S.1 Ep.2 “Tech as Governance” Is a Lie? Angela Walch on Power, Protocols & Emergencies
In this episode of The Governance Futures Podcast, Eugene Leventhal & Jamilya Kamalova speak with Angela Walch about the promises and pitfalls of replacing failing institutions with technologies like crypto and AI. Angela discusses the collapse of rule of law, the myth of “tech as governance,” and the limits of algorithmic solutions to political problems. Together, we explore how protocol systems assign roles that shape our behavior - and what Web3 emergencies reveal about where power really lies. Angela Walch is an independent researcher and writer. She writes the Angela Walch publication on Substack, and was a core researcher in the Ethereum Foundation’s inaugural Summer of Protocols program in 2023. Her most recent work is The Protocol System Experience, which provides a conceptual framework for human rule systems of all kinds. Angela was a Professor of Law at St. Mary’s University of Law from 2012 - 2023. Her research has focused on blockchain governance, decentralization, systemic risks, blockchain language, and the intersection between these areas. Her work on blockchains as financial market infrastructure, the operational risks of open source software governance, the role of software developers as fiduciaries of public blockchains, and the role of miners as intermediaries has been foundational to the field of cryptoeconomic systems, and is recognized internationally. Angela has advised policy makers and regulators around the world, including the Federal Reserve, the White House, the Bank of England, and the BIS, and has testified before the US Senate Banking Committee. Her research has been featured in The Economist, Bloomberg, Wired, Coindesk, and more. Angela's work and publications we mention in this episode: * “Blockchain Emergencies & Open-Source Software Governance: Is ‘Rough Consensus’ a Suicide Pact?” (2021) https://commons.stmarytx.edu/cgi/viewcontent.cgi?article=1631&context=facarticles* Substack Note on Governance and Protocols https://substack.com/@angelawalch/note/c-106330495 * "The Fundamentals of Protocol Systems” (2023) https://summerofprotocols.com/wp-content/uploads/2024/08/The-Fundamentals-of-Protocol-Systems-Angela-Walch.pdf Listen to this episode on all platforms: - Apple : https://podcasts.apple.com/us/podcast/gov-futures-trailer/id1823028614?i=1000714675608- Spotify : https://open.spotify.com/show/6QRkrWmq21Z66jRJtN2UIu- Youtube: https://www.youtube.com/@Gov_Futures- Follow us on X: https://x.com/gov_futures<br> <br>00:00 Teaser and Introduction<br>02:10 Setting the Stage<br>02:20 Institutional Collapse and Tech's Role<br>03:04 Skepticism Towards Tech Replacing Institutions<br>05:56 Misconceptions About Technology<br>09:09 AI and Crypto Governance Challenges<br>12:59 Roles and Perceptions in Governance Systems<br>22:02 Decentralization and Power Dynamics<br>23:52 Emergency Responses and Governance Legitimacy<br>31:39 Addressing Conflict of Interest in DAOs<br>34:17 The Mythology of Governance Systems<br>38:17 Handling Emergencies in Crypto and Beyond<br>44:05 The Role of Emergency Response Groups in Web3<br>49:39 Building Robust Governance Systems from Scratch<br>55:15 The Importance of Funding Basic Research<br>58:38 Quick-Fire Quiz and Conclusion
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- mythology 0.005
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- power 0.005
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- suffering 0.004
Transcript
People who don't happen to fall into the simple if then statement, if we'd say that everything is fully automated, that means to me that a lot of people end up suffering potentially through automated systems. It was all BS before Satoshi. So yeah.
And the EF folks were just like, just don't expect the bailout from the l one. Right? Like, if you break stuff above us, we're not helping you out on the lower level. What do we do when there's an emergency? How do we react, and how do we justify those reactions?
So a well handled emergency, you reduce the human suffering from that emergency.
The eyes will have the biggest effect on governance relating to hi. I'm Eugene.
And I'm Jamila. And this is the Governance Futures podcast where we explore the past, present, and future of decentralized governance. This week, we had the pleasure of speaking with Angela Walsh. Angela is an independent researcher and writer. She writes the Angela Walsh publication on Substack and was a core researcher in the Ethereum Foundation inaugural summer of protocols program in 2023. Her most recent work is the protocol system experience, which provide a conceptual framework for human rule systems of all kinds.
Angela was a professor of law at Saint Mary's University of Law from 2012 till 2023. Her research has focused on blockchain governance, decentralization, systemic risks, and the intersection between these areas. Angela has advised policymakers and regulators around the world, including the Federal Reserve, the White House, the Bank of England, the Bank of International Settlements, and has testified before the US Banking Committee. In this conversation, we started with a splash of doom and gloom in the form of institutional collapse and then went on to talk about protocols, emergencies, and what it looks like to have a well handled response to an emergency.
Before we get into the interview, a reminder that if you like what you hear, please subscribe wherever you're listening. Leave us a review, share with others, or reach out if you want to chat.
And now here's Angela. Angela, thank you so much for joining us today.
Thank you for having me. I'm really excited to be here.
Likewise. And we wanted to start the conversation on a very light and casual topic of institutional collapse and tech relation to that. And, specifically, wanted to touch on the thread where, you know, you voiced concerns that the collapse of rule of law in The United States can signal a broader breakdown of social infrastructure. You know, on the other hand, there's this rising narrative that technology, whether crypto, AI, or others, can step in to really replace those broken institutions. So would love to start the conversation with what are your broad views on tech as the new governance, so to say.
Yeah. Very light note to start on. Definitely. Keeping it casual. Yeah. I am always accused of being, like, the ultimate pessimist and worst case scenarioist. And then people want to know, well, what are your solutions if you're pointing out all these problems? And I don't think there are easy solutions to any of these. So I do see, and I'm not the only one to see, like, just kind of widespread loss of faith in core institutions. And this has been going on for, you know, several decades, I would say, now. And it feels like we have really hit kind of a tipping point, I think, where it's not it's not just a single big institution that is, you know, uncertain such as, like, the university sector or the health care sector or the finance sector. It's all of them at once, and and that includes, like, the governance of nations that were have been perceived as really stable and kind of reliable for the long term, like The US, etcetera. So all of that is going on, and I subscribe to beliefs that we have we're either at the tipping point or have already passed a tipping point, and it's kind of on a downhill slope from here. Now, luckily, right, we have all this tech that has been growing for decades as well. Right? I think Bitcoin came onto the scene as kind of a reaction in part to this sense of failing institutions, right, with Bitcoin, like the financial sector and government money, basically. But to me, like, if you lose faith in the government's money, you've lost faith in the government itself. So over the course of the last fifteen years, the narrative, I think, has been that it's okay. We've got this life raft here of cryptosystems to kind of fall back on. Right? And they are going to be able to serve different needs for us from from money and payments, which is kind of like the original starting point, but also more significant things, like the record keeping for society itself. And I am very skeptical of them being ready for this first, for crypto systems to suddenly replace all these existing institutions because, well, fifteen years is you know, they're not babies anymore. We're still figuring a lot of stuff out within crypto. And as far as AI goes with AI in the mix, I think that, again, it's one of those kind of, like, rapid growth, move move fast, and break things. And, again, I don't think they're ready to bear the weight that we need to put on them. So I am I'm worried. I don't know what's gonna happen, honestly. I don't know if we have the systems to accommodate.
And on that note, I guess, do you see any specific common misconceptions in that exact relationship between tech and society where so often the technologists themselves are potentially overpromising and underdelivering on these kind of societal benefits. What do you see as some misconceptions there?
Yeah. I mean, I think a fundamental misconception is that technology replaces humans, and it does so without duplicating human flaws and foibles. K? And that has manifested in different slogans we've seen from the technology sector over time. I mean, Google famously, you know, had their slogan for a long time, they don't anymore, of don't be evil. Right? And so, you know, tech is great because it makes sure that we're not gonna be evil. But that has kind of been co opted by some within the the crypto space as can't be evil. Right? So you can rely on crypto systems because not only are they, you know, making a promise like, they're not like Google and just making a promise that we're not gonna be bad. Right? They're saying that what they have built, these systems are invulnerable to evil, right, that they can't be, which raises all these very interesting questions about what is evil. Right? Because it's not like evil has a definition that is not going to be debated. Right? Like, just for one example, I mean, in Bitcoin right now, the longest living crypto system, they're having big discussions and fights about what is evil to put on the blockchain. Right? Is it purely supposed to be about money and and payments and just, well, really money, I guess, and not have any extra stuff that is being stored on the blockchain? That's one perspective, and they say that those who want to kind of enable Bitcoin to function more like, I guess, in Ethereum or something where there's more layer twos above it, right, which embeds stuff on the Bitcoin blockchain that's extra. K? So, like, there are really vitriolic words being thrown around to as to what is evil and what is good. Yeah. K? So that's a big mythology, I think, that somehow using tech gets us away from human flaws. I mean and as for AI, right, AI replicates all of human flaws. It learns from us, and we can't necessarily easily teach it stuff that we're bad at. Right? And we have all of our unknown and unrecognized prejudices and our bad decisions embedded in what we're teaching it. So I think tech solutionism, which I think Siva always have I should have looked up his name in advance here, but a professor at UVA who wrote the Googleization of everything, like, he he really talked about tech solutionism early on. And I think he's right and being proved right every day.
And I guess in that regard, when, you know, thinking of crypto, of AI, and how these things are you know, whether it's we're looking at DAOs and how governance has been evolving in the web three space, which is, you know, no shortage of challenges and problems there to put mildly. You know, now there's this kind of excitement of, well, what if we just AI all of governance and various aspects of it, whether it's kinda small things to help people make better decisions versus fully automating governance and, you know, leaning much more towards a world where the AI is governed for us and represent our interests. I mean, as the, you know, the self proclaimed worst case scenario thinker, are there specific elements of this kind of AI and crypto governance that make you particularly worried about both web three systems, but societal systems more broadly? I think the idea of automating
everything and automating decisions that humans find hard is very naive. That means that people who don't happen to fall into the simple if then statement, If we say that everything is fully automated, well, too bad for you. And that means to me that a lot of people end up suffering potentially through automated systems. We talked about this a lot when I was teaching philosophy of law and jurisprudence whether, you know, what would be better, a judge that was more like a robot and literally tried to just call balls and strikes and, you know, applies the law without regard for for anything other than what the law says, right, versus a judge who can take into consideration the facts, the context around them, and sometimes make exceptions to what looks like a bright line rule because it seems to be in the spirit of the rule to make this exception. And if you automate all that, then you lose that flexibility. And I honestly think that flexibility is a really crucial component of governance generally. Right? This is a fundamental fight that has been going on in crypto, certainly, for the last fifteen years, right, since its inception. Like, how much flexibility and how much should the need to change be accommodated? That's been an ongoing tension in the space, and it's certainly an ongoing tension in all these other existing governance systems like the US government. Right? I was thinking about it last night, and it's not been in my lifetime, at least, that I recall that there's been a constitutional amendment in The US. And there were, right, for many years. You know, those happened periodically, right, when the nation felt the need to change. And if we're automating everything and thinking that we've got governance solved, then we're losing that flexibility. And I think a lot of people get hurt if you don't have flexibility in a system.
That's an incredible point. And, while you were talking about flexibility, legality, legitimacy, and constitutional amendments, I couldn't help but to think that, well, I'm originally from Russia, and we have a fair amount of constitutional amendments as of lately. Mhmm. And I usually bring that example as, you know, the opposite, that it means that there is absolute lack of stability in society, that there's so many over changing, you know, just scenarios. And if we change our fundamental, you know, values so often, what does it, you know, tell us about the society and the state? But before I really want to explore the topic of legitimacy with you, I wanted to just take a step back and talk about something that you've written extensively about is what is a protocol and who we are in it. You define protocols as rules that are created by humans that shape the behavior of groups of people, and you describe that they could be they come in different shapes and forms, whether they're called laws, standards, customs, contracts, etcetera. And you've mentioned that every person plays a role in a protocol system and especially within the web three ecosystems. We could be developers, validators, token holders, contributors, governance facilitators, whatever it can be. And we often wear many hats, and sometimes we do that consciously or subconsciously. So my question here is, do you think that most people inside of governance systems, specifically within DAOs and protocols, do you think they have an accurate sense of the roles they're actually performing? And have you ever seen a moment where someone believed that they were performing one role, like a designer who creates a protocol, a maintainer, who acts as its caretaker, but the community clearly saw them differently? And what happens when those perceptions fall out of sync?
So that is a fascinating question. Yeah. I had talked about in my framework for protocol systems, how we play these roles, and there's an important element of it in the framework that that we may not be conscious necessarily of the roles or how we got into them or why we're playing the role that necessarily of the roles or how we got into them or why we're playing the role that we're playing. And I would just raise what's going on in Bitcoin again as an example of different perceptions of the role that people are playing. And this is manifesting right now in the role of the core dev in Bitcoin. Okay? So we've got this up return, whatever fight. But to me, that's a fight about, like, what kind of data can go on the blockchain. And it's kind of a, you know, an echo of the block size debate from 2015, 2016, that kind of stuff. And it's interesting because it's not been fully resolved as to what roles people play and what they believe what should happen with the blockchain. But as an example of this role kind of different perception, I would say that the mythology kind of around what the core devs do is that they are purely well, there's several mythologies, and I I think they probably conflict actually with each other. But one of the mythologies is that they are like janitors. K? They just as the maintainer, they don't really exercise much discretion. They are checking these pull requests or suggestions for changes to the the software client. They're checking those for, like, technical compliance, and and it's really anyone can propose one of those changes, and the core devs are not the one who ultimately make the decisions about whether that particular change goes out in a software release. It's, you know, rough consensus that makes that decision, and they're only implementers of the will of the public, right, of the people in the blockchain system, in the Bitcoin system. And we're seeing lots of fights accusing the core devs of being much more than purely implementers, but decision makers as to what is best for the trajectory of the Bitcoin blockchain. Right? And this manifested in debates being shut down is what one side has claimed. Right? That we're not even going to discuss on these certain forums. I think that, like, the moderator's closed discussion on a particular topic or something like that. And what is open for discussion is something that the public is seeming to perceive the core devs as doing. Like, controlling the field of possible discussion is a much bigger role than just implementing the will of the people.
So they may not vote or, like, they allow people to vote on a specific thing, but they are the ones who are ultimately deciding what is being voted on. Do I understand you correctly?
So the idea is that people essentially get to vote on what is being offered. And the core devs are being accused of being, like, censoring things, essentially deciding what comes up for a vote. And you can see a really strong analogy there, right, to, like, what happens in the US Congress and whether different legislation actually even comes up for a vote. Right? So core devs are being accused of being, like, gatekeepers to changes to the blockchain system or having a particular political position that that is determining what comes up, essentially. And those are very different perceptions of what the court devs are doing. And what's interesting is that they've had the ability to do these things all along, And I don't know if the public who is upset with them now chose not to perceive it that they have those or just were not paying attention or what, But not noticing governance that is happening is kind of a big theme of blockchain systems, I would say. Like, that the public buys into the discussion of or the mythology of you don't have to worry. Right? The technology constrains the power, and the game theory constrains the power of people within the system. So you don't necessarily even have to pay attention that much. But it's imperfect, I would say, and and it's highlighted when there's a big debate like this.
So if I understand correctly, you're saying that governance was always there. It just wasn't in, you know, formalized rules or constitutions that we see today. Mhmm. And if you are blaming someone who have been working on a particular project for a very long time, you would assume that they have a lot of insights and they have a lot of decision making power. So that is then a naive take to think that they wouldn't have this decision making power because of those, you know, even not fully formalized rules where they were the designers, the maintainers, the person persons who put those things to vote. So it's more about actually looking deeper and saying, okay. So this is what's happening. And then is it problematic? And if it is, then how do we change that situation where we have concentration of power in the hands of few?
I think there's implicit governance happening all over the place. Right? And so it's noticing that it's happening and deciding what you want to do about it. Like, people can have different ideas about what to do about it. Maybe there is nothing that they need to do about it. Maybe they want to be sure that people who are performing these implicit but very important governance actions have some duties to the people in the system to do their very best, be competent, and to not exploit their positions of power. And one thing that I have noticed just kind of even just following the current Bitcoin kind of saga on social media, on Twitter, well, x now, is that the implicit governance, like, you have to decide whether you want the people who are performing that because they kind of always are even if you don't want to admit it, if you want them to be constrained, if you want there to be any constraints on that power. Right? It's an acknowledgment that the game theory kind of is imperfect. Right? Some governance, some power by humans slips through. And what's, again, been fascinating is to watch the conversation on social media, which has people who are upset with the Bitcoin core devs right now making arguments essentially that they should have fiduciary duties without calling them fiduciary duties. So, yeah, fascinating.
That is absolutely great because I have this Zalb Buterin's book, which is basically essentially just a collection of his essays edited by Ethan Schneider. And I feel like somewhere I was trying to find the picture. I don't think I'm be I would be able to find it now. But there is basically this conversation about the centralization of power within Bitcoin network, and there is a photo of back in the day when it was, like, I mean, 2015 or something of just basically maybe 10 men who are basically the, you know, those are the whales in whose hands the basically the most of the decision making power within the network. And that brings us to the discussion of decentralization, which is you wrote about. And, you know, it's just probably the biggest buzzword within the web three ecosystem. And Yeah. Obviously, there is no common definition how we define decentralization even within Web three. What does it mean? Vitalik Buterin defined decentralization within Web three through different ways, and he described blockchains are being politically decentralized, architecturally decentralized, but then logically centralized. And then I really like the study of DAO constitution that was done by Metagoff. They've basically analyzed different DAO constitutions, and they revealed that there are different key values that communities put in their constitutions when they try to describe the values. And decentralization is one of them. Yet the question is, what is exactly what do we mean by decentralization? So I really also wanted to mention this book on polycentric governance and development edited by professor Michael McGinnis. But this chapter by Vincent Ostrom specifically on crypto and parallelism, I definitely suggest everyone to know that. Sounds good. But crypton parallelism, of course, in Winston Ostrom's chapter has nothing to do with crypto as in web three. He states that crypton parallelism is a theory for creating crypt empires, hidden empires, in which the control apparatus is concealed by a veil of secrecy behind rhetoric about freedom and liberation. And interestingly, that also just reminded me about all those conversations. What do we do when there is an emergency? How do we react? And how do we justify those reactions? So my question here, because you've mentioned that you do enjoy researching and analyzing crisis situations. So in web three governments, legitimacy is often hinges on the community perception that decisions are made fairly, transparently. And during emergencies, when quick action override normal processes, How can project maintain legitimacy while still coordinating effective rapid responses? And where is this line between necessary centralization and effective response and then, you know, legitimacy crisis, essentially, where, you know, the means might justify the cost. But, you know, when we think back about the Dow hack and many other examples, how do we feel about the legitimacy and maybe even broader governance? How should it be constructed so those emergency responses don't just come out as, you know, a few people just taking actions, deciding everything for everyone, and then us just dealing with it because we're like, well, oh.
Yeah. Right. I think this is something that's come up over and over again over the course of, you know, crypto time. I guess maybe we should start to have, like, a before crypto and, in the years of crypto or something like that because we're you know, we've got a decent amount of time accumulated
at the point. BS before Satoshi and after Satoshi.
Okay. That's perfect. Yeah. BS. Right. It was all BS before Satoshi. So yeah. Nice. Okay. Good, Eugene. We're keeping that. That's really good. Okay. So emergencies. You've talked about how they come up, and there's always a big hullabaloo about how to address them and then people getting mad at the people who did address them. And one of my roles in in these discussions has been to point out the also anytime. Right? It just becomes more visible in emergencies. So as far as, you know, constructive suggestions for how to address this issue that you cannot get away from. Okay? There will always be emergencies. And the kind of the mindset that if you can just get to the ossification stage of a protocol, then it's just gonna run forever smoothly, and then we really don't have to have humans involved and hooray. K. I don't believe in that because the world keeps changing, and I don't think anything can ever be or should ever be fully ossified. Okay? So if that is the case, then you have to plan in advance for how you're going to handle emergencies. And I think doing so increases legitimacy for the governance. Right? It if people know when they're in a DAO or whatever that the system will be protected, and if you're having a system, then and you believe it has value, which is why people are involved in them, then shouldn't you want to, you know, make it more likely that the system will endure? And I think it's like a it's kind of like a growing up thing. Right? We are acknowledging the reality that emergencies will happen, so we're going to do something about it. And that has been happening more and more over the years within crypto. I think our return was the first one to do a security council. I may be wrong on that. But I think security councils are a really good idea. Right? That you have people who are designated to address issues. That does admit that power is not fully decentralized. That admits it. By having a council in involved to address it, that does admit that it's not fully decentralized because if it were, then you'd have random people, you know, oh, we think there's a problem. Get some help. And you have, like, a fire brigade from, you know, from scratch. Right? Bring your buckets. We're gonna see what we can do to save the system. And that works, right, in small communities, maybe. But it doesn't work when you have a lot of people who count on that system enduring for socially important tasks, which is what crypto's goal is. Right? So I think it's a good idea to designate it. And I think it's important for the people who are so designated to have obligations to act in the best interest of the system rather than themselves. Right? And I know I'm like beating this dead horse here of the obligations that people with power have to those they serve within the system. But it matters, right? We're seeing this come to life in, you know, fireworks, basically, like, in the spotlight in The US right now. Right? Whose interests does the president serve? Whose interests does Congress serve? Right? We've had a long debate over whether Congress people should be able to buy and trade stocks when their, you know, their privileged position within the system gives them inside knowledge because they're regulating the companies that they're investing in. I mean, it's insane, honestly, that this has been allowed for so long. Right? So there are flaws in existing governance systems, The US, and those have been and are being constantly shown. Right? So a lot of those have to do with poor management of conflicts of interest of those in power. And why would we want to duplicate those in crypto systems that are supposed to be better, right, by denying exercises of power in order to be able to claim this mantra of decentralization? Right? I am all for let's be honest and prepare for something. And then if people, have obligations to act, right, to disclose their conflicts of interest, etcetera, the question becomes what to do if they don't follow those. And I think crypto's got to think really hard about that. And I've been, like, one of the big critiques that I've had of my theories about, you know, they're functioning as fiduciaries. So what do you want to do about it? Is that, well, of course, people won't serve in these roles if they feel like they are gonna be financially liable to anyone and everyone who wants to sue them if they fail in their exercise of duties. And that is not a unique problem to crypto. Right? Directors and officers of corporations, they don't wanna have to be sued either if they fail in serving the interests of their shareholders. Right? And so what they demand is, like, insurance, directors and officers' insurance and things like that, and that the system funds them to take on these positions of power. So, you know, should there be more formalized compensation and, like, backup, financial backup for people serving in these positions of power in order to justify them taking on these necessary protective positions for the system. Right? It's being mature about it rather than denying it.
Yeah. And I wanted to especially double click on what you've been mentioning from the conflict of interest disclosure to I think that part is somewhat happening, at least theoretically, but the enforcement of it seems totally wanting of just there's no formalized enforcement in most ecosystems. And I think with a lot of other elements that you're mentioning, you know, DAOs are trying to take a step in that direction with, say, legal defense funds that if you're a delegate and some some regulator comes after you, we have a defense fund or, you know, we have these different elements around it, but it does kinda speak to this fundamental tension. I think it was I saw in the optimism ecosystem where I forgot which delegate, but one delegate was like, we need all the power. We want all the wallets, and we want everything. And then the foundation kind of came out with, like, just to be clear, you want the fiduciary responsibility of wallets with hundreds of millions of dollars, if not billions of dollars in them. And then they immediately back down. Like, you know, well, if you put it like that, not really. And so how do you I guess, what do you see as the next steps that you would hope to see advancement in this year when it comes to things like actually enforcing a conflict of interest disclosure or truly just acknowledging the reality of fiduciary responsibility and that we either formalize it and deal with it or we brush it under the rug, and then massive issues just come up and, you know, it'll be a a dumpster fire when that happens.
So I think one of the fundamental struggles here is that actually putting and calling them some you can call them fiduciary. You can call them something else. I don't care. It's caretaking, right, and being responsible to do the right things in the system and also having the power to be able to do that. Right? So you can call it whatever you want, but I I think it's the people with courage, actually, in the crypto space who are admitting these things and and doing something about it that is more formal. Of course, the problem is that admits that cryptosystems are not fundamentally different than existing systems. So why won't they have all the same problems as existing systems? And then is the mythology worth it in the end? Right? If you have to if the problems are the same and it's only by denying the problems that you have something different, I'm not sure that's a great place to be in. So, but maybe I mean, I've also got these theories in my head that maybe that's just how humans function. Right? That with these systems that we build, they are all inherently flawed, but we subscribe to them because we believe in the mythology. There's a mythology for everything. Right? And the mythology of The US, for instance, this story of democracy and We the People and All Men Are Created Equal and the Great Founding Fathers, and we've been able to, you know, keep that up over time, etcetera. A big part of the polarization, I think, that we've seen today is the debates over whether the mythology is real, right, and whether we have to keep keep not just believing, but, like, behaving as if the mythology is real. And then all of a sudden, it kinda falls apart and people stop believing it. And then we jump to the next thing, which has a good sounding mythology. And so crypto has a good sounding mythology to people right now, and people have less faith in the mythologies of existing systems. So maybe we just keep building mythologies as life rafts, and none of them really work. But we believe in them for a time, and then someone else comes up with something that sounds good or better, and we jump to that. That's very pessimistic, I guess. I don't know. I don't know. It sounded quite hopeful to me.
Okay. It sounded like we shouldn't give up, and perhaps we should, you know, think about that. Sure. Some things might not work, But there are other things, and we shouldn't just stop experimenting just because you know, and giving up on everything. There there's still some light in the end of the tunnel. No. I'm grateful,
to be honest. I'm grateful that people are not just giving up and that they are trying to come up with alternative systems. Right? Because I don't know how this all plays out over the next few years. So there's gotta be something. But I think humans we're fundamentally we have these, like, poor flaws or whatever. And I think we are destined to repeat flawed systems that we create over and over again. Right? Like, one of the ways that is kind of like one of the phrases that's kind of like in the zeitgeist right now is, like, techno feudalism, Right? Mhmm. So that we're returning or perhaps probably already have essentially been living under techno feudalism. So it's like, you know, all the power is concentrated in a select group of people, and everyone else basically serves them in order to survive. So it's a repeat, right, of the feudalism that existed for so long during the middle ages. It's just in a slightly new form. So maybe we just repeat things in cycles, and we come up with a little bit of a new name. But I do think governance is always experimental even if we perceive it for a period of time to be the way it is and we fix the problem. Right? I don't think there is a, like, a final solution in a good way. I'm trying to use that in a good way, not in a bad way here. Right? I don't think there's a final solution that humans are gonna come up with for governance that's gonna work forever. I think it's always gonna be experimental, and we're gonna keep trying to improve.
You know, while you were talking, I was I was hearing a lot of warning. Be realistic. Set up infrastructure that can support you during emergencies. So don't be naive. Be responsible. Admit your mistakes. So those are some of the, you know, emotions I was picking up while I was listening to you. And this brings me to the question, what in your opinion constitutes a well handled emergency? You could if you have any examples from nation states or any crypto projects, that's amazing. But even in general terms.
Okay. So a well handled emergency. I guess that would be one. Like, if we're just speaking, like, high level to start, one in which you reduce the human suffering from that emergency, And you resolve it and try to return to status quo, I guess, as soon as possible, right, while minimizing human suffering. You're trying to balance those things. And so good examples of, you know, managing emergencies would be, one, like, getting the right people to see the emergency, right, and why it's an emergency. And those people, like, marshaling appropriate resources to address it. Right? And then having the minimum and and putting putting those into practice. Right? Putting into practice the the actions necessary to resolve it. So, I mean, you can apply the those broad principles anywhere. Right? Like, examples of badly managed emergencies would be like when The US, we had the terrible hurricane Katrina in New Orleans, and it was viewed as a complete failure of an emergency response system because it didn't minimize human suffering. Right? There are people suffering for long periods of time without being able to get what they needed to survive like people on overpasses and. Like it was just horrific, right? And so that was viewed as a bad response to an emergency. Honestly, I think in crypto, probably there have been some very good responses to emergencies. Right? In a number of cases, in the big systems like like Bitcoin, like Zcash is smaller, but it's been around a long time. And I think even it just happened with Solana, something on Solana, is when, you know, the small group of people with expertise is informed of a possible emergency and has the expertise in order to identify it as such. So expertise is critical here Mhmm. And being able to come up with a solution and do the quickest implementation. And that means in crypto systems, recognizing it it has in crypto systems, then recognizing that a bug in the software code could have terrible implications that would bring down the system, whether that is a bug and just, like, how the software was coded or whether it was in one of the cryptographic proofs that underlies, right, like, why the system works, but it's implemented through software. And so that has happened in Bitcoin. It's happened in Zcash. I think it just happened with Solana and was it the SUI? I don't even know. But yes. So it's happened multiple times, and it's not just happened in the past, long past. It's continuing to happen today. And they got it out, and they got the bug patched. Of course, it was done secretly, which is, I think, the only way to do it responsibly. Because otherwise, everyone would panic, and maybe you wouldn't get the bug fixed or it would slow down and more people would suffer. So I think they're doing it in a way that minimizes suffering, but that means they're exercising their power to do it. One thing that's really important about emergencies is how time bounded they are. Right? Living in a state of perpetual emergency or what is defined as perpetual emergency allows those in power to exercise extra powers and justify it because you're in a state of emergency. Right? And that we have seen happen in nation state governance. I think Hitler was under a state of emergency and a lot of what he did. And, you know, now we have a state of emergency declared over the border, right, that is justifying a lot of the deportation actions by the Trump administration. So calling something an emergency can be kind of like a a get out of jail free card for people to not be bound by constraints on their power and use the emergency to justify taking actions that people wouldn't be okay with otherwise.
Absolutely. I've seen it firsthand happening in my country. And currently, with the war in Ukraine, of course, Putin is using whatever excuse he can use to justify whatever he wants to justify, basically. And but we've even seen that in cases like South Korea. And it's happening more often than we, you know, like to think. And on responses and emergencies, I agree with you. Here in Spain, we had Dana floods in October 2024, and Spain has many different regions. And the Valencian community faced it was horrible. So many people were affected. But then the president faced huge criticism, first of all, of course, for mishandling this emergency. But I also I think he made a comment of something like, well, they're autonomous region. They should have asked for help. Something like that. Completely outrageous. And, well, you know, I'm not gonna continue here, but, yes, it's just it's absolutely horrible that we see. And we often criticize how emergencies are being handled within the crypto space, but if we look around, just happens daily. And here, I wanted to ask you, you know, about emergency response groups. So there are some of the groups like SEAL nine one one that are basically for anyone who may not know from our listeners. There's kind of like a WhiteHat Rapid Response Network, basically a group that involves security, top researchers, white hat hackers, and they come together to coordinate urgent interventions and, you know, when critical vulnerabilities happen. So my question to you here is, where do groups like CIL nine eleven step in during web three emergencies to coordinate rapid technical responses? Where do you see them being on the spectrum between being, you know, those guardians of security and the ecosystem, and then also being kind of like informal power centers that raise their own legitimacy questions. So how should we think about legitimacy in this kind of actor networks?
Yeah. I don't know too much about them, but I am aware of them and that it sounds like they're involved in in helping to resolve quite a few issues, serious issues. And I think in a practical sense, that's a very good thing. Right? That if these people are true experts and this is what they do, then if there are, you know, different systems failing, it's really helpful, right, to bring in people who are experts in these emergencies and can identify the problem quickly and come up with a solution quickly and maybe have a, you know, developed probably protocols, right, for how they respond from a communication perspective, from, you know, diagnostic, from implementation, all those type of things. And I think, you know, checklists and protocols for emergencies are really important, and that's why we do them in real life in noncrypto settings. Right? We have checklists for for medical processes, for medical emergencies, and all those types of things. So I think, practically, that is a very good thing. If there is confidential information that they shouldn't be trading on, right, you don't wanna just, like, spread the problem out. Right? What like, you're bringing in essentially consulting expertise. Right? And consultants, when they act as the system's agents, should have the same obligations to the system's participants as the devs or whoever would otherwise the court as or whoever otherwise would resolve that problem. So I think people who have access to important information and with crypto, it's always important that there's a bug because they're so that they these systems are so financialized. Right there's lots of opportunities both for personal enrichment, but also for potentially destroying. Systems right? And when that potential exists, right? You can kind of decide to save one system if. Or not save it as well or hurt his reputation because it'll be another system will benefit from that. Right? So there's so many different considerations. But in general, I think that's a really good idea. And if they want to outsource essentially security for emergencies to someone who has the expertise, great. But do it again in an open way, in an explicit way, in a way that will continue to protect the interests of those in the system. And, of course, I shouldn't fail to mention. That it's not just the people in the system. Whose interests are relevant. Right? Mhmm. Particularly if that system is serving as infrastructure to other systems, layer twos, or it depends on, right, are we talking about an emergency in a layer one system? Are we talking about an emergency in a layer two system? In many cases, it is not gonna just be the one system where there's the bug that suffers from it, that has people suffering. Right? Because these things are very much interlinked. And we have learned again and again that something that happens in a single layer two application can affect all the other layer twos, right, if the layer two with the problem has to get the layer one to respond. Right? If it's that and I think that is something that just happened. Is that the SUI blockchain thing with the I don't I don't know how you pronounce that one. S u I. Yeah. This is silly, but I'm not caught up on what's going on there. Something that just happened there where the there was a layer two issue, and so the layer one was had to respond and do something to change, which changes everything for every other layer two on it. Right? So the interconnections here and the who owes duties to who and who should owe duties to who is complex.
Wow. Yes. That brought me thinking back to, you know, community standards, and I feel like every time there's a major hack or something like FTX happen and then all eyes are on the crypto industry, we think about, okay. We don't want anyone externally come and regulate us because they don't understand how technology works. But we also, on our side, don't really feel like establishing certain, like, immunity rules or certain, you know, ethical standards or just some technical standards even, which we do have in some areas, but not everywhere, not enough, which FTX showed. One small follow-up question for me, and I'm so sorry if it's just, you know, oversimplified. But if, for example, someone were to start building their governance system from scratch and they wanted to account for all those things that you've mentioned. Is there, like, a checklist or some of the top things that you think people should think about before, like, you know, deploying before even, you know, producing anything?
It's a great question. I'm sure there are materials that have been developed within DAOs and stuff. I know that there are resources being developed all the time. But something that that I would say is I will plug my own theory here in the protocol system framework that I built the protocol system experience. I have an area of the framework that's devoted to what do you do in protocol systems. We talked a little bit earlier about that everybody plays a role, and that's kind of like how you're known and you have certain tasks that you perform in that role. And so since we're talking crypto today, you know, that would be you're a dev, you're a a delegate, a DAO delegate or something. You're a node. You're a validator, whatever. But there are also what I call protocol actions that are performed, and those are in relation to the rules themselves of the protocol. So I think that that these actions, basically, that are taken in relation to the rules either are going to help to sustain the rules or to undermine them. And I have a I came up with a list of, you know, supportive protocol actions and destructive protocol actions. But then there's this kind of middle group where the actions I call, like, double edged protocol actions because depending on the context of your system, they could either be supportive or destructive. They're the ones that fall on the line. And so I think a protocol system dies when people stop performing these supportive protocol actions. And just to stop being so abstract, so things like, right, acting as the guardian, responding to emergencies, educating people who are coming into the system, marketing the system. I think that's been interesting because we've seen this whole big conversation in Ethereum about, well, Ethereum did all this technical stuff, but no one was really tasked with telling its story, essentially, to the world. And so maybe they were missing out on that important supportive protocol action that helps assist them to endure for the long term. If I were, you know, starting something from scratch, I would take a look at that and see, like, do we have people and tasked with performing these actions? And I think something that's really important too is the openness to change having change procedures admitting. That things will change early on admitting that there will be emergencies. It's basically admitting real life is in the design. And lawyers are really good at that because when we counsel clients, like, you know, in my past life before being a law professor, I was a transactional lawyer, and I work with some early stage companies like biotech companies. I was in Boston where all that goes on. You know, you try to help your client think about reality, essentially. Well, what if this doesn't happen that you're expecting all the investment doesn't come in? Like, how are we gonna handle that situation? So I hate to say it, but lawyers can be useful in certain circumstances to help you think about the future, you know, you know, in a worst case scenario or dare I say, realistic way,
and think about how you wanna handle those things. And I guess before transitioning to the final part with our short quiz, I did wanna ask a quick follow-up just because, you know, thinking of parallels to the more early computing days and the Internet just taking off and when the first vulnerabilities were being disclosed to the Microsofts of the world, they kinda treated them as like, hey. You're a hacker, and you're trying to break my system. And, you know, we've had a few decades of getting to learn from that evolution. And yet, you know, as you're saying, we're fifteen years into web three, and there still aren't standardized systems of vulnerability disclosure across the space. And, you know, when you're alluding to some of these challenges where it's, oh, if something breaks on the l two, you might need to go to the l one. I remember watching an interview with, I think, Vitalik and Justin Drake and some other EF researchers, and then the Eigenlayer team when that was just theory and not yet in in practice. And the EF folks were just like, just don't expect the bailout from the l one. Right? Like, if you break stuff above us, we're not helping you out on a lower level. And it does also just bring up this question of what kind of capacity building, whether organizational or institutional, needs to happen as an industry in order for us to be able to manage some of these kind of emergencies and support more of these supportive behaviors. Because even if an individual actor might want to go and contribute in a supportive way because of all of these things missing, and it might not just be at the l two or the l one, it is just so systemic. I guess, do you have a certain change you're hopeful of seeing or that you would wanna see in the next, you know, let's call it months or years so that we as a industry can actually respond better there?
I think something that is helpful is and I know Ethereum kind of it's funny because it kind of gets critique for this is having, you know, people there thinking about implications and, like, deep research and things like that. And I think that the deep research continues to be hugely important and should be funded. And I think that these I guess, there are research institutes that are being formed, right, kind of across different protocol systems. And I'm not familiar with all of them, but something I will say from a personal perspective is that I have a lot of things that I want to write and explore from philosophical perspective, like this concept of, you know, change versus ossification or the ideas about sale game theory and just a bunch of different ones that are applicable to all systems. Right? Because it's grappling with philosophical questions. But I don't even know where I would go to get funding for something like that even though they're, like, still fundamental base layer questions that still need funding. And if one organization, one crypto system funds it, great. But maybe they don't see the need enough to fund it because it's such basic research. Right? And so that is exactly what we're seeing in The US right now with turning away from funding basic research because we don't see the need. Why are they investigating that stupid question about what is it the venom of the I don't don't know how you pronounce it. Is it Gagila monster, Gaila monster, or something that ended up being incredibly important. Right? So why are we asking these stupid philosophical questions when we need to be just looking at the proofs for z k or whatever? Zero knowledge proofs, and we have to do that. So there are so many different types of questions that need to be looked at. And I was a participant in the Ethereum summer protocols program, and I very much appreciated the opportunity to do that. And the research grant for that and What was good about that is that It tried to look at protocols from a bunch of different perspectives, acknowledging that it's not just technology and math. It's not just purely governance scholars that are necessary. It's a whole bunch of different ways of looking at these systems because they have high goals. Right? And if they have high goals to replace a lot of really big social systems, then you gotta put in the funding to understand them and develop them.
For sure. And I feel like we could spend a whole separate podcast episode just on funding the unfunded necessities, but I we'll have to save that for another conversation. Yeah. No one ever in any context, no one wants to fund those. Yes. It's by no means a purely web three portion. But given the hard constraints that of time still rolling forward and coming to an end for what we had scheduled today, I did wanna jump over to the last section of the day, which is our little quiz where we prepared a couple questions for you. Please keep the answers to one word. Take all the time you need to think about it. But to kick that off, the first question that I have for you is the biggest impact of technology on governance has been?
Social media.
I'll take it. Your favorite role to play in Web three protocols is?
Buzzkill.
AIs will have the biggest effect on governance relating to?
Catastrophe.
And then the last question that we ask all of our guests, what is the future of governance in one word? Transitory. Well, Angela, thank you so much for joining us for the conversation and indulging us with our little quiz at the end there. And, yeah, we look forward to the episode being out and continuing the dialogue beyond it.
Thank you. This was a really fun, like, really fun conversation where you made me think hard and imagine. So thank you so much.
Thanks for tuning in. The Governance Futures podcast is sponsored by the Skrull Foundation and produced by the governance team at the foundation, Eugene Leventhau and Jamila Kamalova, with editing support from Hirdesh Sapkora. Any music and photos are tested in the episode description. Feel free to subscribe, leave a review, and share with a friend. If you'd like to get in touch, reach out over Twitter or LinkedIn, which you can find links to in the episode description, or you can email us at governance@scroll.io. Until next time.