tag:drydenbrown.posthaven.com,2013:/posts Dryden Brown 2024-03-05T19:13:49Z tag:drydenbrown.posthaven.com,2013:Post/2081110 2024-01-26T17:19:17Z 2024-02-27T01:43:08Z The technology industry should be powerful

The technology industry should be the most powerful political coalition in the history of man. 

Great founders are some of the most relentless, intelligent, talented people in the world, and they’ve built institutions faster than anyone in human history. 

Meta has tens of thousands of employees, Alphabet has hundreds of thousands, and Amazon has millions. However, their wins in the political arena are limited to DoD contracts and lowering EU fines. 

I think this has to do with the psychographics of our industry. Tech founders are sigmas. We do things our own way. We get mad at incumbents and build startups. We don’t immerse ourselves in powerful institutions; we get frustrated with them and leave. There are virtues to this orientation, but it results in a lack of understanding of bureaucracy, particular institutions, and ultimately power itself. 

Libertarians are often the worst offenders. After axiomatically refuting the morality of government, they content themselves with writing essays, hosting debates, and giving speeches. Seriousness about theory necessitates praxis, which is itself knowledge-generating. 

The Thiel Fellowship is not a replacement for Harvard. It’s a genius PR play — communicating a world view by making a contrarian prediction about an institution’s demise, concretized through charismatic example after example after example of people making life-altering decisions that undeniably convey their commitment to that world view. But ultimately, it does not displace Harvard as a source of institutional power. It’s a sigma move. 

Firing Claudine Gay was Alpha. Finance understands power, immerses itself in it, and occasionally takes radical action when profitable. 

Substack does not obviate the need for NYT's value prop. New business models could collapse the NYT, but there is still a need for an institution that tells elites what the Truth is. Reframing Exit vs. Voice, we should consider Startup vs. Acquisition. 

To change the world, tech needs to understand institutional power, and get it. 

I’m working on a few projects along these lines. Reach out if interested. 

]]>
tag:drydenbrown.posthaven.com,2013:Post/2037841 2023-10-18T22:38:42Z 2024-02-18T22:34:27Z Acceleration Zones

A New Type of Special Economic Zone for Technologists

(Mostly from NA post)

I want a radically better future. I believe that technology, in coordination with institutions, can deliver it. At Praxis, we announced a new kind of Special Economic Zone today: Acceleration Zones. 

Acceleration Zones.

Acceleration Zones (AZs) are a new type of Special Economic Zone that accelerate technological progress in service of national priorities. Acceleration Zones do this by attracting technologists and developing an institutional structure that guides technological development and the reinvestment of proceeds. The key features of Acceleration Zones are: 

  1. Permissionless innovation as an operating principle; new technologies will not be preemptively regulated.

  2. Labor law must be Elon-compatible.

  3. Simple, familiar laws.

  4. Swift, merit-based visa issuance.

  5. Specific regulatory changes and incentives tailored to attract companies in regulated industries, and guide technological progress. 

  6. Governance by Acceleration Zone Board: AZB is authorized to make regulatory changes on an ongoing basis to meet the changing needs of companies and upon identifying new opportunities for the nation. The board sets measurable, quantifiable goals.

  7. Operated by a private Acceleration Zone Operator: a company or foundation dedicated to the aggregation of residential and commercial demand, and the ongoing development and operation of the AZ. This is supplementary State Capacity

  8. Optional: Acceleration Zone Fund, to invest in businesses that establish operations within the Zone, with strategic local, corporate, and bilateral LPs.

Acceleration Zones are designed to be attractive to Government, Companies, Capital, and Residents. 

Governments (especially elected officials): AZs are simple to implement (generally passing one law is sufficient), and offer an immediate winning popular narrative: 

  • $10-100B Foreign Direct Investment (FDI) package from the companies that set up operations.

  • Concrete solutions to pressing issues in the country (e.g. public transportation, energy, unemployment), direct or indirect. 1) Direct: Create jobs, reverse brain drain. 2) Indirect: Proceeds invested in infrastructure and social goods.

  • Big name companies, founders, and cultural figures moving elicits a sense of national pride.

  • Visually attractive: Successful AZs will become beautiful, green, culturally dynamic cities, monuments to their nation’s culture and future.

  • Influence over technology development. 

  • Competitive strategic positioning, e.g. internal production of energy, semiconductors, etc. 

Companies: AZs unlock technological progress and economic opportunity via regulatory change, economic incentives, and new infrastructure. Further, successful AZs will have top talent and offer Silicon Valley business norms in new markets. 

Investors: AZs will make money on golden visas for residents, land value appreciation / monetization (the companies are clustered on a single site), and corporate and income tax revenue. Investors will include the governments, corporate strategics, bilateral strategics, partner developers, and residents. 

Residents will move to Acceleration Zones because they offer an opportunity to build the future. Some residents will be returning to their homeland with a feeling of patriotic duty; others exploring a new frontier. AZs are an opportunity to found a new company, found a new culture, and found a new city with the most talented, ambitious, optimistic people in the world. 


Opportunities unlocked by Acceleration Zones generally take the shape of new technologies with significant regulatory burden. Examples include:

  • Accelerating AI: 

    • Implement Model AI Regulation, become a global thought leader. 

    • Build $100B of data centers; blockers AZs can remove include land acquisition, zoning, energy cost, and capital cost via local and bi-lateral strategic investment and economic incentives. 

    • 10x’ing semiconductor manufacturing: blockers AZs can remove include land acquisition, zoning, energy cost, talent, and capital cost via local and bi-lateral strategic investment and economic incentives. 

  • Accelerating Energy:

    • 10x’ing energy production with nuclear: blockers AZs can remove include regulation, accelerated licensing, land acquisition, zoning, energy cost, capital cost, and revenue risk. 

  • Accelerating Biotech: 

    • Increasing velocity of experiments: blockers AZs can remove include regulation (Right-to-Try laws), revenue risk (regional licenses), capital cost, and talent. 

There are a ton of companies that could help build AZs, and benefit from them::

These companies are building the future in a diffuse sense; people should be able to visit the future. Acceleration Zones unlock that possibility. 

The aggregate impact of Acceleration Zones is the acceleration of AI, energy, biotech, and everything else. AZs will quickly deliver the benefits of Silicon Valley to the world, in a real, practical, visible way to impact the everyday lives of people. Further, they do so in an institutionally aligned way to avoid friction and blockers. Long term, Acceleration Zones may be our path to the stars. 


Praxis is Developing Acceleration Zones. 

Praxis is actively developing special zones for technologists, in partnership with governments. 

  • We are engaged with 7 governments on Zone creation projects.

  • We are working with companies (including some of the companies linked above) to identify regulatory and incentive unlocks for technology and research projects via new Zones. 

  • Our development team has built 3 new cities with >100k residents each. 

Praxis’ first project will be a new city on the Mediterranean in an Acceleration Zone. The City will accelerate technological progress by supporting those solving the world’s hardest problems, and foster a culture of vitality. 


Acceleration Zone Ecosystem.

We hope Acceleration Zones become a lever that everyone in the ecosystem can use: 

Existing startup city projects:

Other projects in the ecosystem:

Funds:


Please reach out on X if you want to discuss details.


Join us.

If you represent a Government and want to develop an Acceleration Zone, reach out (government@cityofpraxis.org). Our Government Relations team is happy to speak with you. 

If you represent a company and want to build the future in an Acceleration Zone, reach out. We want to help you unlock progress. 

And if you believe in techno-optimism and want to see it implemented, help us build Acceleration Zones by joining the Praxis community and moving to the first one. It’s time to build the future. It’s time to kickstart a new civilizational technology program that will deliver us the final frontier, infinite wisdom, and eternal life.

]]>
tag:drydenbrown.posthaven.com,2013:Post/2037682 2023-10-18T17:09:54Z 2024-02-18T22:34:42Z National Accelerationism

How to Implement a Program of Techno-Optimism Now

INTRODUCTION.

I want a radically better future. I believe that technology, in coordination with institutions, can deliver it. Beyond philosophy, what follows is a plan that we can begin executing immediately. 

Technology. 

Technology is the set of tools we use to do new things, and old things better. Technology is how we shape our world and build the future. The moral compass metaphor is instructive: technology is the ship, we're the crew; you still need a compass to get where you're going. And, for that matter, you need to know where you're going. Our values imply our vision for the future. Values tell us what technology to strive for, and how to use it. Technology is a scalar, and values make it a vector. Technology is inextricably linked to our values.

The Exponential. 

Technological progress is accelerating. “Compare how the world looked 15 years ago (no smartphones, really), 150 years ago (no combustion engine, no home electricity), 1,500 years ago (no industrial machines), 15,000 years ago (no agriculture),” writes OpenAI CEO Sam Altman. “The technological progress we make in the next 100 years will be far larger than all we’ve made since we first controlled fire and invented the wheel.” Humanity is propelled by technological progress; on a long enough time scale, the exponential appears to be inevitable. Leaps are made by individuals, but humanity always finds a way. 

Today, we see inflection points in artificial intelligence, energy, and biotech. 

AI is working – products like ChatGPT and Midjourney create labor efficiency by helping us do tasks faster, and gesture at a structural cost reduction in knowledge work. The ultimate promise of artificial intelligence is limitless knowledge, and its application. 

In energy, nuclear fusion – which offers virtually limitless, clean energy – is beginning to work in the lab. Private companies are commercializing early, signing contracts with future customers e.g. Microsoft. The consequences of fusion are profound: material cost reduction in the operation of data centers (compute / AI), manufacturing, transportation, and much else; energy is 13% of global GDP. Unlimited energy, in combination with the secrets of the universe learned from superintelligence, unlock an infinite frontier. 

Biotech is having a moment as well. Brain-computer interfaces are beginning human clinical trials, and perhaps LLMs or DeepMind's AlphaFold will become a lever in drug discovery and personalized medicine. Healthcare is ~18% of US GDP; further, it is a low-productivity-growth sector, so the 18% is closer to a cost than an investment. The promise of biotech is BCI fusion with superintelligence, and the holy grail: eternal life. 

These technologies are interrelated. AI is extremely energy-intensive (e.g. a query on ChatGPT uses about 10x the compute as the same search on Google). Energy is the core input to AI; biotech is a core output. 

If exponential technological progress continues, we have an opportunity to live through the most exciting time in human history. We can choose to enter an age of exploration and enlightenment. We can travel to the far reaches of the universe, learn the secrets of reality, and live forever. The exponential unlocks this possibility, and more than we can possibly imagine. But to realize a possible future, we must choose it. 

Institutions. 

Ideas about how we should live take the form of religions, philosophies, and ideologies; they are spread by the memes we call culture; these memes compel a suprapersonal commitment to a cultural form; and this cultural form, projected through time, is our vision for the future. Institutions are sets of norms and rules that we use to coordinate disparate humans. They guide us towards our vision for the future codified in our values. The Catholic Church, the law, marriage, the SEC, Harvard, and the New York Times are all institutions. Institutions have a duty to protect the spiritual core of society. 

The most powerful and important institution in our society is Government. Governments serve as a final backstop, enforcing adherence to the most fundamental rules and norms. Humans are social and need institutions to coordinate; their persistence is inevitable. 

Sovereign Alignment. 

There is a natural antagonism between technology and institutions. Institutions provide stability. Technology causes change. 

Governments view technology skeptically, and technology views governments skeptically. As the custodians of our values and way of life, governments reasonably seek to ensure that tech-driven change furthers a vision for the future that is consistent with their values. Technologists give us the ability to improve our lives, and reasonably seek to avoid governments preventing progress. Governments view economic volatility (especially job automation) as dangerous; technology views economic stagnation as dangerous. 

Exponential technological progress will worsen the tension between technology and government. The world will change faster. This will be startling to staid institutions. Threats to our way of life posed by the aimless or destructive application of technology will be met by draconian regulation, which will startle even the most DC-active technologists. The US is already doing this in crypto; nuclear and biotech regulations are onerous as well. The EU regulates benign software.

Regulation can slow technological progress locally, but not globally. Governments can use the lever of the law within their jurisdiction, and effectively in other jurisdictions where they have material influence. Fear of technology is ancient. Plato criticized the invention of writing. While concerns are not always unfounded, technology has always prevailed. Competitive dynamics create an opportunity for adversaries to speed up when you slow down. The costs of going slow include: 

  1. Loss of talent: Talented people will move to places with greater economic opportunity driven by technology. As we’ve seen over the last century, brains drain to technologically progressive societies. This trend will accelerate.

  2. Loss of capital: If the talent moves, so does the money. 

  3. Loss of military capability: Governments that clamp down on technology will not persist over the long term. Adversaries will beat them with more advanced weapons tech. 

  4. Reliance on External Parties: Countries that import e.g. energy, compute, and semiconductors are vulnerable to supply chain issues and geopolitical instability. 

Going slow locally is unwise because going slow globally is impossible.

Technological progress is inevitable, and so are institutions. A dynamic compromise of mutual improvement can be reached by leaning into the exponential curve of technological progress, while aiming at a clear vision for the future. This is the story of the Manhattan Project and Apollo 11, Singapore and Shenzhen. 


THE PLAN.

National Accelerationism. 

National Accelerationism is the alignment of technology and government, where technology serves the national interest: directly, through the attraction of technologists and technology companies that drive economic growth, shaping technological development with cultural and economic incentives, and by reducing external dependencies e.g. in energy, compute, semiconductors, and defense tech; and indirectly, through the reinvestment of proceeds into social goods and infrastructure. Institutions can shape incentive structures to determine which technologies get developed through social movements and resource allocation decisions. A nation of explorers can fund their journey to Mars with the proceeds of advanced energy; art can be funded with the cash thrown off by personalized medicine; education paid for by AI dividends. 

American Accelerationism might consist of revamping the manufacturing ecosystem through upskilling and automation, reshoring the medical supply chain, onshoring the electronics supply chain, a state acquisition of TSMC, eliminating zoning, nuclear fusion, an American Equity Fund, eliminating many social welfare programs (lean into the rugged individualism ethos), creating a neo-art-deco, banning TikTok, building a merit-based immigration system at the macro level, and the micro level (college admissions, job applications), and investing heavily in space exploration. America is a nation of explorers. 100 years into American Accelerationism, I imagine a crew of pioneers boldly voyaging into the solar system, building industry on asteroids, pushing the horizons of humanity further. 

Source: https://twitter.com/FilArons/status/1714465274949255242

Arabian Accelerationism is happening now in NEOM. The Line, and Vision 2030 broadly, represents greater clarity of vision than perhaps any other project does for any nation in the world today. Arabian Accelerationism should extend the line out to 2100 – what does the Kingdom look like then? 

Israeli Accelerationism is also happening – Israel became a world leader in technological progress in two generations. 

Irish Accelerationism; could a futuristic megacity be built off the coast of Mullaghmore? 

Link: https://twitter.com/_PeterRyan/status/1710094988405841963

Internet Accelerationism; one can imagine quasi-stateless crypto nomads developing further communal sensibilities, formalizing their rules and norms, developing institutions. This is aligned with The Network State; Zuzalu represents a step forward; so does Sol Brah’s tribe. 

Governments begin a plan of National Accelerationism by doing the following: 

  1. Clarifying national priorities: in terms of your vision for the future, grounded on firm moral foundations; and questions of vital strategic importance. This will inform the incentive structures you create to influence the development of technology. 

  2. Discovering comparative advantages: map the existing industrial base, labor pool, geography, markets, and natural resources to begin identifying opportunities for industry growth. 

  3. Interviewing technologists: in target and non-target industries to understand what regulatory changes and economic incentives they would need to establish operations in your country. Identify potential actions and the FDI amount, jobs, and other key milestones they unlock. 

Next, governments need a simple legal mechanism and a charismatic vision to make the institutional changes that unlock their nation’s future. 

Acceleration Zones.

Acceleration Zones (AZs) are a new type of Special Economic Zone that accelerate technological progress in service of national priorities. Acceleration Zones do this by attracting technologists and developing an institutional structure that guides technological development and the reinvestment of proceeds. The key features of Acceleration Zones are: 

  1. Permissionless innovation as an operating principle; new technologies will not be preemptively regulated.

  2. Labor law must be Elon-compatible.

  3. Simple, familiar laws.

  4. Swift, merit-based visa issuance.

  5. Specific regulatory changes and incentives tailored to attract companies in regulated industries, and guide technological progress. 

  6. Governance by Acceleration Zone Board: AZB is authorized to make regulatory changes on an ongoing basis to meet the changing needs of companies and upon identifying new opportunities for the nation. The board sets measurable, quantifiable goals.

  7. Operated by a private Acceleration Zone Operator: a company or foundation dedicated to the aggregation of residential and commercial demand, and the ongoing development and operation of the AZ. This is supplementary State Capacity

  8. Optional: Acceleration Zone Fund, to invest in businesses that establish operations within the Zone, with strategic local, corporate, and bilateral LPs.

Acceleration Zones are designed to be attractive to Government, Companies, Capital, and Residents. 

Governments (especially elected officials): AZs are simple to implement (generally passing one law is sufficient), and offer an immediate winning popular narrative: 

  • $10-100B Foreign Direct Investment (FDI) package from the companies that set up operations.

  • Concrete solutions to pressing issues in the country (e.g. public transportation, energy, unemployment), direct or indirect. 1) Direct: Create jobs, reverse brain drain. 2) Indirect: Proceeds invested in infrastructure and social goods.

  • Big name companies, founders, and cultural figures moving elicits a sense of national pride.

  • Visually attractive: Successful AZs will become beautiful, green, culturally dynamic cities, monuments to their nation’s culture and future.

  • Influence over technology development. 

  • Competitive strategic positioning, e.g. internal production of energy, semiconductors, etc. 

Companies: AZs unlock technological progress and economic opportunity via regulatory change, economic incentives, and new infrastructure. Further, successful AZs will have top talent and offer Silicon Valley business norms in new markets. 

Investors: AZs will make money on golden visas for residents, land value appreciation / monetization (the companies are clustered on a single site), and corporate and income tax revenue. Investors will include the governments, corporate strategics, bilateral strategics, partner developers, and residents. 

Residents will move to Acceleration Zones because they offer an opportunity to build the future. Some residents will be returning to their homeland with a feeling of patriotic duty; others exploring a new frontier. AZs are an opportunity to found a new company, found a new culture, and found a new city with the most talented, ambitious, optimistic people in the world. 

Opportunities unlocked by Acceleration Zones generally take the shape of new technologies with significant regulatory burden. Examples include:

  • Accelerating AI: 

    • Implement Model AI Regulation, become a global thought leader. 

    • Build $100B of data centers; blockers AZs can remove include land acquisition, zoning, energy cost, lower cost of capital from local and bi-lateral strategic investment, and economic incentives. 

    • 10x’ing semiconductor manufacturing: blockers AZs can remove include land acquisition, zoning, energy cost, talent, lower cost of capital from local and bi-lateral strategic investment, and economic incentives. 

  • Accelerating Energy:

    • 10x’ing energy production with nuclear: blockers AZs can remove include regulation, accelerated licensing, land acquisition, zoning, energy cost, capital cost, and revenue risk. 

  • Accelerating Biotech: 

    • Increasing velocity of experiments: blockers AZs can remove include regulation (Right-to-Try laws), revenue risk (regional licenses), capital cost, and talent. 

There are a ton of companies that could help build AZs, and benefit from them. They include:

These companies are building the future in a diffuse sense; people should be able to visit the future. Acceleration Zones unlock that possibility. 

The aggregate impact of Acceleration Zones is the acceleration of AI, energy, biotech, and everything else. AZs will quickly deliver the benefits of Silicon Valley to the world, in a real, practical, visible way to impact the everyday lives of people. Further, they do so in an institutionally aligned way to avoid friction and blockers. Long term, Acceleration Zones may be our path to the stars. 

Join us. 

Why am I so confident that this path is viable? Acceleration Zones are not a fantasy born of abstract philosophy. 

At Praxis, we are actively developing special zones for technologists, in partnership with governments. 

  • We are already engaged with 7 governments on Zone creation projects.

  • We are already working with companies (including some of the companies linked above) to identify regulatory and incentive unlocks for technology and research projects via new Zones. 

  • Our development team has built 3 new cities with >100k residents each. 

  • We partnered with two former Heads of State (G7 & EU) and their teams on governance. 

  • We have a community of >12,000 members and hundreds of Residents. 

Praxis’ first project will be a new city on the Mediterranean in an Acceleration Zone. The City will accelerate technological progress by supporting those solving the world’s hardest problems, and building institutions to foster a culture of vitality. 

If you represent a Government and want to develop an Acceleration Zone, reach out (government@cityofpraxis.org). Our Government Relations team is happy to speak with you. 

If you represent a company and want to build the future in an Acceleration Zone, reach out. We want to help you unlock progress. 

And if you believe in techno-optimism and want to see it implemented, help us build Acceleration Zones by joining the Praxis community and moving to the first one. It’s time to build the future. It’s time to kickstart a new civilizational technology program that will deliver us the final frontier, infinite wisdom, and eternal life. It’s time to enshrine our values in new institutions. A more vital world is on the horizon. 

References: 

  1. Moore's Law for Everything, Sam Altman

  2. Navigating the Cosmos: How Energy, AI, and Longevity Shape Our Future, Shyamal Anadkat

  3. The Founder Visa, Paul Graham

  4. How AI Will Remake the Rules of International Trade, Tyler Cowen

  5. The Techno-Optimist Manifesto, Marc Andreessen

  6. What libertarianism has become and will become — State Capacity Libertarianism, Tyler Cowen

  7. Reinventing Societal Infrastructure with Technology, Vinod Khosla 


]]>
tag:drydenbrown.posthaven.com,2013:Post/2035097 2023-10-11T01:38:03Z 2023-10-12T02:27:37Z Elites vs Elite Institutions

For the first time in recent memory, we are seeing elites condemn elite institutions.

For example: Larry Summers, the former President of Harvard, on Harvard: "In nearly 50 years of Harvard affiliation, I have never been as disillusioned and alienated as I am today."

The Israel / Palestine conflict – on which the American elite range from firmly to exuberantly in support of Israel – has strangely elicited from elite media and educational institutions (e.g. NYT, Harvard) a response ranging from tepid support of Israel to righteous support of Palestine. 

This was inevitable, but it is still bizarre watching it happen. It’s the necessary consequence of Boomer elites encouraging diversity admissions and hiring practices in these institutions, and attracting non-Jewish Marxists and "decolonizers", who stand firmly on the other side of the issue they view as being of the highest importance. 

Institutions are supposed to maintain norms and rules resting on a shared moral foundation, advancing a shared vision for the future. Institutions lose face when they fail to do this – and invite a rehaul when they reveal their moral foundations deviate from those on which the elite stand. We are witnessing unprecedented legitimacy collapse. 

On education, this is a huge win for Peter Thiel and Joe Lonsdale – who have in turn been advocating for the effective boycott of elite educational institutions (Peter: Thiel Fellowship) and the generative production of new ones (Joe: University of Austin). 

On media, this is a huge win for Balaji Srinivasan and Marc Andreessen – who have advocated for the boycott of traditional media, and the development of owned channels (twitter, blogs, substack, etc.). 

I expect an enormous, ongoing sentiment shift on education and media, but also on immigration – which is the macro version of the aforementioned hiring policies. Immigration policies led to pro-Hamas rallies in major cities this week. 

Want to start a new university or new elite media org? Harvard and NYT waffling on Israel, and losing legitimacy, are your “Why Now.” It’s time to build…

]]>
tag:drydenbrown.posthaven.com,2013:Post/2034890 2023-10-10T16:25:32Z 2024-03-05T19:13:49Z Manufacturing Consensus

Thanks to Vitalik Buterin, Tarun Chitra, Sreeram Kannan, Arthaud Mesnard, Maxwell Tabarrok, and Robert Drost for feedback.

TLDR. 

Crypto is threatened by decentralization. Decentralization is the transfer of power from Direct Leaders to Opinion Leaders; Opinion Leaders inform the voting preferences of Token Holders. There are fewer Opinion Leaders than Direct Leaders, as Opinion Leaders have cross-project influence. As such, when projects decentralize governance, they centralize power across the industry. This makes crypto more vulnerable to capture and attack, because a smaller number of people need to be captured, and their distribution can be boosted or constrained by the owners of the social platforms they use. We can mitigate the risks of decentralization if we understand them. Finally, we should develop a regulatory environment that promotes the longevity and growth of the industry.


Why Decentralize?

Crypto projects always start with centralized governance. Projects begin with a vision and an attempt at realizing this vision, carried out by an individual or team led by a Direct Leader. The Direct Leader makes decisions about strategy and resource allocation. 

Often an element of the strategy or product design involves issuing a token. A token is usually a liquid, tradable claim on a share of the value created by a project. Decentralization is the process by which the Direct Leader transfers the right to make decisions (power) from themselves to the holders of their token. Token Holders vote on what the project should do: strategy and resource allocation.

Why do Direct Leaders decentralize when they issue a token? Decentralization imposes costs on an organization — decisions are made more slowly by lower context people who are not held accountable for bad decisions — this is why companies don’t operate this way. These costs are being felt across the industry. Kevin Owocki, who left as Direct Leader of Gitcoin to later return, described a broader trend of “founders boomeranging” back into leadership to solve the organizational dysfunction caused by decentralization. As the impetus for governance changes, Rune Christensen wrote of MakerDAO in 2022, “The governance processes and political dynamics… fundamentally aren’t compatible with the reality of effectively processing complicated real-world financial deals.”

Projects decentralize because this is usually a regulatory requirement to issue tokens, implicitly mandated by the Howey Test. Howey deems (most) tokens that claim value from a project led by a “common enterprise” (Direct Leader and team) securities. If a token is judged a security, it imposes a massive regulatory headache and expense on the Direct Leader and team. Beyond the functional product possibilities unlocked by tokens, the following benefits inform the calculus around decentralization:

  1. Liquidity for early stakeholders; less market and regulatory scrutiny than equities markets; cheaper than IPOing 

  2. Increased financing availability and project value by unlocking new demand for ownership via liquid capital markets; less market and regulatory scrutiny than tradfi equities markets; cheaper than IPOing

  3. Stakeholder alignment — give tokens to customers, vendors, etc.; tokens as a CAC/retention lever for users and teams building on top of the protocol; cheaper than IPOing; fewer restrictions

  4. Retirement  – stop working, reap the benefits

These benefits are material. The industry is not totally cynical about this, because a final rationale for decentralization blinds them: Cargo culting Bitcoin leads to brand value accrual that cashes out in legitimacy. Ceding power is perceived as noble; actually, it is often a pretense for an economically-motivated abdication of responsibility. Leadership is noble. 

Projects decentralize because there is a powerful economic incentive to do so in light of US regulations, and because it conveys upon them legitimacy; but they do so at the project-level cost of decreased organizational effectiveness, and at the industry-level cost of the centralization of power. 


Manufacturing Consensus.

When projects decentralize, Direct Leaders are nominally ceding power to the Token Holders — but is this actually the case? No – decentralization is the transfer of power from Direct Leaders to Opinion Leaders. 

Voting fails to express the preferences of the voters because in democratic systems, voters prefer to delegate power to Opinion Leaders. Opinion Leaders are people who inform voters’ views on a project, because they are perceived as being higher context than them, perhaps wiser, and certainly more legitimate. Opinion Leaders are often a former Direct Leader, but sometimes they are the former or current Direct Leader of another project. Using the power bestowed upon them as a function of Token Holders’ trust, Opinion Leaders come to control the information flows that inform the preferences of voters. By controlling information, Opinion Leaders dictate voting outcomes; sometimes Opinion Leaders have explicit power via a formal delegate system. Often L1s like Ethereum have robust off-chain governance systems (e.g. EIP) that precede votes, but votes formally decide the fate of a proposed change. 

This dynamic was most famously described in Chomsky and Herman’s Manufacturing Consent. They argue that mass media is the propaganda arm of the US government – mass media controls the flow of information, so it dictates voting outcomes. Today, there is a broader network of independent Opinion Leaders who come to prominence on social media, but still they feel the weight of the power of politics. Further, independent Opinion Leaders are subject to the whims of the Direct Leaders who control the social media platforms they use to disseminate their ideas. If social media platforms were to decentralize, this problem would be compounded further. Elon demonstrates the potential of Direct Leadership, as someone capable of breaking with Opinion Leader influence. 

Adversarial actors seeking to harm a project or the industry will be operating outside the bounds of the internal logic of a project (a Byzantine Participant) – they won’t be attempting to steal money, or tokens, but rather to sow discord to create a meta-problem: industry dysfunction and potentially collapse. If crypto is taking zero-sum political power from an actor, this response is rational. 

The lesson is: if an adversarial actor (perhaps a hostile government, or other misaligned interest groups) wanted to control crypto, they would:

  1. Incentivize project decentralization (with financial or social capital)

  2. Encourage Opinion Leadership centralization (potentially using social platforms as a lever)

  3. Co-opt Opinion Leaders with the reach to influence the important projects 

This would be much easier than co-opting the teams of those projects, because Opinion Leaders have cross-project influence. The result of decentralization is a more fragile industry, with a clear Achilles’ heel. 


Dead or Alive. 

Ethereum is formally decentralized, but its a Live Player project: it is actively led by a group of high-legitimacy Opinion Leaders including its founder, Vitalik. There is little-to-no cross project influence present, because there is no power vacuum left by a checked-out core developer team.  It’s hard to find a single non-Ethereum Opinion Leader that Ethereum people seriously listen to. Within the broader Ethereum ecosystem, L2s are deeply influenced by core Ethereum devs; given that their decentralization largely comes from a tight coupling to the underlying L1, this seems necessary – which highlights a vector of attack for L2s – a Dead Player L1. 

Dead Player projects are projects that have decentralized, and instead of graduating from Direct Leader to Opinion Leader, the founder has meaningfully retired – leaving a power vacuum, opening the project up to external influence. 

Dead Player projects are hard to resuscitate, and Opinion Leader led projects are hard to pivot. There’s little incentive to execute on the pivots required to have a major second or third act, because as a new would-be Live Player leader, it’s an uphill battle for social capital within the project, and there is no clear mechanism for attaining an economic incentive i.e. tokens commensurate with CEO-level work. It’s much easier to simply start a new project. 


Stunted Growth.

Many projects have a vision for an end state like Bitcoin’s: an autonomous, immutable system running itself on the internet forever. It’s worth taking a moment to appreciate the cyberpunk elegance and historical achievement of such systems. But, it takes leadership to steward a project to a lofty perch – if the history of technology has taught us anything, it is that new projects using new technologies will displace older ones, particularly if there is not a high-legitimacy Direct Leader in place to navigate through Christensensian disruption. Premature decentralization is not the path to immortality – it’s the path to a quicker death. 

Opinion Leader-led projects have a limited ability to have strong second or third acts, creating a greater opportunity for new entrants. Imagine if Facebook had decentralized to Facebook Protocol upon achieving PMF (or hitting 1B DAUs): META wouldn’t be a $800B company because Opinion Leaders would not have guided Token Holders to vote for the “overpriced” Instagram acquisition, and certainly not the investment in metaverse technology. Only a Direct Leader with Mark Zuckerberg’s legitimacy can make contrarian calls. In Facebook Protocol world, Instagram would’ve taken eyeballs from the Facebook core product, and Oculus might be doing significant R&D on metaverse tech – building their own empires. And Facebook Protocol would be dying. This is not bad in its own right, but it does suggest that premature decentralization stunts projects’ growth. An unfufilled destiny is a sad sight to behold, but more practically, smaller outcomes means a higher cost of capital for the industry. VCs are willing to underwrite “expensive” deals in spaces with megaoutcomes. 

Recruiting is harder for decentralized projects. With less confidence that they can make bold strategic decisions, would-be recruits become founders. Rare are projects with such insane legitimacy that the social capital they convey outweighs the obvious economic incentive to build a new project using new technology. The Ethereum Foundation recruits extremely well – their researchers could make more money launching new L1s a la Avalanche or Solana – but the EF is an exception. 

Premature decentralization leads to more projects (which is good), but smaller outcomes and a higher cost of capital for the industry (which is bad). 


Conclusion.

Contemplate the costs the decentralization imposes both on your project and to the industry. Vitalik wrote, “small things being centralized is great, extremely large things being centralized is terrifying.” The biggest thing in crypto is the entire industry. We should not shepard crypto to a place where power could potentially be centralized and controlled by adversarial Opinion Leaders, under the pretense of the noble ideals on which the industry was founded. 

We need to be able to create tokens without removing Direct Leaders. Great things get built over long periods of time by great leaders with the legitimacy to take bold action. To realize the benefits of tokenization without misguided decentralization, we need to create a regulatory environment that enables this. In doing so, we will enable bigger outcomes, which lowers the cost of capital for crypto, enabling further growth. But more importantly, we will reduce the fragility of the industry, closing off an avenue of attack that we are largely blind to – the potential for malicious actors to leverage decentralization against crypto. 

I will explore a new regulatory model for crypto and a token-based implementation approach in a follow-up essay. 



References:
  1. The Most Important Scarce Resource is Legitimacy, Vitalik Buterin

  2. Manufacturing Consent, Noam Chomsky and Edward Herman

  3. Rationality is Self-Defeating in Permissionless Systems, Bryan Ford and Rainer Böhme

  4. Live Players versus Dead Player, Samo Burja 

  5. What do I think about network states?, Vitalik Buterin

]]>
tag:drydenbrown.posthaven.com,2013:Post/2030148 2023-09-28T09:32:14Z 2023-10-15T01:30:17Z Aphorisms I (with annotations)

Sharing ideas I wrote at the end of 2022. Amusing reading this now, as some of them are key to understanding why I made the mistakes I did in 2023. Adding some annotations in italics. 

The most profound insights I discovered about human nature and society are secrets. Most important ideas can only be spoken in hushed tones, and the most profound ones stay locked away. Human nature is bizarre, and society cannot easily internalize the truths at its foundation. Some musings that I will share:

  • The idea that great leaders usefully create a “Reality Distortion Field” is backwards. People are already living in a distorted reality. It's your job to break them out using a Reality Field. [This is mostly correct, should be taken seriously]

  • Cultivate a sense of inevitability. Become a winner at all (non-moral) costs. You can solve any problem life throws at you. [You cannot solve every problem; sometimes you have to eat the cost and move on]

  • I was at lunch with the childhood friend of the biggest hedge fund managers in the world (Bob). Bob was down 50% last year. I asked my friend if he was “freaking out.” He was vividly taken aback. “Freaking out?? Bob? I’ve never seen him freak out in his life. He’s just busy. He’s at his desk making the calls he needs to make.” This is an aspiration of mine — that if you asked my friends how I’m doing when crisis hits, they would look at you like you’re from another planet if you suggested I might not be totally locked in, taking the steps needed to escape the precipice and achieve total victory. 

  • Have faith and act with conviction. The core mistakes I made last year were the consequence of me questioning my own intuitions and deferring to people who had more “experience”. Trust your gut on the big things, and execute relentlessly. [Yes]

  • Social norms are actually pretty good guides to conduct. Break rules and make contrarian bets only when you are very high conviction. It’s easy for smart people to construct self-serving, internally consistent arguments to justify nearly anything. Be wary of your intellect. [More true than I appreciated]

  • Only make enemies when absolutely necessary. Conflict is negative sum. People will intuitively perceive interacting with you as riskier if you have conflicts, even if you eloquently explain how it wasn’t your fault. [Building a large following is extremely high-leverage, and public conflict / drama is useful when doing so; I am extremely comfortable with conflict, so this (as much advice is) was directional advice for myself, but not generalizable to all people seeking success]

  • Surround yourself with people you respect who look up to you, and live up to their aspirational perception. Earn their respect and admiration with every choice you make. [This is totally wrong and will lead you astray; cultivate a strong sense of self, a notion of the divine, and do what you think is right]

  • Your analysis of any situation will be 2D, but reality is 3D. Cubes will appear to you as squares. You can see a fuller picture of reality by knitting together seemingly contradictory stories and models that gesture at the same underlying reality from different vantage points. 

  • The design space for your life is much larger than you can fathom. There are moves you can make beyond your imagination. Expand your horizon, and be more aggressive.

  • The most important skill in life is saying things the way people need to hear them. Empathy and lucidity of communication are paramount. Wed this skill with the noble virtues of honesty and integrity, and you can achieve any vision over the long term.

  • Experience beauty. See masterworks in museums, visit Florentine cathedrals, invest in Italian fabrics when you can afford them. [Wait until rates come down to buy the fabrics]

  • Most people have really bad taste. Your preferences should hew towards objective beauty.

  • Don’t just use music as a stimulant, e.g. hype-up rap music on your commute. Listen to Idioteque and Lotus Flower by Radiohead and contemplate your relationships.

  • Long walks are extremely important for clarity of thought.

  • Find magic people, bring them into your life, and keep them close. [Yes, but: some magic people do dark magic; beware]

  • Cultivate noble virtues, let them guide your behavior. The accumulated effect is a radiant vitality that will cause every element of your life to flourish. 


]]>