The Commons Stack: Scaling the Commons to Re-Prioritize People and the Planet
This is a transcript of @jeffemmett’s presentation on the Commons Stack, the closing session at the Token Engineering Global Gathering (TEGG) in Berlin on August 23. Article transcribed by Don Adams, edited by @krrisis, with added links for reference.
Why the Commons?
Thank you for joining us. Today we will be talking about the tools that we’re building to scale the commons, to re-prioritize people and the planet.
It’s first good to establish: why are the commons important? We have some really big issues on the horizon that we can only solve together: climate change, resource depletion, open source incentivization — these are all public goods that are prone to the free-rider problem. This problem applies just as much to the extraction of environmental resources as well as the funding of writing open code. It’s a coordination problem that underlies some of the biggest problems we face. Ostrom and others have suggested that we need larger-scale coordination mechanisms for making rules to determine how we use and allocate existing resources. We have some of these coordination tools already, but our current approaches are flawed. Our current global coordination mechanisms — both markets and states — are dealing with quite some challenges. We have one-dimensional economies that optimize for profit and exclude people and the environment from their calculations. We have outdated governance structures that are reactive to the problems we seem to be creating for ourselves, rather than being proactive in solving them. They don’t seem up to the task of responding to new problems fast enough to keep up with the speed at which they’re emerging. We have a lack of global cooperation around the resolution of these problems, which leads to a breakdown of coordination on a global scale. We have nations coming together to resolve climate change, but country A won’t commit to carbon reduction measures because country B won’t do it first, and vice versa, until we wind up in this stalemate where very little gets done and climate change only gets worse — the tragedy of the commons writ large.
But there are solutions out there in cooperative structures: communities come together around shared goals (the commons) and value their local communities and environments. They have their own non-hierarchical governance structures and decision-making processes. These are great solutions, but they have a problem. They rely on trust, which today is person to person — this doesn’t scale. So how can we scale this trust and these coordination mechanisms to apply commons-type solutions on a global scale?
Scaling Trust With Blockchain
Luckily there’s this new technology you may have heard of called the blockchain. So we have this opportunity to create what are essentially global trust networks, in which we align economic incentives with these communities’ values. We can give communities economies and allow them to encode their community values within these economies. In this way, we can scale these community commons into global networks that are protecting our most valuable resources.
This is essentially what the Commons Stack is trying to do. We’re trying to scale trust using the blockchain, and we’re trying to scale the commons with these tools that we’re building. We’re creating an open-source library of components that enable purpose-driven communities that are united around any cause, whether it be cleaning up trash or planting trees or producing open source components for the betterment of humanity, and we’re giving them the ability to raise money, make decisions about how to spend it, and to measure impact.
This tech stack for the commons will include tools for varying methods of governance, funding, proposals, simulation and initialization. These are modular, interoperable components, so any project can take the pieces that are relevant to their community, customise them to their specific needs, and combine them into a token network . This could be considered an SDK for DAOs, so you can take any of these components, interoperably combine them and launch your token network around your community goals. This is a future vision of the Commons Stack, so let’s look at where we’re going to start today.
A Minimum Viable Commons
We’ve identified four key components for a ‘Minimum Viable Commons’: the Augmented Bonding Curve would provide sustainable funding for communities, the Giveth Dapp provides a proposal and escrow service, we have Conviction Voting which is a continuous decision making governance process, and we will have the Commons Analytics Dashboard (powered by cadCAD) which will allow us to measure the value produced in these communities. We’ll be building with an iterative engineering approach, so we’ll be developing each component one by one and inviting communities to launch them in beta test environments. As they we test out how these components work in live environments, we can improve them in our next codebase iteration. Once each of these components is built we will synthesize them into an ‘Minimum Viable Commons’ and we believe it will be a new standard in token network design.
So the important thing to note about the Commons Stack is that it has a rigorous token engineering foundation. This is not based off an idea in a whitepaper, it’s based on solid token engineering research and built with tools and processes like cadCAD. Each of these components will be modeled based on mathematical-first principles, then we test them and only then do we start implementing them. We’re producing a library of robustly designed components that can then be forked and used in any commons initiative or open source project, and anything we learn from those live deployments are an opportunity to collect data and improve our model. We’re turning this into an engineering design process which will revolutionize the entire crypto industry.
Complex system design is complex. To build these components, we start by defining mathematical conversation laws, then we model these systems in token circuit diagrams and simulate them to understand where their systemic failure modes may lie before we even write our first line of code. The great thing is that you don’t have to do this modeling, you can just use Commons Stack components, knowing that this robust design is already baked in.
Sustainable Funding: the Augmented Bonding Curve
To zoom in on the first component: the Augmented Bonding Curve is a sustainable funding mechanism for your community, one that we think will help solve the problem of community incentivization. The Augmented Bonding Curve is a token bonding curve, with some added mechanisms to address attack vectors. It has two phases: the Hatch phase is the initialization phase, and then there’s the Open phase when the public can buy from and sell to the bonding curve. The Hatch phase is a community crowdfund to initialize the funding pool and collateral pool. Most token bonding curves only have a collateral pool, but by separating these into two pools we can create two different uses for the token which brings some stability that we’ll discuss in a moment.
First, the Hatch phase: the community comes together and funds an initiative they believe in. That money is split according to some agreed-upon percentage into the funding and collateral pools, and then you are issued a dual-purpose token, which is both a claim to one part of the collateral pool (you can burn it for some collateral) and it provides you with governance rights over the funding pool (you will be able to vote on how the funds are used). Note that this is not a time graph, it’s the amount of money people put into the bonding curve, so it can go up or down depending on people’s behavior. It’s not a magic money-making machine.
Next, the Open phase: as the price goes up people may want to sell their tokens to reclaim the collateral backing them. As more and more people exit the economy, though, the people who are left have all the governance over the funding pool. Then others who want to share this decision making power will buy-in, exerting an opposing buy pressure against those selling. The interplay of these forces creates market volatility within an acceptable range, which generates funds for the funding pool via an ‘exit tribute’. Every time someone sells their tokens, some percentage of the value that it represents is taken from the collateral they get, and deposited into the funding pool to pay for more work in your community.
To recap the Augmented Bonding Curve: we’re creating circular, regenerative economies that can be used by anyone, any community, any cause or open source project that wants to coordinate around a goal. We have incoming capital that gets split between the funding and collateral pool, we have funds flowing from the funding pool to complete proposals and provide value to the community and perhaps the world at large, and you have exiting capital which creates this circular flow from the collateral pool into the funding pool, so that you get sustainable funding into your community.
Augmented Bonding Curve Simulation
What can we do with cadCAD? Here’s a simulation: You can set all these initial conditions, for example what percent of community funds goes into the funding pool, the pre-and post-Hatch token prices, the exit tribute amount, the vesting half-life (which protects the initialization period before the community establishes value for itself). And you can approximate how much you might raise from your community. Important to note: when you run this info, it’s of course just a simulation and not an actual prediction. The green line represents your community token and the blue line is the accumulation of funds continuously flowing into the funding pool. So you can see this community in this example has raised 2,000,000 DAI in a year. This is what we can do with cadCAD, you can see how this system might fail and how to adapt it, before a single line of Augmented Bonding Curve code has been written. Play around with this demo and see how it could be useful to your community.
How might the Augmented Bonding Curve be applied in the crypto space? We have ‘ecosystem-funding DAOs’ popping up all over the place, and they’re targeted towards specific purposes. Moloch DAO is focused on ETH2.0, MetaCartel on UX, we have art DAOs, open-source DAOs … many different communities are coming together around causes, and they could all use the Augmented Bonding Curve as a sustainable funding mechanism, rather than just relying on member donations.
There are other challenges we can tackle with ecosystem-funding DAOs too. There’s no accountability right now over allocated funds, there are on-chain voting issues all throughout the space, and a lack of impact measurement, it is difficult to trace whether our money spent has the intended impact. Solving these problems is the roadmap of the Commons Stack, each of these challenges, one by one, and synthesizing them into an easily forkable ‘Minimum Viable Commons’ to move forward with and bring us into an age of decentralization.
Token Engineering Commons
We have an invitation to the community today. We’ve realized that blockchain research and development is a public good as well, it’s also a commons. It’s providing public goods for the entire community to use: it’s non-rivalrous, it’s inclusive, and therefore it falls prey to the free-rider problem as well. We need an ecosystem-funding DAO to push forward token engineering R&D in the blockchain space. Our invitation to the token engineering community is to come together as a DAO once the tech is ready and launch the Token Engineering Commons (TEC). This will be the first commons that we hope will be launched, using the Augmented Bonding Curve. Many of the token engineers today are working separately, getting by on client work, doing token engineering research in their spare time. This work is crucial, and we believe it needs to be done, it will push the ecosystem into the next level of maturity. The Token Engineering Commons will provide a sustainable funding mechanism to unite these researchers around the common cause of maturing this industry.
We’re going with an old school, tranche-style raise to fund the development of each component in this system. We are excited to think that once we build this system, such old-school style raises will never again be necessary, because we will be able to use the Commons Stack as a sustainable funding mechanism to raise money for similar OS software and community endeavors.
We’ve broken it down component by component to be synthesized in the last step into a ‘Minimum Viable Commons’. We’ve gotten here through contributions of labor and finances and we’re more than open to contributions from the token engineering and blockchain communities, because we’re excited to start building these components as soon as possible. We have ideas, we have tested our assumptions, run simulations, and now we’re going to get down to building these OS tools for the community at large. We have a dedicated team with decades of experience in this and relevant fields, we have some of the top token engineering advisors giving us their wisdom and expertise, and ensuring that we’re moving forward in the most circumspect way as we build these components. We have a strong legal team that’s looking at the future legal framework of DAO ecosystems because this is also an important entanglement that we need to keep our eye on.
We are here today to ask you to join the Commons Stack community: help us help you to realign our economies and re-prioritize people and the planet.
One final announcement: a year ago at the first unofficial TEGG, a tool was announced that had the potential to revolutionize the crypto industry by introducing an engineer’s loop of simulating, modeling, and testing these systems before we get down to coding them: that tool is cadCAD. Our team and advisors think this is such an industry-critical bedrock for pushing forward the token engineering industry that we’re happy to announce that after completing an internal raise, we’re open-sourcing cadCAD… today.
So jump into the repo, have fun, and join the Commons Stack community. We want to coalesce a community of people who want to use token engineering and practices to push this discipline to a greater level of maturity so that we can all tackle the biggest issues of our times, together.