Bankless - 33 - Slaying Moloch | Ameen Soleimani & Kevin Owocki

Starting point is 00:00:00 Welcome to bankless, where we explore the frontier of internet money and internet finance. This is how to get started, how to get better, and how to front run the opportunity. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more bankless. David, I know you love this episode. Did you love it as much as I think you do? Absolutely. We have a common enemy in Molo. and we need a nation to help slay him, right? And so we brought Amin Soleimani and Kevin O'Waki to individual Molok slayers to come on to the bankless pod to talk about what Moloch is and why we are trying to slay him and what is different

Starting point is 00:00:57 this time now that we have Ethereum and all the tools in the Ethereum tool belt to help slay Moloch. So that's what this episode is all about. And I'm pretty passionate about getting this message into as many years as possible. Well, I'm passionate about it too because I think that you have correctly identified in your past writings, as have others, as have many of this kind of Molok slaying tribe, that Molok is really, he's the god of coordination failure, is really the biggest problem that humanity faces and maybe the only problem. So if we are going to have an enemy as the bankless nation, it should definitely be. Molok. Yeah, I really like that phrase. I think we can all label some problems that we have in our lives. And I think if you keep on pulling back the layers, every single problem that we have, Molok is at the end of it.

Starting point is 00:01:53 Right. So to some degree, Molok is problems, right? And to some degree, it's also the most relevant problem that we could ever face. But I think he's specifically rearing his head lately, right? Like 2020 is a year of many different crises. And I think it's pretty easy to connect every single crisis that we have, be it the lack of our ability to coordinate around coronavirus or the lack of like the polar opposite ends of the United States to be able to coordinate in politics. Facebook is tearing us apart from our communities and making us believe different things. You know, at the end of the day, like I feel like 2020 especially is the year that Moloch is rearing its head. And we need more help to slay this beast. he is he's approaching from all sides. Yeah, and he's, he's really a common enemy for all of us. I think also what you're saying is once you see Moloch in things, once you see human coordination

Starting point is 00:02:50 failures, like you see them anywhere, everywhere, you begin to be able to identify the root of so many things that seem like they're individual caused or human caused, and they're really systemic flaws. They're problems with kind of the, you know, the game theory or the coordination traps that we all fall into. So it, there's actually hope, I think, here. And particularly at the end of the episode where we talk about humanity, some of humanity's big problems, once you can identify what the problem actually is, you can also start to plan a solution and a way to create this sword that can actually attack and slay the coordination problems and propel humanity in the future. So this is, this is definitely a very hopeful, hopeful episode. And I think Ethereum at the core and Bitcoin and

Starting point is 00:03:45 crypto and everything that we talk about every week on bankless, it's a hopeful technology. I mean, that's why we're here. Yeah, it's the technology that makes me optimistic every single morning when I wake up. It's like, oh, thank God. You know, the world's on fire. There's smoke outside my window, but at least Ethereum is here, right? At least I have this common group of people where we can all collaborate and coordinate as to what the problems actually are, because like you said, we can't solve the problems unless we can identify them. And Moloch is the problem of all problems, right? And we are all here to help slay Moloch.

Starting point is 00:04:21 If you guys are confused, perhaps, as to why Ryan and I are saying this Moloch word or who Moloch is or what this Moloch thing is all about, there's a lot of other content available for context. And we start to talk about that, what that context is in the very beginning. of the episode, but there's going to be plenty of resources also in the show notes to get you up to speed as well. And we discuss some of that context right at the beginning of this episode. So let's just go ahead and get right into it. But first, we're going to talk about some of our fantastic sponsors that really enable us to slay Moloch from so many different angles.

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Starting point is 00:07:24 It's optimized for European listeners. be coming to the U.S. soon. And when you get that visa card, the monolith card, tweet about it when you do. I love seeing people unpacking their beautiful bankless visa cards. It makes me realize that the revolution is here. Search monolith in the app store. All right, everyone, draw your swords because it's time to slay moloch. Amin, Kevin, welcome to the bankless pod. Today, I hope to inspire a bunch of people to join in a long journey of slang moloch. And I think you two individuals are perhaps the best inspiration for encouraging people to go on this journey. So, Amin, welcome to Bankless. Thank you for having me. Kevin, also, thank you for coming on this journey as well.

Starting point is 00:08:23 Thanks for having me. Excited for the conversation. I mean, back in 2018, 2019, it was the bear market gang, right? At that point in time, the people that had came in through 2017 to join in, you know, the Ethereum fund times of getting rich quick had then therefore left, right? And so the 2018, 2019 bear market crew were the people that were left behind that, you know, kind of by definition, were interested and incentivized for Ethereum to fulfill the vision that we all wanted it to, but it wasn't there yet. And you gathered everyone around to hear about, the story of Moloch. Let's start there. I mean, what is Moloch? Why are we talking about the canonite god of child sacrifice? Mollok, I like to say, is why we can't have nice things.

Starting point is 00:09:11 Mollock is a pattern that helps us make sense of the world. And so when we want to build, you know, societies want to build schools and hospitals and infrastructure, but instead build guns and bombs and planes, it's because they can't effectively coordinate together to disarm. And that's because the dominant strategy is to get everyone else to disarm and then secretly keep your weapons. And that is Mollock. And so Mollock defines these like prisoners dilemmas that lead to unfortunate equilibriums that either the players, like can't get out of, or they don't know enough about it, or they just can't coordinate enough to change the equilibrium. And it was encoded very nicely in a rationalist blog post called Meditations on Mollock.

Starting point is 00:10:03 And so the idea behind Mollock Tao was largely to try and bring some of the teachings of Meditations on Mollock to the Ethereum community. And in order to understand what happens essentially when coordination breaks down and what is ultimately at stake with Ethereum. Yeah. I mean, I think that Meditations on Mollock is a super inspiring blog post. And the problem with it is that it's 25 pages long. And so I have to admit that in 2018, when people were passing it along and they sent it to me,

Starting point is 00:10:40 I opened it up and read a couple paragraphs and I was like, I'll come back to this later. But I think that one of the cool things about what you're doing, David, here, is making the 25 page blog post into something that can be consumed in a few minutes with the bankless podcast and consumed in other venues. And it's a super important message. So would encourage people to read the post itself. But if you can't, the bankless material and some of the material that we're putting out here

Starting point is 00:11:06 will be also a good summary. That is absolutely the goal of what we're trying to do here today. So I just want to reiterate one of some of the things that Amin was saying, where he said it's these prisoners dilemmas that result in these coordination failures. right? And at the heart of every single instance of coordination failure is the basic principle of the prisoner's dilemma where you have two rational actors who if they knew what's best for themselves, they would both choose to coordinate with each other. But because each one has their own individual incentives, they end up both defecting from each other, which ultimately creates worse outcomes for

Starting point is 00:11:45 both. And in the meditations on Moloch blog post, there's this very short, two paragraphs, which I think really illustrate what we're really talking about here. So I'm going to read that out loud, and then we will go from there. So imagine the possibility of a dictatorless dystopia, one that every single citizen, including the leadership hates, but which nevertheless endures unconquered. It's easy to imagine such a state. Imagine a country with two rules. First, every person must spend eight hours a day giving themselves strong electric shocks.

Starting point is 00:12:16 Second, if anyone fails to follow a rule, including this one, or speaks out against it, or fails to enforce it, all citizens must unite to kill that person. Suppose these rules were well enforced enough and established by tradition that everyone expected them to be enforced. So therefore, you shock yourself for eight hours a day because you know if you don't, everyone else will kill you. Because if they don't, everyone else will kill them, and so on. Every single citizen hates the system, but for lack of a good coordination mechanism, it endures. From a God's eye view, we can optimize the system to, everyone agrees to stop doing this all at once, but no one within the system is able to affect the transition without great risk to themselves. That's the end of the passage.

Starting point is 00:13:04 What we are seeing with Moloch is that you can take this basic principle and apply it to any sort of, you know, rationally bad outcomes, such as war, for example, and apply a Moldok principle to it. So the project that I work on in the space is called Gitcoin, and it's a place that you can get coins if you're a software engineer. And the specific mission that we set out to solve back in 2017 when we started the project was to create economic incentives for open source software. open source software creates $400 billion per year in economic value. That was a study that was done in 2010, so before blockchain. But the people who are working on open source software are just working on nights and weekends

Starting point is 00:13:48 and not able to pay their mortgage by working on open source software. And that is a coordination failure in that our digital infrastructure goes underfunded that Gitcoin is setting out to solve. So I think that that's another tangible example of from a God's eye view, a system that is suboptimal, but the individual actors have no incentive to maintain open source, and so we can't really increment our way out of it. Molluk Dow is similar to Gitcoin in the sense that it was designed to help solve these collective action funding problems, where there would be something that we would all benefit

Starting point is 00:14:29 from if we could only all fund it together. But because not enough people are funding things together, than none of it gets funded. And so Gitcoin has acted as this great signal to attract a lot of projects that are up and coming in the space and can receive broad community support. Mollick Dow and Metacartel Dow also helped to solve some of this by allowing people to pool money and spend it together. And the reality of Ethereum is that, you know, it sort of takes this kind of collective of action because we don't have any inflation mechanisms.

Starting point is 00:15:06 We don't have any sort of taxes or any of the normal mechanisms through which public goods are funded. And so we sort of had to roll our own. The Mollock situation is that, like, of course it would benefit everybody on Ethereum if, like, we had a little bit more money to pay for devs and da-da-da-da-da. But, like, it's, you know, too difficult for any actor to, like, try to put that into place into Ethereum because of the coordination effort that it would take to convince everybody to accept block rewards for devs and figure how to govern it and da-da-da, that like we've,

Starting point is 00:15:43 you know, started off by just completely going around that and using voluntary donations from, you know, people who are aligned with the long-term success of the platform. Yeah, these public goods have this problem called the Free Rider problem, which is that public goods like open source software are non-excludable and non-rivalous, which just means that when you create a public good like open source, it benefits everyone. So why does anyone have an incentive to give back their rational economic incentive? If you look at it narrowly, is to just free ride on the system. And the cool thing about Ethereum is that it introduces this transparent economic coordination layer where the rules can't change on you. So it's a transparent economic layer where

Starting point is 00:16:30 the rules can't change on you. And so that allows a project like Moloch to Mollickdow to basically create collective action based off of Ethereum. And as I understand it, the game theory of Mollettel is that I am going to fund Project X, but only if 100 other people in Mollockdale also fund it. So it gets over that free rider problem of why should I be the only person that funds this. And Gitcoin grants uses this thing called quadratic funding, which gets over the free rider problem by providing a matching bonus for every single contribution that goes over to Gitcoin grants. But the cool thing is that we now have Ethereum. And those are just two instantiations of coordination games that can be played on the Ethereum network in order to support public goods. And I think that Gitcoin and Mollick are both early examples of coordination games that solve public goods problems.

Starting point is 00:17:25 but I hope to see hundreds more coordination games built on top of Ethereum. And I think that that's how we're going to build the momentum to slay Molluck, David. Absolutely. And the end goal of this conversation is to talk about the strengths of Ethereum as a technology, as a platform for why it is particularly well suited to aiding coordination among humans, right, in an adversarial environment. But first, before we get there, I kind of want to go through some historical and first principles, conversations of Molok, right? I mean, before this episode, we were talking in

Starting point is 00:18:00 Twitter DMs about how groups coordinate and how the status quo emerges based off of coordinating groups, right? And you said that as the status quo of the world, right? Like, the whole entire world changes. It's because groups tend to coordinate better than whatever the status quo is. When we think about at a very high level, the systems that govern our reality, right? Like the coordination mechanisms, you know, you could go super high level and start with like time. But if you, you know, like without time, things would be a lot harder to do together. And then you can go a level down and, you know, have like names of people and like conventions around naming. You could go a level down and then be like, you know, what story are we all

Starting point is 00:18:51 participating in, right? And it's like the nation state story. And, and this is actually not always been the case, right? Because before there were nation states, there was, you know, empires. And before there were empires, there was like feudalism and, you know, then back to empires and so forth. And the interesting thing is simply that, you know, whatever system dominates, whatever coordination mechanism dominates, like had to have outcompeted all of the previous coordination mechanisms. So, like, there is a point at which, you know, feudalism was harder to maintain than it was to compete against. And there will probably be a point that, like, maintaining a nation state is harder than competing against it. And the role of any coordination platform is sort of to enable these

Starting point is 00:19:40 kinds of, you know, transitions as facilitated by technology. And the bet is that the people who are able to most effectively use these coordination platforms are going to be the ones that outcompete over time. So I wrote this article way back when that kind of instantiated the metaphor of the bankless nation. And it was just a kind of an iteration of this where I claim that we started with, I mean, in the article I said we go even further back than religion, but I use religion as like this first example of a coordination substrate, a coordination tool where, you know, some somebody on one side of a continent could coordinate with somebody on another side of a continent if these two other people ever met because they understood that they both used the same story, the same coordination tool of like Christianity or, you know, insert your religion here, right? And so religion, first and foremost, was a coordination tool. And the reason why religion was successful was it allowed coordination across a wide variety of people, right? And what you're saying, I mean, is that, you know, religions were useful and maybe they're still useful to some degree for coordination. But eventually the nation state

Starting point is 00:20:54 came and that turned out to be a much more scalable infrastructure, much more scalable scaffolding for people to coordinate with. And so, you know, for better or for worse, for more morality or less morality, it doesn't really matter the morals or ethics of these coordination tools. It's just that one of these systems can coordinate better than the other. And therefore, that new system comes to dominate and becomes the new status quo. Yeah, that's right. Mollock is ultimately about, like, what thing you're willing to sacrifice to get ahead. And, like, the reality is that any time, you know, a group can sacrifice something to get

Starting point is 00:21:34 ahead, they do it. And that's what drives these sort of equilibrium. And so, like, you know, if I can sacrifice my morality for some sort of advantage, then, like, I'm likely to do that. If I can sacrifice, you know, my belief in the nation state for some sort of advantage, then I might do that. The issue is like, you know, these opportunities don't present themselves. There's no way for a bunch of people in like a country, for example, to coordinate against all nations at the same time.

Starting point is 00:22:12 The interesting thing with, you know, network-based monies like Bitcoin and Ethereum and others is that, you know, for the first time, like anywhere you are on the world, you can be on the same team. And that's a really powerful, you know, state of affairs. And I just, I can't, I would expect that to continue to, to propagate because the ease of recruiting and the ease of winning people over and, you know, could see that nation states which are bound geographically are going to have a hard time keeping up. Can we go back to, I guess, talking about like coordination failure? So I remember reading the blog post you guys referenced a while ago, but it's not, it might not be immediately obvious to everyone why human coordination is so hard, right? So, like, why do we have to invent all of these things, all of these technologies, if you consider, like, you know, money and nation state as sort of a social technology to help us

Starting point is 00:23:22 coordinate? Why is it just so hard? Is it because we're all kind of greedy and evil? Or is there something more pernicious here? I mean, I think it's a, it's a question of what you're optimizing for. And to me, the reason why coordination is hard is because we're all arbitraging between different incentive gradients that we're all climbing. So we're all optimizing for different things. And Ryan, if you and I were to be put in a game together, like an economic game in which I could cheat, in which I could defect and get some gain for myself. And you would pay the cost of that. I could externalize the cost to you. then you and I would have to have pretty high trust in order to both play the game and not do that to each other because there's an incentive gradient that I'm climbing that basically you're not on.

Starting point is 00:24:17 And so I think that there's a question of are our incentives aligned and are our individual incentives aligned with each other and are they aligned with the broader group? and what is the cost to to create, create value for yourself relative to others. And do we trust each other to do what's best for the group as opposed to all go our own separate ways? I think trust is what it comes down to. So that's fine, Kevin, because you and I, you know, we're friends and I trust you, right? So it's not a big deal. I would trust that you wouldn't cheat.

Starting point is 00:24:50 But maybe somebody that I don't know that doesn't have a reputation as esteemed as yours, Kevin. Is that sort of where the trust breaks down when it gets outside of kind of your social circle and your reputational knowledge circle? Yeah. So, I mean, the way I think about it is that like if it, and bear with me, but if you go back far enough in time, the way humanity organized has changed a lot. And I think of the main epochs of human organization as being the hunter-gatherer age in which we gathered around in small bands, hunting game and sharing it with each other.

Starting point is 00:25:24 then the agricultural age in which humanity went through a stepwise increase in complexity, which transcended and included the hunter-gatherer sort of epoch. And we all settled on lands and started farming. And there were towns in which you had to interact with more and more people. And then the industrial age where you can move to New York City and there would be eight million people in your local area that you would have to coordinate with through city government. As David noted that the nation state is prominent during the industrial age. And now we're in the information age where we've all been thrown on Twitter together, and we're all from different parts of the world, don't trust each other, partially because it's hard to build trust in 280 characters,

Starting point is 00:26:03 but partially because we've never been in this online first environment with people of different backgrounds and all sorts of different priors about the world. And so for me, it's a question of Dunbar's number. Back in the hunter-gatherer age, you could trust everyone around you because that's how human society had evolved. But if you pay it forward to the information age in which we're all regularly interacting with, in some way, eight million, eight billion strangers, then Dunbar's number, our ability to trust the rest of humanity has not caught up with our ability to communicate with the rest of humanity. And so that's what's so powerful about Ethereum for me and gives me so much hope about the Ethereum space is that we can build trust into our systems by putting them on top of this transparent economic substrate that cannot change the rules on you. I think it's all about trust in the number of people you are interacting with. Are they inside your Dunbar's number or are they not?

Starting point is 00:26:57 So for people who haven't heard of Dunbar's number, that's kind of like an upper cognitive limit on the amount of people that you can trust, right? Exactly. What is that number? Something like 150, 180? It's 150. I think it's basically you have like your kin, which is five people. You have your inner circle, which can be 10 or 15.

Starting point is 00:27:18 and then like the outermost ring is around 50 or 150. So, and the story of humanity, right, is finding newer and improved mechanisms to scale up Dunbar's number, right? And so, and for what it's worth, like Dunbar's number is also different for every single species, right?

Starting point is 00:27:37 Because it's totally dependent on brain size and in brain capacity, right? So, you know, the reason why Dunbar's number for humans is 150 is because that's about the number of relationships that you can hold in memory. So like it's not just your relationships with, you know, your friend Joe, but it's also Joe's relationship with Joe's friend Fred and your relationship with Fred and the intersection between all of these things, right? And so. And when David, when you say when you say relationship, David, like you could kind of boil that down to trust, right? Yes, exactly.

Starting point is 00:28:10 It's like it, it's kind of like this mental picture that I have of you and your reputation. And like a relationship is whether if I do this, like, I know I can trust David to do this. Right. Right. So initial societies scaled up to about 150 people because that's how much trust that you could have in memory, right? And in hunter-gatherer societies, when it started to get larger than 150, we would start to see these hunter-gatherer societies split into two. And because trust wasn't able to scale that far, so in order to solve that problem, the society of greater than 150 people split into two societies of like, you know, 70. Yeah.

Starting point is 00:28:51 And then I think that, you know, this is where a Steve Jobs quote comes to mind for me. He used to say technology is a bicycle for the mind. So if you think of someone who's running, you can use a bicycle to go faster. And so technology is a bicycle for the mind. And so as technology advances, we're not going to be able to increase the cognitive limit of how many relationships you can hold in your head. but we can augment the mind's ability to have working relationships with all of these people by hopefully using technology in a way that increases trust in doesn't erode it.

Starting point is 00:29:28 Yeah. So to bring this to the get coin example, like what get coin accomplishes is making you feel like you're part of something even though you're playing by yourself. So like I donate to a bunch of stuff, but like I rest assured that, you know, my donation's going to be matched and I'm playing as part of this game and I can use. my signaling to get other people to also donate. And so it's really like bolsters the, the individual action by connecting it to the larger whole. Mollock Dow does something similar because you can vote on something, but it'll either passes or fails. And if it passes everybody spending money on it.

Starting point is 00:30:10 And the reason that you feel confident, you know, putting your money down with a bunch of strangers on the internet is because you know you can take it out at any time. And those rules, like Kevin said, can't be changed on you. Kevin, I'm really happy you brought up that Steve Jobs quote, technology is a bicycle for the mind. Because the first instance that we saw a society start to exceed Dunbar's number and stay as one whole society was when the ancient Sumerians were invented writing. And as people may know, writing,

Starting point is 00:30:43 the first iteration of writing was just a ledger, right? It was a list of numbers next to a list of nouns, right? Like a numbers next to some animals, merchandise, names, or dates, right? And so what people were doing at this time were tracking the ownership of items, right? They were making ledgers, which I think is actually fascinating because that's kind of the industry that we are in now, right? like, you know, distributed blockchain networks are distributed ledgers, right? And so the first piece of technology that scaled Dunbar's number was the piece of technology that allowed for people to manage and come to consensus as to who owned what.

Starting point is 00:31:27 And I thought, I just think that's absolutely fascinating. Yeah, I think it's fascinating because it's like it's, it's both a, I guess a ledger. So it's something numerical. But it's also like a very early primitive property rights system, which is super reminiscent of what we're effectively building and working on with like Bitcoin and Ethereum. These are a property right system. These are ledgers that keep track of, you know, who owns what Bitcoin and which tokens are owned by what eth address, basically. So it's kind of the same thing, only in digital form.

Starting point is 00:31:58 I mean, offline, you said a line, which has really resonated with me, which you said, crypto, you think is valuable because it coordinates people better than previous mechanisms, right? So something you said earlier in this podcast was that if you're on the internet and you ascribe to this game of Bitcoin and Ethereum, you are opting into a system that is outside the nation state that you can trust that many, many other people who are in their own separate nation states can all opt into. And I think what you were alluding to is that like the market cap of these coins, you know, as volatile as they are, still comes from the fact that. people believe that these systems can coordinate people better than, better than previous mechanisms. Yeah. It ends up being like the Olympics of belief. So let me like every country puts forth their, you know, best contestants in the Olympics and they all, they all do battle. But imagine if it's like, instead of, you know, athletes like belief in their

Starting point is 00:33:04 monetary system, right? Like, at the end of the day, we, are trust, like we have options to trust people and they are, you know, the stewards of our financial systems, the central bankers and so forth. Or we can opt out. And like the really cool thing about Bitcoin is that you can go home and you can just sit there and believe as hard as you can in Bitcoin. And you will actually make a tangible difference in the sense that like your belief is what gives Bitcoin value. And if, and if, everybody went home and believed really hard in Bitcoin as a store of value, then it would win immediately. And that is interesting because it points out, you know, how much of these things are

Starting point is 00:33:55 just based on belief. And with Ethereum, it's a little harder. It's not so much enough to believe in Ethereum. We also have to build useful stuff on it to get people to use it and then believe in it. When you say believe, I mean, you mean believe, but also they have to take some action, right? It's like you believe in by virtue of your belief you hold or you buy more, right? Yeah, you believe, you talk about it, you, right? So you go from this position of not having any belief in Bitcoin to then like being like, this thing is inevitable. It's the future, right? You turn into essentially an agent of the system, right?

Starting point is 00:34:31 And it's important to realize, like, the extent to which everybody is implicitly an agent of, like, the financial system if they're not in crypto, right? Like, if you have your, you know, 401k in U.S. dollars, you've got, you know, your pension is on its way. Like, you're going to want to preserve the U.S. dollar. You are in some sense a staker of U.S. dollars. If you hold any U.S. denominated debt that you expect to. to receive. Right. Um, so, uh, like, you know, in some sense, uh, these two systems are coordinating against each other, right? Like I like the crypto game is playing against everybody who has, uh, a, you know, 401k. Um, like if crypto works, it's going to be much better for the people that hold crypto for them for the people who hold, uh, you know, fiat currencies. Um, and so the game ends up being recruits. the best and brightest from those people. And like the brain drain that's sort of happening is an indicator that that is

Starting point is 00:35:41 continuing to go swimmingly. And you're going to see, you know, the best minds of finance eventually defect to something like Bitcoin and largely crypto because Bitcoin is a malloc technology. It allows anybody at any of these institutions to defect and hold up the flag. Bitcoin and that will that will be what changes it. It won't be that, you know, Bitcoin takes on all of these institutions at the same time. It's that things like banks allowing custody will then turn banks into willing participants of the Bitcoin economy to drive it, drive fees from custodying it, trading and so forth. And like that will then integrate, you know, Bitcoin

Starting point is 00:36:27 into the economy. And I expect the same thing to happen with Ethereum. but more on the financial side, not so much just like the holding. Not only does it give the option to defect and, you know, opt out of your, your dollars and opt into these crypto assets, which I think, you know, maybe perhaps all four of us here have done this, right, in the sense that I'm going to go ahead and guess that all four of us hold more crypto assets than we do dollars. And the fact that, you know, so many people just use dollars on a day-to-day basis, right? Like their employer pays them in dollars to direct deposit to their bank account,

Starting point is 00:37:03 and then they hold their dollars in their bank account. And then, like, this scales up to the entire population of the United States. And then even beyond that, because of that's true, we give the power to, or reason to exist to this thing called the Federal Reserve, right? And the Federal Reserve is this super powerful, you know, agency that has, you know, a ton of control over the, it has a ton of, you know, puppet strings over, over all of our lives. And the reason why that has power in the first place is because we're all using the dollar, right? Except the amazing thing about the ecosystems of Bitcoin and Ethereum is that,

Starting point is 00:37:38 you know, as soon as a few people start to defect and adopt the values that we see in Bitcoin and Ethereum, there's an incentive to get other people to also defect. And when those people then are convinced to defect, then it turns into this grand recruiting arm, right? And so as platforms, Bitcoin and Ethereum have probably the world's best, like, free marketing division. There is so much free marketing that people like me and Ryan is content producers, people like Eric and Anthony with their ETHUB podcasts, anyone that produces content, like Peter McCormick with the what Bitcoin did podcast. Like, he doesn't get paid by Bitcoin.

Starting point is 00:38:19 Bitcoin doesn't pay him. Ethereum doesn't pay us. But we do it for free because of the incentive to defect from the system. because if this financial system works out, you know, we're going, we believe that we're going to do pretty well for ourselves. That's exactly right. It's one of the news stories I've been waiting on for a while is like, who's going to be the first central banker to defect, right? And announce that they are holding Bitcoin reserves, right? The incentive to do so is very high because you don't want to be the last one to adopt Bitcoin. You guarantee yourself upside pretty much if you,

Starting point is 00:38:57 if you are the first one to announce that you're holding Bitcoin because then you benefit from the price appreciation of everybody else trying to do that. So I actually think it's like largely inevitable. And you see with getting pretty close with like Iran, for example, being easier on Bitcoin miners and Kazakhstan also like being easier on Bitcoin miners because they know that's you know how to generate anonymous Bitcoins. So I think it's actually already happening. And and, you know, that sort of excites me and scares the shit out of me at the same time. Well, so I tweeted out yesterday just a question. It's like, do you think crypto is on a collision course with the nation state. And the majority of people on that Twitter poll said yes. So like so here is a wrench

Starting point is 00:39:54 that could be thrown in the gears. I mean is the nation state does have a monopoly on violence, right? So they can through legal tender laws say, hey, if you don't accept our coin, our US dollars, or if you choose to hold Bitcoin, then that is now a legal offense and we can put you in a cage or we could take away some of your rights or we could find you or tax you or all of these things. How does that play into the game theory that you were talking about? That's why I think a lot of people, we had been Hunt on the podcast and he basically said, yeah, I like this bankless idea, but you guys are wrong to go try to take on money because money is the nation states and they're not going to give that up. What do you think about that argument?

Starting point is 00:40:38 I think the world gets weird really fast sometimes. And it's important to keep that in mind. And it's, so I think everything is going after the nation state in, you know, this century. It's not just crypto. It's like bleeding out from, you know, a lot of different inefficiencies. The financial stuff is just one side of it. What I would say to that is that all nation states sort of compete. heat, right? So like if one nation state cracks down on crypto, for example, and others leave the

Starting point is 00:41:13 opportunity open, then you could see a migration there. It's really hard to stamp it out entirely. And like the more that some nations try to fight it, it just means that like the U.S. might be the last to adopt, right? There's less of an incentive to adopt a game resetting technology like crypto for the incumbent, where there's more incentive from the competitors who might, you know, let the chips fall where they may and see a slight, you know, increase in their standing as a result by, by piling on. And that's, and that's sort of why I think it's inevitable. Because, you know, even if the United States does nothing about it, like everyone else eventually will. And I'm curious, just to follow up on that, when you say it's inevitable, what kind of time range you're thinking?

Starting point is 00:42:07 Like, is this something that inevitably happens in the next decade? Or is this like you're just talking in your lifetime? You'll see it. I think decade just because of how fast things get faster. Like every time, every year or two years, you know, there we go through a crypto market cycle, like 10 times as many people hold crypto and have, are talking about it. And so like right now we're thing around the 1% mark, right? If we do it again, it goes to 10%, like, that's, you know, more than, like, that's, that's, that's quite a number of people at that point. And, and so, like, in terms of motivated participants, like, I could see it being, like, growing exponentially and that being a hard thing to clamp down on. Like, also, I think money is just going to be private and there's

Starting point is 00:43:00 nothing anybody can do about it. So, like, good luck. Just because, like, the stuff around, you know, anonymous, like ZK. Snark's magic is going to proliferate everywhere. It's going to be on every chain and every token is going to have a way to become anonymized. Well, it's funny, though. So we see a little bit of maybe we've always talked about the nation states being the

Starting point is 00:43:25 final boss and, like, routinely popping its head around. And this year, at least in the U.S., you know, the 2020 tax returns when you're filing your taxes, they're asking the question, do you hold, or in the last year, have you traded or done anything transferred, paid with any crypto? You have to check a box, yes or no, which is kind of interesting, right? So like it does feel like there is going to be some kind of a clash, but you're saying, I mean, that privacy technologies might give, I guess, the, the, the, the strength to the individual who maybe, you know, doesn't need to disclose that, disclose that.

Starting point is 00:44:07 Yeah, it's really about cost benefit, right? Like, eventually you're going to be sending as a country, like a lot of money trying to tax people who really don't want to be taxed and, like, driving them all away. And, you know, the anonymity is, it's like, it's just going to be, I think, insurmountable. And I don't think crypto is going to go quietly either. Like Bitcoin has a lot of fanatics. I would be surprised if the people who were driving much of the fight against Bitcoin were personally at least somewhat scared just because like I don't know what Bitcoiners will do.

Starting point is 00:44:51 They're kind of crazy. Like if somebody threatens to shut down Bitcoin like, you know, they all like, post pictures on their Twitter with guns. Were they just playing? Like, was it just a LARP? Or like, will they actually die for Bitcoin? You know, it remains to be seen. Because these are political platforms, right?

Starting point is 00:45:16 There are politics baked into the code of any crypto-economic platform like Bitcoin and Ethereum, right? And we've seen that Bitcoin tends to attract the more conservative more libertarian types and Ethereum, I don't know what it attracts, but I feel like it attracts maybe a greater audience. But overall, there are still values of how things should be baked into these systems, right? And one of the things that I'm always interested in following is that, you know, before we had crypto, we never really, we wouldn't even bother to have this conversation

Starting point is 00:45:52 of defecting from the nation state because where we would go after that, we wouldn't have anything to talk about, right? But now we actually have some quote unquote like destination of when we defect, we actually can like say, well, what do what do we mean by this? Well, we can say like, well, I plan to host my my personal capital, my personal value on this non-sovereign, you know, financial platform called Bitcoin or Ethereum, right? And so prior to this, when the, you know, the effective tax rate for the average US citizen is 34% or something, that's 34% of your capital as incentive to defect into these other systems, right? And, you know, everyone should pay their taxes. But if there's this system that makes it easier for people to,

Starting point is 00:46:38 you know, hide their wealth or have gone from taxes, you can bet that some people are going to take that incentive to defect from, you know, the United States nation state, right? And, and not only that, but we can compare, you know, the defy infrastructure, you know, swapping one currency for another, paying a friend, like, you know, sending funds from one address to another, it's just straight up better, right? So not only is there the incentive to defect, but these things are straight up just more useful. And so, like, I'm just absolutely fascinated at the future conflict between, like, the United States or the nation state that's trying to, like, grasp for straws to retain people's allegiance to it versus this new platform that, you know,

Starting point is 00:47:25 is as great as we know it to be. Hey guys, we're going to pause the conversation and talk about some of the fantastic sponsors that help sharpen the sword that will hopefully slay Moloch one day. Your Ethereum address is a bankless bank account, but here's the problem. It doesn't have a human readable name.

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Starting point is 00:50:11 just being too many money legos to choose from so check them out at zapper dot phi enter your ethereum addresses and check out your portfolio and see if there's anything that you missed yeah i mean i think one of the things that is interesting to me about this is that when I talk to libertarians, they really, my whole thing is that I want to see public goods funding, including open source, clean air, clean water, stuff like that. And when I talk to libertarians, it seems like they're really concerned about how taxation is theft. And we can kind of get into this sort of zero-sum thinking in which like hippies like me who like public goods and clean air and stuff are zero sum pitted against the libertarians who are just like, I don't want to pay any taxes.

Starting point is 00:51:01 And in the old world, I think that we see so I see some wiggle room here because in the old world, the mechanism for funding public goods was by paying your taxes and then the government will take care of it. And now in the information age, if we can come up with new ways of funding public goods of making sure that the climate doesn't warm, that our infrastructure is still funded, but without coercive taxation, then I think that that's a really exciting, uniting point for humanity. And people who have particularly in the past been opposed on different parts of the ideological spectrum, I understand why libertarians say taxation is theft. You can assemble the argument from first principles. You can also assemble the argument from

Starting point is 00:51:43 first principles that without money that's going to some to public goods then we're going to create a hellscape on earth. And so I think that being able to meet in the middle by creating funding public goods funding mechanisms that don't involve the nation state and don't involve taxation, coercive taxation is is really where I see the future going. And that's where it gets really super interesting for me. And that's how we fight Mollock in the information age. Yeah, I'd love to, I kind of wish we could run the experiment of take all the libertarians in America, throw them in one place, and let them figure it out with no benefit from anybody else or like existing public goods.

Starting point is 00:52:24 They're just going to invent a way to like tax themselves to pay for things, right? Or like all complain about public goods not being fun. Like, oh, the goddamn pothole. Like, you know, it's like, who's fixing this? And it's like, well, nobody because nobody wants to pay for anything. Right. And I think part of the severity of like the taxation is theft sentiment comes from not being able to opt out. Like all the land is claimed on earth.

Starting point is 00:52:54 There's nowhere I can go where they won't tax me. And so it sort of feels like being, you know, free range human on a tax farm. Right. where like the ideal would be like if we could run this experiment we had land and we could set up our own governance structures and like you know try stuff but the reality is like that you know where do you even start like how do you get the land how do you get the permits or whatever there's a lot of paperwork involved and and so it's hard to run like meat space governance experiments yeah it seems to me it seems to me the libertarians are rejecting that right like

Starting point is 00:53:31 they can't opt out and so the tax system is coercive but they're also rejecting something that I think like all of us would reject whether we're libertarian or not. And that's like the corruption that like we find when public goods go to politicians. And politicians, excuse me, are the only ones that have a choice and the ability to spend those goods, right? Like it's the idea of a very small group at the, like the power. table here, getting to decide where to spend everyone else's money and the kind of the nepotism

Starting point is 00:54:09 and corruption that that goes along with that. I should mention that a little piece of Ethereum history is that about 15 months ago, I was involved in a group of people who put forward a proposal to fund public goods in Ethereum with block rewards funding. And I've got some scar, if this was a video, I would show you my scars from that proposal. But basically, we kind of learned that you can't put public goods funding into the base layer of Ethereum because of the capture problem. How do you fund public goods from an ongoing emission from the base layer without proof of work, without proving that that was spent in a way that's productive for the network? And how do you prove that it's not going to be captured by the core developers becoming an

Starting point is 00:54:55 oligarchy or something like that? And so I think we learned a lot about that problem of capture in the block rewards funding thing. And the Ethereum space moves so fast. That was 15 months ago, but it feels like forever ago. And now I don't think anyone's talking about public or block rewards funding, at least for Ethereum anymore because of that capture problem. And I think that's something that we should probably avoid in most crypto networks. So, Kevin, if I recall that proposal came out kind of close the same time that Moloch came out,

Starting point is 00:55:26 Moloch down at least. And so this is like another answer to the problem of Moloch, which is like free rider problem that we talked about earlier, lack of public goods funding, which basically an idea, a proposal to the community to take a portion of ether emissions, right? So essentially issuance or like monetary policy inflation, if you will, and have that go to a fund to go pay for things. And like, so what happened for people who weren't there, weren't paying attention, Kevin? So this was kind of floated by the community. What happened to it? Yeah, so I mean, I think that basically we put forward this proposal to insert some sort of funding good public goods mechanism.

Starting point is 00:56:12 EIP 1890, if anyone wants to look up the historical artifact, which is no longer being debated. And basically there was three parts to the proposal. The first part was, do you agree that open source software is important? The second part was, do you agree that our open source infrastructure and Ethereum is underfunded? And at the time, there was a bunch of debates about Heath1X being underfunded. And then the third part of the proposal was what we're doing right now isn't working and we need block rewards funding. So there was sort of like a descending order of arguments and a progressive argument

Starting point is 00:56:52 towards building a case for doing block rewards funding. And I'm guilty. I authored the proposal. So I no longer think that there should be. block rewards funding in Ethereum, but I did put forward that proposal to stimulate conversation. There was about two weeks of positive conversation, and then I think people started turning against it. And I think that they turned against it because of the capture problem. I think, you know, the argument came from a good place. If we give up 0.2% of our money, we can have a 100% better

Starting point is 00:57:24 Ethereum world. And I think the actual proposal was inflation at the time was 4%. And we should have 10% of that inflation, so 0.4% go to Kordevs. And my argument was give up 0.4% and have 100% better world. But what ended up happening was like, I think it was like Aragon came out of nowhere and like tried to capture it or something like that. I forget who it was. And then people revolted against it. Of the people that revolted against it, I think Amin was one of them. So I would hand it off to him to kind of tell the rest of the story. Yeah, I initially supported it. I was like, this seems good. The Ethereum Foundation has, you know, not a lot of money. ETH is it like, $100.

Starting point is 00:58:02 Like if the foundation runs out of money, that's real bad. Who's going to keep funding Ethereum? Like, let's make sure that we have enough money to like make this thing work. But, you know, like Kevin said, two weeks in, a whole bunch of groups came out and everybody made the same argument as to why they are the most qualified to handle the money, myself included. And, you know, we sort of eventually realized this is going to devolve into some sort of quagmire.

Starting point is 00:58:31 And that it wasn't like, we couldn't bootstrap trust fast enough into any sort of party. And like I was proposing we compromise and just give all the money to the EF and let them do it because they've been doing it. And, you know, some of the people who are trying to get it to happen were also like trying to make the money not go to the Ethereum Foundation. And it seemed that like combining the two things of like let's get a bunch of money from block rewards and two like bootstrapers. And two, like bootstrap trust into an entirely new organization to do this. We're just sort of doomed. Even like giving the money to the EF is like hard enough. Just because it, it alters the social contract of like, you know, the Ethereum issuance plan.

Starting point is 00:59:18 It's like minimum viable subsidy for security. Right. Like that's and and it really is about who makes the decision, who makes the calls and like what accountability mechanisms are there. And you have to essentially bootstrap trust in that whole thing before it even launches. And like at, you know, Ethereum 3,4 or whatever it was 2018, so for four years in, like that was just a non-starter. Like maybe one day if we have a lot more experience and like, you know, Dow's are a thing and like people are, have proven that they know how to manage this, like it'll work, but also if the EF just, if ETH goes up enough that like funding can continue,

Starting point is 01:00:00 then might be fine or if Gitcoin just keeps, you know, growing, then who knows. It's, it's going to say, it's interesting that you say, like, we needed, we learned we needed to bootstrap trust a little bit. And in the sort of ashes of the block reward funding proposal, we started to see Moloch really, really take off. And, you know, Gipcoin grants, I think, took off at, like a slower a slower pace was more of like a slower burn but i think that we are starting to sort of like bootstrap these coordination mechanisms for how you can distribute money to public goods but without creating a plutocracy and and we're doing it in more of a contained way not not at the base layer of the ethereum protocol and i think that that's a super positive positive step it's opt in

Starting point is 01:00:47 right yeah part of part of the important thing for us is it's like people were throwing out DAO ideas for managing the funds. And it's like at that time, we had zero successful DAO's on Ethereum. Yeah. And so that that also means like as a community, none of us know how to DAW. And like none of us at that time like really knew how to Gitcoin. And so part of this is like us learning how to be good stewards. And like maybe one day if we're good enough at this, then we can have an easier time bootstrapping trust. You know, after five five years of running Gitcoin, it'll be like, yeah, Kevin, that guy. You know, like maybe they can spend the money well, right?

Starting point is 01:01:28 And to keep this conversation grounded, like the reason why we're talking about this debate with public, with block rewards funding going to Ethereum public goods is the reason why we all kind of rallied against it ultimately was that we were all very aware of the presence of Moloch's power, right? We were all wary that, you know, having 10% of the block rewards, which, you know, usually should, in a typical case, goes to securing the Ethereum blockchain is then, you know, allocated towards some people that we should trust, right? And so it's not unlike an inflation tax, which Bitcoiners are very, you know, they rally against the inflation tax to, you know, the nth degree. but then when we have this inflation or block awards funding that goes to some trusted individuals, well then we kind of start to grow into the same problem of the nation state where like

Starting point is 01:02:26 there are taxes on the constituency of a nation state and then there's politics as to what we should do with those taxes. Yeah. And the core devs become like the government employees that you can't fire. Right. Exactly. Yeah. And so it kind of devolves. what Ethereum could be into a system closer to what we already have, right? And the whole point of Ethereum is to be this like politically free neutral coordination layer. And, and, and that's where I kind of see the power of of Gitcoin where we can still, maybe at the end of the day, Gitcoin still receives a comparable amount of value over time, but the difference of it being a coercive tax with politics involved versus funding by the many in a

Starting point is 01:03:14 free market way, I think is why Ethereum is going to succeed versus an Ethereum with a 10% tax wouldn't. I mean, I think that we should note here that like we pay the miners to secure the network, right? We're inflating the currency with a tax now. But the difference between what we do with the miners and what software developers do is that there is proof of work for securing the Ethereum network. And I can prove that I secured the Ethereum network. With software development, I don't know if the PR I submitted this morning is going

Starting point is 01:03:48 to pass Travis. I don't know if it's going to get deployed into production. And when it gets deployed in production, I don't know if anyone's going to give a crap. And so there is no proof of work for something as abstract as software development or community engagement. There's tons of different public goods. And so really what you need to do is create some sort of verifiability that that this is something that people actually care about. And then you can start to avoid capture. And I think the elegant thing about quadratic funding, we don't have to go into quadratic funding on this call. You should listen to the last bankless podcast about quadratic funding is that you can sort of prove that people actually care about specific items of work because they're donating their

Starting point is 01:04:27 own money to that work. And so I think that it's all about creating verifiable ways of prove that public goods are actually valuable to a broad set of people as opposed to, you know, the oligarchy problem. So I just, I just think that like, David, if we're going to talk about inflation and taxation, we should just note that like the miners are already, like we're already paying, we're already paying for the security of the network, which is a public good in itself. Yeah, there's this term like that Vitalik used in a post earlier this year called credible neutrality. And I think that speaks to what you're talking about, Kevin, right? The difference with the sort of the minor payment through block rewards is it's credibly neutral.

Starting point is 01:05:11 Like everyone knows the rules and we know what the distribution is going to be like. And there's no perception of unfairness, right? Whereas it gets very squishy when you're, you know, funding a Dow that allocates to various parties based on deliverables that are very hard to quantify. Right. Exactly. And I think that like it's important that we figure out how to solve these problems if we're going to slay Moloch. You know, to take it back to the episode title. Moloch is coordination failure. And I think this is where the technology, we should know where our predecessors failed if we're going to move forward in creating this sword that can that can slay Moloch. Absolutely. And I think when we compare what Gitcoin is, which is this wing or arm of Ethereum that attempts to fund public.

Starting point is 01:06:02 goods and every time it's successful, it's, you know, killing Moloch by the death of a thousand cuts versus its predecessor, which is, you know, taxes, which are coercive, which a lot of people get unhappy about. And then there's the politics around where the taxes go, which is its own mess, as we've seen during the times of MoneyPrinter go burr. And so I kind of want to turn the conversation to why are we optimistic that Ethereum as a coordination layer is more, you know, equipped to slay Molok? Like, what about Ethereum allows us to, you know, have a better chance at slaying this god of, you know, coordination failure?

Starting point is 01:06:44 Two things. One of the interesting things about America is that it originally also didn't have any sort of central government and taxes. And they managed to win the Revolutionary War without any of that. But in the aftermath, several notable, like, founding fathers. felt it prudent that they create a strong central government that was able to tax and hold like have troops. And that served to defend them against the invasion and future wars with England. So it's it's actually up in the air in my mind about whether Ethereum eventually adopts some sort of like inflationary dev issuance.

Starting point is 01:07:28 And it'll ultimately be determined by like, market reality and competitive forces. Like the willingness to, the inclination not to have any inflationary dev funding is a product of not having survival pressure. But if Ethereum finds itself under attack or is likely to be outcompeted by, you know, something like Pocod, which has, you know, dev issuance built in from the getco and is, you know, under, like should, we should, we should, bet that it's going to have a large treasury, then we'll have to think about that. It's like, do we want the Ethereum that doesn't have enough money to pay for the things that are going to give Pocodon an advantage, for example, or do we want the Ethereum that's going to compete? And it might be an advantage to Ethereum to not have that dev issuance because it can potentially

Starting point is 01:08:26 move faster and get more social scalability from not having the, the, the, the, the politics around deciding that, but it also could, you know, work to its disadvantage if the money ends up being spent on useful things that then Ethereum can't do. So the, yeah, that's the first point. The second point is like why Ethereum as a coordination platform, and it's to me, because you can build these amazing structures that last forever and iterate on them for very cheap and run all sorts of experiments in decentralized governance and do it and do it quickly. And so like in my case, you know, we launched Mollock Dow as a nonprofit, right? And then that raised a couple million dollars, gave out, you know, half a million dollars

Starting point is 01:09:16 in grants over the last couple of years. And then more recently this February, we launched Mollick Dow version two, which powers the Lao and Venture Dow. And both of those are investment clubs that, have portfolios of tokens and are essentially on-chain organizations where they are both, I think Delaware, either LLCs or C-Corps, I think LLCs, but they both defer, the LLC, both defers to the code. And it says that, you know, whatever the code says that you have is what you have. And that is interesting because what it means is that instead of taking these sort of

Starting point is 01:10:00 templates of coordination structures like, you know, LLC, C corp, uh, whatever, like we can actually program our own. And so the design space is vast. And that's, that's only like one aspect. That's like coordination infra itself. That's that's defining rules of organizations, which now we can do in code instead of in legalese as a, as a much more advanced jurisdictional stack to play with. Um, but the, but, you know, that's only part of the story because like things like maker Dow, die, any of these new money systems, things like Rye, these are all also coordination tools. And they're all tools for builders who want to work together to build this sort of decentralized finance ecosystem.

Starting point is 01:10:46 And the bet for Ethereum is betting that, you know, the group of people who get off on building coordination tools are the group of people that will eventually define what coordination looks like in the 21st century. Yeah, so why is Ethereum going to help solve this problem? Why is it different this time? I mean, I think it's important to note that, like, in the Molluk sort of stories, Mollok is an eternal beast. Coordination failure is like a feature of the universe.

Starting point is 01:11:12 And I think that it can, like, maybe our best, our best bet is to, is to set Mollock back 100 years for the next epoch of humanity. But that's still a noble goal, you know, like I have kids. I would like for them to live in a world with clean air and clean water and free from the influence of Mollock. And what gives me hope that we're going to do that with Ethereum is, as I said on the top, a transparent economic substrate where the rules can't change on you. So it's got immutability, it's got transparency, but it also is super accessible.

Starting point is 01:11:45 So anyone with an internet connection now has access to this programmable internet of money. And to me, that's really exciting because it means that anyone, the poor and the many can run economic experiments and be able to trust each other, not just the rich and the few, which is the financial system that we inherited from the boomers. So I'm really hopeful that people will build more experiences on Ethereum that help solve coordination problems because of its features of being transparent, immutable, and super accessible. And I think that that's going to be the reason why it's going to set us forward in helping to solve these coordination problems. So, Kevin, how do we go from, you know, this internet persistently available smart contract platform with immutability to clean air

Starting point is 01:12:32 and clean water. Like, how do we connect those dots? I think we pump more hackers into the space. We enable them with the tools. You know, we sell pick access to the gold miners. We bring more developers in. We let a thousand experiments blossom in this market cycle. And we pick the best ones. And we pump money into them. So, I mean, one of the things that we're doing with Gikcoin is that, We're famous for, I guess, Gickcoin grants now. And that's an early instance of quadratic funding. But we're not stopping there. And we're also realizing that we can't do it all ourselves.

Starting point is 01:13:07 So actually, week two of October, which I guess it's October 1st right now, we're going to be launching a hackathon with Radical Exchange. It's going to be the quadratic, all the things hackathon. And we're going to be giving talks on quadratic funding, quadratic voting, and other public goods funding mechanisms and just trying to enable as many developers as we can to create new experiments because our mission is open source

Starting point is 01:13:33 and it's a big enough problem to solve open source sustainability. I think that there's a ton of other coordination problems that we need to start making headway into. And I want to note here real quick that we've proven that quadratic funding can go outside of just the Ethereum space. So we actually, when current,

Starting point is 01:13:54 We ran a quadratic funding experiment in downtown Boulder called downtown stimulus. And we raised about 40K for six downtown businesses that were really struggling from the coronavirus by employing quadratic funding on Main Street with credit cards. So that's an instance in which an idea took root in the Ethereum space but then went mainstream because it was able to test itself and prove itself in Ethereum, but then make the jump to an early adopter sort of more mainstream audience. So I think it's about prototyping as many ideas as possible and probably killing the ones that don't work. And then doubling down on the ones that do work and bringing them to more of a mainstream audience is sort of, I think, the order of operations in order to build an information age institution for funding public goods.

Starting point is 01:14:42 When we had Van Spencer on the podcast to talk about the bulk case for defy, he expressed his thesis that defy, the reason why defy will be incredibly powerful is because, it is a developer's sandbox for finance, which is not something the world has ever had before ever. There is no experimental layer for financial products, except for what we now know as Ethereum. The cost of innovation and the cost of iteration is just so low that any individual from any corner of the world can start to build something on Ethereum. And maybe that thing that they built turns into something that can start to do something good for the public, right? And we saw this with Uniswap, right? Uniswap isn't funding public goods, but it itself is a self-funding public good.

Starting point is 01:15:35 And we can start from there and build out. And as a result of this low cost of innovation and progress, we have YAMs. And Yams just took the governance module from compound, rebasing from Amplforth, the synthetic staking contract, the Y-earned Treasury, and then it created Yams. It didn't really do anything else other than to stitch those things together. And now Yams is adding 1% of its rebase to Gitcoin grants, funding the Gitcoin system, right? And so I think what gives me optimism is that, you know, there's the rate of development and progress in Ethereum is, I think, is going to be so far beyond anything we've ever seen before. And when we couple of the,

Starting point is 01:16:19 this with the fact that, well, I believe that the average individual is good, right? Like 97% of the people when they wake up in the morning, they need to take care of themselves. And then anything after that, they just do good things, right? And maybe they, what we ascribe as good is up to our own, perceptions, but very few people wake up in the morning and like looked out to the world and say, like, how can I, you know, how can I commit evil, right? How can I do bad? No one wakes up and thinks that. So understanding that the average person is a good person and they have good intentions. And then we combine that with a governance sandbox layer that is Ethereum, which can iterate

Starting point is 01:17:03 and improve faster than we've ever seen before. That's why I think Ethereum can be the thing that kills Moloch by the death of a thousand experiments. Yeah. I think the thing that really excites me is that I see this at ETH Denver at Eith Global Events and at Gitcoin Hackathon. that hackers can walk in the door and do a Git clone on a Git repository on a piece of software that in the old world would have cost $50 million and 100 developers to make over the course of three years.

Starting point is 01:17:34 And so it's really exciting to just like have open source software. And because of this attribute of composability, just be able to copy like compound and have it at the start of a weekend when you're hacking something. And so there's there's this network effect of Ethereum where there's all these. these different primitives, whether they're compound, uniswap, you know, quadratic funding, things like that where you can just like your bags are packed every time you go to a hackathon and you can just mix and match them these money Legos together. And in one of the money Legos that I know that David, you're really excited about. So I hope it's okay if I turn the conversation there for a second is this idea of minor extracted value. This idea that in the mempool,

Starting point is 01:18:11 you can auction off the rights to order transactions in the Ethereum network. And that can be worth multi-million millions of dollars, and you could use that money to fund public goods. And so I know that there's a couple groups out there that are working on MEV. Optimism is the one that I'm most optimistic, pun intended about. And so it's this composability and this addition of this composable element of minor extracted value that I think is really exciting to me about how we're going to slay Mollock. So this conversation so far has been about, of course, slaying Mollock. And a lot of the examples we've used have been more economic examples, financial examples, even the examples he gave Amin about kind of the LOW and Moloch Dahl.

Starting point is 01:19:01 These have a parallel in the nation state, right? Like an LLC or like a capital pool would be sort of like a bank account. But when people think about, like at least our generation, we think about the big Mollok problems facing us in the next 50 to 75 years. these are big things. These are things like nuclear proliferation, right? That's still a problem. Hasn't gone away. Things like global warming, like all sorts of massive macro challenges that our generations are going to face in the future. Does Ethereum have a solution for them? Is there a coordination answer in something like Ethereum to those big macro problems that literally are possible extinction events for humanity?

Starting point is 01:19:49 Why we start with you, Amin? That's a great question. My instinctive answer is, well, there's only one way to find out. I think it's important to not discount leadership in this regard. So I remember when I was getting ready to launch Mollick Dow. A lot of people were like, you know, you could use this for all sorts of things, like, nonprofits and NGOs and da-da-da. And it's like, yes. Then, you know, they're like, well, do you want to make a platform for doing lots of things? And it's like, no, I want to do one thing

Starting point is 01:20:29 and I want to make it work so that we can show people how to do it. And I think I think Ethereum will solve or provide solutions to many of these like bigger problems, but it's going to look small when it starts. So just like being able to make a credible commitment to something in the future. For example, if I'm like, I'm going to put down, you know, $100,000. And if I fail to, you know, work out at least twice a month for, or twice a week for the next like, you know, month or whatever, I'm going to burn it. And I'm going to set that up with an Oracle, right? Like, that might be a gimmick in order to get me to like move my ass. However, you could imagine that there's like a UN created Oracle that, you know, that, you know,

Starting point is 01:21:16 like determines, you know, the outcome of, you know, China or some major countries like, we will not proliferate. And if you catch us, then we're going to burn all of this money right here. Right. And, and implement the lock in such a way that it doesn't rely on any sort of bank or institution, but it relies on the entire network to enforce. And like, that is an interesting type of thing. Same with like defense pacts, right? Like when you start, like, as a, as an individual, you probably don't think too often about like, you know, I will come to your aid if you are under attack by an aggressor. But like, that's how lots of these defense packs are structured. And it'd be interesting to see like even, you know, what like a peer-to-peer version of that looks like.

Starting point is 01:22:03 What is a big like group of people who all individually decide to like protect each other even, you know, that that might be like a gimmicky thing. Like, oh, look, it's a gang or something. But then like scaled up, that's like, oh, that's actually. actually like countries, alliances are recorded and, you know, ingrained in this chain so that everybody can see. And so like, you know, it seems crazy to think about that kind of thing now, but like somebody, you know, has to do it. Like, we have to conceive and then experiment and do these sort of small scale contain things so that like when the time comes for any of that to happen, we're not just like, you know, still at square one. We're.

Starting point is 01:22:46 We've like, oh, yes, we've tried this. We've run a bunch of smaller scale things and like, here are the results and here's what we learned to get people to be more comfortable, right? Like, for example, Boulder was never going to be the first user of Gitcoin. You know, they need to see Gitcoin working in order to then feel comfortable trying something like that themselves. Yeah, that's a good point. Some of the stuff that you're saying might sound sort of incredible to people, like, you know,

Starting point is 01:23:13 even far-fetched of entire countries, putting pieces. treaties and that sort of thing on Ethereum. But the difference is many of the other coordination mechanisms available to humanity are all like based in nation states, right? So like, you know, law and order of a particular nation state, the U.S., the banking system of a nation state. But something like Ethereum, something like Bitcoin, these are like extra national protocols. These are not controlled by a singular nation state. So maybe some of those ideas are not so far-fetched. But I guess same question to you, Kevin. What do you think?

Starting point is 01:23:48 These big macro problems, do you think they could be solved by Ethereum's coordination mechanisms? I hope so. I think that the financial substrate of the world is definitely one of the primary use cases of Ethereum. But you're already sort of seeing these, you're already sort of seeing groups of corporations that don't maybe necessarily trust each other putting supply chains onto the, blockchain and just using the fact that you've got a cryptographic proof that product X had Y state at Z time, I think is an interesting primitive. Like, we're basically using the ledger for a non-financial reason.

Starting point is 01:24:29 And so you could see how that would be scaled towards like, well, it sounds outlandish to say, but something as, as important as a nuclear non-polar proliferation pact. And, you know, it's hard to see in a world that's becoming more nationalist than globalist right now, how we get to where people want to coordinate and actually do that. But at least the technology is becoming available to do it. So I don't know. I wrestle with this problem a lot. And I hope that we can solve it. But Ethereum seems like the best bet.

Starting point is 01:25:03 But the honest answer, Ryan, is that I'm not really sure. So Ryan just asked the question, how does Ethereum solve climate change and nuclear proliferation? and maybe the listener is, you know, skeptical of like, well, Ethereum's never going to do that. Like, that's crazy. I'm going to double down on something even more crazy than that. There's this thing called the Fermi paradox where, and the Fermi paradox is using the Drake equation. And the Drake equation is collecting data about the surrounding solar systems and planets and possible, possible Earth-like planets that we probably, probabilistically know exist from the

Starting point is 01:25:42 data that we have from looking at our universe, right? And so according to the Drake equation, there should be a pretty decent probability of Earth-like planets that can support life in our realm. And not only enough of these planets, but there should be enough of these types of planets that probabilistically there should be life on at least a few of these. So basically, what you get out of the Drake equation is that is probably pretty likely that there's life, at least according to the math that we can deduce. So the Fermi paradox comes from the fact that, like, well, knowing that there is a large possibility of Earth-like planets in our relative part of the

Starting point is 01:26:24 universe, why haven't we seen any aliens, right? And that's an interesting paradox. Like, if there are so many planets that could support life, why don't we see other, why don't we see life out there? And out of the Fermi paradox is birthed the great filter theory, which the, the great filter theory says that at some point there are these filters that stops life from coming about, right? Like maybe life is really hard to birth in the first place. And so maybe humanity's actually already passed that filter. Maybe the filter is ahead of us and we're yet

Starting point is 01:26:56 to run into it. And maybe that filter is, you know, at some point, the inhabitants of a planet, consume all the energy of that planet and creates global warming and dies from global warming. I contend that the great filter is just an inevitable set of filters over and over and over again that is Moloch instantiated in some particular different way, right? Or where Moloch is the reason why we haven't seen aliens, because if we understand game theory, you know, the prisoner's dilemma is something that should be found in every single corner of the universe, right? And so maybe we don't see other aliens because they also have succumb to Moloch.

Starting point is 01:27:35 Maybe we don't see other aliens because they, weren't able to coordinate. Maybe they didn't invent Ethereum. Maybe they didn't invent, you know, distributed computational blockchain coordination layers. Is this, is this too crazy or do you guys think about this too? It's very real that everybody else, including us and other timelines, like, blow ourselves up before we get to any sort of intergalactic space travel. We've probably, we've probably almost ended our own species a couple times. There's no guarantee that. it will make it. So yeah, it seems real to me. Yeah, I would agree. I think that, you know, it's really amazing to kind of learn about the great filter and to think about, you know,

Starting point is 01:28:19 what is it going to take for humanity to proliferate in the 21st, 22nd, and 23rd century, to think on a century time scale instead of a daily time scale. And, you know, we are kind of on spaceship Earth and we really get one shot at, at least until we, it sounds like, spreading to Mars into other planets would be pretty hellish from what I've read about it, but it seems like it's achievable. Until we do that, we're kind of like all in on planet Earth. And there are these global problems that are developing around, I would say, you know, the ones that I worry about with respect to the Great Filter are climate change, nuclear war,

Starting point is 01:28:58 fake news, the poisoning of our information environment. And yeah, I mean, I would agree with Amin and with you, David, that, you know, you know, there's alternate timelines where we've probably already blown ourselves up, and there's probably timelines where we don't make it. But I do think that there's statistically a timeline in which we do make it. And I think that when I think about what we're doing with the Ethereum space and with public goods, it's about pushing us towards the timeline where humanity does make it. I don't care how many lambos you have in a world in which there's nuclear war or really bad climate change.

Starting point is 01:29:35 you can't enjoy your private goods without your public goods. And it's about sort of reminding people of the plurality of those values and that we're all in this together to some extent. And that's hopefully how we'll survive and thrive into the 23rd century. I mean, if we do make it, it will be because we somehow got a reign on Mollock and got past all of these coordination failures that exist like landmines, basically, in our world today. So I guess what, I mean, what does that look like? If we are able to circumvent these massive problems, what's it going to take?

Starting point is 01:30:20 Is it going to take just some technology like Ethereum or like what do we as individuals, how do we play a role in the development or support of slaying Moloch? How do we become Moloch slayers ourselves? Just think about what you're willing to, sacrifice to get what you want. You sort of, you know, I think Kevin said this earlier, like, we, we can slay Malik, but Malik is sort of this like universal, you know, deity, right? Mollick isn't going anywhere.

Starting point is 01:30:50 Mollock just simply rewards those who are willing to sacrifice something for some coordination advantage. And it ends up that, like, you know, today you can promote, like, you know, Ethereum is sort of a coordination platform. And in that sense, it is a way of, like, worshipping Mollock, right? It's both. At the same time, we need to, like, improve our own ability to coordinate by increasing our power, increasing our technology.

Starting point is 01:31:24 But at the same time, like, know that the end game is out coordinating everybody who wants to shut this down. and that's like the thing to keep in mind. I mean, you've said that a couple times. Like you have to be willing to sacrifice something to Molok. What do you mean by that? Like, so what do I have to sacrifice in order to solve global warming? Like your U.S. citizenship, you know, like there are different things.

Starting point is 01:31:51 Like maybe it's the case that, you know, every government in the world goes quietly. Right. Like if I had my way, if I was the dictator of the earth, which wouldn't be good for anybody, I would like take all the money for the guns and bombs and planes and try to give it to the people making space rockets and medicine and like, you know, stop bailing out cruise lines and start investing in masks, right? The problem is that like I can't get there. And then it's a question of like, if I had the power, to achieve that. Maybe I could, but like I would have to, I don't know, murder a thousand people or something, right? And and so really it's like if I have the power and I'm not willing to murder the thousand people to claim it, then like, you know, I'm not willing to do what is necessary in order to win. And it's not always about murdering people, right? It's also like, you know, work really hard every day. Like, it's just a lot. like that, right? And so sacrifice comes in all the ways, but like, that's like you might,

Starting point is 01:33:05 there might be a time where we're like, okay, the U.S. has, you know, declared war on, on this technology or like, you know, major countries have declared war on this technology. Like, how do we respond? Right. And so then it's a question of like, how much do you value what we are building, right? Like, what are you prepared to lose? And if the group that, you know, values this stuff highly is prepared to respond and overcome and like it'll work. So just to give an example of something that's like would require some amount of sacrifice because it would be extra legal, but could be a useful like coordination thing in order to help society, depending on who you ask.

Starting point is 01:33:52 Like if you ask me, every other country except the US did the mask thing right, right? Everybody enforced lockdown or got masks everywhere. Everybody wore them. There wasn't a whole lot of talk and they've been clubbing in Taiwan for months. Right. So the problem in the US is that we all couldn't coordinate to like wear masks for 10 weeks straight in order to beat this thing. And so like one design for a thing that I thought of on Ethereum, let's call it mask Dow, would be to identify and docs and docks. and shame the non-maskers.

Starting point is 01:34:31 And it would have three phases. The first phase is you take a picture of somebody who is not wearing a mask in a public place where they are clearly putting somebody else at risk. It's not like on the beach by themselves. Then you tag them. So like you either put their personal information, your name or address or, you know, this is the extra legal part because you got to like follow them home or something in a search.

Starting point is 01:34:55 I don't recommend this. I'm just saying this design for a thing. So then, you know, they have their name and then it sort of goes to some, you know, Dow committee. They vote. They say, yes, this person was being bad. And so then they get shame. They get everybody who is, you know, confirmed to be like an anti-masker is then put on a wall of shame. Big website.

Starting point is 01:35:18 You can search for people and see if they're on this list. And the idea is like, this is, you know, the reason the U.S. economy cannot open is because of these individuals. who like can't be you know bothered to to wear masks and like we as all the rest of the people want to remember who who did it so that we can we can you know shame them and the only way you get your name off of the wall of shame is you like pay a hundred dollar bounty to the mask Dow and then they'll remove you and use the funds for more anti-masking and so forth and and so this is the type of thing that's like, you know, do I even want to do this? Because like, I'm going to open Pandora's box. Like, this is going to be used for all sorts of other things. Next thing comes out is like,

Starting point is 01:36:04 anybody who, you know, didn't go to a BLM protest is like, shamed, right? White silence is violent. And so it's like, you know, the technology behind this in the abstract is like, you can scale up shaming as a social structure. Where, we're like, you know, today, the way you do it now is like you just tweet the picture and like hope everybody else figures it out. This would be like, you know, institutionalized shame. And also self-propagating, right? Because the fines people pay basically go back to the Dow. Yeah, exactly.

Starting point is 01:36:41 It's like, you know, like you could unleash a plague of something like this. And like that kind of thing scares me because I'm not particularly into shame. But like at the same time, like I can see that. and sort of marvel at the power that something like that could have. Because, you know, that's the type of thing that, you know, could make a difference. And, like, if we were compelled, like, people in Ethereum, like, could start stuff like that. And those are, like, coordination infrastructure. It's ultimately games that compelled behavior.

Starting point is 01:37:15 I think one interesting thing that you touched on there, I mean, is that public health is a public good. And I don't know if a lot of us, I think we all took it for granted before COVID. I think that the game that you that you sort of designed there is super interesting. And I want to put it in the framework of Ryan asked the question of how do we think about slaying Mollock in our everyday life. And there's this framework that I discovered from Yanceley Strickler, the founder of Kickstarter. He's a proponent of this thing called bentoism. And basically the idea here is that most people are making decisions for optimizing foreign now me for what's good for me right now. So if I'm not wearing a mask, then I'm doing it because

Starting point is 01:37:59 it's inconvenient for now me to wear a mask. But really, people should be thinking about a bento box of incentives. I should also be thinking about future me when I'm not wearing a mask and the fact that future me is going to be stuck in bed for a month with coronavirus if I, if I don't wear a mask. I should be thinking about now us, which is the risk that my decisions spread to other people. And then also future us. So you can picture sort of like a bento box of different incentives, now me, future me, now us, and future us.

Starting point is 01:38:31 And what I think is elegant about the Dow that a mean designed right there is that it arbitrages the incentives. It creates a coordination mechanism through which now me and future, future me, now us and future us can all be coordinated towards a specific outcome. And I agree that there's problems there if the Dow gets too much power, if the Dow is optimizing for a future or a value set that people don't care about. But just a practical tip for the listeners, bentoism is a really great way to think about decisions every day that you make and how you can slay mullock a little bit, a little bit every day.

Starting point is 01:39:12 One just thought on this is, given what you're just, both of you just talking about, I think there was a time we thought that Ethereum scalability was limited by transactions per second or all of these other things. And to some extent it is. But in another extent, it's more limited by the creative mechanisms that mechanism builders and game builders, as you guys were saying, actually are able to bring to Ethereum. I remember in 2018, there was a time where we thought, like, oh, Dexes will never work on Ethereum unless it has, I don't know, 500 transactions per second, right? That's what, like, 0X taught us and all of the early order book exchanges. And here comes a better mechanism in uniswap with an automated market maker, right? It just kind of solves the problem and scales without having to have a large number of transactions per second. Why? Just a better mechanism. It does seem like that is what we need. We need builders of coordination mechanisms to slay Moloch on Ethereum. I mean, I really like the topic of COVID and its failance to Moloch because it's just such a great example of our abilities, our human ability of lack of coordination, right? And to me,

Starting point is 01:40:23 what the COVID pandemic has really illustrated is that, you know, we often forget this, but humanity is just like seven degrees of separation away from each other, right? Like, we are all seven degrees of separation between us and, you know, the patient zero in Wuhan, China, right? And so it's a stark reminder of how close we all are as a species, right? And how important it is for us to be able to coordinate in times of crisis. And as we've, as we've marched through the 2020 year, it's been marked by all these different issues. But they all seem to be coordination failures at their core, right?

Starting point is 01:41:04 Like the United States government failed to really coordinate the control of the pandemic. And, you know, even the world at least. large didn't really do such a great job with controlling the pandemic. And that's how the pandemic got out. And we also have this crisis of fake news and tribalism largely created out of the incentives of Facebook and Silicon Valley's social media algorithms, which are polarizing our country into two very opposite ends of the spectrum, where in times where we needed coordination, our nation is now the most polarized and uncoordinated it's ever been. And I think that the, if we call 20, a year of crisis, because it's, you know, got seven different mini crises in it, it's really just one

Starting point is 01:41:49 single event of poor coordination. And I think that's why I'm so interested in creating this episode with you guys and why I'm so thankful with you guys coming on and talking about Moloch is because really the substrate of it all is can we figure out how to coordinate humanity. How do we coordinate so we can solve these problems, whatever problems arise? And so Amin and Kevin, thank you for coming on the bankless pod and helping us slay Moloch together. Yep. Thanks for having me. Thanks for having us. I hope we can pull it off. Just add that you're absolutely right. And it's like Ethereum is actually added its inflection point right now where we are seeing this sort of exponential growth.

Starting point is 01:42:35 in the capacity of Ethereum devs to build novel, novel systems. And that comes from this composability network effect where we've built in all these Lego pieces. Like the cost of building a novel system on Ethereum drops 10 times every year. If you look at something like MakerDAO, it took them like two years to build single collateral dye because they had to have an auction mechanism, a bunch of market mechanisms, like a governance system. And if you look at, and none of those were external dependencies. But if you look at, you know, the new systems coming online today, it's a lot of modules that use other projects systems, like you were saying,

Starting point is 01:43:16 you know, they use compounds governance and synthetic staking and stuff like that. And so the cost drops and the possibilities expand. So we're actually only getting started. This is just the beginning. The next five years is going to probably like the next year, will have as much as the entire, you know, time thus far. And then the year after that will have as much as the entire time up till that point. So I'm, you know, super optimistic on building on ETH and EVM in general.

Starting point is 01:43:49 David, you, when you were sharing the idea for this podcast with me, talked about this idea of how do we create this sword, this magic sword that can slay the demon moloch? And I kind of like, I mean, as a video gamer, someone who played Zelda. a lot as a kid is like the idea of like getting the master sword and and i really feel like we're at this point in ethereum's history where we can start to pull that sword from the stone like it's actually actually a possible thing that that we have that we have the tools and we have the momentum the meme is there the technology is there and so i'm really excited to see what happens in the next in the next market

Starting point is 01:44:27 cycle and i'm hopeful that a lot of people will become economically better off and move into a new better economic system from out of this, which is private good. But I just remind people that you can't have private good without public good. Your Lambo is not worth anything if the sky is on fire. And if you're in California or Colorado right now, the sky is on fire. And I want to breathe clean air again. And along with private good comes public good. And I really hope that we're on track to solve some of these civilization scale problems because the world is literally on the line when we're working on this. So excited to be to be trying to slay Moloch with all of you.

Starting point is 01:45:09 And I'm looking forward to the episode that we do in a couple of years in which we see whether or not we pulled it off and we followed the journey. Fantastic, guys. Thanks again. Ethereum as the sword that slays Moloch. We are making progress. Amin, Kevin. Thanks for joining us for our listeners, actions and resources.

Starting point is 01:45:28 So Meditations on Moloch is the blog that sort of started it. all blog post. It's a 25-minute read, but it is well worth the read. You can find that in the show notes. Second thing is read David's recent piece, Slayer of Moloch. That is on the bankless newsletter. We'll include a link as well. And if you haven't already get involved in what Kevin is doing with Gitcoin, the grants, this funding round is just ending tomorrow as I talk about this, but you can give at any time. And there are some interesting events coming up with Radical Exchange that will include in the show notes as well. Also check out the latest on what Molok Dow is doing. It's a Dow that spawned probably dozens of other Dow's and maybe hundreds

Starting point is 01:46:14 and thousands into the future. So a lot going on, a lot of follow-ups here. As always, risks and disclaimers, everything we talked about is, of course, risky. If you choose to deploy put your capital on Ethereum, that's risky. Crypto is risky. So is defy. This is not financial advice. You could lose what you put in, but we are heading west. This is the frontier. It's not for everyone, but we're glad that you're with us, slaying Moloch. Thanks a lot.

Bankless - 33 - Slaying Moloch | Ameen Soleimani & Kevin Owocki

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