Blockchain Talks #18 — EVENT RECAP
Revisiting the Commons
Every second Thursday of the month, the historical stock market building at the heart of Amsterdam (Meet Berlage) fills with investors, entrepreneurs, traders, and blockchain enthusiasts for a monthly dose of the most relevant lectures and opportunities to network at the Blockchain Talks meetup.
By the entrance from Oudebrugsteeg 9 street, we cross the old brick portals and turn right into the Meet Berlage cafe, a cozy coworking space during the day turned a bohemian bar in the evenings. It reminds me of the old railway stations; the red and green bricked walls with brick arches ceiling suspended on stone columns and supported by teal beams.
Followed by the smell of old wood and coffee, we pass the bar and the stylish conference rooms and head up the stone staircase, through the wooden panel corridors to reach the lecture room that can host around 60 participants. The murmur of excitement soon dies down and gives way to the main talks of the evening.
On the 11th of April 2019, at Blockchain Talks #18, the central theme is revisiting the Tragedy of the Commons, a well known economic paradigm dating back to nineteen century that has some new interesting solutions if blockchain-based governance, decentralized ownership, and community crowdfunding could be applied (presentation by Beth McCarthy and Abbey Titcomb).
The lecturers will also discuss the regulatory fight to establish compliant blockchain funds in the Netherlands by Wilhelm Roth from Cyber Capital, and real-world use cases of Blockchain in remittance and trade finance by Jonathan Knegtel from Blockdata.
Luuk Weber substituting for our usual host and co-organizer, Jana Patkanic, introduces the first speaker, Beth McCarthy.
Following a DAO Framework
Beth McCarthy is the co-founder of Starfish Labs that support research, design, and developments of projects across the Starfish ecosystem.
Starfish is a network of blockchain coworking spaces in different cities across the world that is currently creating their own DAO (Decentralized Autonomous Organization) as well as a DAO incubator — a group that would provide funding and support for all people interested in initiating DAOs.
Earlier this evening, Beth organized a Minimal Viable Prototype (MVP) Generator Workshop where the participants had a chance to analyze and design their DAOs. The prototyping is distilled into an hour-long process that tries to describe four dimensions of DAO: Ecosystem, Governance, Tokenonics, and Legal structures and Compliance (based on the jurisdiction).
For example, users define different points in the ecosystem, how the value and resources flow through them, who is an agent and who is an actor, all to identify the current state and the state they want to get to and make a map of potential feasibility and viability of different ideas and their on-chain and off-chain implementation, technology, and culture.
The workshop participants discussed and worked on four different DAOs:
- Blockchain Talks DAO —working on a community token to help make our meetup and community even more awesome, decentralized, and scalable.
- Curacao DAO — aiming to offer certain services and support that Curacao community needs and Government doesn’t provide.
- BlockDam DAO — a blockchain coworking space experimenting with democratic structures and DAO theory and scalability.
- A Secret DAO project for the Odyssey Hackathon.
The DAO MVP framework that stems from Beth’s experience in behavioral computational systems and legal design provides a simple set of tools and questions to help communities better understand and create their own DAOs but the MVPs are user-generated. Beth combines token engineering with human-centered incentive design and she will have a chance to test her concepts the following days at the Odyssey Hackathon in Groningen.
Building an Open Source Common Stack
Next speaker, Abbey Titcomb, is Head of Strategy at Onward Labs, a blockchain venture studio, where she leads founders through earliest stage business design and product development.
Abbey is also participating in the Odyssey hackathon where she will help create new open source Common Stack for social good and socio-economic transformation. Today she lets us get a sneak peek at how she will tackle parts of the tragedy of the Commons socio-economic problem using the augmented token bonding curves.
Abbey talks about Elinor Ostrom’s work on how to govern commons and the potential solutions based on cooperatives, many of which established healthy democratic governance and management of scarce public resources. Still, plenty of issues remain unresolved i.e., scaling and funding of the co-ops without centralized control or privatization, setting clear community boundaries and rules, incentivizing participation and contribution, and introducing accountability for the ‘free riders’. The big question is also how to make the Commons competitive on the free market so they don’t have to revert to investor-owned for-profit enterprises as it happened in the case of VISA, initially a participatory enterprise.
Bonding Curves relate to token supply where early investors obtain more tokens, the capital is token-bound and sensitive to speculation. In the case of Augmented Bonding Curves, the capital is token independent thanks to the introduction of a funding pool which offers liquidity for the Common and an ongoing funding mechanism.
Depositing money by investors mints new tokens. Withdrawing money from the system burns tokens and allows for capital to flow into the funding pool. Investors interested only in speculation will fuel the funding mechanism and increase the funding pool. Owners of the tokens can then vote on where the funding pool money could be allocated, and the teams, developers, volunteers who obtain funding will also burn tokens to withdraw which will add to the funding pool again. The system could be build to incentivize token holders to use the governance model and assign the funds first if they want to withdraw tokens. That, in theory, would drive the continuous crowdfunding and the new Commons economy. The Augmented Bonding Curves are still a concept that will be tested at the Odyssey Hackathon. The idea is to create open-source, modularized, crypto-economic primitives based on natural systems and energy conservation.
Abbey joins Odyssey Hackathon as a part of a 30-person group/5 teams working in tandem across 4 different tracks. The teams affiliated with Giveth community hope to build a new Common Stack, an open source infrastructure for anyone willing to create and manage the Commons. At Hackathon they will be addressing some of the core Commons’ issues such as 1) Crowdfunding, 2) Governance and Decision Making, 3)Allocating Capital, 4) Measuring the impact of volunteer support (with SourceCred).
Paving the Way for Crypto Funds in the Netherlands
Wilhelm Roth (call him Will or he might mistake you for his grandmother) is the new CEO of Cyber Capital with a background in crowdfunding for political parties in Switzerland, Germany and the Netherlands. Will has an easy, genuine air about him and is quick to laugh, but gets serious when talking about their voluntary work and help they offer startups and the community by sharing knowledge and expertise.
Wilhelm tells us about Cyber Capital’s efforts in educating regulators and making crypto funds not only regulated but also competitive with similar financial institutions around the world.
‘Be the diplomat that brings the voice of the market to the regulator, and give their answers back.’
Cyber Capital is one of the oldest cryptocurrency funds in the Netherlands and Europe (set up almost 4 years ago), and one of the first to get registered and compliant with AFM (the Dutch financial regulator).
Will reminiscences about the past of blockchain funds and their history with the Dutch regulators. Four years ago, the blockchain ventures still missed many important factors for regulators to take them seriously. There were barely any examples in the world to create precedences. Gradually startups learned to create compliant funds and to communicate with regulators using the first Swiss examples and then more transparent cases coming from Malta and Estonia. More and more guidelines are streaming from funds in Japan, Korean, and the US, on how they organize themselves and hop through all the regulatory loops.
Dutch regulators became interested after seeing tangible results and possibilities around the world. In many ways blockchain funds are similar to the early days of the venture capital, now worth circa 100mln euro per an average VC fund in the Netherlands.
Cyber Capital is a cryptocurrency investment fund strongly based on fundamental analysis. Research, research, research says Will. They are all about the data and more than willing to share it with AFM, ISO Governing Bodies, De Nederlandse Bank, National Notary, and other national companies interested in shaping the industry and the infrastructure in which we all function.
Will is classically educated economist with an old-school cool charm about him. When he thinks of blockchain he doesn’t compare it to the dotcom bubble, the beginnings of the internet, or petsdotcom. Instead, he thinks of Ford’s model A and how it affected not only the car industry but also the road infrastructure and with it the whole world, pushing innovation across many industries.
Researching the Real-world Use Cases for Blockchain
After the beer-2-beer networking session, we head back into the lecture hall for one final lecture by Jonathan Knegtel from Blockdata, a Dutch platform aggregating information about blockchain projects for companies, analysts, and investors.
Jonathan is a captivating speaker, always wearing a recognizable bow-tie and quick to answer all questions. Today he focuses on two main use cases for Distributed Ledger Technology (DLT), the Remittance Market and the Trade Finance.
According to Blockdata’s research, the global remittance market grew by 10% in 2018 alone with a current valuation of $689 billion and is projected to grow to $1.035 trillion by 2022 and $1.413 trillion by 2025, highest inflows in East Asia and Pacific, and highest growth in Sub-Saharan Africa. It creates incredible opportunities for low and low-middle income countries to raise their GDP, alleviate poverty, and reduce income disparity.
Despite large growth, the market continues to suffer from traditional cross-border transfer services like Western Union, characterized by extremely high fees, long transaction times, and low service quality. This creates an interesting opportunity for the blockchain technology that can make transactions 388 times faster and 127 times cheaper on average. According to Blockdata, already 39 blockchain remittance companies were created in the last 9 years and big corporations are actively looking to partner with blockchain startups and innovate the remittance market.
The other use-case mentioned by Jonathan, is the global trade finance, the third most targeted sector for the application of DLT. Trade finance relates to the financing of domestic and international trade. It requires many actors: importers and exporters, banks, carriers, customs officials and insurers working together and largely relies on outdated legacy systems and paper documentation. If successful, DLT could help streamline, speed up, and tamper-proof the trade finance, thus bridging a $1.1 trillion supply-demand market gap.
DLT and blockchain could increase global trade volumes by $1.1 trillion by 2026, of the current base of $16 trillion. — Bain & Company & HSBC, 2018
These are just two use-cases that Blockdata market analyses bring to our attention. Overall, Blockdata aims to be the yellow pages for the blockchain technology by collecting, analyzing, and aggregating information about blockchain projects across industries. Currently, the data is gathered and analyzed by hand, by a team of experienced analysts. Blockdata is also working on a proprietary ‘collective intelligence engine’ that could perhaps one day take over parts of the fundamental analyses.
Jonathan ends his presentation and the whole meetup with a simple but important question:
‘When you talk to your grandchildren… How will you explain your contribution to the future?’
We, gathered at Blockchain Talks monthly meetups are all involved and at the least aware of the benefits that blockchain could bring not only to businesses and investors, but to the people and countries, by disrupting outdated of socio-economical, cultural, and governance paradigms. Who knows what fundamental shifts could lie ahead. We have the knowledge and perhaps capacity to drive some of that change forward. So how will we contribute and what kind of future are we willing to build?
Disclaimer
This article does not constitute any kind of investment advice. Information and opinions contained herein should not be considered an endorsement, solicitation, or offer to buy or sell any securities or other financial instruments or provide any investment advice or service.
This article expresses the authors’ views and experiences. Before taking any action, always do your own research and due diligence.
