Stained Bills: Meet rDAI & VirtueDAO
Leaving your mark — but at what cost?
A new wave of crypto projects now allows you to color, or stain, your digital currency with a public mark of support for a given cause.
With rDAI and PoolDAI, you can signal support by pledging the interest earned on your Dai to any wallet address. These projects offer highly efficient tools for giving/allocating capital, and create new surface area for activism and virtue signaling.
However, they also show just how slippery funny internet space money can be. The same tools that make it easy to create universal fungible currency can just as easily be used by private actors to censor, restrict, and create tainted forms of value that may limit usability and access.
Tainted Money
rDAI allows you to pledge the interest earned on your Dai to a particular cause. The Dai is locked in Compound and the earned interest is allocated to an address, or “hat”, designated by a holder or previous holder.
An rDAI holder effectively owns a (i) pledge, or a security interest, on a unit of locked up Dai and (ii) perpetual right to direct the interest earned on that Dai to an address of their choosing.
An easier way to think about it is that rDAI allows you to scribble a short message on your 1 dollar bill. You could write “Save the Endangered Marmots!” in big red letters on the face of your greenback. This bill would likely still be useable at a local bodega or bank, though some money changers might not accept it. The inscription would minimally affect the bill’s fungibility in exchange for granting you the power to make a very quiet political statement.
Of course, doing so would bring no monetary support to the marmot cause, and it would only increase awareness of the Marmot crusade to the few hands who hold it.
rDAI can also be seen as a more efficient version of Facebook’s “XX Just Donated To” feature. rDAI moves the signaling away from the digital public square of Facebook to the actual unit of currency. The effect is similar to an individual proclaiming marmot love publicly from the vantage of his or her wallet. Apps like PoolTogether have a similar effect, albeit without creating an easily exchangeable unit.
Private Sanctions and Whitelists
rDAI is a great way to virtue signal. It allows for efficient labeling of values and goals on an easily exchanged unit of value. The power to easily give though can just as easily be taken away.
A person or entity could choose to only accept certain kinds of rDAI, or bar receipt of others. I could decide to only accept Marmot Dai at my Marmot conservatory. I could also do so at my business that is entirely unrelated to the marmot cause. It seems inevitable that these tools will be used to create sanction like wrappers that prevent certain sets of Dai from interacting with various addresses.
“The Blockchain” is an extremely efficient piece of whitelisting infrastructure, which of course means it offers a highly efficient means of blacklisting as well. You could curate your own whitelists, or subscribe to those put out by influencers, celebrities, or organizations whose values you share. Perhaps Kanye has his fingers on the pulse of who is hurting the Marmot cause.
The issues posed by rDAI remind me Masterpiece Cakeshop v. Colorado Civil Rights Commission, 584 U.S. ___ (2018), the supreme court case where a devout Christian baker refused to bake a wedding cake for a gay couple. The court mostly punted on the big questions, but the baker argued that it was unreasonably invasive and a violation of his rights to use his creative talents for something he disagreed with on religious grounds.
Effectively, he wanted to control the output of his work. With rDAI, he could control the input on seemingly “neutral” grounds. He might have said — “I do not want to accept dollars whose purpose is pledged for a cause I do not support”, i.e. I won’t accept your tainted bills.
It’s a common misconception that all US vendors must accept US Dollars as payment. The USD dollar is only the preferred currency of the Unite States, and a vendor can choose to accept whatever medium of exchange they please, whether FX, commodities, or otherwise.
Virtue DAO adds another layer to rDAI and DAOs in general. Using rDAI as a base, VirtueDAO defines a set of values and gives out corresponding amounts of “Virtue” to people who exhibit those values. Virtue holders are then entitled to receive Dai for their work. The determination of who is displaying the values of the VirtueDAO seems mostly self-reporting. So, it’s either an incredible experiment in good faith reporting, or a deep dive into off-chain surveillance (VirtueDAO refers to their league of reporters as a “Swarm”). This framework allows any group to incentivize corrective social action at scale, effectively creating a self-replenishing airdrop of tokens and incentives.
Until now, most DAOs (like Moloch and Metacartel) seem fixated on VC like financing vehicles. Like the rest of crypto, finance and venture are top of mind. Virtue DAO is a marked departure from this focus. It allows for efficient incentivization of corrective social behavior. It’s a massive on-going bounty that can summon the virtuous and unvirtuous to act.
There’s a surge in the types of DAIs and other monies available in the ecosystem. Whether or not ETH will be money, for now, it seems that everyone’s trying to build money on top of Ethereum. There’s still something refreshing in picking up a crumpled one dollar bill and not caring or knowing whether it was just spent for a contract killer or a cure for cancer. With rDAI, VirtueDao, and their progenitors, private actors taint that ability and transform that blank canvas.
When David Marcus testified before Congress about Libra, Representative Sean Duffy asked if Libra would deplatform “politically incorrect users”. With these tools, private actors and curators may ultimately be the ones who wield that power.
