Litentry this week: Experimentation with stakeholder capitalism in blockchain ecology
Happy belated Chinese Valentine’s Day! We decided to make some new attempts on the weekly: In addition to technology updates, product plans, market dynamics, etc., we will also incorporate team members’ opinions and thinking.
Table of contents:
- Opinion: Experimentation with stakeholder capitalism in blockchain ecology
- IMe x Litentry: real-time LIT transfer and staking pools plan
- Playback: Substrate Saturday — XCM message interpretation and construction
- Technical updates
🔮 Opinion: Experimentation with stakeholder capitalism in blockchain ecology
A stakeholder was first defined by the Stanford Research Institute in 1963 as a member of “groups without whose support the organization would cease to exist”. Stakeholder Capitalism is to explore a form of Capitalism that emphasizes the importance of stakeholders. Companies need to take into account the needs of all their stakeholders and society at large, besides shareholders, to seek long-term value creation. The concept competed head-on with the “shareholder primacy” notion advocated by The University of Chicago economist Milton Friedman. Traditional Shareholder Capitalism represented by Milton believes that “the social responsibility of a company is to make profits” and “the business of business is business”.
In the years since its inception, stakeholder capitalism has received its fair share of support and criticism, including a Forbes article that said “Stakeholder capitalism will fail.” The main reason is that it confuses a company’s primary responsibility and direction and leads to conflicts in management and strategy making. Earlier this year, Klaus Schwab, chairman of the World Economic Forum, published a book called Stakeholder Capitalism that takes a fresh look at it. He argues that “what was once seen as externalities in national economic policymaking and individual corporate decision making will now need to be incorporated or internalized in the operations of every government, company, community, and individual.” Its capitalism revolves around the most central values, the health of the planet and human well-being. It believes that four stakeholders have a key role to play in ensuring the prosperity of people and the planet:
- Governments focus on creating the greatest possible prosperity for the greatest number of people
- Civil society exists to advance the interest of its constituents and to give a meaning or purpose to its members
- Companies aim to generate an economic surplus, measurable in profits in the short run, and long-term value creation in the long run
- the overarching goal for the international community is to preserve peace
In contrast to the previous interpretation of a company’s goals as diverse, Kraus’s stakeholder capitalism sees the world as an interconnected community in which the company is just one stakeholder that contributes to their betterment. However, under its interpretation, the company should still pursue profits and economic benefits as the primary goal.
Today, the new economic model hatched by blockchain ecology has brought more options to companies and is a great experiment of stakeholder capitalism. Almost all blockchain public chain projects have no profit model. The driving force of their development is to improve the ecology and innovation capability of the whole project, which is finally reflected in the appreciation of the tokens of the public chain itself.
- Unlike traditional tech companies, a profitable business model is not necessary for a blockchain project to succeed — most blockchain projects derive their revenue surplus from the cryptocurrency market, such as through token listing, investment in crypto, etc. This is a tad similar to non-profit organizations.
- Token prices are not directly associated with product profitability and business model. Blockchain projects do not need to maintain token prices through product profitability
- Community supporters’ confidence and consideration in the blockchain project far exceed the profit itself and, rather, pay more attention to the application of the project and its contribution and status in the blockchain ecosystem
- Even if the crypto market is manipulated by shareholders, shareholders often lack the ability to influence the direction where the project goes, as the project usually establishes an independent system of governance mechanisms
- The high liquidity of cryptocurrencies provides more opportunities for VCs to walk out of or make profits from blockchain projects without the need to push the project towards shareholder primacy
Combined with the above factors, most blockchain projects have more freedom to consider more factors beyond shareholder interests, such as product sustainability and impact on the community, community satisfaction, research resource sharing, etc. Therefore, blockchain projects are able to not put their shareholders first, but more take into account the needs of their stakeholders, including users, open-source contributors, community supporters, culture and wellbeing, ecological environment, etc.
Polkadot and Ethereum 2.0 are living examples of stakeholder capitalism. Polkadot, for example, is a sharding heterogeneous multi-chain blockchain infrastructure, on which many parachains with different functions are built and communicate with each other. As the Polkadot ecosystem continues to grow, the price of its native token DOT will continue to rise, eventually feeding back into the project itself, providing sufficient capital for operation and project growth. Polkadot’s development model does not focus on profit or the interests of its shareholders, but rather on the common interests of all stakeholders. Business models such as NPOS staking, gas fee are designed to extend the security of the network by encouraging the community members to join as a node. However, since the on-chain governance power is anchored to the amount of token held, its voting results serve shareholders to some extent. Thus, it is important to design a better governance mechanism to separate the two and make its decision-making system independent of shareholders.
💸 iMe x Litentry: Transfer LIT on iMe; Staking pools
Users can now receive & transfer LIT tokens with their Telegram contacts on iMe. iMe messenger will also support Litentry DID interface in the future, allowing DID profile management as well as displaying on-chain identity computation output like credit rating. In addition, Litentry and iMe plan to launch LIT and LIME staking pools, where LIT or LIME holders can stake their assets to earn LIT / LIME. Please pay attention to our upcoming announcement if you’re interested!
IMe is a crypto wallet instance messaging software developed based on Telegram API. Its high interoperability allows users to use Telegram to send digital currency in real-time to anyone with an active iMe wallet. Litentry’s collaboration with iMe has enhanced LIT’s fluidity and playability.
IMe and Litentry will explore more possibilities of integrating decentralized identity onto the iMe platform. We had a conversation in June about the synergistic potential of DID and instance messaging, review here.
🍸 Subsrate Saturday: Substrate Saturday: Interpretation and construction of XCM message
Litentry engineer John spoke at Substrate Saturday, a live streaming event co-hosted by Oneblock+ and Parity, to share the interpretation and construction of XCM message. The contents are as follows:
- The difference between cross-chain and arbitrary cross-chain assets
- Description of Xcm message types and Transact types
- Implement two instances of an arbitrary message across the chain using Transact
You can watch the live stream here: https://www.bilibili.com/video/BV1EA411w75Z?share_source=copy_web
Testnet: parachain launch process and parameters
- Researched the parachain launch process
- Added the runtime benchmark support in Parachain
- Finished the on_finalize benchmark computing for off-chain worker
- Researched pallet MMR
- Researched parachain launch parameters
Misc: Investigated token issuance
- Investigated token issuance
- Configured Prometheus through ansible
- Refactored parachain CI test
- Added ansible script for
parachain-token-serverfor future usage
- Implemented and deployed Twitter linker
👋 See y’all next time!
Litentry is a Decentralized Identity Aggregator that enables linking user identities across multiple networks. Featuring a DID indexing protocol and a Substrate-built distributed DID validation blockchain, Litentry provides a decentralized, interoperable identity aggregation service that mitigates the difficulty of resolving agnostic DID mechanisms. Litentry provides a secure vehicle through which users manage their identities and dApps obtain real-time DID data of an identity owner across different blockchains.