Sandbox Island For Web3 x Commons

By Noah Yeh

Protocol Labs (PL) is a very interesting existence in the crypto space. The organization was created with strong intentions to build for humanity. Other than IPFS and Filecoin, PL also started a department called “Network Goods” approximately a year ago to build better coordination systems for human beings. Network Goods seems a natural development after IPFS gets widely adopted by web3 communities. IPFS has clearly created a lot of value as a public good, yet means for value capture has not been clear as charging usage fees limits the potential impact IPFS can bring to the industry. Given this context, Evan Miyazono -Head of Research at PL- and his team set out the mission to explore more potential funding models for public goods, so we may have a better future to imagine.

Evan and his colleague Ben Illies visited Taiwan in mid November as da0 helped to plan a series of conversations with governments, media, corporates and academics. Protocol Labs is drawn to Taiwan because of the island’s unique political narratives and civic momentum. And of course, Vivian Chen, da0’s fellow co-organizer, was quite persuasive too.

The discussions during this trip mainly focused on two initiatives built by the Protocol Labs team, “Funding the Commons” and “Hypercerts”. It’s eye opening for us to peek into how Protocol Labs thinks about building new things up. Instead of looking at the rules of the world, designing strategies accordingly, then hoping for positive outcomes like a normal tech startup, they’ve adopted the thoughtful process of mechanism design. Starting by looking at outcomes, they understand why and how strategies were formed, then try to change the rules. They truly make me believe it is possible to change the rules of the world, so we can have a more collaborative future.

Hypercerts

Hypercerts, at least from what I can see, has gained a lot of resonation from people who learn about the concept. Evan and us have a few discussions about why that is. My belief is that people see plenty aspects of hopes in Hypercerts. There are hopes to bring commons and public goods to another dimension, but there are also hopes that it’d fix bad business ideas. Hypercerts is an amazing tool, but it can’t fix everything, that being said, we are still very excited and hopeful for what Hypercerts can do.

If you haven’t been able to read about what Hypercerts are, here are some links to catch you up:
Official Website
Blog Post in English
Blog Post in Madarin

From the discussions, we also received overwhelmingly positive feedbacks from event participants. However, no good discussions come without questions and doubts, a couple interesting questions came up during these talks, such as:

• Hypercerts might not be able to provide long term sustainable funding
• Resource allocation towards head projects
• Evil use of Hypercerts

So far, the biggest question for Hypercerts is where do the retroactive funds come from? Who’s on the secondary market? Who would want to buy Hypercerts? The theoretical answer is, for phase one, in order to establish positive market signals that would convince proactive funders and contributors to join in, we should focus on persuading foundations, governments, wealthy philanthropists to become retroactive funders. Once there are enough positive signals, the market would grow organically.

Yet having the signals transition from “guaranteed buyout” to “someone will buy this” requires more than hopes and wishes. Impact comes in the form of collectible could plays an interesting role here. Say what if we make impact more like baseball cards?

I recently watched a documentary made by Ryan Reynolds and Rob Mcelhenney. The film is about them buying a football club from Wales in UK (… Wait what?). The interesting and relevant part about this is that the football club Wrexham A.F.C. does not own the stadium, Racecourse Ground (used to be a place for horse racing), they play in, the Wrexham fans do. They bought it because the previous owner wanted to demolish the stadium and build more profitable constructions on the lot, thus he intentionally bankrupted the organization in order to have the stadium been sold at a much lower price- at least that was the story. To save the stadium from the evil businessmen, the fans pooled together enough money to make the purchase. Years later, Ryan and Rob came in and bought the stadium from the fans.

This is a very good example of how Hypercerts might have been used. The Wrexham case of course did not rely on Hypercerts or any blockchain technology to be made possible, but Hypercerts can certainly make cases like this more prevalent. The fans during the buyout probably did not think too much about financial gains, they wanted to keep their stadium, they wanted to make local impacts. The target audience of Hypercerts, at least in the next couple of years, probably would not be the traders in crypto markets- those people have way too many choices that trumps Hypercerts in profitability. But the possible financial gains of Hypercerts might persuade more donors to chime in. If Ryan and Rob didn’t show up from thin air, it’d be an impact collectible; and that might just be enough.

The other possibility is to “process” these impact certificates with value aligned transformations. Art would be a good example, with generative art picking up pace in the NFT world, project owners can stake “impact” at smart contracts that issue NFT art, when the NFT gets bought, collectors didn’t just collect art, they also collected impacts. Artist didn’t just make art, they also made impacts. In theory, impacts can be staked in many more types of smart contracts that issue membership, tickets or others.

For phase one, we are inclined to stick to pledgers who are more likely to write bigger checks to incentivize participation from proactive contributors or funders (One can use labor, time or resources, other than money, in exchange of Hypercerts). One group we’d really love to reach is the government (although negotiation might require some early successful PoCs). Governmental spendings are often criticized to be wasteful and unprofessional, spending on funding retroactive impact might be able to have the problem ceases to exist. Same thing goes to any grant or organization who wants to see positive impacts growing and intends to regard this outcome as public goods and commons.

The second question is about concentration of funding towards bigger players. This depends on the types of retroactive funders. If it is a single wealthy funder, grants that disclose transparent and fair measurement of results would most likely get more projects to participate because these projects would understand which metrics to focus on. Similarly grants/programs with more reputable evaluators would theoretically also gain more participation. Of course participation would be affected by the size of the fund, but if people believe these fund would only be sent to certain participants anyway, the retroactive funder probably wouldn’t be able to get as much outcome as they would like to see. It’s a different story if the distribution of funding is based on market attention, although we still believe this is better than not having a market.

Meanwhile, a few interesting questions were raised during our session with academic researchers: What if China issues a 10 billion dollar retroactive fund to topple Taiwanese democracy? What if retroactive funding is used to incentivize terrorist attacks? This is exactly what the thought experiment of Roko’s Basilisk is about: an evil being from the future can incentivize people from the present to help it come to existence, if one doesn’t, one would be punished when it comes to life. Evan’s answer is if this is what Hypercerts are used for, it probably would make it easier for the officials to track who is doing what.

For da0, the intention here is to build a trusting and sustainable partnership with Protocol Labs. We want to build the first batch of Hypercerts experiments in Taiwan; and we want the world to benefit from these experiments. These experiments will include Vivian and potentially other proactive partners in a leadership role, which have always given me a peace of mind.

Funding the Commons

Another very exciting project that we are looking forward to take part in is Funding the Commons (FtC). Unlike most research projects at PL, FtC is a global effort that builds a network of communities around public goods and commons. No spoilers, but we might see it somewhere close to us in 2023.

There have been five FtC events around the world so far in different formats. The biggest one was FtC New York in June 2022. It was held in the American History Museum right next to Central Park. And it was exactly where Vivian and I got inspired and then decided to start da0. The crowd you would see at FtC is very different from the ones we’d see in any other crypto events. There’s no talk about market conditions, trading NFTs, or building hypes as well as excitements. It’s all about bringing likeminded individuals together to solve much bigger problems such as climate change and many many more. Participants usually include impact project owners, impact funds, nonprofit organizations, and researchers.

Funding the Commons would be the social fabric behind this movement for the betterment of society. And luckily we have Ben from PL to lead this forward. Together we want to make many more friends and build a strong community that deeply believes in the intersection of web3 and humanity in Asia.

Friends with Aligned Values

There are many more projects that PL is working on, but Hypercerts and Funding the Commons are the ones da0 will be focusing on at least in the short term.

Now I believe we can comfortably call Evan and Ben our friends. With our values aligned, trust built and friendship formed, we are super excited about the future we will be able to create together.

If you’re interested, please join us at da0, we live on Slack for now.

DISCLAIMER: The views and opinions are expressed as solely those of the author that does not necessarily reflect those of the da0 community.