and which have been responsible for our broad improvement and broad well-being for the last few centuries are starting to strain. They are starting to get captured and they're kind of inadequate for solving these kinds of challenges. They're designed to go slowly. They're designed to solve problems of a different era and they can't quite cope with problems of this magnitude and the speed that we're encountering in the map.
So we need a new set of solutions. We need new structures and we need new coordination mechanisms that can enable us to solve these extreme challenges. And we need those coordination systems to organize at that macro worldwide scale now. It's extremely difficult to build systems of that magnitude and of that quality and hope they go well.
# Incentive structures to solve next generation problems - 5:20 (opens new window)
The last macro systems that we built took many iterations. There were all kinds of mistakes made and they've progressively evolved into a much better structure. So it's a very difficult challenge to come up with something that can improve those systems and handle the breadth of challenges that these systems handle really well, and on top of that, then help us solve these next generation problems.
However, the way to get there is by applying our best perspectives and theories and testing them in the wild at various different scales, learning from those developments, and getting to progressively larger and larger problem-solving scales – to the point where we can then coordinate millions of people against these problems.
The promise of the entire blockchain world is that it's enabling us to have a programmable interface to build these kinds of coordination tools, starting with very small things that let us experiment and then from there, scaling them to larger and larger sizes – and along the way tests – that they're working well. Tests that are really solving problems, tests that actually yield better ways of coordinating.
So I'm very hopeful that we will solve a lot of these challenges.
“I often get asked what has changed my perspective about crypto and so on in the time that I've been in the community. It's very much undervalued and underestimated, the potential impact and the potential utility of these systems.”
# Why this year – and decade – really matter - 6:58 (opens new window)
Once you step back and see them for what they really are, you realize that there are extremely powerful tools that can help us solve these kinds of problems. So let's dive into why that is, in terms of why this decade and this year really matter. If a lot of these challenges are going to be figured out or things are going to be set in motion in the next decade or two, then this decade really managed to get to work through a lot of those experiments to get to really high quality solutions and then from there scaling them.
Blockchain systems are now at the scale of somewhere between about a trillion dollars in value to three trillion, depending on which month you look at it. Now, that's a big enough scale to try very serious experiments, but not such a big scale that it is a catastrophic system to test and vary with. So that's about the right size scale to experiment with and if we can get some really good principles into these systems now while they're still young and they're so very hopeful and very positive-sum oriented, then they'll carry those principles and those ideas through to much larger scales.
When you think about putting in place things like allocating whole sections of a protocol supply towards funding public goods, that kind of policy is very positive-sum oriented, very long-termist, and is likely to go through now while the community is still very true to its roots and true to its values and much less likely to work in the future once everything gets much more competitive.
So I think now is the right time to put in place these kinds of structures so that when these systems scale by an order of magnitude, they can carry lots of those values with them. Think about the early value systems of the Internet and how those inspired the web versus the Web 2.0 world that became much more extractive.
# The era of cryptoeconomics and block rewards - 8:50 (opens new window)
At the end of the day, cryptoeconomics is the study of a block of cryptographic economic structures, a combination of a set of fields that give us a bunch of tools to analyze. These mechanisms that we can deploy at runtime into the worldwide computing infrastructure and then influence groups and large scale organizations.
I like calling this software-eating mechanism design because it's about the software computing infrastructure that we've built out for the last few decades. It’s about using that entire continuous integration and continuous deployment structure with constant improvement and broad deployment into the world and then deploying incentive structures that can organize groups of people, whole large-scale entities and so on, through these systems.
Just to give you a feel for how powerful these systems are, think of the Bitcoin energy consumption and realize that it just drops out of two components in Bitcoin: one is the block reward impact evaluator and two the price of Bitcoin. So those two things yield this tremendous energy-consuming system. This was kind of an accident. Nobody quite intended this device to consume and waste this amount of energy, but this gives you a sense of the power of these systems.
First off, we should fix this and get better systems that actually make this energy use useful, but I use this as an example to give you a sense of the level of power that comes from these incentive structures and their operation at scale.
In Filecoin, we're very familiar with these kinds of structures. We use the same component, and we've gotten a feel for how powerful this stuff is in just a couple of years. We ended up organizing the build-out of a massive hardware infrastructure for providing storage to the world, using one core incentive structure: a block reward.
# Designing incentive structure that can solve major challenges - 10:00 (opens new window)
So all of this makes me really, really hopeful that we'll be able to build these kinds of incentive structures that can scale to solve extremely large planetary scale problems by designing incentive structures and structures warping the incentive fields and getting us to – little by little, problem by problem, scale by scale – solve challenges.
“So I greatly encourage you, if you aren't already in this world, to try it out, to try creating some smart contracts and deploying them. To try working with other projects to get a feel for how powerful these systems are.”
I'm very hopeful that initiatives like this will have a huge impact on planetary scale problems, like climate change. I've become very hopeful that these systems will let us coordinate massive action against whole industries by letting us have the full power of law and economics in a fully programmable environment.
I'm also very hopeful that we can get to accelerate science and technology development by using these kinds of structures to create instruments to incentivize areas of the innovation chasm that are underserved, areas where it's extremely difficult to get funding for certain projects or to get long-term rewards or long-term success.
Many of you have probably heard me talk about this science and technology translation problem and the lack of incentive structures. And a lot of that just comes from the lack of reward structures that make it impossible for groups building projects to raise capital, because there's no good incentive for capital to deploy there.
So that’s what brought us to knowing that this is a critical century, decade and year, to knowing that cryptoeconomics is extremely powerful, knowing that this is critical, to why are we in Funding the Commons.
# A new model for sustainable public goods funding - 12:00 (opens new window)
We thought about this problem last year and we saw the scale of the problem of blockchains and the kind of rapid pace of development in industry and the emergence of things like DeFi and NFTs and so on, and especially the broad adoption by millions of people of these tools. This gave us a very promising landscape to be able to solve these kinds of problems.
We have the potential to solve all these massive coordination problems, but we're lacking good mechanisms. We need better governance structures. We need better funding mechanisms. We need to study these things with much deeper theory and experimental analysis.
We ourselves needed better funding and organizational structures to do our own work, to develop our own teams, to grow our own networks.
Based on that, we decided to organize a movement to build these kinds of new models to arrive at much more sustainable public goods funding. Not just sustainable, but ideally regenerative systems with possible externalities. They're not just sustaining themselves at some level, but actually creating a lot more value around themselves.
We hope to also create structures for much better value alignment within these networks. We decided to throw an event last year, so it's less than a year ago. There's probably a number of other people that helped put this on. It really takes a village to put this on, especially the PL events team and many others who have helped. Since then we've now had three events – two virtual ones and one in person – and we're scaling the community in the size of the conversations, the systems that we're reviewing, the mechanisms that we're exploring, the studies that we're doing, and so on.
We’re also very fortunate to be working with a whole bunch of other folks in the ecosystem building out the broader public goods movement in the blockchain space. Thanks to the GitHub community and Shelling Point and many other groups that are very focused on building regenerative structures.
# Deep dive into impact certificates and the drive for a new set of funding mechanisms - 15:00 (opens new window)
All of this leaves me very hopeful. Our impact so far has been to explore a set of funding mechanisms. Some have some kind of experimental review, it’s still early days, so a lot of it is still not very systematic and not very well experimented upon. I'd love to kind of crank that up and get to drastically better study to the point where we can analyze these systems with the same level of rigor that we analyze things like network protocols or hardware devices and things like that.
We've also revived the impact certificates idea and field, and we've gotten to explore a number of novel entity types. I know that a few of these are actually getting booted up now which is a really awesome impact for just a few months of talking about things. We've talked about some coordination systems that could be extremely useful. This is a very promising area, but probably understudied, and an area that is maybe harder or seems much more difficult to get traction on. So it doesn't get studied as much. With coordination systems, how do you get large groups of people to organize much better?
That holds some of the most promise.
I talked a bit about the funding mechanisms on impact certificates. It’s one of these ideas that a number of people have been discussing for the last few years and this event really helped revive that entire track.
We'll probably hear a number of talks during this conference about impact certificates and a number of projects got catalyzed out of this, so it's super exciting. So this is exactly the kind of thing that we want to have going, not just in this one area of impact certificates, but across a whole variety of potential mechanisms, of potential systems. Great credit goes to all the people doing this work. Let's work on this in other areas as well. There’s a lot of latent potential in this coordination mechanisms layer.
There's a bunch of really good ideas around things, like futarchy. I'm not necessarily sure that that particular construction will work, but we need to do a lot of experiments with those kinds of governance structures to see if there could be ways of governing systems algorithmically. We need a way of aggregating a lot of our perspectives and thoughts and values in a much more systematic way than a very brittle representative democracy that doesn't really scale to millions of people.
“With a lot of the mechanisms and structures that we want to build, there's a lot more theory that is needed. There's a lot more implementations that are needed, more rigorous study and assessment of performance. There's lots of interesting work to get done here.”
# Community goals for the near future - 18:50 (opens new window)
I want to frame some goals for the community for this next year. I'd love to see some impact in these things I'm going to be working on. I would love to invite you to join me and join other people doing this. It'd be great to look back, so I commit that a year from now, halfway through next year, I'll look back and see how we did on some of these goals.
To introduce these concepts: Again, this is a very special year in weathering crypto. There's tens of thousands of scientists and builders worldwide, there's massive scale resources in these networks, a proper well of experience, well-sized experiments, scale is very fluid and very easy. It's a community that's very excited to try new things, that is encountering real large, large-scale problems and is very interested in getting solutions to work, which is very different from a lot of governments.
I don't know if any of you have tried to change your local government and try to pass something, but it's an extremely grueling process compared to the idea of starting a system, a community online of people that want to try these things and try to experiment with them.
# Why we should build regenerative structures during downturns - 20:10 (opens new window)
In this kind of moment of downturn, in both crypto and the macro world, it's a great moment to build a lot of these things and get poised for a very strong ReFi summer to come out of it. The crypto world has had many downturns. There have been at least four of them. And it usually follows a cycle of a big hype moment and then a downturn where people start building lots of things.
In one of those downturns, I started Protocol Labs and built the first version of IPFS with a whole number of folks. Then, in the next one of those [downturns], we had the next generation blockchains, a lot of the layer 2’s, DeFi, all of the NFTs, DAO tooling – all of that came out of one of those build times.
So, I really hope that in this next downturn, we can build all of these kinds of regenerative structures, build out a much better framework for studying all these systems and get to a much better outcome.
# Plans to grow the community, experiment, and build together - 21:00 (opens new window)
Let's establish some meta goals. Let's continue to grow this community. Let's explore a bunch of domain specific tracks. Let's dive deeper into certain kinds of mechanisms. Let's explore having some events that pull together a set of people focused very much in one area. Let's try and experiment with workshops and hackathons.
We've been thinking it aloud together for a while. It's time to put a lot of that into practice and stimulate that by having workshops and hackathons that enable both theorists and builders, often the same people to come together, connect and make a bunch of these things and experiment with them.
I'd love to have some network funding for ourselves to build a network-oriented grant program to support researchers and builders in this space. I'd love to target a five million dollar fund size – that’s a good place to start. Of course, if we can get more that'd be even better!
We should grow the community. We should think of this as an expansion space for us and bring new people. Let each of you bring three new people to the event and refer them to talk – something to get them interested in the space. If you recommend three speakers that you think should be talking to us about their ideas and their thoughts, imagine where we could end up.
# Deploying impact certificates, building markets and more concrete goals - 22:00 (opens new window)
For concrete goals, I think the impact certificates idea space is extremely interesting and valuable. Let's dive deeper into it. Let's deploy more systems. Let's deploy hyper certificates. Let's figure out the NFT structures for them. Let's build a market. Let's fill, ideally, multiple markets in a few different verticals. It would be amazing to get to a scale of having an impact market with around 50 million dollars in value.
Next year, I think it will be at that scale where you can see some interesting things starting to take shape. Smaller than that, it's harder to see it working higher than that, too hard to reach for in one year. The 50 million scale is achievable. It's very ambitious but achievable. It will give us really good outcomes.
Beyond that, impact evaluators are one of these tools that are extremely powerful. We just haven't studied or experimented with them enough. I invite everybody to dive into that. I might lead workshops on this kind of stuff. Let's study the outcomes because this is one of these areas where you want to be careful because if you get it right, you build really compelling things. You get it wrong, you get a runaway process that is eating up all the energy in the world. So careful! It's like Mickey Mouse with the brooms.
We need much better performance evaluations of all these systems. We need good evaluations, good mechanisms and structured evaluations of mechanisms. We need better frameworks, better benchmarks to hit. I would love to get to a set of governance benchmarks where you could come up with a benchmark test suite to analyze whether a particular governance structure is doing well or poorly for a community.
# Setting new industry standards and better governance structures – 23:00 (opens new window)
Think of having a set of features that you would want your governance systems to do well at and then we can turn that into a set of observations that you could apply on top of any governance structure. Then, it'd be great to have that as a test suite for people to to develop against; in the computer science world this has been incredibly instrumental in getting us to build the modern computing infrastructure.
Almost every field that you can look at in computer science tends to have an intense battery of tests that keep getting developed and refined and improved over time — but then every successive system has to beat, and so you get this amazing evolutionary structure where whenever you're proposing some new system, you can always run it against this ever-growing intense battery of tests and see whether it's actually better.
That yields an extremely good evolutionary environment. We need something like that for governance structures. We just don't have that, we have no way of properly evaluating whether one particular governance structure is actually going to be better than another one in a systematic, repeatable way where we can all clearly see – with hard data – that it actually works better than another. I think it is very, very achievable.
# The benefits of an impact evaluator - 25:30 (opens new window)
I’ll leave you with this one idea of an impact evaluator. I'll maybe describe it in high level now and am happy to discuss it in more detail with folks. It's a very simple system which just says that you're going to have a periodic evaluation of some value across a community, so this could be a rated performance against some goal. And with time, the impact evaluator is going to release a reward proportional to the value contributed.
It's very simple and it provides a long-running, repeatable auction that consumes a set of indicators from an environment, so it measures the environment and it rates all participants and their contribution in that time step. Then it rewards, proportionally, all participants with a fraction of the pot together.
Now, that sounds kind of serious, so you can make it positive-sum. By just scaling, the reward gets put out by the increase in the thing you're trying to measure in the indicator.
So this kind of structure can be applied to all kinds of measuring, all kinds of properties that you might want to measure. It's extremely useful because it gives you this repeatable thing that you can just keep scaling the level of impact and sharing in that pot of rewards. If you associate the work being done with the value of the reward itself, then you get this amazingly positive feedback loop that then scales really fast. That's the magic behind Bitcoin and Filecoin and a lot of these structures.
# Final thoughts - 27:11 (opens new window)
In the last 50 seconds, some thoughts and advice for everybody:
- Connect with other folks. I think this is one of those times in the development of a field where everything is moving very quickly and new ideas will diffuse fast.
- There will be a lot of independent discovery or independent discovery. There will be a lot of people very interested in building things, so this is not a time to hold back your ideas and develop them very deeply and then publish something like drop information theory in the world or calculus or something like that and spend five years thinking about it. That is going to be way too slow.
- I almost guarantee you that most, if not all, of your ideas will probably get independently discovered and so you'll do much better by working with a lot more people a lot faster to develop everything much more quickly.
- Get it deployed out there, get it tested, get it scaled
- The sooner we do this the better because all of that value flow will compound. So if you have a great improvement and you deploy it now and we get to have more months and years to compound it – even if it's like 20 percent as good as you could have done it in a year or two years – that compounding rate and that utility of scaling it sooner will be much more valuable to everybody.
We really strongly encourage you to collaborate, work with other folks, get things tested and really experiment and try things out. Try something, see if it works, evaluate and measure it and so on. Reach out for help, so if you are running into some problem, if you
have some ideas and you feel stuck, reach out to the community and ask for help. This is a super positive-sum oriented community and group; everyone helps each other.
Reach out with your thoughts and ideas, and people will be glad to help. Really focus on composability of these structures. If you build a thing, try to make it as simple as possible and try to make it very composable with other tools and other systems.
That is part of what made DeFi scale. It’s part of what made NFTs work really well on scale. That's part of what's holding back DAOs. DAOs are not nearly as composable as they need to be. They're kind of composable, but they could be much more composable.
Go forth and prosper. Thank you.