Last week I laid out the basics of blockchain communities and a bit about their culture. This week I want to dive into what it all means and where it’s all intersects with impact.
A bit of venting
Over the past couple of weeks, I’ve been immersing myself in blockchain communities. That means Discord channels, Twitter threads, articles on medium, and so on. I’ve been trying to figure out how this all works. What does the culture feel like, who is involved, what is getting done through these communities, and why on earth would anybody want to read so many messages.
I found that a lot of the culture is a bit unripe (to put it mildly). There is a lot of internet meme culture, trolling, and just downright scams woven into the fabric of some of these communities. I couldn’t help but notice the culture of platitudes and wishing people good morning and good night on these channels (shortened to gm and gn). One Discord even had a #GM channel to keep all the good mornings in one place… Some of this can be fun, but also, can be distracting from actually being productive. Anthropologically speaking, somebody more learned than me can probably dissect why all this is happening and expand on this topic in a more nuanced way.
What I noticed is a lot of this language is just kind of how the internet works. It brewed in Reddit, Twitter, and gaming over the past decade - now it is part of the language of communities. "Wen drop?" "Gm", "gn," "hello frens", "ser", and so on. It's a bit silly, maybe even childish, and it seems like a bunch of bored men at times (there is quite a shortage diversity in most places I've visited). I don’t know as to geographic or cultural diversity, but since it’s the internet, I think it's safe to assume there's a bit from everywhere, but mostly the Global North.
There can be a lot of shilling of NFTs, bots, scammers sending you private messages, etc. This can be overwhelming. Speaking of overwhelming, the amount of messages in some communities requires reading back through hundreds of messages and tens of discussions that just seem pointless. You can spend hours of your time scrolling back through intertwining conversations just to get to understand what a certain community vote is about.
Much of the culture of "structured communities", meaning, communities that convene on Discord or some other platform, is sorted, but disorganized. What I mean by this is that there are different channels or threads for different topics (similar to Slack), but with the exception of locked channels for announcements (meaning not everyone can post there), it’s a hot mess.
I could probably go on about all the weird and sometimes toxic culture going on in crypto and NFTs in particular, but I really couldn’t give a more well put out and scathing critique than Dan Olson’s “Line goes up”. I recommend putting aside a couple of hours and listening to Dan before getting into this wild world of crypto. He gets a lot of things right about crypto, NFTs, toxic culture, and scams – Knowing what he says, you can enter the rabbit hole with eyes wide open to its faults.
So, after all that, why would I bother? Why take the risk and waste our time if so much of it is asinine "crypto-bros" peddling their wares of half-assed digital art and MLM for millennial men? Because I recognize we have a long way to go. It’s almost a cliché at this point, but, these are the early days of the internet all over again. It’s unclear how powerful this tool will be, how ideologically implemented, and who will come out on top.
I’m hopeful because I see the potential in these communities. I believe that when democracy sprouted in Greek civilization, it was unripe, it was violent, it was classist, it was imperfect. There was no new technology involved, it was a cultural shift, an it took time. I believe that if we would have been standing in a Greek forum, we too would not be impressed by men yelling at each other, we would not think necessarily that this is the most just and right system to govern by. But through working on this imperfect system, we’ve created some remarkable things.
Blockchain, and its communities, are not technological breakthroughs, they are philosophical and cultural breakthroughs. No novel hardware was created, no new game theory, this is just a merging of logical applications and tech with economics. And it’s hopeful.
It’s a bit of open-source culture, filled with sharing, Github style. It’s a lot of community support because, in that mix of chaos in those Discord groups, there’s also sharing of ideas, voting, genuine help, answering questions, shared learning, and more. People are (for better or worse) rediscovering what finance is and how economics works. How do we create meaningful incentives for users without them dumping on us? How do we facilitate and share value?
Dan Olson is correct in his view of the current crypto landscape in a lot of ways, but there's a lot he doesn’t see that is also happening. DAOs focused on environmental regeneration (#refi and the Regen Network), creating open-source common tools (The Commons Stack), creating metrics for tokenomics that are applicable to future DAOs, making information available and easier to read (Scribe DAO). I believe Olson's real critique is not of blockchain or crypto, but rather of capitalism itself.
Almost all critique of crypto that isn’t related to regulation is really criticism of capitalism and societial issues. Scams have always existed, shillers have always peddled goods, bro-culture was always disgusting, nothing new under the sun. Defending this stuff boils down to defending our current economic system.
Critiquing capitalism is a fan favorite. Who doesn’t like to blame our economic system for every woe in society while using our Macs and typing on Twitter and Instagram? And, you’d also have to be pretty stubborn to not recognize the damage our current ultra-neo-liberal-lobbyist-fueled economy is creating in our societies and environment. This binary of Marx vs Milton Friedman is very present on my social media feed. The middle ground is scarce but it does exist. Let’s take a brief detour through capitalist ideas:
What? Capitalism is evolving!
Without going too much into economic history, We’ve had all sorts of capitalism over the ages. We started off with the idea of a free market, guided by “the invisible hand” in Adam Smith's "The Wealth of Nations". Essentially This idealistic view of markets is based in supply, demand, and scarcity of land, labor and capital.
But this idea of our market evolved, and competition became the most important driving force of everything. With the industrial age, competition became irrelevant with monopolies. So we regulated more than we had in the past. This push and pull of regulation created a system that relies on lobbyists that sway our democratic representatives and corrupt our leaders. The system we have is a bureaucratic one, not one concerned with ethics or morals.
We live in a world Milton Friedman crafted for us. A world of capitalism that sees one thing only: Shareholders. Shareholders are the main thing that matters and if they are happy, the market goes up, the rich get richer, and that all supposedly “trickles down” to the rest of us.
This is supposedly good because we compete, get better products, shareholders win. If they win enough they choose to contribute back to society. This is the Carnegie and Rockefeller, model. Men who got so rich, monopolizing markets, that after they literally had people die (and possibly killed) to turn their profits, they became philanthropists. With one hand they destroy, with the other they build.
Neglect to build a dam to save some money, some workers get killed when the dam collapses, then turn around and build a library or a grand hall with your name on it. Everybody’s happy, all is forgiven.
But we are living through a shift. We are witnessing a new version of capitalism, an evolution. It’s been brewing for decades and I think that it is just about ripening. This version too has growing pains. It’s been called many names – conscious capitalism, citizen capitalism, stakeholder capitalism. Each one of these has books that go with them. But the bottom line is that the neo-liberal version of the free market isn’t working. It might be the cronyism, it might be corruption, it might be the ideology, but a replacement is in the works.
In this new version of capitalism, there is not only an "Invisible Hand" but also and "Invisible Heart". Borrowing from Sir Ronald Cohen’s “Impact”:
“ ‘The Theory of Moral Sentiments’, published 17 years before “The Wealth of Nations” in 1759. In this earlier work, [Adam Smith] sought to provide the moral and ethical foundation for human behavior, postulating that, “how selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.” It is this that constitutes the “Invisible Heart of the Markets”.
This invisible heart can indeed guide the invisible hand. In fact, as consumers, it happens a lot that we choose to buy ethically sourced or fair trade products. We may have dietary preferences based on our beliefs, we may try to consume less and conserve more. These are consumer behaviors especially prevalent with Millenials and Gen Z.
Why do I mention all this? Because these trends are part of a change that is happening in our economy. Markets are reacting to it in different ways. Whether with voluntary reporting of their impact and corporate social responsibility (CSR), measurement of their environmental, social and governance risks (ESG), or even companies making efforts to reduce their harm, benefit stakeholders, and contribute to solutions. Investors are interested in investment products that they know are classified by these metrics and consumers are as well.
Purpose in the market
What our current version of capitalism lacks is purpose. We add it on, as a voluntary measure. We create alliances, commitments, communities of practitioners that work to put band-aids on the gushing wounds our market inflicts on society and the environment.
We train people to take business models that give nothing to the planet and paint a smiley face on them with CSR. We take companies' risk mitigation strategies around flooding and call it an environmental impact strategy. This is why so many companies are working to recieve an ESG ranking, it affords them an opportunity to say they are green now… It’s cynical.
There are countless measures, metrics, certifications, and more to show just how green/responsible/accountable/sustainable a brand is. This is often the responsibility of the marketing department more than anyone else. But, sadly and luckily, a generation that has grown up through economic crises, pandemics, wars, and so on, is seeing the limits of this paradigm in the economy.
The mistrust in our economy is the ideological basis of Bitcoin really. Deeply anti-institutional, untrusting, and unimpressed with their economic prospects under this system. I believe this is why there is wide appeal of leftist economics to younger generations, and this is why crypto-economics is both being discovered and reimagined on the internet, in a somewhat egalitarian fashion.
One of labs that these discoveries and experiments is happening in are DAOs.
What is a DAO?
Wikipedia’s definition of a DAO is a good place to start:
“A decentralized autonomous organization (DAO), sometimes called a decentralized autonomous corporation (DAC), is an organization represented by rules encoded as a computer program that is transparent, controlled by the organization members, and not influenced by a central government.”
Put differently, think of it as a democratic co-op, where everybody owns a piece, and gets a say in decision-making. For example, instead of having an accountant, or payroll, those functions can (but don’t have to) be run by code or a voting mechanism that is enshrined in code.
The mechanics are interesting, and just as we are rediscovering finance, DAOs challenge us to rediscover what organizations and governance are. The rules change from DAO to DAO and are evolving as we progress. DAOs are making and learning from mistakes, some DAOs aren’t actually DAOs (The DAO), some DAOs are DAOs but they're not very successful, some are scams, and some are really inspiring (Earth Fund)!
DAOs can choose to use tokens and their treasuries in different ways. DAOs have come into being as VCs, where all the members vote to fund various projects, some DAOs are built to fund and support other DAOs (DAOhaus). It could be that a DAO is a social club and as the DAO becomes more popular and useful, their token gains value, and so early adopters might sell some of their tokens. There are DAOs that separate voting tokens from the token that runs the community and create "governance tokens" needed to vote on changes. Some DAOs give NFTs as badges of merit... The possibilities and variations are many.
What you might notice is that DAOs can have different purposes. They are a new form of incorporating and cooperating as a community. Why is this an interesting idea? It further democratizes power and organizes people in a new way. DAOs are the pinnacle of community in the Blockchain world in my opinion. These aren’t communities that are pumping coins, or voting on blocks, they have a reason to be, and a bank account to back it up.
Just as communities in our real world have moved from needing to survive in the jungle to wanting to thrive in urban areas, we work to create more efficient systems of organizations in order to thrive. This is a natural shift.
Thriving means fulfilling purpose – I believe we are beginning to see this in our markets with companies showing that they are about more than just shareholders and profit. They are weaving purpose into their mission statements, into their work. This is something that drives communities forward.
Just the same, these digital communities are no longer just about surviving and choosing the best algorithm to mine or stake. We are looking for ways to use these systems to thrive. Communities are sprouting up around purposeful ideas. Some are interesting and novel, and really well made!
Some great DAOs I’ve run into:
Scribe DAO – Working on writing and summarizing long articles in the blockchain world.
Klima DAO – Tokenizes carbon credits and drives market prices up to force companies to either pollute less or invest in tech to mitigate their carbon footprint.
Earth Fund - A DAO that uses its treasury to find and fund planet-saving projects.
Diatom DAO - A DAO aimed at investing in off-chain private companies whose mission is aligned with ocean protection.
Unf_ck the Planet - A web3, community-driven initiative to fund, develop and deploy IRL climate technologies & moonshot projects with a real chance of unf_cking our planet.
These DAOs are organizing to make a dent in markets. Literally gaming the system to make a difference using new financial tools and methods of organization. This is not normal! This is a new phenomenon. It's shareholder activism but with a twist. There are so many more I hope to write about in the future.
DAOs are still full of bugs, still full of scams, still not always engaging all actors with voting, and some are even reverting backward and somehow recentralizing power after gaining a following. It's not perfect, but there's potential.
Value from purpose
These communities are new. Lots will fail because of bad teams, bad actors, bad timing, lack of engagement and other usual pitfalls. Right now in general blockchain is very new. We’re still working out the kinks, the communities are quite homogenous, mostly, young, male, and tech-savvy. There are communities of speculators, and communities of practice, learning to build this world.
Also, the threshold to enter is high. In order to participate in something like Earth Fund, Klima DAO, and others, you have to go through multiple steps to find and stake a token. Be prepared to put in a good half hour at least if this is new to you. The barrier for entry is too high at the moment.
So what is possible? We must continue to build and experiment. Those that are in on it, can work on making these tools accessible, so that those that aren’t in on it, find it more usable. Currently, the language is too techy and not mainstream enough.
It should be simple to understand, it should be clear how to participate. Users that will look to extract real-world value from these systems should be about as interested in the blockchain infrastructure as they are in understanding what ‘HTTP’ stands for and why it’s there. It simply isn’t important – what’s interesting is what value does the thing give us.
I think we will be seeing more and more DAOs bring value into this world. I think that the idea of democratizing and decentralizing power is intuitive to those of us that see the ideological opportunity to affect the market.
I think that from this thinking a new paradigm of economics will grow. It’s a matter of time before the paradigm shifts. I mentioned we're reimagining the economy, and governance. We can also reimigine our impact and the value it has.
Just keep a lookout. Tokens may fund carbon sequestration, NFT communities may regenerate forests, DAOs may create common open-source tools, Blockchain companies may create decentralized UBI. These communities that grew from shitposting may end up changing our world for the better.