 Thank you so much for coming through for this workshop today. My name is Paul Kohas. I'm going to introduce these amazing gentlemen in a second. So the topic for today's workshop is funding as a medium and a message, how we get capital, and the influence that it has on what we build. The reason I chose this topic was because it became a very personal topic for me as well. I saw a lot of funding scenarios that evolved in the Ethiopian system over time, and I think it's a really important topic to actually address when we're opening. What are the different sources of capital? Where does capital come from? What are the incentives that come with it? And how do we decide where to get it from if we need it? Cool. So I'll just bring in Honichiwa. Honichiwa. Our goals for today are really to foster an open conversation, to explore the role of funding and capital at Web3, specifically in funding Web3 infrastructure. We want to look at different sources of funding and incentive design. We're going to go from centralized model to very decentralized models of funding. And then what we really want to try and do is make this a very open platform for you guys to share your experiences, discuss the problems that you've encountered, to ask questions. Yeah, so that's one of the core goals of the workshop. We really want to try and make this as open as we can. So please feel free to engage, ask questions, interrupt. It really shouldn't be like a very kind of front-facing workshop. Cool. Our workshop challenge for today are Andrew Keyes from Dama Capital. We're going to give a super quick intro. So unfortunately or unfortunately I've been raising money. I feel like most of my adult career first at a tech startup. Within Consensus. I raised money for the launch of the Enterprise Ethereum Alliance. So in the open source standards world. And recently at Dama Capital where we managed, I think, the largest actively managed Ethereum fund. We've got $150 million worth of Ethernet. And I think that can speak to some of the issues with institutional allocators, open source grants and venture. Next up we have Amin Soleimani. Hi, I'm Amin Soleimani. I'm the CEO of Snack Chain. I've been the recipient of grants in the board from Jeff to both payment channels and stuff. And also I'm the Summoner of Mall of Dow which helps open source infrastructure for the whole period. Hi, I'm Jeff Amin. Hey everybody, working on a project called the Common Snack which is a collaboration between Givit and BlockScience and we're pushing forward open source token engineering and robust design in crypto economic systems. And the first component we're building is an augmented bond indicator which is a funding mechanism for open source projects Cool guys, thank you so much. I want to give a brief intro to myself as well. It's something that's really interesting often we're going to try and cover a host of topics in this workshop. I always feel like to say I like to say I'm not qualified to talk about any of these topics but I've learned so much over the time and what I'm really trying to do is really just share my experiences. To give you a very brief background about myself I first got into Dogecoin in 2013 and got really interested in mathematics and the first community economics that came with Dogecoin. I think no crypto presentation was ever complete without mentioning Dogecoin. I studied economics in Switzerland and Cape Town really fell down when you came to Rabinol in late 2015. Found a company called Lulamabs and worked on an identity for the community set. I met a lot of people at Consensus and worked on U-Port that left Consensus and founded a company called Polyco. We're aiming to redesign the way that essentially decentralized drug development for biotech products. We're launching our first app and the fundraising topic for me became very prominent. This year we got into fundraising mode. I had to go for a lot of these challenges that come with fundraising as well as the good sides. I ran for a maker. I've been involved in a lot of fundraising initiatives with Doge itself. Cool. So funding. Maybe quick question into the room. Who has received funding before in any kind of form? It's a lot of people. Which is great. So you can all join in to the original topics later on. Maybe I have a who's received funding. Masters. We'll get into the structure of the workshop. I'll explain this a bit later. We'll go into each funding category. The funding categories go from VC to DOWs to grants to token sales. Maybe hands up. Who has received funding by doing a token sale? Gross. So that's interesting already. That's a lot less people than VC which is I think that's really interesting. Who has received a grant from any kind of grant issuing? 30. Wow. That's more people than we had with token sales less people than VC. Who has received funding from a DOW before? Nice. Cool. Okay. Maybe more of an open question to the room. Why do you guys feel that funding often feels like a taboo topic to talk about the body? Do you guys feel like it is a taboo topic? Okay. So funding is very openly discussed in the Ethereum ecosystem. Would we all say yes to that? Would you say yes? Which ecosystem you're in? So our grant funding I think for example is very transparent. It's very openly discussed. Probably things like VC funding less so. It's almost moving from the scale from non-profit to for-profit which also changes the scale in terms of transparency. For example for me as an early founder Ethereum gives us that was really hard to figure out how any of these companies got VC funding orders. The business model was the incentive for the VC. How does a round structure work? Valuation, term sheet. Yeah, but maybe that's not a bomb. That's unique to the Ethereum ecosystem. Cool. So why is funding a core tool to build anything? Well, you've got to pay yourself. You want to grow your team and your product. Legal expenses. Community building, marketing and awareness. Fundamentally defined point bill. How you monetize it and in what time frame you do that. So getting a grant to fund your DAB has very different implications than trying to get to a VC to fund your DAB. And it's really important to understand what are the different incentives for those different issuing authorities. Cool. So this is kind of the general framework that we're going to follow going through each of these topics. Feel free to interrupt. Guys, by the way, if you want to come have a sit down, there's still spaces here in the front. In Milwaukee to come sit with us, I think you would add a ton about Milwaukee. Would you mind coming and sharing some of your wisdom with us? Please. Come on. We literally an hour before this we said that we could have back you here. So, here I am. Cool. Kevin, thank you so much for joining us. Do you also the other champions already introduced themselves? Do you want to give a quick intro? Yeah, sure. Hi, I'm Kevin and I'm one of the co-founders of Gitcoin. Our mission is to grow and sustain open source software, a software platform that connects funders to coders going access to funding and vice versa. And I guess our most recent funding stuff we did in the ecosystem was Gitcoin grants, which just around 3 raised just under 300k for ETH 2.0 projects in the ecosystem. And explain the matching. Because this is so rad. Yeah, so Glenn while in Vitalik published this post called Constraint Capital Liberal Radicalism which is basically you have a pool of matching funds that will be distributed to projects that get crowdfund contributions and instead of a one to one match where if Andrew gives $100 to project A it will get matched by $100 from the matching fund that's distributed according to the breadth of contributions not just the depth. So if project A raises $100 from one donor then it will get matched less than project B that got $10 from 10 different donors. So both projects raised $100 but the second had much broader base of support. And so with quadratic matching which is another word for Constraint Capital Liberal Radicalism you can have some of the projects on Gitcoin grants would you with a $1 contribution would get $200 worth of matching just because it's a broad base of support. So it's according to Glenn and Weil the mathematically optimal way to fund public goods that the ecosystem cares about. I think that's why Andrew invited me up here. Ok, cool. So as we move through these different topics we'll look at what is being funded, what is being offered Is this a for profit model or non profit funding model? Governance who makes the decision on what gets funded and what doesn't? The incentives who benefits from the funding? And then what are the key issues that can come with it? We have this question already who we've seen funding before. I'm actually really glad that covered that you joined. So I think one of the core questions that we have in this ecosystem and that keeps coming up again is like funding, how do we fund open source infrastructure? And it's kind of the strategy of the commerce problem. Yeah, like how do we fund open source infrastructure? There's a lot of expectation that funding goes into the base protocol layer once it's deployed. But we haven't really developed I think good models yet to scale that up and I think that's why we're seeing so much investment and so much kind of scaling away from the core layer to monetize on other layers like monetizing layer one and layer two and so on. And the core thing that I want to get into this is well, this is kind of what we're trying to do. You guys can't see it, it's just the public works. And so in our current society we pay taxes in order to pay for the rows to be done. We kind of say we kind of pay taxes to use Ethereum to the miners, but the miners don't kind of invest back into continuous development of the rows and of the base layer. So if we don't kind of find good ways to invest in public works like we funnel capital into public works then we end up with taxes like shitty pothold roads and this is a really big problem I think not just a problem that we have in I think in the current open blockchain space, but it's a problem in open source maintenance in general. Kevin, maybe you have or like any of you I know it's really really difficult to be maintained to be paid as an open source maintainer for any kind of project. Yes, I mean, I think that our mission is to ground sustain open source, but everyone up here has an interesting model that could be used to solve the coordination problem of funding our digital infrastructure ComSAC and PoloDAL from different grants I know are all experimenting on space and so I think a diversification of funding models that will make the ecosystem stronger from the others on the panel channel. Cool. We'll get into like each of the funding models, just like as a base opener. Okay, so we don't want this, so we need better funding models for the comments which will be one big topic that we'll get to in the end. We also don't want this. So this is Tollgate in China and so like on the one side we have free roads, but if they're not maintained well, they're going to end up like this. And on the other side this kind of reminds me of some of the day one solutions that are being built up. It's like if we start monetizing scalability too hard, then essentially it becomes like using Ethereum will be like passing from Tollgate to Tollgate. That's also something that we want to afford. Okay. So over the next kind of hour plus we're really going to kind of take a journey from different for-profit models into non-profit models and then finally to the comments the first one that we're going to start with is venture capital. One of the oldest funding models in existence I think compared to the other one it's not one of the oldest funding models in the world. Cool. So let's talk about venture capital. I think going back to earlier I saw the most amount of hands up for people that had previously received VC Do you guys mind raising your hand again? Okay. Does anyone want to speak about their experience share an experience they had with VC maybe some of the issues they encountered? Yeah? The only language VC's understand is like FOMO, so you've got to see them online and they'll watch that speak the same language you can see. So the only way I got a VC to invest in my company basically going in and said the round is full and in a week are you in? They said yes and that's money. So that was my base that you have to show that there is a chance of missing out or you can get funded. Your idea may be good your model may be good that doesn't really cut it in some way. You have to feel the human nature. Thanks for that. One other thing different is like the environment was very different and hopefully your bill will be raised in 2017 VCs are like throwing us money. It's so easy to raise like in 2017 when we started and when we tried to raise like this year it was like a completely different day. VCs are like way more scared of the space so I think a lot of it depends on the environment. You see that from the round sizes as well I mean round sizes were like and have now grown down to like very very careful. I think that speaks to exactly what your previous is like FOMA has decreased a lot of space. FOMA I was going to say something similar but it depends on the type of VCs. You can be in early stage or you can be in stage VCs and if it's proud, ideal it's just like a one-off type thing so environment is important but also the type of VCs. Coming from the VCs side I worked out a VCs that invested in the source which was really interesting so although I think that VCs do have FOMA I think that also some VCs are really great in a lot of ways but the issue is that crypto VCs crypto is way different than VCs sass right? So venture capital works for a lot of models but a lot of the businesses and the projects that we're building right now in crypto aren't served by the traditional venture capital return structures investment process so we're seeing this association with how venture capital can be applied to crypto projects and that's causing us a question like how private capital is being funneled to early tech innovation in the first place. Really, really interesting comment I think something that will be very interesting to see play out is a lot of companies that are being funded at the moment don't have a business model yet it'll be very interesting to see at some point if LP pressure starts rising on investments that were made that have large user bases that people are now using that have created this open infrastructure but that now need to start monetizing that open infrastructure which might kill those user bases so it'll be interesting to see really interesting to see how that evolves Yeah, VCs pattern mesh they look at what's been successful in the past and they look to apply that moving forward and the patterns we're developing here don't matter very well Yeah, generally speaking some VCs on with tech startups I've just heard a lot of failed stories where there's been the odd rogue investor that had some power to do something wrong and they sort of yeah, basically try to maybe take the capital or do some dodgy move but yeah, I've just heard time and time again the odd story of the one rogue investor that messes it for everyone and then there's a lot of pain and torture in getting rid of that rogue investor but that's generally not the opposite of the open source I think another generalization is what we're seeing right now with entities that try to become ubiquitous like we were in the Uber that wanted to grow as quickly as possible and didn't necessarily consider the balance sheets and we're seeing that kind of unwind right now and that was driven primarily by investor pressure and kind of balancing actually building a sustainable business with if I put a dollar in, how do I get $5 out and recognizing that we actually do need balance sheets in the end for everyone who's kind of more new to the topic, I want to give a very quick overview so VC is general the for profit funding model VC is invest to make money like and that's a big confusion that sometimes people can have if you're like building this cool open source project on the blockchain and C-centralize like does it make money? No if it doesn't then that's a hard bit unless you can convince someone that you're going to grow to an enormous user base and some will be able to monetize the user base that was some learning from me when you're coming out of the open source blockchain space it's like people better make money and if you don't make them money and it's generally in exchange for company equity we've seen a lot of SAF models evolve over time there's also an increasing there's an increasing trend back to equity and they know maybe into SAF models again but yeah that's generally generally how it works if you're trying to raise VC and you don't have a company yet and it's decentralized team of go-getters and you're making it work and even before SAF are we familiar with why companies are safe standard agreement so that's even more nuanced the token part versus the equity that created it's a great comment just as a company a company normally has equity shared that can be issued the easiest ways to raise early stage financing are either through a safe which is a simple agreement for future equity or through something called a convertible note convertible note is a debt instrument that can be converted into equity at a later liquidation stage so you could say for example you're now you guys are just starting out you have an early stage team you've created your company and now you're raising 200,000 in financing via convertible note so that's essentially a debt that comes onto your balance sheet and that debt you would then say to the VC cool and we're looking to raise a million once we fit those milestones and once you raise that million that debt then converts into equity just a little bit of background generally it's based on consecutive funding rounds based on progress and it's kind of like leveling up which makes a lot of sense imagine it's a video game when you're moving from level to level the bosses become harder it becomes like more and more and generally you go from a friends and family round to a VCD there's very few companies in the crypto space that have kind of made it into like this range like a coin base when we hear most companies are kind of ads most companies are pre-seed to seed stage a lot of companies are at series A in series A you normally want serious kind of customer attraction so like your business is probably starting to work starting to generate first revenue in general it's only we exchanges in my opinion that I've made it into like further up the slide Andrew I don't know if you have any maybe to give you guys a range as well so maybe friends and family rounds tend to be like you're really just raising early stage money to get going maybe up to like 50,000 or 100,000 it really depends on you obviously on your on your friends and family it's a horrible idea it's actually worse than your family 100% right it's a great way to alienate your friends your family your family less because they believe in you and you but yeah then your company built and your family it's much better to raise from angels at the same actually so I forgot to add angels here ideally you raise from an angel who is not your friends or family because I mean it's right if you're part of your company a pre-seed is in general anything that you refer to the first kind of institutional money so this could be a very early stage fund and a couple of angels it could also be a couple of angels the range would be anywhere from like 100,000 up to a million there's even like one and a half million pre-seed rounds now but this is tends to be the range then seed now slowly starts upward of like 750 to a million and then goes up to up to 4 so there's seed rounds up to 4 to 5 million a lot of this is very flexible the numbers over the past 2 to 3 years have just been going up up up so companies raise more money at an earlier stage which is part of I think we're seeing end to end this really big just excess in capital which is also starting to flip now as I said earlier with like IPOs kind of going past the timeline so really you want to start making money within 3 to 5 years minimum there's few businesses like that I mean there's very long term big project companies but that doesn't imply it to like to crypto in general it's very centralized decision making so one thing that you have to remember is selling equity means you're selling stake in your company which means now those people have a say over the governance and how you run your company so there's many examples kind of horror stories like if a VC doesn't like the way that you're leading your company or your team they might just replace you in an upcoming funding round or the board will try to push you out doesn't have you haven't really seen that yet much in crypto but it is something to consider just from the governance perspective then VCs are really looking for 10x business models so if you can't demonstrate how this is going to have like 10x in terms of an investment if they invest a million they want to exit with 10 million which means for example your business at that point needs to really grow to match those numbers valuations and term sheets so valuations basically once you go to a VC or even to an angel for equity you're going to try and want to get to a valuation which means you need to now put a price on your company which now means you need to evaluate how much money could this company make at some point and then ideally you want to get to a term sheet a term sheet is kind of the offer from the VC how much they're willing to invest and in what terms cool and then there is a best thing which is something that is often forgotten in crypto we'll get to that a little bit later so your own shares in the company or your employees shares can best over time cool so this is really just to cover the basis I now really want to make this like an open kind of discussion round to discuss what is the role of VCs in funding decentralized open infrastructure but also the role of VCs in like funding projects in the space in general Abby just had a great comment earlier that I think for a lot of open source business models VC funding doesn't actually work well and yeah maybe to kick it off I want to hand it over to you guys in terms of experiences that's one thing we've come up in the common stack looking for funding to build the common stack looking at VCs and the first question is often what's your profit model we're building open source components for communities to use basically like an SDK for DAOs we don't have a profit model we don't want a profit model and that makes the VC road very difficult road to walk for an open source project like the common stack some the projects that seem to have had some success raising VCs are projects that they might have an open source infrastructure for them but they are going to then figure out a business model on top of that two come to mind that raise money recently one in both our Ethereum projects one is Uniswap and the other is Instadap so Uniswap raise your hand if you know what Uniswap is very cool it's about happening it's one of the coolest exchanges on Ethereum it's bombing curves and it's an automated market maker those words mean nothing to you it doesn't matter just means that you can always trade against it and it will always trade back with you you can put money there it doesn't actually take any fees in its current implementation but the team is building services around it and they're able to raise money on the premise that those services would be valuable Instadap on the other hand it allows you to better manage your CDPs so who here knows what maker now is and die almost all of you so you can take a loan and you'll be paying for interest but maybe there's a compound which is another platform where you can take a loan and that gives you a better interest rate and the process of moving your debt over one of those platforms the other is actually quite annoying and like from to error and so they provide a valuable service and they take a fee if you're doing that something like 0.5% for being able to migrate your your loan over and that's then an investable business model and they just close it down so to answer this question I don't necessarily think there has been a role for VCs in funding decentralized open infrastructure and I think that the notion of decentralized open infrastructure being funded by a small gatekeeper really just opposes the notion of what we're trying to do or what that infrastructure is trying to do and I think that is kind of the aha moment with I would say the Ethereum token sale is that it wasn't a bunch of people on Sand Hill Road that were the gatekeepers to this and I think that was kind of the aha moment of the token sale although it got a little silly token sales in general but I mean the future of finance is we're witnessing it where you don't need the VCs for everyone to come to VCs how do you guys feel though so I think we've got to token sales just now as well I think we've largely seen token sales disappear and now there seems to be a big gap as well in terms of because now a lot of people are going back to the VCs for example projects like the Common Stack I think you guys would totally go for the option of raising from everyone as a VCE but the market isn't there anymore and the liquidity isn't there I think I forget who tweeted this just a couple weeks ago they said the internet turned everyone into micro bloggers and the blockchain will turn everyone into micro investors and we see at the Common Stack a future of community subscription models or community investment models where you are paying a subscription fee and you receive a token an asset which gives you governance in that community and also provides capital to that community to continue doing good work so kind of emerging these for-profit and non-profit actually going back to the point you made earlier about public works the way we get things done a human society is we pool capital and allocate it towards what's best now we do that through taxes that isn't necessarily efficient we do that through the stock market global capital pools to provide liquidity for to do work and grow the value of what we gave them but we don't have this for the non-profit open source infrastructure that doesn't have a revenue model so I think that's we're really on the cusp of figuring that out and that's what we're really excited about the Common Stack is basically creating that capital pool for a non-profit open source infrastructure to survive and thrive I have a question even if you say that that the internet blockchain has potential of making people micro investors most people are conditioned that if I'm going to invest my money I want this to make a return they are thinking like a VC they are thinking that how can an open source generate returns for me so how do you I don't know this by the way so I'd like to appreciate your views appreciate it so like VC they often look for 100,000 x returns they're pushing to go to the moon or explode fast get their money out and move on to the next project but if you're trying to build a community you might not want to go that way you might want to focus on 2x returns or something that might get you back over a maybe a longer timeline but it's also potentially less risky so there's different ways of thinking thinking like a VC is sort of a box where it's like you can think like a capitalist but not necessarily a VC any other burning questions about VC funding I would just say one thing about corporate structures in this space I came from consensus and I think with perspective venture capital consensus no surprise or secret they have tried or trying to raise capital and when having these conversations there were lots of businesses where the value essentially proved to the protocol of a theory things like education things like funding research but that didn't fit into the box of if I put a dollar in I get five dollars out so I think one other piece that I would say is that when we are talking venture capital there is in many cases kind of like product market fit modeling if I put one dollar in how do I get this five ten dollars out and there is not too much in what I've experienced room for creativity and I think that one has to have a serious conversation on if my business is going to approve to a token or to be enterprise value maybe a personal experience from my side as well I found the experience of interacting with VCs at least the ones that are more generous not like super deep crypto small team so the more general big VCs I always find them a very disillusioning experience like VCs can be very smart but they can also just be extremely close minded and you come in there and you have this big vision and you're like cool this is what we're trying to do, this is all the cool things and you get boiled down to this very narrow set of questions or a very narrow view on the world that also doesn't fit I think with a lot of these new business models that we are trying to build the bulk of VCs are historically late to the party tend to be on the wrong side of the spectrum there's really very few VCs that actually outlies in their respective fields but at the same time being a VC like a partner and analyst I don't know why but for some reason it's such a prestigious job title to have so there's also this very elitist feel that comes with the culture of being a VC being funded by a VC interacting with a VC that's I found it a little bit always disillusioning to be interacting with I guess it's a really hard experience if you guys ever get to the point and also it's a really hard experience to pitch to someone to give them money and kind of to go through those continuous pitches to refine your pitch it's actually really interesting to see if I compare like early slide decks that I made to like going through the experience and then like later in slide decks you'll see how you keep boiling it down to like those core questions like yeah cool okay can everybody have a question must be any experience related getting support from virtual capital but from big corporations like offer to them impact instead of 10x return of money has been any experience with them I don't know make them have a proposal and say hey you know you're going to have this impact and you're going to have to do that in the VC platform where you will have a benefit from that and it's not necessarily economic so like most Fortune 500s now have corporate venturing and you're seeing a lot of it in the financial sector where with things like Dodd-Frank most banks are just kind of keeping the lights on with their budgets and they have to acquire and with that to your point it has to solve a specific problem for that entity and really they are very so if you are you know building the next best thing for oil and gas maybe ExxonMobil will help but it has to be very specific to the industry that they're solving the problems and it also ties you very specifically to that company which might not mean that you essentially become that company's product and it might then mean like if you get in front of ExxonMobil that Chevron or anyone says we won't tough this which will be worse the agrar okay and there was I'll hit you up later I also have a question okay last question I'm surprised by the comparison that's being grown between traditional VC and token sales as they're being defined on this panel which seem to be just ICOs and utility tokens but there's no mention of token ice securities and how that is actually a more let's say digitized form capital racing whereas ICOs community building since they don't actually offer people equity in those companies what does the panel feel or how does everyone feel about token ice securities and their comparison to sort of traditional VC great question I don't think we even started talking about tokens but I think that right now the capital markets don't necessarily have the appetite for them we're seeing them as basically my opinion glorified cheats where maybe $5-$10 million raised so what I do agree is the future of finance I would just like to see corporations or investors be able to hold them easily on their balance sheets to be your hurdles to that right now it also doesn't seem like they're doing it for equity like the securities that are getting tokenized are like you know yes, some sort of real asset that's generating revenue or something so it's not quite like a VC would go and buy that if they're looking for that new shop I think looking at your point I think it's important to differentiate you can have tokens and then you can have tokens representing equity which then fits just as well into the venture capital kind of field yeah I mean those exist there are a lot of people great comment there's something called venture philanthropy venture philanthropy is basically like LGT that will have people willing to put money behind something from venture capital perspective maybe is capital recycling as opposed to getting back and then you also have these donor advice funds which are kind of like a VC approach and all they want maybe is to recycle your capital and that's a huge subset of the kind of money that goes to these open source also like UNICEF they have a venture capital type fund which is focused on open source and they're the only problem that they want to hold the IP and then you have to struggle with that but great great financial comment maybe I think to contextualize it's very easy to bash VC but I think VCs can add a ton of value to your startup you just have to know that you fit into that box so that you don't move too far out of the box and then it's going to add a ton of value like in terms of like I've seen like very young inexperienced teams get VC funding and where the VC really tries to help you out do executive coaching make sure you guys stay on track really revamp marketing think about your go to market so VC is also I think especially to the Ethereum space and to the servers that get funded have added an enormous amount of professionalization in the space I think that's specifically common in DeFi we need that professionalization because we can't build everything open source and all like decentralized if we want to serve as real customers like real people then we need professional product and VC do an enormous amount to like push us there and keep us as well and then I think without VC funding the Ethereum space in terms of growth would have struggled enormously over the past one and a half years just as like any other form of financing essentially fell into into the trough into the venture that we see cool, next up tokens who has I saw less hands up than from VC who has received funding from token logic do you guys want to does anyone want to share an experience what was it like going through that maybe at what point did you launch what is it like engaging with that community of investors is it public is it still private token I would like to share a little bit we we go through the VC first and then we realize the Ethereum which is a very mixed experience at this scale it was in February 2018 which is very good timing so the token sale went pretty well but there was a lot of scam a lot of things going on yeah so for the other running I started a beautiful project so no matter if it's from VC if you need the real money it needs the money so there's money for you to find a project going on but at the start dealing with ICO I would say it definitely cost a lot of a lot of energy to be dealing with you so what can you do worrying about after you worrying about what those scammers will do for the reputation of the project and I think the even worst is later on you have to deal with a lot of token holders most of those token holders they are not necessarily understand or have any visions for your project they just because of time people just want to make quick money but when the whole market is going down we and me myself spend tons of time trying to comfort them and try to communicate with them I would say this is too much to start with the real thing some really really good comments yeah anyone interested to discuss with me about this so luckily I think we are doing good with that so far there's no problem I wonder if there's been like I was like self help before like no honestly I had a friend who dated a token sale and he got death threats from multiple different accounts and when the whole market is crashing and you're getting death threats from your investors that's an enormous amount of and then you don't even know if the SEC is going to come after you like he said that's an enormous amount of psychological pressure which I think is a lot at that stage I thought we made a challenge but I decided I guess for some insights so I'm congolden we did one of the early token sales back in 2016 and honestly back then I thought that this is a very natural path to find a stuff type project because there is like a very deep conflict between funding infrastructure part open source part of the stock and venture funding to me it is obvious and I believe this is still like that of course you can do a venture funding of the other things on a higher level I can perfectly imagine consumer oriented project building on top of blockchains of infrastructure project that has like a venture funding but not for the lower level projects but then of course the idea of token sales of that type of funding products got derailed in 2017 when we had like a dating up tokenized projects doing ICOs and other things like that to me it was especially painful to look at that because I felt like oh f**k this and now a part of that where really we did the sale in November 2016 that looked like really the way of collecting very very special type of funding for very special type of projects like that thing and an easy tool for everyone to get money for whatever and the same time I believe that that's really what happened in 2017 like discredit the whole idea because exactly because of that we have a problem we mentioned of the funding for ethereum ecosystem other parts of the centralized system and then VC funding cannot solve I believe that even today we can see maybe not exactly in the ethereum community but in a broader blockchain space I have a feeling I don't have like a heard data on that maybe somewhere from analyst comment on that statement but I think like we started now the race for the kind of like a blockchain maximalism but driven by the by the VC funding that now the approach is that the real backbone will be for a VC funded project that will build like a closed solution that everyone will use using the kind of technologies that we are going to look at yeah to summarize I believe that token is a great way to finance a very special type of project also I don't think this is really in the scope of the meeting today but I think that we have a problem with the token economies in general so we need much more exciting ways tokens can be used I think that our fact protocols is not really working maybe apart from like a very special low level cases like Ethereum for example but not for the many projects hiring the stack and I think that really like things like like for example like discussing radical markets there are a lot of ideas that in funding, in reputation in governance that can be built around tokens and I think we are only at the start of that way so that for sure needs to be taken care of to move on with tokens and of course cool ideas like comparing DAO approach with the ICO approach and you have some control over how the money is spent you can terminate the funding if the teams they cease to do anything and so on that's also important and I don't really know about VC how that can be referred and moving so I think you I'm talking too long so I will stop here I just wanted to thank you so much I think that was a really great comment same as the previous speaker I want to add to that so specifically those early token sales I think fully followed the ethos of what we were trying to do and then later on we got dating apps I still think if the DAO the original the DAO would have survived I think it would have put a stop to a lot of the madness that was going on because the DAO could have been this collective efficient capital allocation mechanism into good projects forcing them to actually do due diligence how they spend their funds all of that rather than everyone just slapping like a smart contract on to maintain that and send funds to this address so what would you do the token sale after the DAO collapsed before that we were preparing a proposal for the DAO I just think in terms of the madness that we saw I think if the DAO itself was completely madness it would be right there but if it had worked then I think it would have been a great filter Griff I saw you nodding your head a lot do you want to add anything so Griff is actually one of the original let's say collaborators one of the five employees of SLOP so yeah I was there yeah it definitely changed it everyone kind of had an excuse to not put some kind of accountability on chain it's like we'll help the DAO effect so put the money in my multi-sale and yeah that became an excuse kind of to do what was in your best interest so there is an interesting evolution that I think is happening with the tokenization there is a group out of consensus called COVEN which takes the concept of a 2 in 20 carry or let's just say the fees that would accrue to a venture fund and basically parses it by the person who sources the deal could receive 10% of the 2 in 20 the people that do the technical due diligence, the business due diligence the legal due diligence could receive a part of that 2 in 20 and if you source the deal and no one wants to fund it you could actually lose your stake so there are these kind of next generation game theoretical models that are kind of creating a hybrid with venture and tokenization which I think are kind of the evolution of what could happen and with that you have kind of this broader sense of due diligence where you could see in a future state anybody could do that technical due diligence and you could have reputation and if you're great at this you get a score and then become someone that sought after to do technical due diligence so you can really kind of decentralize the concept of venture funding Can I try to get a sense of the room? Who bought tokens? Who bought tokens in 2017? Who in 2017 or 2018 thought that tokenization was the future and that we were totally owning the VCs? Who still thinks that? What kind of tokenization? It was also pretty case specific People launched a lot of different kinds of tokens Many of the tokens made absolutely no sense from an economics standpoint You said you were at GOLD, right? So your token was a two-sided marketplace that was used to transact, makes no sense Thank you And some people launched token sales that were super-exploded and tried to get as much money as possible Maybe this guy who's trying to comfort his ICO buyers I launched worse than a dating token I've run a porn company It's called Spank Chain So I launched ICO and I raised six and a half million dollars in the global public auction for spank tokens And one of the main spank tokens is that you can stake them in the spank bank which is our algorithmic central bank that mints booty tokens based on our fees So it actually powers a circular economy that makes sense Now, the execution following market, whatever it's been hard for us to get traction but as we continue to grow as a company the token holders will see the growth of our economy that there is value capture present in the protocol And further, the way that we sold the token specifically was not intending to capture as much of the possible value on the table I actually launched the most fair ICO ever And I can say that It's true, if you look it up So the way we designed it was it was a single round, blind auction And so you would submit a series of bids So we actually sort of used state channels for this as a state channel guy So you would deposit a bunch of your ether onto the contract And afterwards you would place bids which would have the price and the quantity and so it would be the amount of spank that you wanted and the price you were willing to pay for it And so you could submit any of those up to the price and not approximate your demand curve And so then what we did is we got all of those bids together and we had our own supply curve which was the amount of tokens that we were willing to sell at each price We figured out where those matched We picked a strike price and then we gave everybody the same price And so we sold 30% of the tokens and raised $6.5 million And the benefit of doing it that way is that even in the best case the token was up 30x from the sale In the worst case it's down about 4x And so it's like you have some token sales that were so exploitative that they're down 99% from the point of the sale And so when you're talking about these don't try to lump everything into a category even if it is a dating app or a porn point Just to add on that I was intubated on Twitter about two months ago about how all tokens are not equal and we really need a decentralized rating agency to rate the AAA shitcoins from the worst shitcoins And so the problem with that is when you create a ratings agency well how do you prevent capture of that ratings agency you give them a bribe and they rate your shitcoin higher And so I think it would be interesting to see a trusted community source that can separate the worst shitcoins from the best ones And I think the way it means framed it as being down 4x is way different than being down 99% And I agree with that I was talking to someone at Heathrow Lynn about the multi collateral die with makers going to be that So basically right now the collateral in maker that makes die into a stable coin is Heath and that single collateral die and in the future we're going to have auger or I forget what tokens are going to be launched in multi collateral die But you can basically look as more tokens are stakes to create die in makers economics at the different attributes of those markets and then you can use that to approximate a rating for each of those tokens based off volume and the flow of the tokens in multi collateral die So I guess to some of my two points decentralized rating agency will be important it will and making sure that it's not captureable will be important and maybe multi collateral die couldn't do that We're already starting to it's not necessarily decentralized but it was two weeks ago Coinbase et al is creating a rating to define if something's the utility or security and I think that's a step in the right direction Last comment That was ridiculous now that he's not in the room I feel like I can say that and check back but interesting that's a previous discussion of BC and how can they fund a model that is open source and not necessarily have a profit model driven I think it's interesting to talk about token prices like value capture I think that it really goes against what we're saying where some sort of crowdfunding is good for funding open source projects when really impact for funding that early just looking for a return which brings us back to the BC model or smaller BCs across money and so I think it's very important to think about why you're raising money and if you're raising money other people looking to invest expecting a larger money if you are and you can't sell BCs then you're just critically seeing people with less utilities than BCs and I think from that model it's important to note that token pricing is not wrong I think it's a great comment as well just maybe to ask a kind of question how does Ethereum frequently fit into that model like did Ethereum crowd sell do you want to answer I don't personally I don't think layer one should have a common token that is fluctuating in the digital disabled by bringing a set of gas fees that all layer one should adopt a SaaS model you don't pay for getting like a drop-off source and say you pay $10,000 you don't want to lose your shares I think in that sense I think loan use of nodes should be paid in the actual standard of return on what you're doing so that means not volatility the problem with that is that you're always like the dollar's dish like if your protocol depends on the stable value of the dollar it will operate I'm not saying it's all I'm just saying there's no need for stuff to fall that's as possible okay for the same time we kind of went through a lot of this so this is what we saw a lot in 2018 I really just love this meme I wonder if that's the same I mean the white paper what was the white paper what was the production and the actual product release I think we saw a ton of this which also discredited the whole blockchain space unfortunately I think a lot of enterprises have kind of made the 360 circle come to realize like it's broader space be very disillusioned but then come to realize that there is actual value to be delivered cool and we saw a lot of this as well what is your business plan what is the value capture for the token I think 95% of tokens that are on point market cap like there's no working model that is beyond like there's a limited supply and it's listed somewhere okay we went through a lot of this I'm not going to delve into depth again maybe some of the important things to differentiate with token models I think there's both for profit and non profit in second models something that Andrew mentioned I think we're beating you to strongly differentiate in token models or in token sales or tokenized business models between an application layer token and a portfolio token Andrew I think that's fair one thing to go back to the Ethereum crowd sale that I think triggered me was that there was no investing the Vitality is still in the way and nine tenths of the other people they had what 15 million ether are off to raise another token or run a competing protocol et cetera so you know making that type of behavioral economic incentive makes a lot of sense I think Blockstream is an example with Bitcoin where they time released bitcoins and obviously that's a little bit a bit different because it's for profit and I think baking in typical concepts like best thing in a corporation and I think if there's a huge tragedy of the commons issue think about all the people that are working on E2.0 versus Gav or Jeff Wilkie who I think added value to E1.0 but 300,000 ether so I think thinking about those types of tragedy the commons issues is very important I think there was a lot of misraised funds by token sales at the application layer which fundamentally these should have been ideally even cash for positive businesses bootstrap or VC funded if they had tried to get VC funded probably a lot of that space a lot of the coins that we see wouldn't exist in protocol layer I think is a great different thing just some generalising things in in general we do a token sale to exchange for a network stake or an asset so that goes into what was raised with the security area it's often a possible lump sum financing it also comes with a lot of issues so here's $20 million how are you going to disperse that at the time then with that there hasn't been the same experience as you have with VC which is the kind of levelling up aspect kind of a more decentralized decision making about funders like everyone's at VC there's various business and operating models that run through that I think the key problems that a lot of companies have faced is the legal incentives of the funders and then the token models cool maybe as a last question before we close the token topic to come back again what do you guys feel is the role of tokens in funding decentralized open infrastructure projects are loading yeah, do we got it? this is our topic because I suppose we have achieved most token area like debt morning to view the utility and then after one year to view most remotes instead of using the utility first then raising a token for that and I mean if you can build the utility without raising a token then you probably shouldn't integrate a token into the model later on unless it solves like a fundamental agatness it solves a fundamental problem I guess I'll chime in and say that several months ago I authored an e-key that talks about using inflation funding on the Ethereum mainnet but the current controversy is PROGPOW I guess five months ago the controversy was block rewards funding and the whole problem is basically with if you create inflation funding at that later one of a protocol then how do you prevent capture inflation funding by by people who just want to be the oligarchs of the network and basically with proof of work you can prove that miners are adding value to the network because there's a consensus algorithm that says that miners are adding value to the network but with software development the value proposition is inherently abstract and software developers are sometimes not great communicators even though if the project that I worked on for the last month that I've been launched it's going to have any value to the community because value propositions are subjective and so there's a room for capture of funding of open source infrastructure via inflation funding Vitalik sums up really nicely in his blog post on collusion which is on his website there is an inescapable tradeoff between failure to fund legitimate public goods and enabling a plutocracy and I think that's why the blocker worth funding on the Ethereum project, mainnet that is dead and maybe we'll see it on a side number or maybe an incentive of a test met that has value or some other platform but we're not going to see it on Ethereum in terms of you know I don't think let me show that who's for inflation funding but in what context in the context that you just described so I mean like the picture of the horse that you had being drawn out progressively is sort of relevant here my VIP was broken up into three sections the first is that software development is valuable the second was that current methods of funding open source infrastructure are not working and the third is we should explore block reward funding and it was designed to be a gradient of of fully bakedness and controversy where I don't think in this room people would how many people agree that software development is valuable to Ethereum how many people think that current mechanisms are not working how many people think that we should use inflation funding to deploy capital to ETH 2.0 clients there you go so that's the gradient right there sure that's the can of worms this is like a really fun conversation having the abstract and Kevin props to just like bulldozing ahead and putting it into practice and so people like it's a can of worms don't open it we're like let's just take a look so like we looked and we found the worms we made a telegram group there's like a couple hundred people in it and a bunch of people came in and like started being well I think the core devs should be responsible for distributing funding because we know best and then like Aragon comes in it's like well we should put the money in an Aragon now because you know and then I'm like well I should clearly be in charge and you know I'm right but that's irrelevant the point is is like by the virtue that nobody else wants to you know give me the legitimacy to spend the money even if I think I'm right like it's the same exact way I'm thinking about other people trying to spend the money and so it's a death lock right and it's it's it's devolved into this sort of like political power struggle and then that's when I raged with that whole thing and I was like I'm out of here I see the worms this is what people argue about right it's that the whole thing could lose legitimacy because people can believe that it has been captured by some special interest and that potentially is more damaging to the project than the value that the funding would provide I will say that the architecture is quite elegant where the amount of influence that you have is only relative to the amount of tokens that you've was it like staked or I guess you're called the attribute in Logged Out and so basically no one will ever have more influence than the value they brought to the table in the first place whereas with block rewards funding the funding is being created out of thin air by inflation and therefore you don't have that sort of mechanism I want to copy up this too we started the conversation with the goal of you know become a noble goal it's like long term how are we going to sustain this forever right like in five years how are we going to fund devs like yes you know runs out of money whatever like we still want to keep doing this right so that part I'm still in favor of like I believe that we should I'm optimistic that we'll come up with something and maybe be able to do it but I think that the bar is really high so earn legitimacy to be able to drive that conversation right and we're like the proposals are like let's just put it in and doubt like you guys remember what happened last time like we as a community haven't even participated in doubts we're not used to this like we haven't learned from through experience of managing funds this way we haven't made mistakes so my take on this was like let's run a bunch of control experiments and so I some of all of Dow and we can talk more about that later but like it's still possible for this to be involved in the direction where some Dow like structure does inflation now other people wanted to like use money to pay for contracts immediately and the situation there is like ETH was like a hundred dollars yeah front way was like you know shaky and people were rightfully concerned but then like after ETH rose a bit the efficiency of the need was sort of faded away and it means that like we shouldn't take an insane risk we should try to work up to it that's what I thought so I think it's still an important thing to continue it's like very slowly maybe if we open the can we'll figure it out speaking of experiments here we are experimenting with different funding models where they will work really hard the gigs like matching is the best I think this is the perfect segue into our next topic we talked maybe one last thing that we haven't talked about Andrew actually mentioned it VC token launches and just something like to quickly mention here it's a very common problem of like private capital versus public capital variations and we now see this with companies like Google we work as Andrew mentioned going public I think there's many recent examples in crypto where extremely recent funded coin tries to go public and then loses the majority of its valuation to the public market so maybe it's a lost caveat here there's too many things to bring up just one is Zcash and the other is green who here knows what Zcash has who here knows that Zcash has 20% inflation funding so they put that in at the beginning they said we're going for 3 years we're going to give the developer a 20% of the protocol rewards to pay for for development that works when you do it at the beginning it doesn't quite work when you try to add it later as we're seeing it's kind of like a social contract in the beginning but once later if you try to change the contract later on then you get forced the other thing is green raised a bunch of money and it was touted by all the BC's who here knows what green is they're happy and they had no inflation funding for devs they're like everybody who makes money off this has to mind and what happened was like the most predictable tragedy of the comments ever all the people who are operating your protocol are BC's and 2 you have no money set for devs the devs were broke and trying to plead with the BC's to pay them to continue doing work and BC's wanted to do it and I don't really know how that went I stopped following it which fundamentally doesn't make sense but that's the classic tragedy of the comments problem yet a bunch of BC's invested into the miners but no one is willing to continue funding the actual protocol development doesn't make any cognitive sense but it's this from a single axis perspective you're like well let somebody else fund it why should we fund it I think in the blogging place you saw the creation of these community funds like a lot of big of the bigger projects simultaneously also raised their own BC fund to support their community which now obviously operated under a much less narrow minded focus but before we get too deep into the bigger things I want to talk about grants so this is actually the last few comments are actually a great segue from tokens now to grants as a funding option after tokens we're going to go into DAOs and then kind of hybrid models in between how is everybody doing with like should we take a mini break or should we just keep it rolling I fear if we take a break we might disperse too far cool that's so far grants who's received a grant once maybe someone in the back here was what was your experience so it was nice that support but it's difficult to align at once with such a long term quite difficult to prove the decentralized process that you're always delivering and it can become quite so like we got a grant for the DAO so it was even a more particular process and I think we are going forward there should be clearer mechanisms for the same amount of these grants for sure and also some accountability so using those will also help with that process because often people are saying they want to see the value of what they are paying for I think I've seen some grant funding processes be like more stringent much smaller amounts but much more stringency in terms of the decision making process in terms of the milestone I guess it's a very different accountability layer as well because there is no investment being made so it has to be a general investment does anyone else want to add something their experience yet? Grants are like mandates they give you like okay I have a problem I don't have any economic model I want to produce value but the value isn't valued by the market for a while until the grant funding runs out and then oh I guess I have to die it's a sad thing that's why I love get point grants because they are not like grants it's like a continuous funding and you can start making plans when you rely on bulk grants at the beginning it's like you have to use that money to figure out how you are going to get your next money you know it's almost like it's kind of wasted just to play in the grant circuit if you can actually have a residual income coming in and you can count on that you can hire a developer and you know where they are getting paid every month you know until of course that runs out but that helps a lot this is the opportunity cost of the non-profit space in general is grants are a time consuming process you have to conform to each different grant making body that is time spent applying for money that governments and for-profits have supplied to them in spades in capital markets or in tax pools so this is where the non-profit has a huge opportunity cost in continually trying to find these grants and donations rather than just getting to work changing the world I think as a business being dependent on grant funding on a continuous level must be extremely stressful I mean fair being VC funded is stressful actually probably any type of funding if you're not running a sustainable business is insanely stressful that's a story for the day yeah great thanks so much for that comment quickly run into like a recap again it's clear it's a non-profit funding model for me grants are normally in exchange for services for like a community so build something to deliver a specific service to come good normally it's payment on the delivery what I've seen it's like very milestone based payments not on full delivery but it's like you do the one thing you gotta pay and do the other thing in general fund open infrastructure community initiatives it's generally very small amounts compared to VC and tokens and I think maybe that's where the whole model again of like how can we fund this open source infrastructure falls short for pumping so much money into the other direction however a lot of value accrues to the protocol that you're here it's centralized decision making and centralized governance in many cases what it feels like even if it's a premium I've heard it can take a really long time to like to hear from the grant funding authority we go to grant once ourselves and to this date still haven't received the second payment of the grant just being like yeah when is it coming and just being like oh yeah it'll come out in the next batch and this is like a very renowned grant funding company and a foundation in the user space we still haven't gotten it and if we were relying on that as a business and I mean the grant was approved like 9 months ago and then the first payment came a month after and we still didn't get the rest it's not like we're super dependent on it but like partly emails anyway I might interject that I mean grant is pushing to decentralized decision making about grants to an algorithm on the CLR stuff so it's not all of them are decentralized or RR centralized I'd also say the Wall of Dow has a decentralized grant decision making process so people are pushing pushing that about here okay sweet as a kind of not really a grant funding model but I wanted to I wanted to give Andrew a chance to talk a little bit about consensus I think consensus did so much in the ATM space early on and really invested a lot at the protocol there it's definitely being a grant funding model although they have a grant funding do you want to talk a little bit about that I already kind of said it but basically compared to traditional venture where here's our product market fit here's our traction consensus had lots of different tentacles and some of them the value would accrue to the Ether token things like consensus diligence things like education and things like labor's marketing for awareness and those wouldn't necessarily be something that would be venture investable so just kind of defining that but I think that consensus did usher in the culmination to a certain extent I think grants are an important part of the penny ecosystem because if you have a vested interest in something succeeding you would be willing to put up money to help it do so spend money because they want it for the Ethereum same with consensus I received a grant from the EF $420,000 for payment channels work with plaintiffs back there the connex team we work with them to deploy it and that's like open source infrastructure for the whole space some of that work was research oriented because we were the first ones to do it and it's hard to take that kind of risk if you aren't being supported in any way whereas they're still making a venture funded business out of that but we're able to build a better product for Ethereum because of the grants that we also received the Andrew Keyes grant so this was I was broke in working consensus and Andrew crashed his house for a month trying to raise money for consensus people are really helpful if you're also trying to help them succeed too something that I've noticed with grants as well personalities still matter a lot building a good relationship with a grant funding authority it may seem like you're applying to the for example to the EF it's a very technical thing that absolutely must be funded and someone else gets funded for you so it's a very good relationship but that's the thing that I haven't the space is small I was super broke on this so what are you on now? thank you either I think we can let's talk about Dawes it's getting moving through this whole like for-profit older models into like for-profit models into non-profits and now into like new non-profit models they can be for-profit exactly they can be for-profit too we'll get into like the last section of the workshop just discussing new hybrid models so slapping a bonding curve on to Dawes see what happens let's talk about Dawes more generally initially I want to open it up to the audience again do you guys want to raise any specific point about Dawes have you received funding from Dawes? I would say that I'm a bad Dawes actor I am part of the mall of Dawes and I think- raise your hand if you're part of the mall of Dawes and I haven't voted yet and I think that with respect to these common utilities governance is not necessarily prioritized or incentivized and you know I'm a proxy vote I just kind of trust a mean kind of sort of and I think that that's an issue with public utility governance proxy voting I mean you just raised I know G-Dates so I got personally in a hundred either into the Dow and then I'm from Spain like I see a money into the Dow which is like half of what the EF is but then I reached that mark because I need to focus more on Spain so okay can you talk about like the proxy voting and talk about all this stuff so who here has heard of the mall of Dawes right cool it's this thing it's I got a grant from the EF I was a little frustrated about how inefficient that process was so I decided to launch a competing grants organization you know so the way mall of Dawes works is you can put money in and you buy shares you have to be voted in by the existing members and you get voting power proportional to the amount of money that you put in okay and the only way that the Dow can spend money is to mint new shares and so if you want a grant from the Dow it will say I want X shares and the grant will mint those shares and that proportionally dilutes all of the existing members so that the money comes from everybody who is in if the Dow has for example 1000 Ether you want a 10 Ether grant it will if it has like 1000 shares it will mint 10 shares and then you'll get those 10 shares you can then rage quit so two other mechanisms there's a 7 day voting period and a 7 day grace period so during the voting period everybody can vote and that vote is final and before the money is actually spent everybody who didn't vote yes has the opportunity to withdraw all of their funds and basically everybody else to pay for it it makes it so that if you disagree strongly enough with the way that the Dow is going to spend your money you can take your money and leave so the thing is it's not really a bad actor it's just like implicitly trusting the people who are voting to make decent decisions and if he's ever made aware of the people who are actually voting to spend the money not making decisions that he thinks are reasonable he can pull he has a week to pull out his money before that money gets spent it's pretty powerful because it means he always has sovereignty over his funds unlike some Dow's where like if you want to take out your money you actually have to submit a proposal and get everybody else to vote to let you pull out your money so if that Dow gets captured you can potentially never get your money I didn't think that was safe so so far that's like the mechanism of Molek but we launched it in February we raised right now it has about a million dollars it was about 20 of us that were crazy enough to put in 100 ether at the beginning we have no idea where this is going to go but it seems like a good idea, let's try it and then eventually we proved that we could coordinate and fund grants for we funded ETH2 reports we funded ETH2 development we funded a mixer recently we funded a bunch of core infrastructure audits for the payment channels that connects this building and sort of the highest moment of this was like when Vitalik and Joe and Contensus and the F each decided to put in 1000 ether also and really give us a lot more firepower to be able to not only engage people in the community to potentially execute grants that we wanted to see done but it also just amplified the amount of value that we have to spend and so far that's been going really well I think one of the key things that's really cool about it is just how efficient the whole process is from the time that you submit a proposal you will get your answer in a week and you will get your money in a week after that if it passes and so there's some due diligence going back and forth negotiating process we submitted but that whole thing the fastest we ever ran this was like we need an ETH2 test runner so that the client teams can run tests against their builds to make sure that if something changes they know it broke something and the next day the guy was like I'll do it and we're like alright we'll interview him the next day after that we're like alright well he seems good and so we submitted a proposal for like $20,000 so we worked with him to form the proposal because it was our idea and then it was Antoine now the CTO of white block he came on to help execute it was like a one month project the key thing is like a one month contract it's not even worth doing it's not even worth thinking about going to the EF for money because the amount of time and effort you have to spend just to get the proposal through is like more value than the whole grant right and so being able to have like fast efficient grants is like I think a nice like complimentary aspect to EF grants and I think that the model has sort of taken off also because we're seeing the same code being used for Yangdao which is like a super pack to fund Andrew Yang memes and like Meta Cartel which is like a bunch of application layer developers coming together application layer infrastructure and like charging out our collective different sort but I think that it also presents a model for the EF to credibly decentralize their funding so they get criticism because they you know they're like how do you guys make your decisions how do you decide where to spend your money all this stuff and it's like well if they could put more of their money into these specific areas of the ecosystem then they would be engaging the other ecosystem stakeholders and being able to collaborate on making these decisions and do it in a transparent way so all of this stuff is on chain all the votes through the funding so that's the model primer I think it's I think it's one of the biggest contributions in the space like that I've seen in like I think the amount of the coolest one of the things that I love most about Moloch is the way that the actual contract starts it says like please steal this code which is like one of the guiding principles of open source but like since Moloch came out we've seen so many iterations of that and so quickly like the space is literally exploding with ideas and that's something that is really important at this point that we iterate and we test quickly I think even beyond of what Moloch the code itself has taken on its own life form in things like Meta Cartel is anyone from Meta Cartel here? Yeah? Yeah, if you want to explain Moloch Peter Pan which is the summer of Moloch basically he got rejected by Moloch I think He tried to get a grant from Moloch I tried to get him in and the rest of the members were like no so like Peter Pan was like right I'm gonna fold the code and so he's got the text on the background so it's really more in the application layer the UX and so Meta Cartel is basically just saying primer as Moloch but to fund the application later and but that's a different story than Moloch because Moloch since it's funding two it's still grants given but Meta Cartel makes more sense to maybe switch to for profit and so it's going to it's like an ongoing discussion and it's going to be like finalized because the first wave of grants for instance like we fund in Basin keep back which are like event ticketing NFTs or staking or any kind of thing and basically they're like starting to incorporate and so maybe we're going to do another DAO structure to kind of get maybe system investors or other people so anyways like regarding business models it's different from Moloch and we might switch to for profit but so yeah basically it's like Moloch for the application layer Super cool and like now great to have segue into the next topic as well but like we're seeing like a lot of experimentation and people actually moving from non-profit models again into for profit models which is really cool and really good so I think what we'll see over the next six months is like the reinvigoration of models like what the DAO were originally trying to do and I can't wait for like a VC to actually for a real VC to come along and say well actually let's allocate capital into the sub-DAO that will then invest into like these set of projects which is going to be really exciting to see Actually we're also planning to experiment with cohort based funding so kind of like going towards like a mini Y-combinator kind of thing coming next year Awesome I think there's been some really really great experiments so far with DAOs but I think we're still in the very early stages of this experimentation as you pointed out and I think centralization and decentralization is still a spectrum you know and you can have DAO being more decentralized but I've also heard, I mean say if there's something he doesn't like, he'll make a couple calls and like that's not going to pass so there is some kind of decentralization in DAOs depending on how they're set up so there are certainly aspects of DAOs where governance is one question of how do we make decisions so that they're representative of the group how do we address on-chain voting issues with people who are not voting and is that really a representative decision or are these stakeholders actually checked out and not really paying attention to these voting systems Also long term sustainability and scalability mall ecometric cartel these are great examples but they're still deflating, continuously deflating the state of everyone involved so if you carry this out to its logical conclusion once mall ec has spent all its money the next person to come in puts in 100 E and they suddenly have a very small proportion of governance over their money and meanwhile everyone who is in mall ec before who spent all of mall ec's old money now has an equal say over the new money coming in so if you take this to the long term it still has a question of sustainability and scalability of funding which is I think the problem that we're here to discuss These are all valid criticisms by the way I think one thing to remember with all of these decentralized models is that humans in human nature naturally tend to flock or look for leadership and you tend to look for leaders even in decentralized systems so you can say what you want but I mean you're kind of the leader of mall ec the other same way I wanted that didn't happen also just to be clear and there's a couple things where I had to bring all my shares to bear there was a lot of people who didn't want Yangdao to get funding for mall ec and I really wanted Yangdao to get funding for mall ec so I voted with every single one of my 601 shares to make sure to make sure that Yangdao went through and some people were like so upset about that that they almost raged with and took their money and went home but then they decided not to and that's interesting because they have that option so you can say maybe I anticipated that it would piss people off just enough that they wouldn't leave but that's how it ended up and I think actually most of the members are in retrospect happy with that decision because the people who joined are people who who now runs Meta Cartel who was doing the coordination for Yangdao and Ben just who Yangdao uses the same code they're actually what we're the mobile app mobile UI for mall ec which mall ec could eventually use also right and he's also building Dow house which now you can spin up your own mall ec and see all the dashboard of all the mall ec Dow's I think that's maybe one aspect of Dow in this blockchain space where there's a large ethos of code is law we often forget that there's a cultural aspect to these as well and having a mean as the steward of mall ec and I mean each Dow kind of has this leader or group of people that the community looks to steward these Dow's in the right direction and that's not necessarily a bad thing decentralization is the spectrum and we're at one point on that spectrum and hopefully we can move further towards that there are certain puzzle pieces we need before we can continue moving down down that spectrum so also one more thing is just like I'm actually taking a step back from my sort of active participation in mall ec Dow in terms of just like a lot of the coordination work due diligence stuff like that and we're excited to see how it's going to evolve as other members step up and fill the role that we were that I was doing before so I'm going to be it's not going to be just me there's a lot of people who would help make this happen you know build the sites and like talk to the teams and bring ideas to bear I think giving them more platform is going to be important cool I want to move to the I think we've kind of discussed this again I want to move to the last topic which I think is really exciting and guys thanks a lot for bearing with us for entertaining through this pretty long workshop cool the last thing to really talk about are new hybrid models that are emerging personally something that I think is really really interesting and I just want to ask into the audience is anyone will explain a little bit as well is anyone already familiar with models like the ConStack or the Ergon fundraising app or something like continuous organizations that's okay about half of the room cool maybe to open up the question then to those people who raised their hand well why don't you explain it to the rest of us simple things yeah actually so for me when these two models really come with these two models really combined are now combining governance and style structures with fundraising and token sales but the main I think the key difference between these two is that these are now they're looking at continuous financing mechanisms and a lot of them are looking through financing mechanisms through bonding curves which are instead of just issuing a lump sum of tokens you really issue them continuously over time according to supply and demand of the market in exchange for funding there's taxation mechanisms that we can build into the curves yeah so for me the hybrid model is kind of our continuous fundraising model which is ours plus token refinancing who here doesn't know what a token bonding curve is but you know what I'll do it first who knows what it is who knows what it is okay I'm assuming I'm assuming most people know but I'll just explain for accurate it's essentially an autonomous market maker what to mean with autonomous market maker so many if you the previous token launch that we've seen someone makes the smart contract and issues all of the tokens at once in this case the tokens are continuously issued through kind of a market maker and what this means also it's not just a token issue but it's also an exchange and liquidity provider and this is the most stereotypical design that you see a lot of design that just pre-chips represent it's actually a terrible way to represent bonding curves but it's what the industry has been accustomed to so this is a supplied demand curve for a market economy, you have the price on one side and then the supply to the bottom and then you have a curve that governs the issuance so it's essentially a function a mathematical function it can be exponential, it can be sequoial that gets encoded into the smart contract and so as more tokens are issued the price increases according to that curve if people can also burn tokens by just sending them back to the contract and then the price decreases again so essentially people are always trading along this curve it doesn't mean though that the actual trading looks like that the trading can look very much like a normal chart so remember that this is their supply and not its kind of time so it's a really interesting mechanism because it provides liquidity instantaneously and it provides really great feedback loops to whatever that token issue mechanism represents so a lot of these let's say hybrid funding models or hybrid organizations are looking at the token model representing membership but then obviously membership could also for example equate to returns that are generated by that continuous organization and we have Jeff here from the CommentsStack as well as Griff and I think the CommentsStack is one of the most exciting projects that I've seen in the space come about that is really pursuing these hybrid type models and specifically interesting in the context of funding open source infrastructure Jeff, Jeff, you want to give it? Yeah, it's good so I think we've touched on these topics multiple times throughout the day and I think that we really need to close the loop from raising funds, allocating those funds making decisions as a group and then measuring impact and that full loop we have a really hard time basically governing how we're going to raise and allocate those funds so we look at Malmuktao we see this as an amazing community of people who have come together basically contributed their funds into a pool and then make decisions based on the amount contributed on how those should be spent awesome, the issues with it long term, the funds slowly deflate so you have more people joining contributing funds but there's less funds because those funds are continually being spent when you introduce something like Bonding Curve and the basic Bonding Curve that Paul described here a lot of people have criticisms of it in that it could be considered a Ponzi scheme basically people put money in, when someone else puts money in that first person can sell and make a profit so this is an issue but if we give that token multiple forms of value so in the common stack we're working on a token Bonding Curve model like the Augmented Bonding Curve and that token is not worth just a claim on the collateral pool like in Malmuk, if you ragequake you take your portion or what's left of it out but we also give it another value in the governance of how those tokens are spent so when you go when more people buy in the price of the token goes up some people may want to sell and this is where the race to the exit the Ponzi scheme of a traditional Bonding Curve comes in but with the Augmented Bonding Curve as the price as people sell out if you're the last person holding tokens in Malmuk you're holding the bag basically and the Augmented Bonding Curve you are holding all the governance power of that community so we have a special mechanism called the exit tribute when people exit the curve you pay a small tribute to the community which is kind of like we talked about before the opt-in agreement you know if you are going to join this community you understand that when you sell this token you're going to pay 5% or 10% to the community this goes into a communal funding pool and then if you help hold all those tokens you basically have governance over that funding pool so this also encourages an opposite pressure of more people to buy so you have this interplay of people wanting to sell to claim returns people wanting to buy for governance over that collateral pool and that creates a natural volatility on the curve and that creates continuous funding for the project through the exit tribute so this is just one type of mechanism Bonding Curves are a very new concept the solution space is very open and I think we've designed the Augmented Bonding Curve for a non-profit model you could have all sorts of different mechanisms included there, you could include quadratic voting or CLR matching you could and this is kind of the approach of the common stack we're coming at this from a modular component approach so you could have all sorts of different mechanisms that you could build into those bonding curves to suit that to each niche use case on top of that we are working on some novel governance processes that we see a lot of problems with on-chain governance mostly apathy or people being busy or people not following up how many dows are you a part of are you checking in with each of them do you know when each of those votes is going on the user interface isn't always great in these early experiments so we're working on a governance process called Conviction Voting which is less of a voting system but more of a preference broadcast you're always signaling what you want to see done in the ecosystem and that conviction grows over time so this also gives long standing minorities more weight over a last minute whale that comes in and says no this is how the vote should go we can also see in on-chain governance if there's a certain vote maybe in Molek maybe there's someone with a lot of tokens who doesn't want to see that go through and last minute they come in and just quash it I mean there are protections against it but we just want to see this balance of a long standing minority having some weight against a late whale coming in and saying this is how it should go not that that's a bad thing that we're working with today we do want these safeguards these people who know what's best for these communities but when we're looking at long-term scaling this into larger ecosystems we want to make sure that there is proper community representation in the governance so that's basically the long and the short of the common stack we're basically looking to build a library of components that can be used to build DAOs all sorts of different use cases there is no one answer to how do we govern economies you know an economy around EVE 2.0 may be very different from an economy around trash cleanup may be very different from a community economy so we have all sorts of different components that you can basically combine and create your own DAO suited for your ecosystem and one other really important part of the common stack is the simulation has anyone heard cat-cat here show of hands quickly so this is a simulation tool that is just coming up from BlockScience it was just open sourced through the common stack a month ago and the cool thing about the common stack components is all of these will be rigorously designed from mathematical first principles so you can just take them off the shelf, combine them plug them into the simulator and see how your token network will respond to stress test before you start coding and we can go away from this whole idea of I have an idea I'm going to write a white paper and I now launch this economy and then we'll see what happens which could have disastrous consequences when we're talking about a billion dollar public infrastructure which is really what we're building here one of your co-workers is Sargo he told me he's like it's really fun watching you play out the explorer part of my exploit algorithm because I didn't do this we didn't start malloc to save the world we just wanted to fund these two stuff and continue to fund it so we I try to practice mean driven development so we with malloc we have memed the doubt we made it cool again people want to join them and we've all been able to learn from this experience and we're all sort of inspired by it and everybody who's in the doubt will be able to take that with any other doubt that they join and have that knowledge and bring it to other projects as well so it's fun to have this kind of there's like there always needs to be somebody who goes first like just try something even though you're not doing it for all these cases and then other people who use that as like a research project in order to learn from that and hone something that might then be able to be taken to the broader market and markets that we might not have even anticipated that being used for so excited for what you guys have coming does it seem like human behavior in terms of purchasing and it hence the explorer story I'm just wondering how sort of how does that work in terms of getting that you know, is it just sort of based on theory or just greedy algorithm so CAD CAD stands for complex adaptive dynamics computer aided design so economies are complex systems when you embed humans and actually it's a cybernetic governance system and also second-order cybernetic governance system where we are part of the system that we're trying to govern so it makes it a really tricky problem and I mean we definitely get a lot of skepticism when we say we're simulating economic behavior because humans are predictable it is not a rational economic actor that we can predict behavior but when we put human behavior on a blockchain you only have a certain number of loud actions so in Bitcoin for example they sell very basic network in other networks there might be governance there might be voting, there might be different things but still you have a very well-defined set of actions and because on a blockchain economic code or the code is what you have to follow in our real economies we have gray markets we have black markets, we have cash transactions this can be captured but when you put it all on a blockchain you kind of get this economic big data and you can define agents that pursue extractive behavior for example and when you run Monte Carlo analyses and parameter sweeps you can get a pretty good envelope of behavior you can see where your system fails systemically before you start coding so it's not necessarily predictive saying someone is going to do this it's saying this is the list of loud behaviors and if we throw in 10,000 agents with 10,000 different objectives and run Monte Carlo analyses and parameter sweeps and really use the big data crunching algorithms and say this is where the system could fail it's not saying we're going to capture everything I mean when we started simulating bridges someone forgot to include harmonic resonance until Tacoma Narrows and now we've built that into our model so this is turning crypto economic design into an engineering discipline basically that we can continue improving that model the more we learn Thank you so much Jeff that was a great comment I think maybe a lot is coming from me we're at the end of the workshop we did kind of a full almost like a 360 round of going from traditional for profit models into the token ICO craze that we saw then into grant funding for public infrastructure always guiding with these questions like how can we fund the comments what model is right for which business case I think if we are to ever see kind of a revival of very large scale open source funding like we did with the early ICOs it will probably be through models as like Graf is describing which are incredibly new thoughtful ways of really using simulation design to build these economies and using kind of I think these moniker type models are much closer in incentive design as to what you might see in like venture capital funding runs really like levelling up going from stage to stage to stage so I think we're making like the best of two worlds together at this stage I'm really really excited to see keep an eye out for all these initiatives good things organization to have much fundraising and comment section specifically as they are really kind of pushing the space forward a lot and then I want to give a huge thank you to all of you for sitting in this two hour workshop bringing all these amazing contributions and thank you so much guys