A minimum viable DISC: how to make a UBI in the age of Blockchain.

Introduction

Here at Social Evolution, we encourage a mindset not just of critiquing the old but of building the new. We are disciples of Buckminster Fuller’s doctrine of creative criticism:

You never change things by fighting the existing reality.
To change something, build a new model that makes the existing model obsolete.

It is a quote who’s time has come thanks to the rise of technologies which asymmetrically benefit the small individual over the centralized entity; technologies such as cryptography, blockchain, 3D printing and the (re)emergence of intelligent city states.

Another quote that captures the changing sands of our time comes to us from the greatest intellectual opponent to industrial capitalism, Karl Marx:

The mode of production of material life determines the social, political and intellectual life process in general.

In his time, industrial economies of scale took advantage of market agglomeration brought about by the rise of nation states. As he predicted, increasing returns to centralized industry gave rise to centralized government with centralized regulation shaped by the industry that gave those governments their power.

source: wattsupwiththat.com

I believe that of his many writings, this thought has stood the test of time and for this reason, the current era which is witnessing the crest of the centralization wave as it gives way to a new tide of decentralizing technologies will witness a similar downstream effect on politics. When changes to society are spurred by technological change, culture often displays a certain level of hysteresis in resisting the new modes of thought. As such, it is not surprising that the most popular solution to the end of jobs brought on by automation is a centralized, twentieth-century style top down solution: the universal basic income (UBI).

In the spirit of creative criticism, we don’t believe in drawing lines the ideological sand and arguing about it endlessly. This is the tactic of the age of centralization where the most dominant thought school would seize the means of political production, ushering in an era of utopianism founded on the hegemonic ideology. When we critique a proposal such as the UBI, we do so because it is inappropriate for the society in which we live, not because of capitalism vs socialism. To that end, although many of us come from a libertarian corner of the internet, we heartily encourage experimental projects founded on ideas we thoroughly disagree with such as the Venus Project, whose proponents argue that scarcity is a disease of the mind, rather than a condition of nature. This is the perfect example of creative criticism and if the supporters of the Venus Project believe they’ve found the next step in social evolution, we would be the first to wish them luck in testing that concept (provided they do so with funds they raise voluntarily and not through taxation).

source: https://www.thevenusproject.com/

Using this framework of ideological neutrality founded in creative criticism, Max Borders has presented two compelling pieces, first critiquing the proposal of the UBI while acknowledging that the concerns that underpin it are 100 percent valid and, secondly offering a glimpse into a twenty-first century-appropriate decentralized alternative, the DISC. If you haven’t read his illuminating piece, please do so before continuing with this article (it is a two part piece so if you want a more thorough critique of the UBI, be sure to see part 1).

Following on from the intellectual manifesto laid out by Max, I’d like to follow up with a slightly more practical iteration by illustrating how we could create a DISC using our current technology.

DISC ALPHA: an example of a DISC using a 2018 software stack

The Software Stack

The purpose of a blockchain, secured by tokens, is to be able to write incentives in code. A blockchain has no power to initiate change. Rather it is a database of scarcity which can be shuffled by external conditions. As such, the core of Disc Alpha will be a smart contract written on the Ethereum blockchain.

Hooking into the smart contract will be a traditional website hosted on a cloud stack, composed of a social media appropriate database such as a Graph DB and a web layer most likely built using a modern Javascript framework such as React or Angular. A lightweight Nodejs server will exist as middleware between the blockchain and the web layer for security purposes.

Mechanism

In Disc Alpha, members can purchase tokens monthly for a set price denominated in ether as defined by the following smart contract written in Solidity:

contract DiscAlpha {
mapping(address=>uint) tokenBalance;
uint monthlyLimit;
uint tokenPrice;
mapping (address=>uint) blockNumberOfLastPurchase;
uint lastMonthBlock;
function purchase() payable {
require(msg.value/tokenPrice<=monthlyLimit);
require(blockNumberOfLastPurchase-lastMonthBlock>1 month);//a little bit pseudo code-ish. You get the idea
tokenBalance[msg.sender] += msg.value/tokenPrice;
    }
//More code...
}

Here, members can purchase a monthly allotment of tokens. Members can only purchase a certain maximum number of tokens in a given month. If they wish to purchase more, they must wait until the next month. This prevents wealthy new members from swooping in and scooping up a large share of tokens in one go.

The purpose of tokens

The tokens give members voting power similar to existing DAO contracts. There is no limit placed on the total supply of tokens. Instead, voting power is proportional to the existing total supply. This means that members who purchase tokens only infrequently will lose voting power, relative to members who make monthly contributions.

Since a growing endowment of ether will emerge, members will use their tokens to vote on how to manage the endowment. This is where the traditional web stack comes in. A Reddit-like site will be created where members can propose investments which other members can upvote or downvote. Voting power will be proportional to member holdings as discussed above so that a member with twice as many tokens as another will have twice as much voting power. Proposals can be investments or charitable, whatever the members wish. It is their endowment to manage, after all. Perhaps they simply wish to HODL.

A second section of the site will resemble a simplified Facebook with profile and picture/video uploads. This will foster community growth and friendship building between members.

The Safety Net

So far, we’ve laid the foundation of a joint investment vehicle on the blockchain. However, the killer app feature of the DISC is to offer a social safety net alternative to the UBI. Disc Alpha members have the option of making an emergency appeal of assistance to the other members. Like all proposals, this can be voted on. If the appeal is successful in its bid for votes, a payment in ether is made out from the central endowment to the applicant. However, some new mechanisms come into play that ensure that there is sufficient skin in the game to prevent free-riding and gaming by bad actors.

The appeal for assistance comes in 2 forms, a loan or a blanket donation. Members vote by submitting their tokens. If the appeal is approved then every token that was submitted as a “yes” vote is burnt in the case of a blanket donation. This means that yes voting members aren’t just deciding on how to allocate a common pool of ether but personally place skin in the game by incurring a permanent loss of voting power. In the case of a loan, yes votes are locked in a smart contract vault until the loan is repaid in full, upon which the yes votes are relinquished to the original voters. If the loan payments default, the tokens in the vault are burnt. Finally, the distressed member loses all tokens in the case of a blanket donation or has all tokens locked in a vault until repayment in the case of a loan. It is essential that tokens are not tradable on exchanges or by any other means. To ensure this, tokens are not transferable between addresses.

Incentives

The structure of incentives outlined above means that the longer a member has accrued tokens, the more they stand to lose by lodging an appeal because no matter how small an appeal you make, all your tokens are burnt (or locked away until repaid). Seeing this, other members are more likely to hear appeals by longer term members over brand new members since the long term members stand to lose the most. Secondly, since yes voters lose their voting tokens committed to the vote, distressed members will have to go to great lengths to convince the community that their appeal is authentic. Perhaps providing proof of medical bills uploaded to the site or whatever it is they need to convince the community that they are indeed in distress. It need not be distress of course. Perhaps a member wants to quit their job so that they can focus on their startup. The validity of appeals will be decided by the community.

The final incentive in play is that since longer term members have a reduced incentive to lodge an application to be paid from the pool, the community takes on a vascular network of membership with long term members constituting the arteries that maintain the endowment through incentivized stewardship and disincentivized intention to claim against the endowment. As such the fractal inequality of wealth that DISCs seek to leverage (as outlined by Max Borders in the above linked articles) naturally emerges without requiring rich donors or corporate sponsors.

Conclusion

The purpose of this article is primarily illustrative of the framework of creative criticism as an alternative to political activism. The framework follows 6 steps:

  1. Critique a centralized system by leveraging intellectually rigorous reasoning from first principles.
  2. Propose a bottom up solution founded on solid technological and economic reasoning.
  3. Iterate with a practical implementation of the ideas at step 2.
  4. Repeat step 3 until the solution is sufficiently reified.
  5. Build it!
  6. Use the scientific method to test the efficacy of the solution and return to either step 2 or 3 as necessary.

Disc Alpha is currently sitting at step 3 and could do with a few more iterations before it is ready to launch. When going from step 2 to 3, it is important to either have some practical knowledge on the topic or to consult someone who does. In my case, I’m a software developer with experience in Ethereum smart contract creation so I have sufficient experience to make a first go at step 3. I encourage anyone who finds the idea of Disc Alpha exciting and who has practical development or marketing experience to take the project further without permission from anyone at Social Evolution.