The World Has a Governance Problem | Nick Almond (Jito)

Um, hi, my name's Nick. I am currently head of governance at um, Gito, which is a uh, DeFi protocol on Solana. Uh, and I'm also chief scientist of a uh, Ethereum-based company I founded called Factory Labs. Um, so yeah, um, I I just did a talk at Eth Prague about uh, called decentralize uh, decentralize or die. And yeah, I I I thought it was a interesting time to get back to what decentralization is from first principles.

And I I made the argument that there's a a broad spectrum governance crisis uh, which I think is being um, experienced everywhere at the moment. Uh, every major uh, large governing system uh, institutions of all scale, especially governments, are um, failing to keep up with the rate of change of of of society and and writ large. Uh, and I made the argument this is about complexity increasing and and consequently they they don't have the governments uh, to deal with it. I think the solution to um, to that issue in particular is decentralization, right? So, yeah, the argument is that I tried to make is that the these large large systems when they get a sufficient scale should offload um, parts of the the governance action to uh, local levels.

So, one of the ways that uh, this is conceptualized is a concept called subsidiarity, which is uh, power should be transferred to the most local place possible. Uh, and this works well in those for feeding context into the system. So yeah, decentralization is a way for uh, governance everywhere to get better, particularly the bigger uh, the bigger areas. So, that's why we work on DAOs and things like that. Yeah, so DAOs haven't worked largely because we just haven't figured out how to use them yet.

Um, I could go on about why I think this has happened for a long time. I think it one of the things we did was over decentralize. So, um, part of the argument I just made was that there's a sweet spot for tuning decentralization. We kind of had this, uh, uh, decentralized or not, right? That that was a binary.

Um, but it's a continuum and you can like find you can architect decentralization in in ways that are more sophisticated than let's think this, uh, dumb smart contract with some token voting's going to be able to do anything. There's no reason to believe a DAO can do anything unless it's had the capacity to do it. Uh, so I think mostly we just expected too much from them and and gave them bigger jobs than they were capable of doing. So, my definition of DAOs is that they're it's any organizational system which, uh, uses blockchain technology, um, to, uh, and to leverage some element of decentralization, autonomy, and, um, an organization. So, I think it's very possible that some of these very large systems, um, could decentralize to the point where you could call them a DAO.

Um, I think it would take a long time to do properly and sensibly. Um, but yeah, I've got faith that, um, massive scale decentralized organizations could could exist and be more performant, um, and more humane than, um, than many centralized government systems, including governments. Um, I think privacy is one of these things that we're meant to have as, um, as just humans, as beings, actually. So, one of the things one of the arguments I made is that, um, the cryptography is a uh, a universal source of of sovereignty and peace actually. Um because there are aliens in different civilizations right now who have access to elliptic curve cryptography.

Um so everyone in the universe has this. So it doesn't really make sense to me for why anyone should be able to say that you shouldn't have it. So uh the ability to hide secrets is just written into the universe and and I think that's a signal that uh people deserve privacy as a kind of fundamental right. Um Now this comes with challenges of course for big systems and I like I advocate for a a sensible uh approach to how you mainstream that into broader society. Um but I think at the base of it um it would be unethical to like ban it.

Um my favorite privacy tool is uh Signal. Um just because it's uh it's one that's worked and it's open source. Um and I uh I trust it to be able to communicate freely with my peers with it. Um and it's not big tech thing. They're not trying to aggressively like monetize me.

It's not WhatsApp which again I don't particularly trust and um yeah so just purely by its utility I think uh you you you um you can't get much better than Signal at the moment. Um I mean practically speaking um I like a few VPNs. Uh I think uh Nym is a very interesting project which I'm glad exists. Um There's um Mullvad is a VPN that I kind of trust because I can uh just the way that that you can that you can get a Mullvad VPN ticket by sending money in the post and they will send you back a little code that you can put in. Which just exemplifies that you can't ban them.

Right? It's just um So, VPNs are the next layer of again not that esoteric, I guess. Um And then I like a few things conceptually. I think um the potential for ZK-TLS is really powerful. So, I like the bit like I can effectively generate proofs of any any centralized products that I'm I'm like my Spotify plays or details from my my bank account or whatever.

Um so, that ability to selectively reveal your yourself, I think is one of the cool kind of like Cypherpunk things that I'm very excited about getting explored. That's an interesting question. So, my conceptualization of like Neo as a suffix, if you like, is that it it's radically new. So, if we're I would say it's whatever we reconceptualize Cypherpunk to mean now. Um and then something like post-Cypherpunk would have like keep the other stuff more readily in it.

So, I think it we're inviting ourselves to kind of radically reconceptualize Cypherpunk, whatever that means. Which I think is a nice idea cuz I think it's um the kind of real Cypherpunk legacy is either like very academic or very paranoid. And I think it's um we need to find a sort of way of of talking about these things that is um Yeah, just more human and fun and and open friendly. Um so, I kind of hope that's what it is. How could we make DAOs more human friendly, more um suitable for the average person?

Um so, this is something that I've been thinking about a lot more and more as the years go on. Um cuz I'm starting to realize that the only people who are going to use DAOs are people who need to coordinate. Um so, I'm I'm I'm especially interested in small community groups. Um, I currently do some research with the uh Architectural Association in in in London. Uh, and and work with some architects there who are thinking about things like DAO design with real communities.

So, uh people who run like local food banks and community gardens and and things like that. Um, and so the way to make uh DAOs friendly for for them is to solve problems for them. So, like I'm still getting very acquainted with what people actually need. Um, do they need crypto at this point? Um, not yet, but I think there's um, the ability to coordinate money with a community of people without having to set and not having to incorporate something.

It's just an elaboration on the multi-sig. Um, and then you can get into exciting ways of like reaching consensus more readily and sense making with your community better. Um, so yeah, it has to be useful, basically. I think we've been doing that at scale for So, people um, used DAOs. Uh, I said people, I mean like protocols, big big the biggest projects used DAOs.

So, we neglected DAO tooling to the point where we didn't really build anything new for 7 years or something like that. But then made them absolutely critical to all of the major protocols that we launched. And we did it so we could launch a token and it was largely used to as a kind of reg- regulatory arbitrage uh util- like function. Rather than let's decentralize this protocol. So, we had the priorities the wrong way round.

We we didn't um, we used it for something as in generate a token. And then and was kind of almost discarded as an afterthought or thrown out into a community rather uncritically. So, I think we just didn't care about them enough generally. So, a bit of care would have made all the difference. And and some better infrastructure and tooling, you know, it's a job's not finished on on good tools that will improve people's community activities.

Um main challenges for mass adoption of DAOs. So, yeah, one day I I call this moment the DAO takeoff moment when um we end up with thousands a day. And when you think there's like 50,000 uh you know, meme coins a day or something, you know, it it's a thousand a day feels like something that could happen. Um and so it needs to just get so easy that people can just launch them themselves to try it out and we kind of like have almost like a um the UX is so good that it's like frivolously easy to just throw one together with your friends to see what happens. Um so, yeah, we've got the the kind of form factor of what that app looks like needs to be discovered.

Um and then we just we we just need that um cascading moment of success. So, we need people who actually deliver something um of use using DAO-like tools. Um and then we it'll catch fire at that point. Um like people doing real real community stuff making their lives better at the local level. Um even more so if people make money out of them.

Um and then because that's how the news will get around and and so yeah, there's a there's tooling work to be done. Um but there's also um the real world job of actually doing something useful. Um so, it's the the work of the people actually building useful things. Like it all ultimately comes down to the group of humans that decide to to launch one. It's uh, it It's we need good good people to do that basically.

Um, you should read the best um, accessible text on this is the chapter on DAOs by Paul Dillon Ellis in the absolute essentials of uh, of Ethereum. Uh, you should just read that book generally if you're interested in Ethereum. Um, the other texts I would say you'll find most of the discourses from lawyers. Um, lawyers uh, are very interested in DAOs because they represent a kind of uh, uh, attention with uh, they're they're curious about them because it's uh, very un- unresolved question about how decentralization and and liability and power and you'll find there's a lot of writing around around that. I wouldn't read them.

I would find like other find people who've actually built DAOs and and talk to them. Um, there's not that many. So, I would say don't read texts, go and talk to people who've done it. You'll find them online. Um, just uh, drop them a DM.

I hope to launch some in the near future that will uh, fill a bit of a hole. We're in we're in a bit of a mess with DAO tooling. Like the major DAO tooling companies have just like shut down basically. Um, I think Aragon's probably got the best um, and most customizable stack at the moment and I would certainly check that check them out. Um, I think they're probably last DAO framework standing of of note.

Um, and yeah, if you're more technically minded uh, go and find the Moloch DAO repos and just deploy one, play with it. Um, and then if you're brand new to all of it um, a multi-sig is just a mini DAO. So, uh, go and set a multi-sig up with your friends. Make it a three of five or a even more even more interestingly a seven of 12 or something like that. And pull some money together and and do something.

And um when you find the limits of a multi-sig, that's when you'll probably need to upgrade to a DAO. But uh till then just start with a multi-sig. Okay, so we want to go uh visionary about let's um I'm going to go sub utopia. One of the kind of things that um I think we can get trapped in utopian thinking where uh it makes us like overly purist about things because we we we're building towards like a utopia means no place. It's uh you can't have sadly.

So um yeah, I think uh the kind of pragmatic world that I could see happening in the next like 20 30 years is I would love to see more governance infrastructure used by governments that is completely open source. So uh completely open We're getting to the point where new technologies are they're getting more centralized and more powerful. The really really powerful technologies are built by really powerful people. And I think governments are at risk of being captured by them if they're not careful. Um and you know, there's evidence that they you know, these big contracts with Microsoft and you know, Oracle and and all these people are are quite a material risk for governments.

So I would hope that just um the open source movement gets so mature that it um incredibly creates the safest tools for for for governance scale. Um and downstream of that, I think that would bring a realm of transparency to global government that would uh be extremely useful. Um and the the privacy elements is less necessary because there's no need there's no uh, failing um, uh, Uh system full of secrets that uh, has detractors that need to be surveilled and all that sort of stuff. Um, it'd be nice if we just lived in a world where you had surveillance wasn't necessary. Um, and you know, until then you need hard privacy tools to um, protect you from uh, if nothing else the corporations.

Um, and we get over um, uh, over index on on on the state being the the kind of scary one. When actually I think you should be uh, looking at privacy tools just to to to shield your data from these corporate monoliths. So, I genuinely think like one let forget a little bit more utopian if we um, starve the corpos of their data, their business models die. Um, so I think you could have this mass decentralization of uh, of corporations simply by starving them of your data. So, yeah, an open source future which um, you know, the tools are there if we need them, but mostly we don't because uh, uh, everything's just a little bit better and less centralized.

Do you think there's a kind of game theoretic uh, dimension to this? Where they're like just the fact that signal exists now um, makes it quite difficult for powerful people to um, um, to really crush people at scale. Like the because you won't be able to stop them communicating. So, the more the people are able to have these pri- these privacy tools are are well formed, it limits the chance of something terrible happening and and someone just going, "Okay, let's uh, let's let's make a really totalitarian move on our own people." And the if the people have open source tools that protect them from that, I think the whole thing is less likely to happen.

So, it's uh it it it's important create creates kind of equilibrium between uh of power I think it's just really important.