AMA: 4.10.2018 – DAOstack asks DAOstack: Matan Field and the Community Team

The DAOstack Community & Campaign team asks @matan questions about the project. ArcHives, Token Curated Registries, Genesis DAO, Matan’s backgroun and anti-rivalrous economy.
Transcript provided below for convenience.

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Speaker Timestamp Speech
Josh: 00:00:01 Okay. Hey everybody, we’re here this week with an AMA with Matan, specifically with our community team. The DAOstack community team has a number of questions that we’ve been wanting to ask on behalf of really our own interest, but also on behalf of what we’ve been hearing in the community. We thought we’d just open a dialogue today with Matan Field, architect and CEO of DAOstack.
Josh: 00:00:29 With that, we’ll just make this an open dialogue and wondering if Matan is no longer on the call. That’s one thing I’m wondering. Does anybody see Matan? No. Better that happens now than later. I’ll stop our recording. There he is.
Matan: 00:00:51 Yeah. Sorry.
Josh: 00:00:53 Okay, no problem. With that, I’ll just open it up. Who would like to start? We’ll just make it an open dialogue. Patrick?
Patrick: 00:01:06 Yeah. I’ll go. I have a couple of questions that I’ve just been accumulating from the community, and then I have a few of my own. I was hoping we could start maybe with a discussion of the ArcHives and maybe we could … I’m sort of confused as to the relationship between the ArcHives and the GEN token. I think you briefly mentioned monetizing the ArcHives at some point. I was hoping you could maybe expand upon that and maybe how that would also affect partners and other people who build on DAOstack.
Matan: 00:01:46 Right. Yeah. That’s a really good question, because clearly the ArcHive is the least explained and also the least understood element in DAOstack just for one reason, because it’s the only element that’s not fully implemented. That’s clearly why there is room for miscommunication. Let’s briefly mention what is the ArcHives, what is their functionality, why they are needed and then also how they are monetize-able.
Matan: 00:02:29 By the way, just for reference, I think perhaps the most popular topic today in the blockchain space is called Token Curated Registries. If you heard this terminology, TCR, Token Curated Registries, very hot, very trendy. The archives is in a way our variation of TCRs, which I also argue are better. We’ll get there if you want to dive into it.
Matan: 00:03:03 Before saying Token Curated Registry or Reputation Curated Registry, let’s just call them curated registries. What are curated registries? Firstly, what are registries? Registries are simply databases. If you want to reduce it to the simplest form, it’s just lists. For example, let’s make a list of good things and bad things. Good things can be anything.
Matan: 00:03:28 Let’s say that it can be restaurants. Let’s make then a list of good restaurants versus bad restaurants, which are not in the list. These are curated lists. It can be a list of good organizations and organizations that are not in the list, which are bad organizations. It can also be not binary, doesn’t have to be good versus bad. It can also be ranked.
Matan: 00:03:51 Let’s rank all organization in the space with respect to some metric, with respect to their effectivity, with respect to how well they contribute to the climate change, with respect to how professional they are in terms of blockchain technology and so on and so forth. You can make curation lists for any set of objects and any desired metric. Basically, that’s curated lists.
Matan: 00:04:17 Why it’s important? I think it’s quite obvious, because then if there is a curated list that a lot of people are trusting, then there’s a lot of viewers to that list, which by the way, brings you also to the way to monetize it, because if there’s a lot of viewers that trust that list, you can monetize the ability to register that list. If there’s a lot of viewers, probably someone has an incentive to be registered there and that registry would agree to pay for the registration.
Matan: 00:04:47 Who is it paying it to? Who is benefiting from those payment? Two. One is the curators. Clearly, if there is a curated registry, someone needs to curate it. Someone needs to create it, is expecting returns, so it can benefit the curators. That’s one way. The second way is the token holders themselves. Someone needs to hold the tokens. They’re basically the economic driving engine of those curation lists. This is a very, very quick summary of what curated lists, curated registries are. I highly recommend reading one of the core blog posts on this topic. I have one really good one. I need to find it, but if I find I will send it over. Otherwise, I just recommend looking at it.
Patrick: 00:05:37 I know Simon has written a couple.
Matan: 00:05:41 Simon basically invented this technology. He’s like the guru of curated lists. To be frank, he didn’t invented the topic. The topic was known well before, but he invented the name of it. He also popularized it. He wrote the first blog post that really marketed it very well. He explained beautifully. He’s also a very smart guy. Basically, Simon was the guy in charge of popularizing that technology, but then many people are fold up and came up with more and more models.
Matan: 00:06:13 Why it’s called token curated registries, because that is to say that tokens drive the economy of curated registries. Notice that there are two things, different things, that you can drive. You can drive the economy, and you can drive the governor system, the curation. When people say token curated registries, they mean that tokens drive both. The governance is what you call economic governance as much prediction market. Futarchy governance is the governance system that’s purely driven by economic forces.
Matan: 00:06:48 Plutocracy, so token based voting is economic governance. Okay? Token curated registries are registries that both economically and governmentally driven by tokens. I don’t want to open a pandora box, but basically, my general claim is that purely economic governing system do not work properly for several reasons, but two main reason is that, one, they are highly manipulable, just as markets are. Markets are very highly manipulable. It happens every day. The markets that are manipulable today, they are exploitable. Their economic values are exploitable and they are exploited every day.
Matan: 00:07:34 The problem with economic governance is much more severe, because not only you’re exploiting the economic power of it, you’re also impacting the wrong decisions. It’s two different problems. Then there’s a second problem of pure market economy, market governance systems, which are they don’t cohere well. I argue that they don’t cohere as good as meritocratic systems, but they are very scalable. That’s why we argue that holographic consensus actually merge to these two qualities.
Matan: 00:08:07 The market forces are in charge of scalability, but then the meritocratic forces are in charge of coherence and resilience. This is the really quick summary of what curated registries are and what are token registries. Now, there are many different use cases for token curated registries. For example, one really neat example that someone gave in one of the blog posts was about curating the top universities.
Matan: 00:08:35 Curating the list of the top universities that, if you study in them you basically pay back your loans in 10 years. That’s the list. The university that argue that they pay back their loans in 10 years. That’s example for curated lists. In our case, although the topic of curated lists is very interesting generally and I think there will be a lot of doubts coming on top of the stack to do curated lists, we found the necessity, for you, very specific curated lists that support the DAOstack ecosystem. There are special curated lists.
Matan: 00:09:16 Let’s see which of them. For example, one: we argue that we have a framework with which you can build any government system, right? The building block of that framework is all sort of modules and plug-ins that you can bind together and you build governance protocols. The whole power of it is that anyone can build. I come to DAOstack, I want to build a new government system and I see the existing library of modules. I tried to play with them and I found out that I missed one module that doesn’t exist there, which I think is super important for my organization. Great.
Matan: 00:09:55 Since everything is open source, I can just write my own module, but then, where is list of modules that you can pick from? It’s not just about where it is. You can say OK, it’s GitHub, but the question is who decides about which module is legit and which module is not legit. What does it mean to be legit? Is legit code-wise? Is it legit protocol wise? And so and so forth.
Matan: 00:10:26 For this kind of ecosystem, you need to have this list of modules that the professional network has stamped that it’s legit in some sense. This is curated list. One of those curated registries is the curated registries of governance modules. Another one … Right now when I open remark, an organization or maybe a sub-organization, nobody can see that I deploy an organization with blockchain. I just deployed contract. Nobody can go over the blog and say, these are organizations by DAOstack. It’s one big mess.
Matan: 00:11:13 Of course, when we run Alchemy, we keep that list of objects, of organizations, we keep that on our server, but there is now a problem. What if now Nathalia is bringing her interface through the stack and she has a great application, but she doesn’t know about organization that I’m opening in my interface. There is a need to have this collective shared database of organizations. Whenever you plug in new interface, we can instantly see the state of the world, which organization exist and are the relationships with them.
Matan: 00:11:48 This is again a curation list, because it has to be curated. If it’s not curated, I can spam it, right? If it’s open and anyone can register organization I would like maybe harm that ecosystem. I will just deploy thousands of false organizations. There is a good reason to protect it. Protecting means curating.
Matan: 00:12:11 Now there’s interesting question with respect to which metrics, so metric of what? Good organizations, bad organizations, real, fake who defines that? You can have different forms of that curated registries that measure the goodness of organization in different metrics, different axes. This is another curated list, which curated list of organization.
Matan: 00:12:34 We also notice a third one. We can probably go on and probably find more. A third one will be, for example, messages. I have a need. In our application, Alchemy, someone is asking for something. Then nobody is answering that something, but then, if we had a database that all other applications can look at, they can look at it and maybe give an answer. Maybe in their network effect, they have an answer to that question, which in our network, we don’t have an answer to.
Matan: 00:13:05 This is like marketplace for offers and asks. You can go on and on with that. The bottom line to remember is those are … where they become important? They become important when you look at the eco-systemic point of view, because when you only look at one interface, you can keep all of that information on the server. It comes in two dimensions, when you look at the eco-systemic point of view, when you want to have interoperability between different interfaces. It comes when you talk about curation, because curation requires decisions and consensus, so you want to register something.
Matan: 00:13:46 That’s basically two aspects of importance of curated registry and specifically the archives, which are the specific use cases of curated registries that supports specifically the DAOstack ecosystem. Let’s make a quick survey. How clear it is from one to 10 for each of you? Please.
Danilo: 00:14:09 Nine.
Matan: 00:14:10 Eight, nine
Patrick: 00:14:12 Seven
Erick: 00:14:13 Eight.
Matan: 00:14:14 Nine, seven? So, seven. I would be happy to hear another question from you Pat, because you have the lowest ranking.
Patrick: 00:14:25 I dinged you a point, because you didn’t necessarily answer the entire question. The last part of it was the relationship of the gen token to these curated lists.
Matan: 00:14:38 Sorry. I did not yet answer that question. Sorry. I just answered the first half of the question.
Patrick: 00:14:43 Okay.
Josh: 00:14:45 I just have a quick question about what you said. When you talked about the hive you said offers and requests. You equated that with questions and answers. I was surprised to hear that. I thought that offers and requests referred to talent sharing.
Matan: 00:15:00 You’re right. I meant questions in the sense of I need something.
Josh: 00:15:03 Good. Thank you.
Matan: 00:15:05 Totally. By the way, not hives. The archives is collective name for all of them. There are names for each of them which actually, it’s a long story where they came from. To your question, Patrick, the relationship is very easy. I just say that they are monetize-able. So I need to tell you two things, how it’s monetize-able and how it’s related to gen tokens. The second question is very easy.
Matan: 00:15:32 The monetization is by the Gen Token, just for the special curated registries that support the ecosystem. The monetization is with the Gen Token. Then what is their monetization. For example, imagine that organizations, they have incentive to register themselves on that registry because then they are more visible to a larger network effect of interfaces. Imagine there is a fee. There is a fee to register your organization, maybe now say $5 to register your organization on that registry. Then once you apply, the governance systems decides if you’re eligible to be register or not. If not eligible, you don’t get back your money. You just paid it.
Matan: 00:16:15 There are different forms of monetization of those registries. Since we haven’t yet implemented … We have implemented the product many months ago, but we haven’t implemented yet production-ready version of it so I don’t have one specific product of organization that is the one we are going to use, but there are many. It’s not hard to find a monetizing product. It’s actually hard to find the best one of them.
Matan: 00:16:41 We will explore that, but the reason why we postpone that is if you look in the entire DAOstack, it’s that one element that is not critical to the first move. It’s more critical for growth and interpret-ability and all that. We allowed ourselves to postpone that element to the second version, the second release of the stack.
Patrick: 00:16:41 Cool, thank you.
Matan: 00:16:41 Can we resurvey? Can we resurvey quickly? Or just Patrick, so how are you Pat?
Patrick: 00:16:41 I would bring you up to an 8.5 or a nine.
Matan: 00:16:42 Great. If everyone had an eight and about we are fine.


Speaker Timestamp Speech
Josh: 00:17:29 I imagine there might be questions related to that. I have one. And Patrick, you and I have talked about this as well. Matan, is this related to how the GEN Token will have utility in the case of curation networks that use the DAOstack as their engine?
Matan: 00:17:54 Well, not exactly. Let me explain. You can run any curation … Let’s run a curation network of restaurants on the DAOstack. The curation utility, the tokens that people pay for subscription, pay for registration, each list will have its own token. Then the question, how do you do the governance? How you do the decision making process to decide about whether to list or not registries and how to rank them. That process … Then you need to ask, what is your process?
Matan: 00:18:42 When people today are speaking about token curated registry, as I mentioned before, they tie up those two things. They tie up the utility of the token and those are the decision making process. That’s why it’s the token curated registries, the token are those for the utility and also decisions. It’s purely economic decisions.
Matan: 00:19:04 But, once you are separating that … So still, you’re playing with token x to list on a curated registry x, then the decision making process doesn’t occur by the x token holders. It occurs by reputation holders of that list or maybe a combination of them. Then the problem with meritocratic governing system is that they are not scalable as token governing system. By the way, also token governing system are not scalable and they are much more manipulable. Then you need holographic consensus. In order to facilitate holographic consensus you need the network effect of predictors, and that network effect of predictors comes from the larger network effect of predictors of the DAOstack, and in order to involve them you need to stay with GEN Tokens.
Matan: 00:19:51 So you see, in a DAOstack curated registry, you actually have two tokens. One token for the utility, just as much as in any DAO, you have two tokens. You have the token of the DAO and you have the token for the governance, which is the GEN Token.
Josh: 00:20:03 As well as our reputation currency.
Matan: 00:20:05 As well as our reputation, correct.
Josh: 00:20:07 Mm-hmm (affirmative) OK, so, in that sense, it sounds like the utility of the GEN Token for DAOs and curation networks and really any organization that’s building on the stack is related to the holographic consensus.
Matan: 00:20:23 Correct, or more broadly if you want, is related to the ability to produce large-scale decision-making process. Large-scale and coherence or resilient decision-making process. I argue that, I mean I don’t have a mathematical proof yet, but I argue that this is probably a universal nature that there is no way to scale up coherent decision-making process without using some sort of like governance-utility token which effectively outsources the navigation of collective attention to a market-like network.
Josh: 00:21:02 Mm-hmm (affirmative) Yes, that makes total sense. Guys, any following questions to that?


Speaker Timestamp Speech
Erick: 00:21:11 Yeah, so, when it comes to use cases, one of the question that sparks me, and it has to do with the utility of token, is that: If I’m part of a thousand-people organization and in order to utilize Alchemy to organize our collective decision making, do we need to create a fund and purchase GEN Tokens? Or do we need to create a fund and employ our own token?
Matan: 00:21:47 So, the line broke for two seconds, so I heard 90% of it and then I just missed two seconds. So you’re asking, just to make sure, you’re asking that when you are building a new network on top of the DAOstack, do you need your own token for the network? That’s the question? Or?
Erick: 00:22:04 Yeah, and if I need my own token, is there a limited amount that should be the minimum of this funds in comparison to the size of the network? Or there should be a minimum amount of tokens that should be generated also?
Matan: 00:22:24 Let me try to see if I understand correctly the question and then try to answer, but please stop me if I answer the wrong question. You can stop me.
Matan: 00:22:32 So, if I understand correctly the question, you’re asking whether an organization with the stack requires a new token and what are the rules to know how many tokens, maybe? To print or to mint?
Erick: 00:22:46 Yes.
Matan: 00:22:48 So, OK. So, let’s start from the end. There is no meaning for the number of tokens in your organization. Generally there is no meaning of token because, I mean, if we had a hundred tokens or we have one thousand tokens, there is just no meaning. We can just always divide the token by ten and it’s the same thing. So, by itself, there is no meaning to the number of tokens in circulation, it’s absolutely meaningless. It only gets meaning once you have an official reference that fixes the scale, if you want. So, for example, let’s take an example. If we decided that we had some service. Let’s say the service is storage because it’s easy to understand. And then, if you want to storage something on that decentralized network, you need to pay one token per gigabyte, now once you fix that rate, one token per gigabyte, now there’s meaning to whether you have a hundred million tokens or a thousand tokens. But as long as you haven’t fixed the reference point for the scale, the number of tokens is just meaningless. So that’s the first thing. Of course, once you did make such a reference, there is absolutely importance for your economy or your economic considerations, but there is no good formula for what is a good economy vs a bad economy. There is no way to decide whether the Bitcoin formula is a good economy, is a good number. Or maybe the parameters should have been different. Probably, they should have been different, but there’s just no way to test it. I would argue that the good protocol is not the protocol that aims to make good number. A good protocol is a protocol that aims to self-correct itself for the good number. You see what I’m saying? So, you use market forces in order to self-improve its economy. I think that’s the only way, actually, to get a good protocol. So that’s in terms of the second question.
Matan: 00:24:50 In terms of first question, so generally I would say yes. So a new organization requires a new token. Specifically I would say it depends on what is the functionality. What is the goal and mission of your organization? So, for example, if the goal and mission of your organization is simply to allocate funds and nothing else, maybe you don’t need a new token, just collect a thousand ether and work with it as you go along. So you don’t need tokens. But if in any stage you have a sense of ownership, you want people to be incentivized to be part of a network in terms of ownership, then you have to have a new token. That new token is basically the symbol for ownership in the network.
Matan: 00:25:38 So it can still hold for a case of funds. So let’s say we are just managing one million dollar collectively, but we also want to incentivize people to place that fund to begin with. So we want to let them to be staked and basically initialize that fund and get tokens in return. So the tokens in that case, that simple case, the tokens stand for financial ownership of the collective assets. So, generally, depends on what’s your use case. I would say that the tokens, no matter what is your use case, if you do have an incentive to make people stake in, then you want to have tokens. I mean, tokens are just symbol for how well they stake in. So, that’s a general answer. But if you want a particular answer, we need to look at particular uses. To what extent [crosstalk 00:26:32]
Erick: 00:26:34 Yeah, pretty much covers everything, yeah.
Matan: 00:26:38 OK, please feel free to say that it is answering the completely different question.
Josh: 00:26:46 For me, Matan, it almost covers it, but when I initially heard Erick’s question, I imagined something related to "do the pools created … do the GEN pools created, and does the token, the DAO specific token created, do those pools need to have a certain sort of value in terms of dollars or is there a certain amount of wealth that needs to be placed into the system?"
Matan: 00:27:20 Yeah, that’s a good question, but it’s actually two questions because you’re asking both on GEN and both on the local tokens. Let’s try to analyze them separately. So in terms of Gen, the GEN pool that the DAO is holding, think about it as the pool, the budget for governance. It’s the governance budget. OK? The more Gens you place on each and every proposal. So remember, the DAO itself places certain bounties, a certain stake for each and every proposal that is going to pass in the DAO. That seems really important. Without that, there is no incentivization for predictors to play the game. Without the predictors, there is no large-scale governance system ability. OK? So, it’s really important that the DAO decides to stake some Gens for each and every successful decision. And the beauty of it is that the DAO completely self-deciding how much of it. It can also decide to put 0. Just my argument if you do it with 0 they will not get large-scale governance. OK? So the beauty of it is the DAO can find you that number of how many GEN they put on each and every decision in terms of some sort of fraction of something.
Matan: 00:28:42 For example, fraction of … If you remember, there’s a threshold for posting, and that it can decide that the stake on each proposal is a fraction of the threshold. Now the fraction is just a number between 0 to 1. So each DAO can find you the number between 0 to 1, and you can think of it as that the more the number is higher, the higher the number is, the more basically inviting the DAO is for predictors. So when the DAO will raise its number up, all of the cloud of predictors will be pulled into that DAO because they want to work there because they get better compensation, right? But then, since all of the clouds are pulling into that DAO, that DAO will scale up better than other DAOs. So, when a DAO would like to raise that number, I’ll tell you when, when decision- making power is the bottleneck for their growth. There are a lot of companies, in fact most companies, or all companies in the regular world, their bottleneck for growth is not decision making. Their bottleneck for growth for slow start-ups are capital, right? They lack capital.
Matan: 00:29:47 And then a second bottleneck is HR, they lack access to good talents. And then we actually see today, in the blockchain space, projects. They have a roughly infinite amount of capital. An infinite amount of community members if you want HR. And their true bottleneck is actually measurement capacity to deploy that capital into that HR.
Matan: 00:30:09 So whenever a DAO runs into that wall, that its limiting factor to growth is actually decision-making, that’s where the DAO would like to raise that number and attract more predictors that attract better decision-making capacity. And the beauty of it is that there will an arm race, right? Because if that the limiting factor and now you’ve just raised the number, so you place more budget on management, but then you become super more efficient, super more scalable, so that then you are more producing than your token value will rise better and you will have actually more capital to induce into management, but then other DAOs will need to compete with you because you just took all of the clouds of predictors into your DAO. So they will basically arm race for the benefit of predictors. So, just opposite from the Bitcoin network, where the market economy works in terms of marginalization of work power against the miners, here the marginalization is towards the miner in a way.
Matan: 00:31:06 But that’s great because it will drive all of those DAOs to grow faster and faster.
Josh: 00:31:13 With the miners, you’re equating the miners with the predictors.
Matan: 00:31:17 Correct. Yeah, I’m not sure anymore if you can tie that back to the original question, but that’s, yeah.
Josh: 00:31:27 I think that’s good for now. And, Danilo, yup.
Danilo: 00:31:33 How does the network know, then, the network of predictors, know what is this number? Would that be a use case for a token curator registry on itself or how do you?
Matan: 00:31:48 That’s great question. So, part of the UX, which is not existing right now, it’s like in the next version, but part of UX is just that. So, right now, the UX is optimized for people who make proposals, but in the next stage you have different UX versions that optimize for different users. So if you’re a staker or predictor, you will be able to look at UX in a way that allows you to browse between different DAOs and optimize with respect to DAOs that pay better if you want. Alright?
Danilo: 00:32:26 You cut when I asked you the second part, but would that be-
Matan: 00:32:29 So, yeah, so soon, in the next UX, predictors will be able to browse between different DAOs and look for those DAOs who pay better. I mean, you can already do that now in principle by looking at the blockchain of course, if you understand what to look at. But it will actually be part of the UX in the next coming version.
Josh: 00:33:01 So, maybe we’ll see if there’s any other … It seems like we’ve covered a lot of territory in a certain area. Anything completely different?


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Patrick: 00:33:16 This has been popping up in our telegram a lot, Matan, but some community members, they are a little concerned that the Genesis DAO has the option to mint forty million Genesis Tokens. They think that this inflation will diminish the value of the Genesis Token and I was wondering if you could give a comprehensive response to that. You know, why is this ability needed and will this actually diminish the value as expected?
Matan: 00:33:52 Well, so, the short answer, no. It won’t if well-managed. OK, that’s the short. No if it will be well-managed. Why? Because the idea is that you should mint tokens for things and activities that produce more value to the ecosystem than the value that you are deleting, right?
Matan: 00:34:14 So, if I am doing an action, whatever I do, I produce codes. And that code has a certain abstract value to the greater ecosystem. And that abstract value to the greater ecosystem can be translatable to the rise of the value of the GEN Token. Maybe because I produced a great code. Maybe I did business development. Maybe I made a partnership with the Ethereum foundation. Whatever I did, it has some abstract value. That abstract value can be translated in principle. Of course, not in measurement. Can be translated into rise in the value of the GEN Token.
Matan: 00:34:49 So, by definition, my action has contributed value to each stake holder in the Gen, each GEN holder in the ecosystem. So that’s driving the value up. Now, when you print tokens and compensate me, of course, you are incentivizing me to do more, but you are bringing the value of each GEN Token down. Now, if you are printing value less or equal to the amount of value I am producing, then you are not diluting. You are actually just doing the opposite.
Matan: 00:35:20 So, and of course the question now is how you do it right? Like, how do you produce the right number of tokens to the right activities, and that’s what all governance system is about. A good governance system is such that it makes decisions to invest, whether it’s hard funds like Ether or soft funds like your own token, but a good governance system is a governance system that invests its own capital in activities that produce more value than the value that you invest again. That’s my definition of a good governance system. And, there is no magic answer as to how to produce that governance system but evolution. Because different DAOs will have different protocols and more so they will also have different reputation distributions so different initial conditions for those protocols, so they will evolve differently. So different governance systems will perform better and outperform the bad governance systems. So, by economic evolution, you will just get better and better government systems.
Matan: 00:36:21 So, you see here, for example, that the importance is about the initial condition. You have to start with sensible protocols to begin with, and sensible reputation distribution to begin with. But, more importantly, or not less importantly, you need to have a good evolution track. So you need to easily be able to upgrade your protocol. But also you need to easily scale up your operations so that the good ones will out-perform and survive and the bad ones will decay. And that’s exactly why you will be at the DAO stacking away with it, to allow for that evolution to rapidly take path.
Matan: 00:36:59 So that’s … Can you re-ask the question? Just to tie me back up to the question?
Patrick: 00:37:09 The primary concern was these tokens inflating the supply and driving the value down.
Matan: 00:37:16 Right, correct. So, bottom line, you can compare it with mining, right? You could have asked the same question about any project that has a sort of mining. So, Ethereum for example. Ethereum produced such-and-such tokens upon genesis, right? And then, they just choose to run the parameter 26%. So 26% of the token printed upon crowd sale were committed to be printed each and every year for further miners, right? 26%. Why? I don’t know. Nobody knows. OK. Whether that’s the right number, there’s no right number. They also kept the freedom to change that strategy.
Matan: 00:38:08 Actually, Ethereum is very special in that it doesn’t have a limit on final cap or the number of tokens definitely, as for example Bitcoin has. They never did that commitment. Actually, in the present, they left the freedom to change that “anytime”. By the way, just a couple of weeks ago, Vitalik made the suggestion to actually finally cap the number of tokens that we ever be printed in the Ethereum network and he suggested to make it twice of the initial distribution. By the way, he also made that comment in April 1st, and it’s really amusing because he basically he did not reveal if it’s a joke or not. It’s a really nice trick for him because in a way he’s not committing whether it’s a joke or not but he’s testing the ground because, by seeing how people react to that he can see if it’s actually a serious proposition. If people will actually swallow. It’s a really sophisticated trick.
Josh: 00:39:04 That’s great. We should actually just implement that as a governance model, that all proposals need to be made on April 1st.
Matan: 00:39:11 Yeah, all really sensitive proposals, yes.
Matan: 00:39:16 So, the answer is that definitely mining is not only is it not diluting, it’s important. Like, let me give you an example. Actually, that’s example by Fred Ehrsam, the founder of Coinbase, they wrote in his blog post.
Matan: 00:39:34 So, imagine if Ethereum today had the ability that DAOstack provides, which is to print more tokens for contributors of value, right? So, would you agree that solving the scalability problem of Ethereum worth at least 10% … will lead to rise of at least 10% of token value? Would you agree with that? Answer yes, and if you don’t agree you need to check something, because it will probably lead to 10x token value, probably, so like 1,000%. But definitely 10%, that’s very, very conservative. Not even 100%, 10% of the token value. And probably actually 1,000%. I mean, 10% is just daily fluctuation, so it’s completely digital. But just 10%. Consistent rise of 10% worth how much? Four billion dollars right now, as we speak. So four billion dollars is the bounty that Ethereum could have offered to people to solve the scalability problem, which is quite a lot. Some people would work on this scalability problem for four billion dollars. It’s a nice bounty.
Matan: 00:40:47 If you just had those and the capacity to manage that bounty, and source it to the right places, which is exactly what we are suggesting. So, if you put aside the way to do it, which is what we’re offering, but even jus the ability and just for a moment imagine that Ethereum foundation just ran out of Ether, which is not the case right now. But let’s assume so. In that scenario, the Ethereum foundation would be stuck. They clearly have incentive to print more tokens and by that solve significant problems, but they don’t have the ability to do so, so they are stuck. So, being able to print more tokens and by that incentivizing the network for growth and problem- solving is a great, great tool. It’s not a dilution, it’s actually an opportunity.
Matan: 00:41:34 Now, of course, that needs to be well-managed. I mean, of course if you use it wrongly, this will not be the case. So the way that we think about it is that we want to gradually … By the way, that same question is true not only about the minting of new tokens but also the management of Ether funds, right? Raise 30 million dollars, 10 goes to the company, to the nonprofit company for further development for years, and then another whatever left from that goes to incubator fund that supports projects that goes on the ecosystem. Now, we still need to make sure that that management works well. So our strategy is to firstly hold that ability within the non-profit company. So both the ability to manage the funds and the ability to mint tokens, but then gradually through experimentation, through the economic evolution that I just mentioned, gradually shift that ability to the Genesis DAO that will be launched on top of the DAOstack. So that’s the answers for the responsibility for making that process correct.


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Danilo: 00:42:48 I think a good follow up there, which is also related to some of the things that we’ve been asking is how will reputation initially be distributed in the Genesis DAO?
Matan: 00:43:02 That’s really important question which we haven’t finalized the answer for, but we do have several approaches we are building up. So you would like to basically mix two strategies. One strategy is to say let’s be very conservative. Let’s allocate reputation to a small number of professional people that we trust and believe will be good initial commission. That’s, what I would call it, “responsible”. But that’s not scalable, right? You’re not involving large number of people and also diversity.
Matan: 00:43:40 I mean, the other side of that’s, OK, let’s distribute all power evenly to all Ether holders. Of course, that’s very risky, right? I mean, that’s pretty large diversity, but it’s pretty risky. So, we are trying to hybrid and mix those two strategies.
Matan: 00:43:56 So let’s say, just an example, this is not a commitment, but just an example, let’s say that 30% of reputation was allocated by the company. Not necessarily to the company, but by the company. So maybe to the vigils of the company, maybe to a few top professionals in the ecosystem, maybe a few top VCs, maybe to some of our top stake holders, etc., etc.
Matan: 00:44:23 Let’s say the rest of 70%, you distribute it, but again you can make better or smarter or less smart distribution mechanism. For example, distributing reputation as an edge up for all ether holders is definitely scalable but pretty st … well, pretty non-smart strategy. Let’s show another smarter structure, let’s do an … well, actually, we’ve already been doing, let’s do a ground drop so every time we go to a conference of Ethereum and meet the top Ethereum developers and thinkers in the space, let’s ground-drop them some amount of reputation they can later redeem and act from. That’s a more selective … you know, it’s an in-between the scalability and smarter, right? It’s a more selective process to scale up reputation distribution, and we’ve already done that in three conferences.
Matan: 00:45:21 Another one will be, and we are going to do it, let’s air-drop, let’s say a Twitter. We make a Twitter announcement of Alchemy. Whoever reply with an address gets some sort of reputation. But let’s do it wisely, because in order to get that reputation you need to actually launch the Alchemy on your browser and do some sort of activity. It’s another filter for people who are more engaged, more interested. More aware, perhaps. So you see, there are several approaches between wide air-drops, partly wide ground-drops, and centralized decision-making distribution, for distribution. And we want to mix those strategies into sort of balance between scalability and accuracy to begin with, and then gradually of course distribute more and more over time.
Matan: 00:46:21 (silence)
Matan: 00:46:27 You’re probably muted, Josh.
Josh: 00:46:31 Anything else?


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Danilo: 00:46:35 I do have a question which is I think … I’m very curious, Matan, how does your background help you to think about DAOstack and things? How does your background help you in this project?
Matan: 00:46:52 Yeah, that’s a good question. I mean, I guess in several ways depending which background you refer to. On one hand, my professional background was, I would say, very strong analytical background but I would say in a way that relate with system thinking on problem-solving. My research in string theory was about solving big problems, structural problems kind of, I would say, that requires both the ability to zoom in and think analytically but also to zoom out and see the bigger picture.
Matan: 00:47:44 By the way, it’s quite known that a lot of string theorists, when they complete their PhD, they transition to completely different domains. I have friends that completed their PhD and moved to biology, friends that moved to economy, and other branches or just the industry, and all of them were very successful in those branches because they just acquired the tools for large-scale, kind of like wide-system thinking combined with strong analytical background. I think that’s one thing, probably.
Matan: 00:48:18 Secondly, I had a really strong passion for cooperative structures for about twenty years. So, starting when I was 18, now I am 39, I will be 39 probably in the same week as the opening of the public sale, so when I was 18 I was really passionate about cooperative structures so how would companies perform better under more cooperative structures that align interests better. That’s also what drove me to found the food cooperative when I was 20-something, 5 maybe? More from the desire to experiment, you know, how cooperation works or doesn’t work. My experience was more … Although the experiment was successful at the social level, for me it felt as failure because the outcome was that cooperation is super-hard. And I think one reason for that is that social, direct cooperation, I think, is hard, and is not scalable.
Matan: 00:49:24 And when I discovered the blockchain, I mean, thereafter, I continued for research and during the postdoc I had this idea for social ride-sharing that was like my third project I did. I did this food cooperative and then I did then I did the communal garden, which was also very good success, and then the third project was about social ride-sharing. That was actually the first ecological project. And then it was clear that we need to have cooperative structure at scale, which I was always interested at, but I didn’t know how to make it work. And then, someone told me to look at the blockchain, and that was the same months where Vitalik published his White Paper, and immediately I said, OK, that was the missing element. We needed technology that can coordinate people at a large scale programmatically, and not directly. Not socially, but actually asocially or indirectly or programmatically. And that’s exactly what blockchain does.
Matan: 00:50:21 Then of course, from there I realized that the missing element from there is basically the rules for programmatic operation scale. So I understood the problem for about four and a half years ago, but it took me like four years to actually resolve the solution to that, which only crystallized … I say crystallized not to say the protocol is completed or will not go under revision, it will go under many revisions, but crystallizing in the sense that I actually feel that we have a full picture of how cooperation scale works which we call Holographic Consensus and that crystallization just took place, finalized only towards the end of 2017, the beginning of 2018, so you know just three or four months ago. So, yeah, background I think roughly, I hope.
Danilo: 00:51:12 Yeah, thanks.
Matan: 00:51:15 Also, I was very passionate about climate, not climate but more generally ecological footprints and ecological problems and was more active in that when I was younger and at some point I just concluded that trying to fight with the system from the small scale is kind of like Don Quixote, it’s like fighting with windmills, because the economic forces that drive the failure are so strong that you can just fight with them forever, they’re just so much stronger than you. So at some point I just realized that the only way to actually correct ecological problems at scale would actually be to actually reinvent the way that the economic works at scale and just to replace the existing system, and not be breaking them but be inventing new system that adjusts more effective at scale. And I think that’s, to be frank with that, I think that cooperation at scale is the only chance for humanity to survive the next two decades. That’s roughly my prediction.
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Josh: 00:52:32 I was hoping we would actually talk about that. Maybe, Matan, you could even say more about this, like what is the larger vision of DAOstack, or of yourself as it pertains to DAOstack in terms of the collaborative economy, the mesh of interrupt-able DAOs, the internet of work, maybe say a few things about this?
Matan: 00:52:54 By the way, I just want to air-drop a name. If you want to know more about that and really understand that topic, you should listen to actually two names. You should listen to Jordan Winhall, and you should listen to Daniel Schmachtenberger. These are the two gurus of this topic. I think two of the greatest thinkers of our time, and definitely the gurus of this specific topic-
Josh: 00:53:15 We have an interview with Jordan specifically about DAOstack on our YouTube, and I’d love to get one with Daniel as well.
Matan: 00:53:23 Yeah, Daniel … I’m not sure if you know, but Daniel is also the official advisor of us. They are both incredible. You should stick with them.
Matan: 00:53:33 So, I think, in terms of vision, if we take a picture of Daniel’s speech for a moment, that it’s basically just what I said. Humanity has no chance to survive the next two decades in the current model. The reason is we gain exponentially, we exponentially increase our powers, in particular destruction powers, but we’re not at the same time exponentially increasing our sense-making and decision-making. So, right now for example, we can self-destruct very easily, but we cannot make sense very easily. And why? Why can we make sense easily? Because the game theory-thinking incentive at the global scale are broken. So for example, if I am the owner of the largest oil industry player, I have hundreds of billions of dollars, right? I have all the capital I want, and I have a direct incentive, first of all a direct incentive to misinform everyone about the danger of fossil fuels and about the solution of alternative energy. Reusable? I forgot the word.
Josh: 00:53:33 Renewable.
Matan: 00:54:53 Renewable, thank you. Renewable energy. So, you see, I have a direct incentive to break the game at a global scale. Now, more than just being evil, let’s say but people are not that evil, they do not want to break the planet. Yeah, but what if I actually convince myself that I will not break the planet? I convince myself that the planet’s unbreakable. And this is a well-known phenomena.
Matan: 00:55:18 If you want another guru in a different topic, my guru on behavioral economics is Dan Ariely, if you haven’t listened to his talks, go fast and listen to a couple of his talks. He’s one of the best speakers I’ve ever seen, and he’s explaining behavioral economics better than anyone I’ve ever met. And he has a lot of talks on YouTube. So, Dan Ariely shows like live experiments, he shows how we are all biased by our incentives. Completely. None of us are free from that. No, even, you can think of no, people have money, they will not be biased by one dollar incentives. Wrong. It’s proven by experiments. People that have money are completely biased by one dollar incentives. So we are all biased, so what would make you think that if I am an owner of a giant industry and I could make billions of dollars in profits, I will not bias my thinking about what is right and what is wrong?
Matan: 00:56:10 So, the very fact that few of us run decision-making at scale, it’s destined to fail. Destined to make the wrong decision-making. And, the only way out of that is if all of us, many people at the same time, could be cooperating and be generating even more powerful economic structures that spread decision-making on the larger collective intelligence and also that built-in aligns the interest of the individual with the interest of the collective, which right now is not the case. That argument by itself suggests that if we do not correct the ability to cooperate better and align interests of the individual with the collective, we will simply not survive in the next some time, but then some experts such as Jordan and Daniel, would argue that this time-frame is much, much shorter than everyone thinks.
Matan: 00:57:12 And I was very generous, by the way, when I said two decades. I was very generous. You should speak with those two gentlemans to get a more clear number.
Matan: 00:57:21 So, and we kind of see that, and I don’t want to take the specific example, but for example if you take the U.S., to take a really specific example, if you look at the U.S. right now, that specific process where wrong sense-making is kind of like enforced on society due to wrong concentration of power, I think it’s completely obvious.
Josh: 00:57:50 It’s evident.
Matan: 00:57:52 Yeah. So, that’s the argument. Now, the vision that we have is that to create that mechanism for large number of people to coordinate well easily, and by that better align the interests of the individuals and collective, and by that create an upper-equal anti-rival economy, which by the way, the one reason I really liked the name Arc, so I like the name Arc for two reasons, so three reasons. Originally, someone suggested us using Arc for completely different reason, that is coming from Alchemy. Arc is a word that is related to alchemical plain if you want, or alchemical domain. But then I really liked Arc because arch, A- R- C- H- is the name for a form of governance in Latin or Greece. In fact, monarchy, hierarchy, plutarchy, it’s all derived from arch. So arch is model of governance, which is just perfect for what Arc does. But the third reason why Arc is so cool is because Arc is also the acronym for anti-rival cooperation, which is exactly what we are producing at scale.
Matan: 00:58:58 So, anti-rival economy is a whole new economy that people are not discussing for a reason we understand, but we should start speaking about it as soon as possible. The thing is that today, the entire economic paradigm is only relying on rival products. Rival products, the definition for rival products is products that if I consume, you have less of it. So if I have an apple and I eat it, it means that you cannot eat it. If I drink that bottle of water or something else, orange juice, you will not drink that bottle of orange juice. They are consumable. So these are rival products. And in fact, the way that our economy is built is only considering rival products. And it’s only in a way benefiting the production of, or incentivizing the production of rival products. But what about anti-rival products? What are anti-rival products?
Matan: 00:59:58 Anti-rival products are products that not only they are not becoming less valuable when I share them to me, so if I share my juice, I have less value of juice in my hand. So, anti-rival products are not only do not become less valuable when I share them, they actually become more valuable when I share them. For example, information, code, knowledge, etc. Right? It actually become more valuable when people are looking at my open-source code, right? So, this is kind of like anti-rival … In the old days, we didn’t have much of anti-rival products but you can see the production and the need of anti-rival products correlates with the base of innovation.
Matan: 01:00:48 In a 0 base innovation society, that’s one of the blog posts I’m now writing, in a 0 base innovation society, there is no need for anti-rival production and also there is the national equilibrium game theoretical, well, the game theoretical national equilibrium is of close or scorcher. And you can look at it and see that in an infinite base innovation society, there is a need for anti-rival products and there is a game theoretical national equilibrium of open-source society. So we are actually transitioning to that, from one to the other, and that goes together with transition from a rival economy to anti- rival economy, or at least a combination of them both. And I think as long as we don’t account for that anti-rival economy, we’re not producing … anti-rival products, we’re not producing anti-rival collaboration, and as more as we are inventing new models that account for anti-rival products, we do produce anti-rival collaboration.
Matan: 01:01:52 And that’s exactly what DAOstack is about at the largest-scale vision, which is to produce an anti-rival economy that incentivizes individuals and generally agents to produce anti-rival products that by definition benefit the collective and not just the interests of the individual. And by that, aligning the interests of the individual and the collective. So that’s the … I am trying to throw in a lot of different ideas into one partly cohesive picture, so I hope something will make sense.
Josh: 01:02:26 Yeah, super good.
Matan: 01:02:28 So, on this survey, 5 would be good. So if I do this survey, 5 would be good.
Josh: 01:02:34 The bar is lower the more abstract the concept.
Matan: 01:02:39 Yeah.
Josh: 01:02:40 It made a lot of sense to me. I saw Roberto come in. I imagine it means you need to go. This has been really useful. How are we doing?
Matan: 01:02:48 Yeah, just it was not Roberto, but yes, all the rest is true.
Josh: 01:02:53 OK, good.
Matan: 01:02:53 I think it’s a good time to call it a day.
Josh: 01:03:01 OK. That work for everybody? Good.
Matan: 01:03:04 Yeah, I am happy to do more if you there is a desire or need or … yeah, I think it’s super beneficial. If you want to publish that, I think, I don’t see why not, but you decide.
Josh: 01:03:16 OK. Yeah, we will I think. OK guys, anything else for now? We’re good?
Josh: 01:03:20 Thank you to Matan, very much. Yeah, great.
Matan: 01:03:23 Also, my opportunity to really, really thank you. I think we have one of the most incredible teams in general, in particular around the community, so just an opportunity to thank you.
Josh: 01:03:33 Thank you. Nice.
Josh: 01:03:37 OK, alright. We’ll be in touch. Take care everybody.