00:00:11 Retroactive Public Goods Funding: A Discussion
Background: Public goods are beneficial to a large, unselected group of people. It’s challenging to find ways for creators of public goods to capture the value they generate.
Public Goods and Private Goods: Private goods are created by entities that can control who benefits from them. Public goods do not allow for selective access, making it difficult to generate revenue.
Incentive Compatibility: Incentive compatibility depends on the mechanism used to distribute the good. Without proper institutions, public goods may not be incentive compatible.
Ethereum’s Public Goods Funding: Ethereum’s public goods have been funded by centralized entities with aligned goals. The Ethereum Foundation, ConsenSys, and various DAOs have played significant roles.
Issues with Centralized Funding: Centralized funding bodies may miss important projects and perspectives. Centralized control over public goods funding can lead to power imbalances.
Retroactive Public Goods Funding: Discussion about the concept of retroactive public goods funding is yet to begin.
00:09:03 Retroactive Public Goods Funding: Empowering Entrepreneurial Innovation
Definition: Retroactive public goods funding is an approach where funding is provided to public goods projects after they have demonstrated their impact. This differs from traditional funding mechanisms that allocate funds based on anticipated value.
Advantages: Ensures that funding is directed towards projects that have already proven their worth. Encourages experimentation and innovation by supporting projects that may not align with conventional wisdom. Reduces the risk of funding projects that ultimately fail to deliver on their promises.
Examples: Retroactive funding could be used to support projects such as Bankless, which has provided significant value to the Ethereum ecosystem, or zero-knowledge cryptography research, which has the potential to revolutionize privacy and security.
Justification: Entrepreneurial public goods are often not recognized as valuable until after they have been widely adopted. Traditional funding mechanisms tend to favor conformist and middle-of-the-road projects, overlooking radical and innovative ideas. Retroactive funding allows for the identification and support of projects that have the potential to make a significant impact, even if they are initially considered risky or unconventional.
00:11:31 Retroactive Public Goods Funding and Legitimacy in the Crypto Space
Retroactive Public Goods Funding: Retroactive public goods funding involves decentralized voting-based mechanisms that allocate funds to projects that have already demonstrated value. This approach ensures that funding is directed towards projects that have a proven track record of success. Project tokens can be created to distribute rewards to contributors and team members, and to generate funds for short-term expenses. The growth of retroactive public goods funding depends on the availability of funds and the willingness of institutions and projects to contribute. Legitimacy plays a crucial role in attracting funding and support for projects, as it signifies community consensus and alignment with shared values.
Legitimacy: Legitimacy is a pattern of higher-order acceptance, where individuals and groups coordinate their actions based on shared expectations and values. Social acceptance and coordination benefits contribute to the legitimacy of certain outcomes and choices. Legitimacy can be context-dependent, as seen in the case of different driving rules in different regions. Legitimacy is crucial in determining the success of NFTs and other crypto assets, as it influences their value and desirability. Legitimacy can be a source of differentiation, as demonstrated by the example of two active descendants of the Ethereum genesis block. Charity activities are motivated by altruism and the desire to create benefits for others without direct incentives. Public goods funding can encompass both charitable activities and broader benefits that positively impact a large group of people.
00:22:28 Types of Motivation for Creating Public Goods
Public Goods in Various Forms: Public goods aren’t limited to grand initiatives; even simple acts like holding a door can be considered a public good. Private entities, such as Facebook, often produce public goods as a byproduct of their private good-oriented activities. Public goods can also be created through paid work, as in the case of government-funded road construction.
The Role of Charity vs. Payment: Public goods can be driven by charitable motives or by financial incentives. The introduction of business models for public goods aims to reduce the reliance on charity and increase non-charity-driven public goods. This shift focuses on remunerating individuals for the value they create, creating a virtuous cycle.
Finding a Balance: There are individuals willing to work on public interest projects for reduced pay but not for free. Public goods funding can empower these individuals to pursue their passions and contribute to the public good.
Challenges in Equitable Remuneration: An ideal world would fairly compensate any value creation, regardless of its distribution. Achieving this requires unprecedented human coordination and public goods funding. In the meantime, addressing the worst aspects of the problem with limited resources can still bring significant positive impact.
Conclusion: Public goods encompass various forms, motivations, and challenges. Efforts are underway to align incentives and create a virtuous cycle of public goods creation. While achieving perfect equity in remuneration remains a long-term goal, progress is being made in empowering individuals and alleviating the most pressing issues.
00:26:52 Blockchain Governance: Current State and Future Possibilities
On-Chain and Off-Chain Governance: Blockchain governance can be categorized into on-chain and off-chain governance. Off-chain governance is used by Bitcoin and Ethereum for protocol changes, involving rough consensus among core developers and community stakeholders. On-chain governance is used in layer one blockchains like Tezos, EOS, and Polkadot, where coin voting or a combination of coin voting and other mechanisms is used to decide on protocol changes.
Coin Voting: Coin voting is commonly used in on-chain governance, where coin holders have the right to vote on protocol changes. Vitalik Buterin criticizes coin voting for its susceptibility to financial market evolution and bribing attacks, leading to the separation of governance rights and economic interest.
Anti-Collusion Technology and Non-Fungible Governance: To address the issues with coin voting, Vitalik Buterin suggests the development of explicit anti-collusion technology to prevent the sale of voting rights. Shifting governance power from coin holders to non-fungible resources like unique identities can alleviate the problem of separating governance rights and economic interest.
Ultimate Governance Model: Vitalik Buterin believes that the ultimate governance model does not exist and can only be discovered through experimentation, which is the essence of the crypto space.
Historical Examples of Coin Governance Failures: Vitalik Buterin cites examples of coin governance failures in EOS and the Steam Hive situation, highlighting low participation rates, low-quality proposals, and the emergence of plutocratic equilibria.
00:36:06 Crypto's Role in Shaping Our Future Internet Interactions
Vitalik Buterin on DAOs: * DAOs are becoming increasingly prevalent in the crypto space, with many projects using them to manage stablecoins, oracles, and other services. * As more people work for DAOs directly or indirectly, they are likely to provide an increasing number of services in the future. * Vitalik Buterin is concerned about the potential for bad governance mechanisms to become entrenched in DAOs, particularly coin voting. * He believes that coin voting is more credible and neutral than other governance mechanisms, but it can also lead to centralized decision-making and a lack of accountability.
Importance of Fun in Mechanism Design: * Vitalik Buterin believes that fun is an underrated part of mechanism design. * He argues that people are more likely to enthusiastically participate in mechanisms that are fun to participate in and that this can lead to better community building.
The Future of the Internet with Crypto: * Vitalik Buterin believes that crypto has the potential to change the way we interact with the internet. * He envisions a future where crypto is used to create more decentralized and user-friendly applications and services. * He also believes that crypto can be used to create new forms of digital ownership and governance.
00:44:35 Crypto Will Succeed by Creating Entirely New Things
Introducing Crypto-Native Services: Crypto’s success lies in creating new services and products that are inherently crypto-based.
Crypto Native Services and Metaverse: A decentralized world with interacting objects can be enabled by blockchain technology. Ethereum wallets may serve as the primary interface for interacting with this metaverse.
DAOs and Ethereum Wallets: DAOs distributing crypto UBI require Ethereum wallets for sign-up, token receipt, and profile submission. DAOs involved in stablecoins, DeFi, or financial operations also utilize Ethereum wallets.
Crypto Accounts for Identity: Instead of signing in with social media platforms, crypto accounts can serve as a unified login method.
Interoperability and Empire Building: Crypto native services prioritize interoperability, fostering collaboration and avoiding empire-building. Centralized entities compete for dominance, while crypto projects focus on building tools and interfacing with others.
Unix Philosophy in the Crypto World: The crypto world adopts the Unix philosophy, where specialized tools interact seamlessly across a community. This approach extends to financial control and other aspects beyond traditional Unix applications.
00:46:53 Crypto's Role in Shaping the Future of Social Interaction
Blockchain’s Role in the Metaverse: Vitalik Buterin believes that blockchain technology will play a significant role in the metaverse, the emerging virtual world where people can interact, socialize, and transact. He envisions a future where cryptocurrencies and NFTs will be used to facilitate various activities within the metaverse, including purchasing virtual land, items, and experiences.
Cryptocurrency as a Social Network: Carl Doe sees cryptocurrency as a means of creating a social network. He suggests that crypto-enabled platforms can be designed to incentivize users to share valuable and accurate information, potentially helping to combat misinformation and promote a healthier online environment.
Retroactive Public Goods Funding: Vitalik Buterin proposes using retroactive public goods funding to reward creators of valuable content and information. This mechanism would incentivize users to produce content that stands the test of time, rather than solely focusing on immediate engagement and virality.
Technology’s Impact on Human Empowerment: Carl Doe raises the question of whether technology is fundamentally empowering humans or if it is leading to a loss of control. He expresses concerns about the potential negative consequences of technological advancements, such as job displacement and the erosion of privacy.
00:48:57 Expert Advice for Navigating Crypto and Human Futures
Vitalik’s Optimism and Outlook on the Future: Vitalik expresses optimism about humanity’s future, citing the potential for scientific and technological advancements. He envisions a future where people achieve immortality and inhabit Mars.
Concerns and Challenges: Vitalik acknowledges short-term headwinds, such as geopolitical tensions. He emphasizes the need for defensive technology, including crypto, to mitigate risks.
AI and Potential Risks: Vitalik identifies the potential for an “unfriendly AI apocalypse,” where AI poses a threat to humanity. He suggests defensive measures, such as developing more defensive technology.
Vitalik’s Advice for Hackers: He encourages persistence and long-term commitment to projects. Vitalik suggests focusing on cross-layer 2 bridging infrastructure to enhance interoperability within the Ethereum ecosystem. He recommends visualizing a bright future and not taking things too seriously. Vitalik emphasizes the importance of listening to others and remaining open to learning.
Additional Advice: Carl Doe advises hackers to enjoy the process, go with the flow, and have freestyle sessions. He suggests embracing uncertainty as a means of growth and progress.
00:57:49 Retroactive Funding, Freestyle Rap, and the Price of ETH
Vitalik Buterin’s Humorous Response: Vitalik Buterin humorously responded to a question about the future price of ETH by saying it would be $30,000, but he didn’t specify the currency. He joked that it could easily be Venezuelan bolivars, implying the uncertainty of future prices.
Concluding Remarks: Carl Doe expressed gratitude to Vitalik Buterin for the engaging and informative discussion. He acknowledged that they would likely have another conversation about their freestyle rap session in the future. The speaker thanked Vitalik Buterin for sharing valuable insights and covering various important topics beyond retroactive funding. The speaker expressed enthusiasm for moving on to the next segment, which involved discussing prizes.
Abstract
Revolutionizing Public Goods and Blockchain Governance: The Evolving Role of Retroactive Funding and Decentralized Decision-Making
In the rapidly evolving landscape of public goods funding and blockchain governance, a new approach is gaining traction: retroactive public goods funding. Unlike traditional funding models, this method provides financial incentives to creators after their contributions have demonstrated impact. With blockchain technology as its foundation, this approach reshapes the relationship between value, legitimacy, and governance in the digital era. Retroactive public goods funding differs from traditional funding mechanisms by providing financial support to projects that have already demonstrated their impact. This approach ensures funding is directed towards projects that have proven their worth, encouraging experimentation and innovation. Examples of projects that could benefit from retroactive funding include Bankless and zero-knowledge cryptography research.
Leading the Charge in Funding Innovation
Public goods, essential for societal well-being, often face funding challenges due to their indiscriminate benefits and lack of clear profit mechanisms. Retroactive public goods funding emerges as a solution, incentivizing the creation of these valuable assets by promising compensation based on their impact. This approach is particularly prominent in the Ethereum ecosystem, where it supports creators and innovators who might otherwise lack conventional funding sources. Vitalik Buterin, a prominent figure in the crypto world, emphasizes the importance of optimism, embracing curiosity, and learning from diverse experiences. His perspective underscores the significance of the human aspect in this technological revolution. Vitalik expresses optimism about humanity’s future, citing the potential for scientific and technological advancements. He envisions a future where people achieve immortality and inhabit Mars.
The Advantages and Challenges
Retroactive public goods funding offers several benefits, including the promotion of societal asset creation, broader community involvement in funding decisions, and support for radical innovation. However, assessing the value of public goods retroactively can be subjective, and ensuring fairness and transparency in the allocation process poses challenges. Retroactive public goods funding in the Ethereum ecosystem utilizes decentralized voting-based mechanisms to allocate funds to projects with proven value. This approach ensures funding is directed towards projects with a track record of success. Project tokens can be created to reward contributors and team members, and to generate funds for short-term expenses. The growth of retroactive public goods funding depends on the availability of funds and the willingness of institutions and projects to contribute. Legitimacy plays a crucial role in attracting funding and support for projects, signifying community consensus and alignment with shared values.
A Growing Scale and the Crucial Role of Legitimacy
The scale of retroactive public goods funding is currently limited but has significant growth potential, particularly with increased institutional funding. The success of this model heavily depends on legitimacya social contract where outcomes are accepted based on collective expectations. This acceptance is vital for the sustainability and effectiveness of any public goods funding mechanism. Carl Doe, a speaker at an Ethereum event, expressed gratitude to Vitalik Buterin for the engaging and informative discussion. He acknowledged that they would likely have another conversation about their freestyle rap session in the future. The speaker thanked Vitalik Buterin for sharing valuable insights and covering various important topics beyond retroactive funding. The speaker expressed enthusiasm for moving on to the next segment, which involved discussing prizes.
The Diversity of Public Goods and Their Impact
Public goods encompass a wide range, including open-source software, scientific research, environmental protection, and infrastructure. They address market failures where private incentives fall short, contributing to societal well-being and economic growth. These goods can emerge as byproducts of private activities or result from deliberate, often altruistically motivated actions. Recognizing the diverse origins and motivations behind public goods is crucial for understanding their funding needs. Public goods encompass various forms and motivations, ranging from grand initiatives to simple acts of kindness. Private entities often produce public goods as byproducts of their private good-oriented activities. Public goods can also be created through paid work or driven by charitable motives. Efforts are underway to align incentives and create a virtuous cycle of public goods creation, while addressing challenges such as equitable remuneration. Vitalik Buterin humorously responded to a question about the future price of ETH by saying it would be $30,000, but he didn’t specify the currency. He joked that it could easily be Venezuelan bolivars, implying the uncertainty of future prices.
Blockchain Governance: A Complex Landscape
Blockchain governance encompasses on-chain and off-chain models, each with its own challenges. Coin voting, a common practice in blockchain governance, often leads to concentrated power and a disconnect between economic interests and governance rights. Innovative solutions, such as anti-collusion technology and the integration of unique identities in decision-making processes, are needed to address these challenges. Blockchain governance can be categorized into on-chain and off-chain governance. Coin voting is a common practice in on-chain governance, where coin holders have the right to vote on protocol changes. Vitalik Buterin criticizes coin voting for its susceptibility to financial market evolution and bribing attacks, leading to the separation of governance rights and economic interest. Anti-collusion technology and shifting governance power from coin holders to non-fungible resources are proposed to address these issues.
The Emergence and Impact of DAOs
Decentralized Autonomous Organizations (DAOs) are redefining governance and funding in the blockchain space. These entities extend their influence beyond financial services to areas like dispute resolution and UBI distribution. However, concerns about the entrenched use of coin voting and its implications for centralized power and decision-making quality persist. Vitalik Buterin acknowledges the growing prevalence of DAOs in the crypto space and their potential to provide various services in the future. However, he expresses concerns about the potential for bad governance mechanisms to become entrenched in DAOs, particularly coin voting. He believes fun is an underrated part of mechanism design, as mechanisms that are enjoyable to participate in can lead to better community building.
Vision for a Crypto-Enabled Internet and Blockchain’s Potential
The future of the internet, envisioned through the lens of crypto, is a decentralized, interoperable landscape where diverse projects coexist seamlessly. Blockchains are seen as pivotal in shaping this future, potentially addressing critical issues like misinformation and fostering more equitable social interactions. Crypto’s success lies in creating new services and products that are inherently crypto-based. A decentralized world with interacting objects can be enabled by blockchain technology. Ethereum wallets may serve as the primary interface for interacting with this metaverse. DAOs distributing crypto UBI require Ethereum wallets for sign-up, token receipt, and profile submission. DAOs involved in stablecoins, DeFi, or financial operations also utilize Ethereum wallets. Instead of signing in with social media platforms, crypto accounts can serve as a unified login method. Crypto native services prioritize interoperability, fostering collaboration and avoiding empire-building. Centralized entities compete for dominance, while crypto projects focus on building tools and interfacing with others. The crypto world adopts the Unix philosophy, where specialized tools interact seamlessly across a community. This approach extends to financial control and other aspects beyond traditional Unix applications.
The Human Element: Vitalik Buterin’s Perspective
Vitalik Buterin emphasizes the importance of maintaining optimism, embracing curiosity, and learning from diverse experiences. His perspective underscores the significance of the human aspect in this technological revolution. Vitalik acknowledges short-term headwinds, such as geopolitical tensions. He emphasizes the need for defensive technology, including crypto, to mitigate risks. Vitalik identifies the potential for an “unfriendly AI apocalypse,” where AI poses a threat to humanity. He suggests defensive measures, such as developing more defensive technology. Vitalik encourages persistence and long-term commitment to projects. He suggests focusing on cross-layer 2 bridging infrastructure to enhance interoperability within the Ethereum ecosystem. He recommends visualizing a bright future and not taking things too seriously. Vitalik emphasizes the importance of listening to others and remaining open to learning.
A New Era of Public Goods and Governance
Retroactive public goods funding and decentralized governance models offer transformative potential in addressing contemporary challenges. By empowering creators, encouraging innovation, and reshaping governance, these approaches pave the way for a more equitable and sustainable future. The journey is just beginning, with much exploration and learning ahead in this dynamic and ever-evolving field.
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