Edition 5: Souls, Standards and Schelling Points

• 🔥 The New Stuff: Standard mate!

• 🏛 The 101 Stuff: Let's onboard the masses via regen 🌱

• 🧠 The Deep Stuff: We just can't seem to get enough of.... souls ... da da da der da 🎶

• 🌎 The IRL Stuff: Is web3 a Schelling Point of your own?

Industries need standards. Ways of working that contributors can learn and adhere to, and minimum levels users know they are getting in products.

Standards help parties within a system to coordinate, and allow different systems to interact reliably. Verra is the pacemaker in the carbon credits ecosystem helping to develop and manage standards - they are benchmarking ‘Standards for a Sustainable Future’.

The entire carbon industry on chain has been grappling with a problem: how can carbon-offsets within crypto-refi initiatives best interact with the Verra Standards.

Now it seems some good news is on the way:

Though its important that crypto-refi initiatives are interactive with non-crypto standards, protocols and instruments, Verra, to date, have not solved this problem, instead choosing to invite key projects such as the Toucan Protocol into the planning process.

Verra’s desire to incorporate better crypto interaction proves that the ‘refi’ and ‘regen’ movement is gaining momentum and credibility.

Yesterday Verra made a public announcement on crypto. Here's our takeaways:

• Prohibits further bridging of carbon credits on-chain

• Explores a path to tokenization by introducing an “immobilized” state into their registry

• Launches a public consultation to create the best carbon market system in the world

The Toucan Protocol were quick to explain how this effects them, in summary:

• The current Carbon Bridge is sub-optimal; it was the best solution at the time of creation but established registries need better collaboration procedures.

• An immobilized state is welcomed as it removes the risk of double-counting and allows bi-directional movement of the carbon credit on to a blockchain, and back to a registry. Better movement will lead to reduced price-risk and increase market volume.

So what are the impacts?

• The carbon credit market can move away from its reliance on trust assumptions - removing a degree of systemic risk to the on-chain carbon market.

• Short-term this reduces bridging of carbon credits on-chain.

• No short-term impact on the integrity of on-chain credits

It’s great to see these changes as it leads to improved coordination between off-chain and on-chain systems that are important to the success of the refi movement.

There's many among us who believe that the regen movement will be the next ‘great onboarding’ into the crypto space. That might sound a bit messianic, but bear in mind 2 tendencies: 

1st: 13% of Americans traded in crypto over the last 12 months, and its growing, 2nd: There's  a media machine creating articles like this that's fuelling a rage among those looking in at crypto from the fringes. 

This critical demographic are basically saying (understandably): "Crypto culture is degenerative, hyper-macho and hyper-financial - its not for me!"Or:"Everything within crypto orientates towards money." And:"Amazing technology? looks like a casino!"And perhaps most importantly:"Blockchain technology is extremely energy intensive, give Mother Earth a break!" (like our buddy, this guy:)

To onboard new members the regen movement needs to listen, and participate in the conversation. Some stock answers won't hurt either though. So let’s start with the energy consumption of blockchains: 

First of all, its a valid criticism. It is estimated that the carbon footprint of a single Ethereum transaction is over 100kg of CO2. Its a tricky dichotomy for regens: Improve the world with blockchain technologies.. yet cause large-scale ecological damage 🤬.

The exhaustive energy consumption is due to how transactions on many blockchains are validated: with proof-of-work (PoW). To validate a transaction answers to complex mathematical calculations are needed, calculations repeated across the network. All those calculations burn energy. So that's how it happens. 

But lets not throw out the baby with the bathwater - there are reasons for regens to be optimistic. Here are your queue cards for the next time you need to talk about this: 

1. Proof of Stake (PoS): Ethereum is transitioning from letting people validate transactions with computation to people validating transactions via staking their own coins. PoS is cryptographically water tight and is expected to reduce Ethereum's energy expenditure, with some predicting a decrease of 99.9% 😮  

2. Zero-Knowledge Roll-Ups: Validating transactions requires knowledge of the entire blockchain ledger. ZK Rollups allow transactions to occur off of the mainnet (less energy intensive) then reconfirmed on the mainnet. This massively reduces energy consumption as transactions 🔥

3. Carbon-Negative Chains: By conceding a little decentralisation and cryptographic complexity, we now have chains that are either; carbon-neutral (like Algorand) or even carbon-negative (like Celo)

Here we are with the second of two Schelling Joint attempts to decode Weyl, Ohlhaver and Buterin’s epic think-piece published in the Social Science Research Network Journal on the 11th May. You can read last week’s newsletter here, where we looked at the first pillar of the article: Soul Bound Tokens (SBTs). 

While we’ve been 101ing it, the paper’s been downloaded close to 20,000 times, and already made it into the top 12 downloads of the year on SSRN. And just in case the original is too dense, and you’ve had enough of our summary style, there are other ways to digest it beyond SJ (we like this one). 

Before we jump into part deux, on Decentralized Society (DeSoc), we just wanted to point to something that often gets overlooked in authoring academic works. And its important. 

Anyone who’s read an academic paper will know that usually the main author gets listed first. But sometimes its advantageous for the main author to be listed second, or even last, if it’s believed the other authors may bring more attention, citations, and debate. That seems to be what’s happened with this piece, and Glen Weyl made sure this week that the world knew that Puja Ohlhaver, a woman of colour leading a majority white and male crypto space - despite featuring second in the list order of authors - was actually the main contributor. Go Puja!

So, onto DeSoc. As we mentioned last week: its nothing to do with removing footwear.

Decentralized Society (DeSoc), sketched out in theory in the last 2 thirds of Ohlhaver, Weyl & Buterin’s piece, is really an expression of what Web3 could be if SBTs were fully operationalised. And the argument the authors make is that their vision of DeSoc is an imperfect but progressively ambitious North Star that builders may choose to create solutions for. If developers respond, then DeSoc may prove to be the best of the options we have for solving the problems of coordination we face now. 

We’ve reordered some of the arguments and tried to connect them to each other here (Sorry Puja, Glen, and Vitalik!). We just thought it might make more sense to newcomers like this. We also had some feedback on last week’s Deep Stuff and heard that some among you had a brain-melt. Suggestion instead: bullets and bolds. That’s cool, we hear you, let’s go.

Here's some things that we think are important to keep in mind as you go through the full version:

• The authors believe in the power of certain arrangements IRL for cooperation. Web3 shouldn’t try to write-over these but try to create relationships that harness the power of connection within them. They propose “augmenting and bridging our sociality across virtual and physical realities, empowering souls and communities to encode rich social and economic relationships”. 

• DeSoc’s greatest strength is its ‘network composability’ (which is the ability of network solutions to be upcycled, connected and integrated into larger systems to become inputs of those systems, rather than simply outputs of their own).

• The article is critical of the idea of privacy über alles (we looked at this a couple of weeks ago in a piece on self-sovereign identity), and they infer throughout that the pursuit of ‘trustless’ economies in crypto is really both a product and an outcome of its current hyper-financialised model. It doesn’t have to be an endgame for crypto; SBTs can be important in this. 

• On this point the author’s say: “privacy should be a programmable, loosely coupled bundle of rights to permission access, alter, or profit from information.” This could piss off some self-sovereign hardliners. Popcorn already in the microwave.

• This new arrangement for understanding privacy matters when compared against how data’s utility now. AI is essentially the practice of machines learning from data which individuals once owned, but is now disproportionally available to data-miners in the web2 version of the internet. This kind of data use disassociates the data itself (info on the web) from the rightful owners of it (us). Plural Intelligence on the other hand, through SBTs, offers “a natural way to program economic incentives for provenance-rich data while empowering data creators with residual governance rights over their data”. In other words, souls own and control their data; SBTs ensure that doesn’t get forgotten, recognised, and rewarded in some way.  

• Co-determined sociality is a bottom-up approach that solves a lot of issues, some of which we talked about last week (like community recovery of wallets).

• Using a ‘discounting’ method within a quadratic funding or polling system, based on assessments of the diversity of SBTs that are ‘for’ a certain proposal, or who back a certain prediction, can help ensure plurality in networks. This means we use SBTs to figure out if we have a diverse pool of people behind a particular movement. 

• This is a problem for some people in crypto - especially those who don’t see a problem with the technology’s lean towards a hyper-financialised libertarian dystopia in its current form. It’s a problem because they see potential to inadvertently doxx individuals and allow their identity to become discoverable. 

• But DeSoc instead seeks to “correct for biases and collusion” in governance systems, using SBTs. If we can ensure this diversity, then this leads to the creation and sustenance of what the authors call plural network goods. 

• It’s not all good news (never is in crypto!). There are issues of privacy (we’ve mentioned these above), cheating, and gaming of the system. Ohlhaver, Weyl and Buterin acknowledge this and suggest solutions that you can find on pages 20 to 24 of the article. But they also say that whilst DeSoc is indeed, potentially dystopian in outcome, Web2 and DeFi are inevitably so. 

Hope you’ve enjoyed this two-part deep-dive into what could be an important moment in the intellectual trajectory of regen. If you have, we want to hear from you. If you haven’t, we don’t. 

(Just kidding we do: DM us on Twitter 😉). 

This tweet hit home.

We all have plural interests, banks of knowledge, arrays of intuitions and collections of passions. At times a few of them can overlap, briefly intertwine and feed off of each other. Yet they often feel confusingly disparate, and janky when you put them together.

We have found that about once a decade something happens that creates a force so large that it starts to pull all these elements together in a beautiful way. The force builds strong and ends in a perfect storm of ‘yes!’.

Web3 feels this way for us. Our very own Schelling Point for all of our IRL passions and experiences. It’s beautiful and powerful and we plan to dance in the rain of this perfect storm.... do you?

We are keen to improve this newsletter and a core part of that is listening to the readers.... you! So if you have some feedback on what we could improve, or even what you love reading here, DM us on twitter 

Thanks for reading!