S.1 Ep.8 Anticapture, Trust Zones, Modularity, and the Future of DAO Governance with Hats Protocol
In this episode, we sit down with Spencer Graham and Nicholas Naraghi, cofounders of Hats Protocol, to explore what it really takes to make DAO governance work. Spencer Graham is a cofounder of Hats Protocol and has been working for five years on making DAOs actually effective. Nicholas Naraghi is a cofounder of Hats Protocol, DAO true believer since 2017, BTC since 2011. Together, they break down the unique strengths of decentralized organizations compared to traditional structures, diving into concepts like hardness, anticapture, trust zones, and modularity. We also discuss the practical challenges DAOs face, from regulatory hurdles to accountability, and how programmable governance frameworks might transform collective decision-making. Finally, we look at the role AI and innovation can play in building more resilient, future-ready decentralized systems. Some of the sources we mention during the episode: - Spencer Graham "Governance is about action, not decision-making" (2022) https://spengrah.mirror.xyz/tGT32p-lA__63rmTXq_OD_iTTDoK-vsUn3QVsnnWmvo - https://docs.hatsprotocol.xyz/ - Spencer Graham "Anticapture" (2022) https://spengrah.mirror.xyz/f6bZ6cPxJpP-4K_NB7JcjbU0XblJcaf7kVLD75dOYRQ - Josh Stark "Atoms, Institutions, Blockchains" (2022) https://stark.mirror.xyz/n2UpRqwdf7yjuiPKVICPpGoUNeDhlWxGqjulrlpyYi0<br>Timestamps00:00 Introduction and Guest Welcome 04:27 Understanding DAOs and Disruptive Innovation07:52 Exploring Decentralized Responsibilities12:37 Defining Decentralization24:44 Governance vs. Operations in DAOs32:43 Accountability in DAOs38:45 The Concept of Hardness in Blockchain43:23 Regulatory Challenges and Innovation in DAOs44:13 The Need for Net New Innovation46:25 Technological and Regulatory Hurdles48:45 The Promise and Challenges of Modularity52:38 Introduction to Trust Zones55:05 Defining Trust Zones and Their Applications01:02:41 Optimizing DAOs with Trust Zones01:07:47 The Future of Governance and Trust Zones01:15:12 Quiz and Closing Remarks
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Transcript
Decentralization is is definitely not an end goal on its own. It is a means to achieve various very important
end goals. In an organization that is well decentralized, I feel like I can show up as my full self authentically because nobody can unfairly kick me out. The idea that you can actually really physically control things together
is totally new. Like, it doesn't have an analog in anything before smart contracts.
1% of all decisions in an organization should be governance decisions. Decentralization at the heart of that creates all these incredible benefits that make everything better for everybody else too. Should people also be thinking of kind of the top level trust zone at the entire entity level with its own kind of mini zones? Or is that just an overly complicated way of framing it and it's better to center a zone around each role and responsibility?
Welcome to Governance Futures podcast, where we explore the past, present, and future of decentralized governance. This week, we had a pleasure of talking with Spencer and Nick from Hutt's Protocol. And, Eugene, how did you feel that conversation went?
I thought it was great. I really enjoy what Hats has been doing. I mean, I feel like one of the biggest missing parts in DAOs, from kind of inception, especially I mean, even until today, but up until a few years ago, was the lack of focus roles and responsibilities, and it was kind of, vaguely left open a lot of the time, and that would present issues. So I'm broadly a big fan of what they're doing. And more specifically, I thought this was a super fun conversation, you know, from the programmatic accountability, to talking about some of the regulatory stuff briefly, to just, at the end with kinda touching on more of, with the quiz, you know, some of the more personal questions that gave some insights that that made me excited for thinking of different kinds of quiz questions in the future. But, yeah, I I really enjoyed it. What about you, Jamila?
Same. I love to see how people shine when they talk about things they are passionate about, things they're doing. But also sometimes we just have those fun moments, and it's just fun to just, you know, play around with words and see what else people are doing outside of their just day job. I also have a feeling that the more conversations we have, the more we have understanding what's going on in the space, what people are building actively. And today, for example, it was quite inspiring to me to hear about just the design space and how they approach this, like, exploration of different design tooling that we're seeing. Very often, unfortunately, the conversations fall somewhere between everything is bad, we shouldn't be doing anything, or we should be doing everything at once. And today, it felt like there was, like, a very balanced conversation, and taking into consideration all the different aspects. I truly enjoyed the conversation with Nick and Spencer. And, yeah, without giving away too many spoilers, Eugene.
Yeah. It's, I also just wanna mention that I feel like hats and the way they talk about it and frame it, at least to me, feels like one of the most applicable conversations we've had so far. Yeah. Right? I feel like we get into very relevant points, and these are important things to understand, and you might wanna ruminate them and have big discussions. But, you know, both for us very specifically with Scroll at the moment, but I feel that anyone doing any kind of organization anywhere, just being super clear on what are the roles and responsibilities, how are we making sure there's accountability in all these basic parts. So, yeah, that feels super important. And, yeah, very excited for the conversation itself. But before we get into it, just a reminder for folks, please like, subscribe, listen, share with a friend, leave a review, and always feel free to reach out to us if you wanna chat.
Absolutely. And now here's to our chat with Spencer and Nick. Hello, Nick. Hello, Spencer. Thank you so much for coming today on our episode. I wanted to start with a question of your origin story. Nick, you recently tweeted graph by saying, if you don't get it, I don't have time to explain it. We're gonna ask you anyways what you meant by that. For those who listen to us, it was a graph which basically maps performance over time for two types of organizations, traditional organizations or trad orgs and DAOs. And the curve for traditional orgs follows somewhat like familiar s shape. It's sort of slow, and then there's a period of growth, and eventually it flattens out. And, then we see for DAOs, on the other hand, it starts off underperforming probably because they're new, chaotic, experimental, but then the graph suggests that they are at the inflection point marked as today. And right around now, Dows are catching up.
Nick, could you please explain to us what did you mean by saying that if you don't get it, I don't have time to explain it? So the it's a old quote from Satoshi on the Bitcoin talk forums where he said, you know, if you don't understand, I don't have time to explain it to you, something like that, about Bitcoin. And I think DAOs are sort of at the early stage of this exciting, disruptive innovation. So the s curves you see on the chart are, like, traditional Clay Christensen style disruptive innovation curves. And, you know, one of the things that Spencer and I have talked a lot about is, you know, where where are where are Dallas in terms of innovation adoption? And this dynamic of things starting off with a really niche use case, and then using that that niche use case as a foothold to expand into other other use cases. And that's what makes a technology fundamentally disruptive is that, you know, incumbents are not interested in that very niche market, and the disruptor gets to actually develop a sort of momentum advantage, because they can serve that niche market well. And if you think about what that means in crypto, and some of the stuff that we're working on, the TrustZone's article is, you know, what what really is that niche market? And you could see with, you know, like, Aave and, Lido, Arbitrum, these DAOs that were serving a specific market that absolutely was willing to pay a premium on hardness or capture resistance to centralization. That was the place where DAOs were able to start and, get that foothold. So now we're starting to see the dynamic of that playing out where the price of of creating a DAO is decreasing significantly, and, it's gonna be able to expand rapidly. And that's also dramatically increased by the programmable nature and the ability for DAOs to be, replicated quickly. So the original version of that that image, what we're really excited about was the learning rate of DAOs and how easily you can just copy and paste DAOs over and over and over again, instead of, like, you know, spinning up entire new companies or human organizations. So that that also accelerates the the learning rate and the for each organization as well as for the entire industry.
Thank you so much. Spencer, similarly, we looked at your Twitter, and not long ago, you quoted someone else's tweet, which said centralized responsibilities and decentralized ownership. And you said that this is what Hat's protocol was made for. Could you elaborate a little bit on what you meant by that? Yeah. So
one of the things that organizations throughout, like, much of or I guess recent human history have learned is that it's very difficult to get things done if everybody is trying to do them together. We have many sayings, about this. Too many cooks in the kitchen is is one. Designed by committee with the implication that the result is bad is is another. And, basically, early in the early days of DAOs, that wisdom has basically been ignored. And the idea has been to do everything together, make every decision together, take every action together, which has a lot of great properties. But for many of the things that an organization needs to do to actually accomplish its goals, to actually get stuff done, that type of decision making or collective action taking is is a terrible fit, for for the actual thing that needs to be get needs to get done. I I really like thinking about this in terms of, Vitalik's framework of convex versus concave world views. We can also apply the same concept to convex versus concave decision making or or action taking, where some types of decisions or actions are convex, in nature where, what's most important is doing something, anything at all. And then following up on that, improving that over time and just, like, making progress versus concave decision making or action taking is where most important the most important is for everybody to come to, consensus or compromise and figure it out together. And that is where, collective decision making, everybody getting involved, having many cooks in the kitchen is really valuable. But those, I think we have been noticing those types of decisions and actions are fewer and farther between than DAOs today or sort of early DAOs have have appreciated. And so the name of the game is figuring out how to facilitate convex decision making and action taking by concentrating the responsibility to do so in smaller numbers of people, sometimes even individuals, but without losing the thing that makes DAOs DAOs, which is the decentralized ownership and the decentralized control. And so what what I meant by HAZ protocol is is designed for this or built for this is that really what HAZ protocol is all about is creating a way for a decentralized organization to identify smaller groups of people or individuals that are gonna be the right people for, accomplishing a specific task or goal or fulfilling a specific objective, giving them the responsibility to do that as well as the actual wherewithal to to do that. So resources, permissions, access rights, but in in such a way that the organization, the DAO, can feel confident, can essentially trust that those people are not gonna run away with the resources, they're not gonna screw up, that they can be held accountable, that they're going to be aligned with the rest of the organization. And, you know, a lot of this is kind of how regular traditional organizations work, but DAOs have a lot more, lot more ways that they can do this. And so we think that Hat's protocol kinda creates like a like an on chain API that DAOs can use to do this in in a really full, rich, and and extremely powerful way.
Thank you. This reminded me of conversation we had with our first guest in our podcast, Eric Alston, and we were talking about the limits of democratic decision making and the importance of formed expert groups and which shapes and forms that might take. Since, Spencer, you mentioned decentralization several times, and we always mention decentralization in our episodes. And as you know, our podcast is governance futures, and we ask every guest what's governance to you or what's the future of governance. Let me actually ask you what is decentralization to you, Spencer, and then Nick. Decentralization
is is definitely not an end goal on its own. It is a it is is a it is a means to achieve various very important end goals. And I I think the the actual goal or goals of decentralization sort of depend on the specific context or, the specific scenario. But, you know, broadly for organizations, there's a handful of things that being decentralized does or accomplishes or or gets that organization. And they're they sort of you know, one way to categorize them is is benefits or or or sort of results of decentralization inside of the organization and then results or benefits of decentralization outside of the organization. So, like, on the inside, decentralization, at least, it it promises to create a a much stronger, meritocracy within the organization and not devolve into little power fiefdoms of executives trying to control their own little space. And so it becomes a much freer place to to work and, you know, and and create value where you know that you're not going to be, you know, fired, unfairly, or you know that, you're gonna be aware of and have access to the right information that you need to actually do your best work. And that's super attractive to, like, the highest performing people to have a safe, exciting environment where they can hold a lot of their their own autonomy in in the way that they work. The other the other way the other important piece is, that's sort of more on the inside is, in a capital formation. The more that I, as somebody with capital, can be confident that I have a say in what the organization is doing and no single other person can just, like, take my money and go do something I don't want, the more likely or the the lower the bar basically for me to contribute capital to to this collective cause. And therefore, the more things that we all can get done together, and that's that's like a super powerful thing. And then from from the external perspective, what decentralization does is it gives other people who might be stakeholders of the organization in the sense of, like, users of what that DAO is creating or, partners with that organization or developers on the platform that the DAO, controls or or builds or or governs. They can have much, much more confidence that that platform is not gonna change the rules, unfairly or in in a way that's not kind of sort of community driven. And that sort of increases, you could say, you know, sort of in in the same way that decentralization internally increases the the liquidity of capital formation. Decentralization from an external perspective increases the liquidity of contributions and usage and sort of building on top of or integrating with. And when we have these networks that are that have very strong network effects where the the more people that are using them, contributing to them, working from them on top of them, the the more people there are doing that, the the more valuable it is for everybody. Decentralization at the heart of that creates all these incredible benefits that make everything better for everybody else too.
I'd be curious to chat more with you about network effect. Meanwhile, Nick, what is decentralization to you?
I think Spencer had a great walk through of basically three three aspects of three layers of it. Right? So there's means, there's ends, and there's implications. So what are the means of decentralization? I would say, like, '26 is still my best reference on this. Academic article breaks down, computational, political, and economic decentralization to 26 categories. We should get that in the show notes. Computational is like how many nodes in the network. Are those nodes into different geographic locations, etcetera, etcetera. Political meaning, you know, who actually holds power? Is it, you know, several people who sit in came in who signed multisigs, or is it, you know, people who are elected by the DAO into different leadership positions? Who elected those people? What control does the DAO have over the different functions that, you know, the can can actually be executed and who has that power? Economic meaning, you know, Murad's, mean, a holder index, how well the tokens are distributed amongst the the holder set, things like that. You know, how many people does it take to pass a vote from the economic side. I think that's those are also really important. So that's the means that that ends. So if things are decentralized well across these three categories, what are the the types of things that we get? The expense recover that really well. We get, you know, hardness. We get reliability. We get capture resistance. We get, you know, that reliability for users, reliability for for developers in a platform. Right? And then implications is stuff like, in an organization that is well decentralized, I feel like I can show up as my full self authentically because nobody can unfairly kick me out. So that's a that's a sort of third layer where, there's that's where the the beauty of the emergence of decentralization. And, really, like, I think most of the interesting things and a lot of the things that haven't really come into the space yet are are still gonna come there because, ultimately, we we saw a lot of people try to decentralize Those experiments mostly didn't work because they're very early. And then we saw the sort of very single singular meta of decentralization that's focused on our particular regulatory strategy. And in in actuality, at the means level, that's not actually that decentralized across all the factors. So the at the implications level, there's a lot of really interesting stuff that's in the category of complexity theory and emergence and, you know, network effects, again, that, is gonna be very, very interesting, but is is gonna be net new this cycle. So that's probably what I'm most excited for
coming soon. And I guess as part of that, I also wanted to kind of build on what you're both saying in these different elements of decentralization. And I know, Spencer, you've, posted before that governance is about action, not decision making. And I think a lot of the time, especially as governance is discussed in Web three circles, you know, there is this deep focus on just, like, how do we vote and who gets to vote, and that's kind of the frame of decentralization that we're talking about. But I really appreciate, you you know, what you're both kind of laying out that decentralization comes in kind of different, contexts or different layers overall of an organization. And so I think, you know, in this combining that thought with this element of the role of action versus decision making, I'd be interested to hear what you both think, around what you think communities might be, especially communities in Web three, might be getting wrong around how they're thinking about governance fundamentally.
So I think this is starting to change a bit. I think we've seen a little more of the of the zeitgeist leaning towards ownership and control as as the the really important thing, relative to or compared just to decision making. And so the I that's, like, super welcome. But I I I generally think that that is still an underrated some it's it's an underrated idea. It's very easy to think about, I I guess decentralized decision making is, like, the easiest way to think about decentralization. Sort of the the the it's the thing that is maybe first comes to mind for for people when they they think about many people doing something together. It's it's actually it's it in practice, it's really hard to get it right as I think we all have, learned the hard way over the last few years. But conceptually, it's very easy to think about and especially compared to the more complex challenging question of, like, how do people owns really own stuff together, actually control stuff together. And I think a lot of that is rooted in the fact that the idea that you can actually really physically control things together is totally new. Like, it doesn't have an analog in anything before smart contracts. Anything where there's, like, a collective ownership of something previously was a useful fiction. That is basically we're relying on, say, the the government or, our genetic material or or something like that to, to back or enforce the idea that they're like, this thing or this concept is owned by by multiple people. But in reality, it's just, like, a couple people that can sort of kill it or control it. And that's totally different with smart contracts using, you know, cryptography the combination of cryptography, economics, incentives, etcetera. We can actually create something that's really physically owned by by many people. So I think it's just taking time for that, like, complete paradigm shift to sort of, cascade through or disperse throughout people's, I think, mental mental models. And I I think one of the things that I'm excited for DAOs to to do is, like, accelerate people's, mindset shifts along those way. It is a a bit of a feedback loop, so it's taking time to accelerate. But I I feel like we're on the upswing of of that curve at at right in this moment. So it's very exciting.
And just to clarify there, when it comes to say, you know, co ops and other core cooperative ownership structures, inherent scale problems that those kind of organizations have where there's just no way to functionally be able to increase that surface area of kind of cooperative ownership from a handful of people unless you're relying on some kind of larger entity, or was that kind of misunderstanding
some of what you were getting at? It's definitely a part of it. But even, like, like, like, the the larger co ops that that exist today, like, they are legally constituted as co as cooperatives. It's still the case that, like, a very small number of people in those cooperatives actually control the the the money or the resources of of the cooperative. And they could, if they wanted to, steal all of it. They would probably, hopefully, get caught and maybe go to jail or or, you know, get fined heavily. But that is relying on this thing called that we call the legal system to actually do that correctly. So it's a the the legal system kind of helps us create these useful fictions of of collective ownership, which have been a huge advancement from from not being able to do that. But the next step of advancement is actually being able to own things and control things together without having to rely on other other humans to to enforce it. We can rely on smart contracts on on on Ethereum to back that for us. And then to your point, the scale of that is or the potential scale of that is is much higher.
And so, you know, shifting to specifically talking about, you know, hats and what y'all are working on now and where you kind of, both see governance going and hope it goes, in terms of what you're building towards. You know, I just wanted to to give a moment and maybe, Nick, you could jump in and start this one off of, you know, just how you generally describe hats, in terms of what you're trying to accomplish, how people use your tool, and how it kinda ties into some of these challenges around DAOs and governance that we've been touching on. Yeah. So first thing I'll say is that,
you know, I make a really strong distinction between governance and operations. So governance has always existed in companies. You have a board of directors. You have shareholder. They make a very small number of, decisions per year, and they mostly serve as a backdrop to, be an aligning force for the organization to follow certain rules and the profit motive in companies, etcetera. You don't have governance in, the daily product stand up or the marketing meetings or the, brand strategy of a company, just like you shouldn't have governance in the operating budgets or the, you know, sort of grants structures of a DAO. That doesn't really make sense. So I think that, what we'll eventually see, we haven't seen yet, is that, governance should represent maybe 1% of all decisions that happen in an organization. And in DAOs, it's been, like, close to 90% or 100%, except for, like, you know, protocol councils and grants committees that are formed, to accomplish certain subsets of tasks. And that paradigm has sort of been increasing, as hats, sort of push this paradigm into the into the DAO space. People use hats to create all sorts of organizational structures. So, you you can grant the, super admin authority over an entire structure to the fold app, and that serves as, like, the governance primitive. And any any admin, power can be enforced by the fold out, usually in in the case of an emergency or serious accountability. And then, you can fractally delegate any subset of responsibilities, resources, power to any group that you want within the organization. What we've seen, and what we've really worked on for the last three years is, like, helping people set these things up, and that takes, like, a while. You know, he needs to think about, okay. Well, should we have a protocol council? Is it a nine of 13 multisig? How often should we elect these people? Like, do they, they get removed? Do we do do that connection on chain or off chain? Where are they geographically located again? What does our lawyer say about the, you know, different nationalities that need you know, all these different decisions. So and then you do that for the protocol council, and then you do that for the grants committee, and then you do that for the you know, we wanna spin up a marketing team or whatever it is. Right? It's very complicated. It's a lot of organizational design, and then we can help translate the we have to check the organizational design with the legal and the regulatory strategy, and then we have to do the translation technically into, you know, an on chain structure. And that combines usually hats per call, covenant bravo contracts, the, you know, custom front end, whether that's from Tali or Agora or someone else, and then, you know, safes for the different councils. You know, Eigenlayer, for example, is using, custom governor bravo contracts for the councils themselves. So you actually have one hat, one vote in a governor bravo contract. It's very esoteric. Right?
And Wait. Before sorry to interrupt. I just want to make sure I understand correctly because you mentioned 1% of all governance decisions. To make sure, I and our, like, listeners understand you correctly, did you mean that 1% of the community should be making all the governance decisions, or did you mean that only 1% of governance decisions should be put out to general community vote?
1% of all decisions in an organization should be governance decisions. A very, very small number of decisions justify, invoking the attention, of the entire organization in order order to actually make that decision. That's because when you go to the holdout to make a decision, it's a very high, cost in terms of numb people have to read the proposal, understand it, understand the other nodes in the network that are close to them, what they think, and then an expressive vote. And then as we mentioned earlier already, the decision making of, a collective is very limited. You're gonna end up with a concave versus a convex decision, which is not appropriate in all, situations. So, so just to go back to what I was saying, the the core concept is that the the main high level cost of setting up these structures is unaffordable to most organizations. So if you go back to that s curve idea, we we're thinking about how how do you actually deploy a fractal distribution delegation of power across the most appropriate sets of people in a larger organization. It is actually bounded by the cost of setting up the smart contracts to pull that structure. So hats enables you to create that structure in any way that you choose, but the design space of how people have used HET so far has been limited by the setup cost. And what we're working on now is using AI agents to significantly decrease the setup cost. So what we're expecting to see is much more efficient organizations that have much more nuanced power structures that are also dynamic. So spending, you know, three months setting up your protocol council can actually just be ten minutes. And you could have hundreds of councils with thousands of AI agents and elected leaders all accountable to the structure, which is, of course, going to dramatically increase the total number of decisions. Therefore, also justifying that of only a very small percentage of them could be presented to the the all token holders in the DAO at large.
And on the AI agent side, I just wanted to quickly double check on that regard. Is that pretty much getting an agent to help you think through the appropriate structure and then put in the right parameters for those structures being reflected on chain, or are the agents actually playing some kind of role in either decision making or, acting on decisions that are made?
Yeah. So what mainly, what we're focused on is the former. So we imagine that there you know, there's already thousands of teams out there building AI agents for different verticals of work. You know, Devon software engineering agents or you have a lot of crypto AI, sort of manage my portfolio, treasury management agents. You know, we our specialty at hats is helping to create the structure for the multi agent coordination system and make sure that the DAO has proper governance and accountability over that. So our agent is actually helping to form the right structure based on how much trust is required for these agents, how much expertise they have, finding the right scale of roles, and the amounts of power and permissions we should give to each agent. And, of course, it works for humans or committees or or just as well as it works for AI agents. And so I guess related to that, I wanted to see how y'all think about this concept of accountability
relationships. And I guess, first off, can you, can you describe what y'all mean by accountability relationships and then kind of mention how that changes dynamics of power and responsibility in a DAO? So accountability
is this super important concept that I think is, I think, a little bit misunderstood and maybe also, you know, as a result underrated within, within, you know, DAO governance and organizational operations as well. And I think it's helpful to think about, like, when is accountability important. Accountability is not really all that important when there are very strong constraints, against somebody, an an agent, somebody that that is, like, working on your behalf, then when there are very strong constraints, that prevent them from doing something that you that would be bad for you or bad for the DAO or bad for the organization.
You don't really need to able to if I'm only able to, like, use the hats Twitter, the accountability of me doing other things is less important.
Right. Or even a more specific example, if somehow I wasn't if if, if you could use the hat's Twitter, but you could not you literally could not type and publish certain words or, like, certain bad things. Like, you could not say good things about Nazis from the hat's Twitter. Like, there was a some sort of, you know, a physical way that you could be blocked from from doing that, that we wouldn't have to have accountability mechanisms that would would, keep you from doing that, on your own. But that example, I think, is a good one because that's, like, not you can't really do that. You can't really, I mean, or maybe you could, but it'd be very challenging or difficult and also like manual setup and diff like very much in the case or in the same way that, lawyers talk about no contract being complete. It's extremely difficult to, like, create all of the specific hard constraint rules that prevent somebody from doing this, like, things that would be bad for their organization. And so you it's really like, it's almost necessary to give people the the the freedom to move around and and do things. Because if you lock them down too much, they'll never gonna be able to do anything good. So you have to open things up a little bit, but then, of course, you open things up for them to do the possibility that they'll do bad things or misalign things. And that's where accountability comes in as a way to essentially create a a negative incentive for those people to not do those things. It's like a post hoc punishment of of some kind. And there's many, many forms of accountability. I think in in DAOs and organizations today, most people sort of default to just, like, assuming that if something is transparent, then you can be held accountable in a very hand wavy sort of social sort of way, which definitely doesn't work at scale and definitely doesn't work in any way where where, Anans are operating. And only really works best if you, like, really personally know people or, like, you have a, like, a strong historical reputation to uphold. But with smart contracts, with the ability to use, like, financial primitives and other sort of tokenized assets and other tokenized representations of different types of things like reputation, we can do much more explicit accountability create much more explicit accountability mechanisms mechanisms. This is what, you know, staking and slashing is is really all about. Right? So it's a really great example of, like, a non friendly kind of accountability that you can get slashed if you do something that the organization that goes against the the desires of the organization. Or you could, you know, lose your reputation points that are on chain if you do something that, warrants your reputation decreasing. The important one another important part here, though, is that there's a ton of work to be done. Like, this is a huge, fascinating, but few huge, fascinating fascinating design space, but one where we're just, like, all of us collectively are just, like, starting to explore in earnest. And so what I think is is really important is that we set up structures that allow us to incrementally figure that out without having to blow everything else up. So I've seen several over the years, like, several sort of DAO frameworks that are, like, set up for, like, clear accountability, but that's so tightly coupled into the core mechanisms that any change to that, if you figure out that there needs to be an improvement or you need to change something over here, necessitates, like, starting from scratch almost.
And And when you're saying the DAO frameworks, are you alluding to things like Moloch DAO or those kind of frameworks or more conceptual, not necessarily programmatic?
There was something called, Elastic DAO that was trying to to do this with sort of, like, elastic pricing of the DAO asset based on certain behaviors. There is something I don't I don't remember the name. I'll try to find it for the for the the show notes. Something very recently that was announced that was trying to bake in accountability into, like, the core of the DAO, like, the on chain DAO framework. So, yes, somewhat like like, somewhat like governor, but, you know, with opinionated other accountability stuff. And I think our perspective is that this is so hard to get right that you have to take an incremental approach to doing it, and therefore, you have to take a modular sort of structural approach. And that's a lot of how we that's a lot of that has informed how we think about what Hath Protocol is and why it creates these, like, flat, fractal roles that can be modularly
updated over time. And I know one term that's come up a couple of times already that I figure, is not necessarily clear to all listeners who would love for y'all to define as the one of hardness, which if I remember correctly, I think, Josh Stark wrote about, in a post. But, yeah, it would be great if, if one of you wouldn't mind jumping in and defining at least how you're using hardness in the context of, of hats and especially as we get closer to talking about trust zones to set some of that up. Yeah. You gotta read the original post from,
Josh Sark, Adams Institutions and Blockchains. It is one of the formative pieces, about what blockchains are useful for. It's one of those pieces I've gone back to, you know, 100 times, while working in the space. Highly recommend reading it. Hardness, roughly, he speaks about, as a as a predictability of future outcomes, and a system that is able to produce hardness. We got hardness from physical matter and atoms when we traded shells and gold. And, then we had institutions where this amazing innovation that were basically able to systematically produce consent, results even if the humans within the institution changed. And then we were able to produce the, hardness field blockchains, which is like writing smart contract code that always gets the same results that's backed by, you know, this validator network of Ethereum nodes that runs this, amazing world computer. We had been working on this TrustLones article for a while, and then, we at Adam's institutions blockchains, found the hardness framework. Okay. That's actually one of the missing pieces for describing this well because Spencer wrote this piece called anti capture, which talks about capture resistance. And, again, when we go back to, like, decentralization means ends and and, implications, to figuring out, like, which part of, you know, how to decentralize actual decentralization, getting hardness as a quality of decentralization, and then what that gets you, that I think it it really, thinking about how to what organizations need from hardness was a was a big unlock for us.
Yeah. We went from thinking about capture resistance as, like, this unique thing that DAOs were doing to understanding that capture resistance, while you can, like, model everything as a resource and therefore everything as the potential for capture, is much more elegant and simple to think about it as as hardness in terms of predictability and, guarantees. We sort of, I think, made a really helpful shift from capture resistance as, like, the main thing that DAOs do uniquely well to hardness as as the main thing, and and we probably will get into that, even more as you said.
Spencer, since Nick mentioned your article, you said that if, humanity is to tackle challenges like climate change or public goods infrastructure, we need new methods for managing shared resources with lower risk of capture. Would you mind elaborating what might those methods look like in practice? Or maybe you have any specific examples where governance systems would resist not just individual bad actors, but
more subtle forms of capture? I that's I mean, that's, like, the question. I don't think I have a satisfactory answer for, like, how to actually do it. I have a meta answer about how to get ourselves to the point where we have the actual answers. Where shall we start? Where should we start, Spencer? Well, we we need to start with with figuring out how to have, like, collective decentralized ownership and and control over those resources, and then figure out how to, like, use those resources or operate them or protect them in actually effectively and not in ways that don't actually make sense. So is that basically everything Yeah. The like, the answer to your question is, like, everything that we're we're talking about, today.
You mentioned, Spencer, modular, modular governance. And since we have, similar conversations with our guests, what is your view on that? I'm gonna give a bit of a spoiler. Our season one, episode five, we talked with Tali CEO, Dennis Zimmerman, with, you know, what's the future of governance looks like. His take is that regulation and just making sure that we have this predictability for builders to build and not have this anxiety of what's gonna happen and how the regulatory landscape would impact innovation, not necessarily modular governance per se. So I'm curious in your take, both Nick and Spencer, where do you stand there, and, maybe you have any spicy takes on regulation.
So super lame. Super lame take. You know, I love Denison, and we've known each other for many years. But the, you know, tally is basically playing the game of, the the full compliance with a regulatory strategy, and that's worked really well for them. But, basically, every DAO that exists today is in a is in a local maxima of its effectiveness. And, it's these DAOs that exist are pretty unlikely to break out of that local maximum. So I think that any net new innovation so to answer your previous question, we need net new innovation on what we do once we get widely distributed ownership via a DAO, to actually manage the resources of the commons to solve all these world problems, climate change, polluting the oceans for you know, make sure everyone has clean water, you know, making sure that people who use a social media platform aren't constantly being extracted their attention and creating addiction for ad revenues. Decentralization can solve these things, but we need action within decentralized decentralized ownership in order to change them. Net new innovation requires different models than what we've had before. So just following sort of in the rut of the the existing local maxima is not gonna get us there. And even Vitalik gave a talk recently and said, we need to we need to get out of the no one got fired for choosing IBM version of everyone deploying governor bravo contracts. And, you know, there's a lot of regulatory change, and there's a lot of issues with, say, the US federal government right now. But there's a lot of open design space that we didn't have when Gary Gensler was writing subpoenas to every single crypto founder no matter what they were building. And then we need to get that raw out of our head to get back into designing really new in innovation experiments because it's gonna matter a lot. Because decentralized governance of AGI and the outputs of, you know, widely distributed, automation systems that are gonna replace most jobs are coming, like, now. And we need to figure out how the exacerbation of this, this wealth inequality, wealth distribution, can can be fixed as as soon as possible, really.
And do you see anything else that was part of what has been limiting that innovation in recent years? Do we see that as a purely a regulatory constraint? Or, you know, how much have we as a space even got a little complacent with, you know, copy pasting of who's doing the next thing and not trying to push the bounds there? I'll give first take, and I'd love to hear Spencer thinks too. So there there are a lot of issues that,
the actual technology have had. So remember if we talk about, like, how hats helps you create a fractal organization, but you have to actually spend time setting up all the pieces. Any smart contract developer who wants to build a sort of complicated and robust system takes a lot of work, and the number of people in the world who can do that is very low. And then that sort of got sidelined by the regulatory pressures of, like, don't do smart contract innovation because you could end up in jail or, you know, things like that. So it became a lot easier to deploy meme coins and, you know, other trading platforms. So a lot of people who are really cool and innovative left the space because they said, I I can't innovate here. Or I'm I don't my I love my family and my home, and I don't wanna put that at risk. And then there's a lot of people who stayed who sort of, like, got beaten down into, well, I I gotta make some money. I gotta figure out how to live, so I'm gonna deploy a meme coin, or that's what everyone's doing, and that's what the VC's narratives are pitching. So it's not so bad to to do that. So sort of, like, wrought two way out, rotted, all of the, like, in a interesting innovation experiments. Lock space was a big challenge. So Dennison famously recounts, like, a year where no one voted on Tally because you couldn't justify spending $80,000 in ETH for a DAO vote, and that's totally changed right now. So, like, you could on base, you could run a DAO vote for, like, less than a cent probably or, you know, less than $10 across all the votes so that, you know, we have basically infinite block space, at very cheap prices. And then the UI level is also very complicated. Right? So, the experiments that are happening with, like, modular front ends and mini apps and the base app and in in Farcaster mini apps is, like, a really interesting new experiment. And then AI agents are now gonna push the cost of development and the, the availability for developers to create new front ends and create new smart contracts. So this is like you know, the Cambrian explosion thing is overused, but it's really this really sweet moment of cost of software development getting really low, cost of using blockchains getting really low, need for these types of things getting really high, and I think we're gonna see a lot of experimentation,
in in the coming year. The only thing I'll I'll add is I think there's a an important relationship between the type of modularity that we think is really powerful and important and a less, sort of capricious and risky regulatory environment. And it it really has to do with the incentives for for experimentation. Like, modularity doesn't really like, a a modular paradigm doesn't really work if there are not a lot of people building modular things that all kind of can plug together. And there are gonna be less people doing that if they feel like they're at risk of of going to jail just because they, you know, publish a a smart contract. So, I mean, I I share Denison's, kind of, like, relief that that we we that we might be getting more regulatory clarity in a way that makes, like, actual sense. And I do think that's going to be very important. I also think that well, I I agree completely with Nick that the benefit of that is less about, sort of snapping to sort of the the templates that, you know, the the legal minds in the space are are giving us that sort of fit with, like, the the primary examples within the that regulatory clarity, but more it's going to come from the experimentation that happens that will sort of, like, create a how do I say Cambrian explosion without saying Cambrian explosion? Create a a, like, wellspring of, of new ideas that are not that don't have to make everything themselves, that can stand on the shoulders of of giants and plug into existing systems and enhance them and and modify them rather than having to replace them wholesale. And so that's where modularity, I think, is really important. And and for organizations to think modularly and not just about, like, I need one framework that's gonna do everything. I need maybe a base framework that's gonna help me with x, and then there's gonna be lots of things that can plug into that. So that base framework needs to be, designed intelligently and with with intention to be a simple base framework that lots of other things can plug into in the right ways. And that's sort of one of our, you know, guiding principles with with hats protocol is to hopefully be one of the base frameworks that allows organizations to actually do this kind of this kind of stuff and works with, you know, whatever other tools the organization wants to use.
Yeah. Yeah. I mean, I feel like we we've opened another a number of fascinating threads from you know, we're recording this around the time when the the storm trial was happening, and we saw that, which very much feels like a break from a lot of the regulatory clarity that is happening, you know, separately with what y'all are mentioning on the modularity. And I know that very much speaks to, to myself, and I know the the whole Medigov community because they're sort of the founding paper was modular politics and thinking about that. And yet at the same time, I feel like in the last six to twelve months, the amount of gov tools who are saying, you know what I need to do? Everything, instead of being overly modularized. And even if you offer everything in a modular component, having modules for kind of a to z of governance, also seems to be its own trend. But time being the slippery creature that it is, I I feel like we I I wanna make sure we get to trust zones and that we don't rush through that part of the conversation. So if y'all do wanna jump back and comment on anything I just mentioned, please feel free to. But, yeah, I wanna make sure we're not rushed, on the trust zone side. So I would love to start off just a short definition of what you mean by trust zones, and then we'll unpack its components and kind of how that can shape the future of governance,
from your view. But, yeah, first, a definition, please. Can I can I comment on something before first?
Please.
Just just one point that I wanna make. So one thing that's really challenging about the modularity in the ecosystem is, Jeff Bezos famously has this memo at, Amazon where it's shifting everyone into, this idea of, teams delivering microservices and that are all the teams needed to communicate via an API. That's a brilliant idea, and I've always felt like working in Ethereum, all the Ethereum teams are sort of like that. They're like, you know, teams that sort of can create a modular component. They can ship a smart contract, and that's available for everyone to use as if it was part of an API. But there's no hierarchical you know, Amazon has hierarchy that says, hey. This team that's supposed to ship module a, you didn't deliver, and module b, c, and d are relying on module a to work. So as a team that's actually been here showing up, you know, working full time on a modular component and delivering our piece of the puzzle, there's a lot of other, teams or promises or projects out there that got funding that never actually delivered on their modules. And I think that's why we're seeing more vertical integration. It's like, I can't actually trust that, this part of the the accounts stack and this part of the front end stack are gonna be available. So I'm gonna try to just, like, do my best to ship a product that has all those pieces. It's really sad because I think that modularity has a lot of promise. But the act getting to the threshold of fully delivered is still not totally there. And I think things like trails from Herd Eco plus, you know, app generation, agents generating full front ends and full smart contracts
may push us over. Yeah. And I feel like that's, we might depending on time, we might come back to sort of the intersection of governance programmable, trust zones, and agents. But, yeah, I definitely wanna come back to and kinda get, yeah. Would love to just get a direct definition of trust zones, and we'll kinda unpack that a little more and where it's headed.
Broadly, trust zones is really two things. One, it's a, descriptive framework that kind of creates, dimensionality or parameters for, principal agent delegation. And I'll we can get way more into that. But then on on the second one, it's sort of like a more opinionated approach of how to use that descriptive framework and why, DAOs are sort of uniquely great at using that descriptive framework. So as a descriptive framework, you can think about a trust zone as a literally a zone, like a container that a a principal creates whenever they delegate to an agent. And it's actually one other helpful way to think about it is that it creates a role. A trust zone is a role, and you could think about that role and trust zone as a container. And what the principal does when it creates the container is it fills the container with the responsibilities and the resources and access rights and and permissions that it wants to delegate to whoever has that role, to whoever whichever agent is going to go into the container. And then it, you know, puts the agent in the container, and therefore, the agent then has access to the resources. But then the boundary of the container on the edges that are sort of like the the the protection mechanisms are, a bunch of other other things that, well, I sort of said it already, that protect, the the principal's interests or prevent the the agent from doing things that the principal doesn't want to do with the resources that it's delegated. So these are sort of qualification criteria. These are sort of ownership stakeholder alignment. These are, you know, positive incentives like compensation and bonuses. These are negative incentives like accountability mechanisms as we are talking about before. And these are also, you know, soft rules as well as hard rules. So, like, physics like constraints, smart contract, constraints that prevent you from, you know, spending or sending funds to x address or, doing something on a Tuesday or, you know, whatever it may be. Yeah. And this whole package, if you sort of zoom out, is like the, that is the entire design space for principal agent delegation. So there's these different parameters, like different strengths of all of these different, parameters that, that when a principal delegates to an agent, it can play with the strength or sort of the the way that those, mechanisms are created and expressed, and that is the entire design space. So that's kind of the descriptive, the idea of TrustRones as a descriptive framework. It's basically describing via these parameters and this container analogy the the the full design space for how a principal can delegate to an agent.
Got it. And so in that case, I do wanna clarify. So it it sounds as though the trust zones exist around these specific roles where that kind of agent can be constrained, where we can, you know, codify that kind of accountability you were mentioning. You know, should people also be thinking of kind of the top level trust zone at the entire entity level with its own kind of mini zones? Or is that just an overly complicated way of framing it, and it's better to center a zone around each role and responsibility?
Yes, and. So this gets sort of, nuanced and kind of networked very, very quickly, but it's really any principal agent relationship. So if if you think about an organization, there are especially a DAO where there are lots of people that have contributed capital to it or other other things to it as a result have ownership in it and collective control over it. The the DAO is, in in a very important sense, a an agent of each of the individuals that have contributed capital to it or other things to it. All of those people are are principles in their own right, and they have kind of delegated in some way to the collective. But then what also happens is the collective can act as a principle itself and delegate different, responsibilities and resources to agents of its own. So the whole thing is the trust zone. The the the DAO itself can absolutely be thought of as the trust zone. And, also, the individual roles, or group roles or sub DAOs or or committees are all, trust zones that the that the DAO that the organization is delegating to. And, actually, I I've missed one important parameter, which is the, the decision making model. So as a as a principle, I can sort of require that the agent that I am going to delegate to have a particular I can enforce a particular decision making model on them. So I can require that it be a multisig that has a three out of five model, or I can actually require, and this is appropriate for the DAO as a whole, that it'd be a DAO with a certain voting distribution and threshold. So it's really trust zones all the way down and all the way up in a fractal turtle kind of, kind of way. Yeah. And that can be nuanced and a little bit challenging to think about. But if you zoom into one and think about and think really deeply or sort of understand deeply a single primitive, all of the rules and concepts about the single primitive apply to every other, like, practically, practically to everything else. So we really like having a single primitive that works practically at every every level and in kind of in in every direction.
Yeah. And I think kinda tying it back to, an earlier part of the conversation where y'all were mentioning this element of, you know, the importance of identifying smaller groups and empowering them to be able to make certain decisions and, you know, stepping away from, let's call it, global voting where everyone needs to vote on everything to, you know, create these more empowered streams of activity, which is a long winded way of saying we're kinda shifting towards optimistic governance models. Right? We're just, smaller groups are empowered to make decisions on behalf of the whole, and there might still be vetoes in place. But I guess as yeah, it's really interesting to think about, as you're saying, the kind of nested nature, and the fractal relationships between these because sort of any token holder and the DAO itself kind of has this trust zone start being established, and then you can start codifying much more nuanced rules as you go down from, you know, the entire DAO to a growth council or an accountability council or insert name for a council and then down to each individual role from there, and that all kind of ties together. So I guess when you're thinking about these kind of systems going into the world and, you know, hats has been doing kind of programmatic role creation for some time already, and, you know, hats is already used. This isn't a theory. This is something that's ready in practice. You know, do you see any particular open questions or problems that need to get solved before
you would look at a DAO and be like, that is embodying trust zones. But something that Nick said earlier is is really relevant here, which is that DAOs have not really explored their full potential design space, especially, you know, with using hats or or including with using hats. And I I think, traditional organizations are kind of the same way. Like, they're now that we understand the fullness of the design space for principal agent delegation and therefore, you know, what we we have kind of imagined as this trust zones framework. If you look at a traditional organization, you can see all the ways that they are not making full use of that entire design space. And as a result are are kind of falling short of what their sort of maximum potential, can be. And, unfortunately, the same has been the case for most DAOs. But we also think that DAOs sort of inherently have a much greater potential to actually use or make better use of that entire design space. And, you know, that's probably the thing that makes us most bullish on on DAOs actually climbing the s curve that Nick was talking about earlier. So we we see so I I I think it's to answer your question more specifically, it's it's really just exploring all of that design space as much as possible. And this is where the modularity and and experimentation and and innovation and the, like, having the right incentives to innovate really, really becomes really important that we can all collectively explore that entire design space and then modularly plug in the exact right pieces to create the exact right, trust zones for for the specific scenario at hand, both individually and then collectively for an entire organization.
You could really think about it as, like, the money ball moment for DAOs. Every DAO, every organization in the world already using trust zones. Trust zone is a framework that describes the principal agent relationships. They're just doing it suboptimally. Right? So by having this framework at hand, you can start to look at the this organization and say, how can we make it better? How can we make it much better? And the key insight that trust TrustJones is bringing and why we're talking about DAOs as a disruptive innovation is because we have to solve a a more complex problem than traditional organizations. Traditional organizations solve for ROI, return on investment. I I take capital. I put that to capital to work. I make money on the capital. How do I do that? I deploy the capital as efficiently as possible. Costs versus benefits. We also have that in Dallas. We have this third hard thing that we have to solve for, which is hard, well, hard thing we have to solve for. The third element that we have to solve for, which is hardness. So the insight that Josh Stark brings us and and this idea of the niche, the starting niche that where DAOs can get a foothold as innovation. And what we saw, you know, Aave and and Arbitrum doing is providing hardness to the market, even though the hardness costs a lot. So we call this the organization organizational trilemma. You you sort of make trade offs, using all the trust zones parameters to navigate it. You make trade offs between cost effectiveness and hardness. And what we're able to do with this framework is take the Moneyball approach to to make really optimal organizations that are highly effective as low cost as possible, but still maintain the the reliability, still maintain the the the hardness benefits that we're seeking, in order to get, you know, clean drinking water for everybody and social networks that don't, you know, steal all of our attention and, protocols that are reliable for the rest of human you know, future history. That's this is the this is the upgrade that's gonna help us deliver on these promises.
Sure. And I guess as, you know, as you start thinking about what this most enables, Right? You're may you kinda tied it back to a number of things that we talked about from, you know, really creating more of an optimal structure of establishing those trust zones. You know, trust zones themselves aren't new. It's just potentially a different way of framing it. But, I guess, where do you see some truly unique potential arising from this? Right? And I I feel like very importantly, right, y'all both keep saying agent and not person because I I would just guess that part of this is also accounting for that more and more in such systems, it will not just be humans, but shall be literal agents. So I guess, what are y'all seeing as the the most the biggest unlocks from this, especially when you factor in the fact that it's going to be increasingly likely to have human next to agent intermingling. And especially in Web three where, you know, pseudonymity or full anonymity is empowered, where we might not even know who we're interacting with. And it's just things are happening from an agent, human or otherwise.
The net new things we get with the trilemma optimized organizations that leverage, you know, trust zones to create a better form of an organization, it it comes back to what we started this conversation, which is that all the key problems in the world, climate issues, political issues, you know, more PVP economics in crypto, more PVP economics in the world, the degradation of our food and water supplies, The these are downstream from, what, you know, the traditionally, people in the space have called, malak malak or the degradation of things because of capitalistic, selfishness. So capitalism sort of, like, accelerates human progress really fast, but it also, makes individual actors in a competitive system, try to, get a little bit of an edge over everyone else. So if you have 50 fishermen fishing from the same lake, have all agreed to use poles and not nets, and then one uses nets, starts stealing from the fishing supply, everyone else uses nets, and then the fish the fishery goes to zero. You know, tragedy of the commons type issues. We solve that with shared ownership. You say, tokenize the lake. Give all the fishermen tokens. Right? Boom. Problem solved. But now you have the next problem, which is how do we take collective action when we have all the tokens. Right? Because, like, well, we should vote on everything. Like, okay. We'll have a we'll have a meeting. And then everyone bring their their ledger, and we're we'll vote with our our tokens. And now you have, people stop showing up to the meetings. Right? They said this can I just delegate to Griff? Because he knows what to do. And that's, you know, that's ultimately, like, not a not a good solution. Trust zones finally is the answer. Pat was originally first drafted the answers. Like, okay. Well, you need, you know, you need to be able to easily spin up committees and leaders, but you need to hold them accountable. Otherwise, you lose the of it. And now trust zones is sort of the second trap, which is, like, if we zoom out, we look at what are the core problems. Core problem one, you have to optimize across, effectiveness and cost and hardness for each decision instead of resources that you wanna make. You know, the second idea is anti capture action phases. We sort of Spencer's introduction gives us cyber cybernetic view of, like, all actions sort of take this loop, and we can go from deciding go from, what the proposal of what the action is to a decision around it, the actual execution of it, to evaluation of the execution, holding people accountable in that frame. And then, you know, actual protocol level instantiation of these things. So using smart accounts, using safes, using government brothels, other DAO contracts combined with, protocol like hats that actually does the distribution of the power of resources combined with an AI agent that actually does the organizational design and the accountability where, you know, human in the loop decision making is not important. That's that finally gets us to, a working theory about how we could have a a meaningfully effective, collective action within a decentralized ownership structure, which then opens up all of these new possibilities for organizations that could exist but didn't before. And that's where I think the net new use cases are.
And before we start wrapping up the conversation, would be great to kind of get some insights on, you know, how you view hardness through these programmatic frames and how that can potentially be embedded, within the tool or within a framework as you're, getting ready to to use such structures to build out an org. Yeah. So the
the best way that I have been thinking about for myself how to how to understand what DAOs really are is that they are fully programmable organizations. And that is unique to DAOs because you can write software that has certain logic that changes what a traditional organization is doing to some degree, But that software is gonna be running on some servers controlled by, you know, some centralized corporation. And so you're kinda doing the same thing that you're doing with the legal system where you're, like, depending on it to work well. But with with smart contracts, DAOs can write software that encodes their own rules that and the where those those rules are now hard. They have very hard properties where you know they won't, change unless you change them as an organization. And so this creates what the smart contracts are basically programmable hardness. And DAOs can uniquely use that programmable hardness to write their own rules in as expressive a way as they want from a, like, a software kind of perspective. They can write whatever rules that that they want. They can write those rules and create their structure to be dynamic and, like, automated and automatically change in, response to, you know, different circumstances or shifting environment. And what we think is really important is to give or create a framework or like a you almost think about it like an API for how to actually use or turn that programmable hardness into real legible, workable, organizational rules and organizational structure. And that's kinda what we think about or one way we think about trust zones is is, like, it it is that framework. And how we think about hats protocol, it is kind of is that API, the way to actually instantiate those rules in a way that, works works together on this programmable hardness substrate
that are smart contracts. Yeah. That makes a lot of sense. And I guess, yeah, again, Nick, on your side, don't know if there was anything else you wanted to make sure we touch on, as y'all get ready to educate the world on trust zones. Just wanna make sure we're not rushing and missing any of the core concept.
The thing that just came to mind was that, Kia from Gnosis Guild, had this tweet a long time ago. Just like, I think about DAOs as dynamic heterarchies, which is, you can basically stack rank the membership in a in a bunch of different ways. And that frame has been super informative to me. I think it presents the the question that we're trying to answer. Any quest any well framed question is halfway to the answer. So I think the question is, in order to be, an effective organization, how do we give the right people or agents the right amount of power, and not too much, at the right times? And if we can create a sort of theoretical framework like trust zones and a protocol that instantiated that framework into code that people can widely use, and we can explore the design space of giving the right people the right amounts of power at the right times to actually get things done, then then I think we could truly solve DAOs. I I feel like that's coming really soon, and it's it's just a very exciting time to have that come to fruition.
Thank you so much both. Been incredible to learn more from you. I suggest we move to our favorite part of the episode is our quiz. And as a reminder, we'll ask you questions, and we ask you to answer with just one word. And I thought we would start with something that has nothing to do with governance, is what keeps you grounded? I've heard, Nick, that you enjoy sunsets and sunrises. So my question let me start with Spencer. What keeps you grounded? Relationships. Thank you. Nick? Reflection. What is the most overrated concept in Web three governance? And maybe, Nick, you start now. Voting.
Spencer? Other than voting, the most overrated concept in Web three governance? I'm not sure I believe this, but it it it still might be overrated, but tokens. If you could
hard code one value into every protocol, what would it be? Spencer?
Hardness. K.
Nick?
Integrity.
And my last question before we ask you our signature question is if trust zones were a filling,
what filling would that be, Nick? Just to be sure, filling, like, for a cake or a bread or a Filling. Like A filling. Okay.
I mean, how wanna hear both. But
Go ahead. I was thinking yeah. I was I was sort of in between, like, something like, that. A chocolate, you know, a chalk for a Okay. Okay. Chocolate sending. But a feeling. Trust knows where feeling. It's a feeling of, centeredness.
Spencer, it's only fair that we ask you both as well. So for for feeling, I would say
confidence. And for, filling or is specifically cake or or any filling? Surprise us. Okay. Well, I mean, I I just I love cheese so much, so I just have to say cheese.
Great. Amazing. And our last signature question, what is the future of governance? Roles. Algorithms. Thank you so much. It's been a pleasure. Thank you for coming to our podcast. Hope you enjoyed it as much as we did. This was awesome. Thank you so much.
Yeah. Thanks. It'd be great to be here.
Thanks for tuning in. The Governance Futures podcast is sponsored by the Scroll Foundation and produced by the governance team at the foundation, Eugene Leventhal and Jamila Kamalova, with editing support from. Any music and photos are tested in the episode description. If you'd like to get in touch, reach out over Twitter at gulffutures or you can email us at governancescroll. Io. Until next time.