Web3 Workers Rights, Exit to Community, and Solidarity Primitives
In this episode I spoke to my friend and scholar Tara Merk who is part of BlockchainGov and has been focusing her PhD thesis on Exit to Community (E2C). E2C is proposed as an alternative to IPOs or buyouts for founders of businesses to be able to be compensated for their work while giving ownership of their business to those that work on or use their product. During the discussion we talked about what crypto brings to E2C, the regulatory landscape for community ownership, and whether web3 w...
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Transcript
Hello, everyone. You're listening to the Blockchain Socialist Podcast. I'm Josh, and I am here in Limassol, Cyprus with my friend Tara Merck. Tara is a student a PhD student with Pumavera de Filippi. She's affiliated with the Weizenbaum Institute, Blockchain Gov, Other Internet, and a few other things. Did I get all of them? Medigov. And Medigov. Yeah. I know I was missing one. And so, yeah, Tara is, has been working on some pretty cool research, including, Exit to Community, which was an idea that was brought forth by, I believe it was Nathan Schneider, a few years ago, which I've talked about on the podcast before, but I think I'll let Tara speak about that more. And then she's also recently published a piece, of research with other internets that's focusing on, I guess, working conditions in Web three and, kind of the the, the issues with that at the moment and what are some suggestions in in improving it. So Aytara, how are you? I'm good. Thanks for having me here. Of course. And how did you, yeah, we were we've been in Money Lab. This is why we're we're in Cyprus, which is the events started by Gert Lovink. Yeah. And you were able to, show some of your research and your work, and your presentation was really nice. But, how are you enjoying
Cyprus? Thank you. I'm, I'm very glad I got to come to Money Lab. First of all, of course, for the interesting conversations and topics brought up there, and secondly, to get out of the gray Berlin winter into the sunny Mediterranean climate. Yeah.
So maybe to start, would you want to if you want to give kind of, like, an introduction to your work on exit to community, and then we can go from there?
Yeah. Sure. So exit to community is kind of, like, the the topic that I chose, for my thesis. And maybe, like, it was fun going into this PhD that at the beginning, I had a a bunch of different ideas sketched out, and you have to apply with a research proposal and whatnot. And pretty much in my first week, Primavera just sat me down and she was like, yeah. But what's your cause? And I said, well, I don't know, but this is a really interesting research topic. She said, no. No. No. Like, what's your cause? And she sent me a way to go, meditate or do whatever I had to do, is what she said, to to go and find that. And, essentially, a bunch of things came together from, like, my own, past experience, but also working closely with Morshed Menon, who's a post doc in the blockchain gov. Friend of the podcast. A friend of the podcast, friend of ours, who's working as a post doc on that project. And he did his PhD thesis on the emergence of cooperative, firms in the platform economy. So this was already and he he wrote, one of the the major sort of academic pieces together with Nathan Schneider around exit to community and three legal strategies or pathways in which a hypothetical company could do it. So I got very interested in that and it connected to a lot of, like, previous experience that I had working in social startups and, you know, being fed up with this sort of the way that big platforms are using my data. As a German, I'm very concerned about my privacy, you know, or any any anybody, in touch with the Internet should be. And and kind of settled on that. And, so my thesis explores this idea of exit to community and, tries to further it as a concept and our understanding of, like, how do we go about, exiting to community? Maybe as a introduction here, what does exit to community refer to? In its most basic form, it's about transitioning founder and investor led startups. So, you know, the the sort of status quo model that we see especially in the in the tech industry. How do we transition that into something that is community owned and governed at a later stage? Exit meaning that both the founder relinquishes ownership and control over the project, as well as the investors sort of, doing the same thing and and leaving that ownership and control to stakeholders that are in some way a community that means they are connected to this product service platform, specifically in my context, that it's all about this organization. And they also have some sort of emotional bond, you know, amongst each other. They they're probably not just customers of of a business, but, yeah, take on the stewardship role. So that's what it's about. I try to understand why is this important. That's maybe the the most pressing thing. And then, obviously, maybe I'm biased, but I try to make a reasoned argument for why it is. Go in the second step to explore how do you practically do it. Like, what are what are strategies that, projects and organizations currently in that transition phase are employing in terms of governance, in terms of communications, in terms of setting up labor policies for the outcome of an exit to community, etcetera, to yeah. Ideally, you have, like, something that others can refer to Right. Going forward.
So well, the way that I, have read about exit to community is I mean, at least in the context of, like, tech start ups is usually that you have more or less two choices as an investor of, or a a star a founder of, like, a company is either you sell it to a bigger player, with more money or you IPO, and enrich sort of, like, the investors through through a public offering. And so, like, this means that your only two choices are really to give in to big capital to to a wide extent, and there isn't much, so exit community is to provide a third option where instead you can give it to give the ownership to those who, actually use the product or actually care about about it, which is, of course, like a really interesting kind of mid mid ground between, you know, just going all in on tech startup sort of mentality versus trying the pretty difficult job of having, like, a purely horizontal cooperative, compete with a tech start up which has much many more resources is kind of like a like a middle ground. Yeah. Exactly. So this is also, like, in my sort of exploring and,
grappling with this idea of exit to community. That's a lot how I understood it as well. Also, historically so there's, there's these there's this discontent with our, tech platforms. So, like, staying with the tech industry, that as I said, is around the use of data. It is around the fact that, platform corporations sort of, have a say on how algorithms are structured, which sometimes is detrimental to content creators or whoever. There's, a really big sort of issue around working conditions in the gig economy, previously, you know, masked as something like the sharing economy, especially in countries that don't have, you know, strong worker protections or governments, regulating around these workers, that that people really get exploited as Uber drivers, as click workers, as, what have you. And another aspect also being a realization that over the past few years, we're having a very hard time from, from a national government perspective to hold these platforms accountable to what we're asking them to do. And it starts with paying taxes, you know, goes on to, to regulating fake news that is spread, etcetera. And all of these things are recognized not just by people who are trying to advance, exit to community, but was also something that was very much picked up by the platform cooperativism movement. And the solution here, was to say, okay. But then why don't we just replicate the sort of function of some of the platforms that we know today? But instead of starting them, with a corporation sort of building out the platform, we're gonna go straight into the, cooperative model where, you know, a ride sharing platform would be owned by the drivers and the users and the developers, etcetera. I think the issue that we've seen here is that, building these tech platforms as a community owned and governed organization from the start means that in the beginning, early stages, you're you're moving a lot slower than if you have this sort of top down, kind of leadership that many, many startup companies do. You're moving a lot slower. It is way more difficult for you to attract, external capital, to to build the market on your platform, etcetera, etcetera. So that even though we have so many successful and like wonderful platform co ops out there, they have not yet become, like, a really serious competition to the big tech platforms, that we're still using today. And exit to community is kind of like, that's how I understand it. A pragmatic approach to that, which says, okay, in the beginning, we're gonna do that sort of, tech startup model, and we're gonna have the founders who can pivot and bring in internal and external investors and etcetera, and build out and scale, like, a platform to a certain size. However, the goal here, as we mentioned, and the, the difference is to build in safeguards that will, ensure that at a later stage, it is not brought to the to the, to an IPO or just, you know, swallowed up by by Facebook and and Google and the likes. Yeah.
And I guess beyond the tech sort of industry, you can also think of it as a way for, businesses that are maybe where the owners are becoming too old or, they're wanting to to sell or something like that to, offer them a way to give that company to maybe the workers or to other people who are giving up since a lot of boomers are,
getting too old to keep running their businesses. Yeah. So so this is exactly this is a really interesting backdrop that is happening outside of the digital platform space where especially in Western economies, we're we're facing this problem that's called the succession problem. Mhmm. Yeah. Where there's all these small and medium sized businesses that are providing a real service or value to a specific community. It could be, you know, a local bakery. It could be, a GP office. This is a very, a big example in Germany, for example, that are just owned and led by the the the doctor. Mhmm. And they're retiring, and they they don't have, maybe they don't have kids who are also doctors who wanna take this on. They're not, like, a business that external, you know, or, like, any any steward sort of would be able or want to buy out. They're not gonna go to the public market. And what we're seeing, for example, to stick with this example of health care in Germany is that they're being bought up by by big, already public sort of corporations where, it's a really, tricky thing because the key purpose of any doctor's office is to provide healthcare services right to their patients. However, being bought up by these big, shareholder led, companies that are often publicly traded, the main purpose becomes to Make a profit. Increase that shareholder value. Exactly. And we're already seeing a decrease in in sort of public health services and and that sort of thing. And this is a trend that's gonna increase, and we're seeing that, for example, in the EU or also in in Germany may sort of local context. Regulators are going against it. In Germany, they're gonna implement a new type of corporate form that, you know, is about to go into the legislative procedure. That is really about providing, standardized model for these small, medium sized businesses to transition into that do not require the workforce or the stewards to necessarily become the owners. But by splitting ownership and governance rights, somebody else can provide the capital. They'll have some revenue share, but the purpose and the stewardship and the governance of these organizations will be led by the people who are close, to the company. So I we're seeing a lot of, like, regulatory things happening both online and offline, and it's just like, an interesting model across, sectors of the economy to, be watching right now. Right.
I think we're potentially seeing just, like, yeah, the further consolidation of, like, most businesses into already large ones that can be, of course, very problematic into the future. And so there is a need for some sort of alternative to to prevent that.
Yeah. Exactly. And to, you know, serve a purpose. That purpose whatever that purpose is that that business, you know, has been catering to, that needs to be maintained, and and not sort of be swallowed by a higher purpose that is, you know, to increase a profit for some external shareholder who has nothing potentially to do, or care about the the the actual thing that is being sold. Right. Right.
So, you've been doing, of course, with this research, kind of making connections with the crypto space because there are a lot of connections. Do you wanna kind of, like, outline maybe why why does exit to community matter to people? Or why what what does crypto bring to exit to community, that makes it interesting?
Yeah. So, I mean, for myself, it was a natural move. I've just been, like, in that space
pre PhD. Yeah. Also, just to say, you've been in, like, crypto, I think, longer than me because I've been being part of the Bitcoin space. Similar, maybe. I'm not sure. But you told me I remember you told me that you were, like, you know, going to Bitcoin meet ups in in Germany. I think probably before
before even I was, doing that type of stuff. I mean, I'm not sure. I came across Bitcoin in, I think, late two thousand fifteen, early two thousand sixteen. Yeah. Oh, like a year ago or something. And then but, I mean, I wasn't taking that very seriously. And then, yeah, maybe, like, towards the end of 2016 was, like, first encounters at Bitcoin meetups when nobody was talking to me. Yeah. So I kind of, like, stuck with a weird hobby. Anyway, so in that sense, it was, like, a natural, connection to to really try and make as the PhD came. It was, like, where's my cause? It is community owned, and stewarded organizations. How can we do that with crypto? Mhmm. And, fortunately, I started my PhD in a time of, DAO booms. Mhmm. So that was a really interesting phenomenon. And that was actually before, you know, this Exoty community did emerge as my main theme. It was it was already DAOs that, I thought were, like, a very interesting phenomenon. Before that, you know, I also like, the governance aspect of of blockchains was already topic of my master's thesis and, like, a question that had been accompanying me, or, like, to refer to your book terms, I think I fall into the third part of, like, blockchain as coordination type of mapping. And so so the question of, like, why is is Web three, like, an interesting space to to, observe and study when we're thinking about exit to community? For me, there's, like, three main reasons. The first one is the social norms that we have in Web three, which, at least myself, sometimes they just take for granted, this idea that decentralization is a really great thing. And, you know, you'll say that at a crypto conference, and everybody's like, yeah. Of course. Like, what are you talking about? And this is just not normal. I think in in many other industries, it's, first of all, maybe just not a topic of conversation. Like, people don't think about decentralization obsessively in all other walks of life. We do, and we all agree, despite our, you know, organizations being very different and their aims, like, super diverse, from the regens to the degens and whoever else. Everybody's, like, yeah. Decentralization. So that's the first thing, which in itself is a social norm that encourages this idea of sort of, or, like, at least is not opposed to the idea of community ownership and governance already with the, you know, one validator, one node sort of, vote model. So the social norms is the first one. The second one was kind of this question a little bit of, like, when we do exit, big, digital platforms to something that is community owned and governed, there's a practical concern that is, for me, like, oh, but, you know, like, then what sort of entity would that become? Like, is that gonna be this new entity type in Germany? Are you as a US citizen gonna be able to become a steward of that? Is it gonna be a US based cooperative? Is Europe gonna be happy with the sort of data protection laws that that co op implements? Is there, so so this weird thing that we've created platforms that are super international, global, like very much beyond the nation state, but they, are attached to organizations incorporated in a specific jurisdiction just seems a little bit at odds. So, I think the way that I like to think about it, it would be really cool that if you exit to community, a global digital platform, it should be incorporated, on the Internet is where we we come together and use it. Right? And DAO is very much, corresponding to that idea, you know, of, like, an organization incorporated on the blockchain first and foremost. And then, of course, we're attaching various, national legal or something. Exactly. But already with, like, the the model law, right, that approach of saying, like, maybe you don't have to incorporate a legal wrapper in any specific jurisdiction. Maybe your DAO just needs to be structured in a specific way so that national legislation, can recognize it as a type of organization that would be incorporated. So I think this is very interesting, and it's also, you know, interesting then to understand tokens as sort of cooperative shares or what have you. Like, just the the medium of a token as something that represents ownership and governance right in a specific organization as opposed to, you know, a a bureaucratic sort of like traditional, equity, agreement. And then, the last thing that I also thought was interesting, at least, you know, before this, crypto winter or bear market or whatever, here was the the thing that investors in Web three were very much on board with, organizations progressively decentralizing as I think, Andreessen Horowitz kind of almost coined that term. And they were, like, pushing pushing for this movement towards of everything. Of course, this is maybe not out of, not don't think they're evil per se, but, you know, there's also a I do. There's also a clear self interest in terms of the regulatory concern, right, that if your project is sufficiently decentralized, it gets exempt from all sorts of security regulations. They use progressive
literally, progressive language to kind of, like, benefit their bottom line.
Yeah. I mean, exactly. So it's, it's sort of, like, making sure that you're not getting into murky regulation. Right. Right. While also and this, I think, is important to point out, just by have like, creating a DAO and dropping a bunch of governance tokens to anybody who's used the protocol plus early team plus investors in many, many cases is not an exit to community because it very much does not represent this idea of relinquishing ownership and control, like cashing out. It's just, you know, it's adding a liquidity event. It's an IPO deluxe. It's yeah. It's very strange. So exactly. So the yeah. Those are kind of the three reasons why I think it's it's interesting to be thinking about exit two community in Web three in regards to digital platforms. Right.
To to to the to the first point about, like, the social expectations, that's interesting because, like, yeah, it's like you don't you don't even have to, like, pretend to be, I don't know, left wing or on the so or like a socialist or anything to be like, yeah, workers should own, you know, or like like the community should own, like, the businesses or should own, like, have a fair share or governance around, like, what we do with our resources and things like that. So it's been like a it's always really interesting to to talk to ostensibly very libertarian, very free market oriented people or people who believe that they are that, but then also talk about, like, worker ownership. Yeah. Like, it is not a contradiction in aerospace. Like Yeah. It's really and it's it's yeah. It's just it's super weird thing that, like, is often missed Yeah. Rather than, like I think exit community also represents, I think, an attempt at kind of, guiding guiding those, intuitions, I guess, of of of those types of people towards, like, probably what they would rather have than sort of like an Anderson Horowitz, you know, progressive decentralization type of scenario. Because I think there's been a lot of, like, disillusionment within the crypto space, and my feeling, is that a lot has to do with it with the influence of venture capital, and people just, like, not really taking it seriously as, like, a problem.
Yeah. Exactly. I think one other thing that, like, with this influence so I'm I'm not sure any like, this is my personal perspective on it, but, the problem is that the venture capital model in crypto is still such that if you invest and have ownership, economic ownership in a project, it also means you have governance. Right? Right? Like governance and a say, around how that project works. And this sort of meshing together of economic power and political power when it comes to protocols and organizations is a very, it's a strange thing. And then, of course, it's easy to say, you know, the VC influence, etcetera, etcetera. We've seen some, you know, weird phenomenon where VCs will delegate their governance tokens to, like, various university, blockchain organizations, etcetera, etcetera. Kind of like saying I don't I don't wanna, be messing up this governance. Like but just also by the way that our tokens work right now, if it was pure equity, then, again, we're falling into a different regulatory terrain. If it is meshed meshed up, it's you know, is it a security token or utility token? Well, governance tokens right now feel to people a little bit like both. So, yeah, we're we're having this, this this strange modeling of things that both creates a skepticism on the side of the community of outsized influence from the investors. Maybe investors don't even want that outsized influence in all cases. Governance is also a lot of work. Right? Like, somebody needs to keep up with all the the crazy forums and, and and then it's transparent so people are gonna know your opinion. So I think I think it's a very, it's a strange situation that we're in where a lot could maybe change if we were able to separate this idea of, like, yes. You know, you helped start this organization. You'd have a right to some revenue share, maybe in a capped way. It's not gonna be a 100 x overnight. But just because you gave money does not mean you get to say, where this project is going. And this so this, for example, you can structure in in traditional legal organizations, and it's also something that, for example, Open Collective is an organization I'm working with right now. They very, consciously did in when they were raising venture capital for Open Collective, the the founders said, you know, we're gonna keep all the board seats. We're gonna we're not gonna relinquish that governance power and that stewardship to the people who helped grow the organization. They have other rights, but not necessarily those.
Right. The kind of default in a lot of these investments has been that you get both. Exactly. And so the although there are legal ways to separate them, they're not very common, what I find. And they it's it tends to be that, like, whenever I hear about this, like, yeah, we had to kind of, like, customize everything, basically. They couldn't there was no, like, cookie cutter thing that they could because it's not a popular thing. A lot of VCs actually don't accept it. They will only have it if they have, like, real equity, real control, over over the business.
Exactly. And, like, recognizing that, that problem and, you know, like, I don't think Germany is so great. I just came across the fact that all of this is happening, and there's so many people working on it. You know, this new entity formed, like, that is exactly the problem that is being addressed because we're already able to separate, the rights that various stakeholders have in an organization. But, usually, it costs a lot of money. You need a bunch of lawyers to write very bespoke sort of contracts and and clauses and whatnot. And by creating, more of a cookie cutter, recipe, which, you know, could be a smart contract standard or whatever in our, in our terrain. It's a very interesting approach just to decrease transaction costs of implementing this and thereby maybe also Right. Facilitating the growth of these types of models. Yeah. Sure. And, I mean, even
it's great that Germany may pass this legislation, but it means but it's only in Germany or it's only in that national context. And I think when we're talking about competing with big platforms, these companies are transnational already. Like, their capital can go anywhere around the world whenever they want. But we don't really have an equivalent, kind of counter to that that allows for those who are working in it to kind of be able to compete with that or, like, to have their interests shown, within that type of context because there are too many, like, like, labor legislation is, like, at a at a national level, and it varies quite a lot. Whereas, I don't know, under neoliberalism, like, capital has been able to, create legislation around the world to allow it to do, you know, basically whatever it wants. And so I think crypto is this very interesting medium to where you can, like you said, reduce the transaction costs so that you can kind of as soon as you have the templates, the template is there. For anybody, it's the same cost. So you can choose then, do you want the the split sort of, economic and political power or the, the shared one, which you have more, more risk of, like, you know, influence sort of dominating over your business. I'm sure if those are e if those are equal, you have, like, more, incentive to choose what is more difficult otherwise, in that situation.
Yeah. I mean, I think, there's an interesting so it's not just Germany, right, that has this, new entity form. There are other existing entity forms that, you know, organizations are exploring. For example, perpetual purpose trust is kind of like what Patagonia did. Mhmm. So placing sort of the the company into this trust that is bound by the purpose. I think in Patagonia's case, it is, climate protection. Mhmm. Right? So everything that this company does, it is tethered to this purpose and, and doing, like, tethering down purpose is interesting because it's always, like, in relinquishing control, maybe as a startup founder, there's what a lot of people also talk about. You built this thing for a reason. Obviously, you wanna make money on the way, but making money maybe was not the the main thing. Right? And social startups have that sort of hybrid dual, purpose of existence. So, and the risk in many traditional exit models is is the fact that, there's always this looming purpose on the side, which is, like, get rich. Right? And money. And, and it in many, many cases starts to trump the original, idea, be it connecting people or, selling bread, or providing health care. And, so this is awesome. Maybe part of my PhD research or something that we've been doing within the blockchain gov, is is an understanding of, like, when you relinquish control, be it by exiting to community through a perpetual purpose trust or transitioning towards a DAO, we are increasingly seeing, how founding teams are trying to protect that purpose. Because once you give up, like, you don't know where it's gonna go. Right. And broadly speaking, in my thinking, I've kind of, like, been identifying, maybe four different types along, like, the the less ex pathetic dot, theory of how to tailor that purpose and maintain purpose of an organization through transition. The first one being maybe mostly the the social norm. So this would be traditional succession or in small communities, like a project that I work with in data. If you know everybody, you trust them very, very much. You trust that they will continue the purpose of this organization. So you don't have to enshrine anything in law or technology or, you know, do this complicated thing. You just have trust that the new stewards and owners, are gonna are gonna do, the right thing. Obviously, in many cases, you don't have that trust. Right? And especially if you're dropping governance tokens to thousands of people, like, you don't know them. So so what are other approaches? One of them could be like a legal approach, like a perpetual purpose trust or this new entity form where, where the capital, you know, is tethered to serve a specific purpose. Foundations do that, already. So you legally cannot, not go along that purpose. A third aspect that I think we're seeing more and more in crypto also in terms of this governance minimization, approach is to tether purpose in technology. So there's just certain things like parameters that we cannot change that are hard coded into our protocols, and that sort of protects, the continuous functioning of a project along its original trajectory. And then a final one that's interesting is this idea of writing a constitution. Right? Which a lot of wave three projects have been doing specifically when they transition into a DAO. Like, Optimism, we saw launched with the constitution arbitrum as well. You know, safe DAO, doing that very much, shortly after announcing the DAO, etcetera, where the constitution is this weird, hybrid that is both, like, very trust based, maybe a legal document. We have not seen them yet being disputed in court. And, to the extent that they can be enforced on chain also a technical, tethering of purpose and protecting of purpose. But yeah. So I think that's, like, a really interesting thing to consider throughout exit that legal entities are trying to do, but we have different means maybe Yeah. In Web three. Yeah. Do you have an example of that third one,
on hand? Like, putting it into technology? The purpose in the technology as a just something for for listeners to to think about?
I'm trying to think of a good example and I cannot.
Oh, no? What's a bad example?
No. So I think, part of the things like, they come in in in this idea, for example, in in maker DAOs, sort of when the peg, like, emergency situations. Right. Right? Who kicks in and what are the new parameters that you can now govern and vote on sort of thing that are usually shut down. Like, you you can't change them. That it's just a protocol executing, certain things. I know, like, other Internet also did a huge research around governance of Uniswap, and there was, like, one of the main things, or, like, one of the insights that was in that report was around, the idea and people at Block Science called the governance surface. So what are even, like, the governable areas around this protocol? And within the Uniswap community, as I read it out of the the that report was, like, people were like, yay. We have these governance tokens now, you know, very early sort of, move. And then they wondered, like, what can we use them for? And realized that in terms of, like, changing protocol parameters, it wasn't that much. So there's a lot of sort of off chain governance maybe in proposals that you can do, but, right now changing protocol parameters, there there's just not that much. And by not allowing too many parameters to be open to change, you're, you know, you're ensuring that that it's just gonna continue as it is. Exactly. So
maybe yeah. Like in Bitcoin, I mean, you could just say that's, the protocol of Bitcoin enshrines kind of, like, the the purpose of only having 21,000,000 Bitcoin or something like that. Yeah. Exactly. But as well, I think there's also, there's probably examples of, like, you know, project I mean, there are for sure. You know, just using within the protocol, like, funding streams towards, you know, public goods, quote unquote, in the crypto space that's sort of enshrined through through code.
Exactly. Like, yeah, Optimisms, I think sequencer revenue, the Yeah. Public goods network, etcetera. They're just gonna automatically do that, and that is part of the purpose. Yeah. And we can't change it.
Hi, everyone. If you're enjoying this episode so far, be sure to subscribe, leave a review, share with a friend, and join the crypto leftist communities on Discord or Reddit, which you can find links to in the show notes. If you're enjoying the episode or find the content I make important, you can pitch into my efforts starting at $3 a month on patreon.com/theblockchainsocialist to help me out and join the nearly 100 other patrons that contribute financially, which really helps since making this stuff isn't free in terms of money or time. As a patron, you'll get a shout out on an episode and access to bonus content like q and a episodes. You can submit and vote on questions you'd like me to answer, and I'll give my thoughts in roughly twenty minutes. The current bonus episodes have so far explored plenty of topics, including how co ops and DAOs relate, whether there is a socialist blockchain, a review of previous crypto events I've been to, and recently a video reaction to an episode of The Deepgram. Of course, I'll still be making free content like this episode to help spread the message that blockchain doesn't need to be used to further entrenched capitalist exploitation if we put our effort into it. So if that message resonates with you, I hope you'll consider helping out. And so one of the other things that you did that we, that I want to talk about is this recent paper on Web three workers, so titled Social Security for Web three work, a preliminary specification of the design and deployment of solidarity primitives for DAO contributors. You wanna talk about that a bit?
Yeah. I wanna talk about that, by starting out that saying that I didn't do that alone. So this was a research project that we did with other Internet, and I worked on it for almost a year or, like yeah. Like, almost a year together with Laura Lotte, and Nikkud. And, essentially, and and the the paper that you just quoted is kind of like the the final output Right. Of of that work, which had several stages. So maybe interesting to start out with what we, wanted to explore and why was this idea that despite there being so much talk about, like, you know, unstoppable protocols and autonomous code and, you know, people being like, you don't have human intervention in a true DAO, etcetera, etcetera. We're like, yeah. But, if you look at it, it's really still people, humans who are spending their working hours building and maintaining and growing, you know, and and using these protocols. And, sort of saying that especially now in a bear market, one of our key priorities as an ecosystem, if we wanna survive and and matter, and also be viewed as legitimate is to ensure that we can maintain that talent and, kind of prioritize building good working conditions for the people in this space because without them, you know, we don't have these technologies or they don't matter. So that was kind of the starting, assumption that we went in with. And, what we did then was, was to explore, has anybody, you know, written or thought about web three as a new work environment and, you know, the needs and desires of these new workers or at least not new workers, but workers in a new industry. And we did find a bunch of things, both from industry and academia. However, what we also saw, a lot of it was from the bull market. A lot of it was quite quantitative or, like, survey based. Very little of it was trying to surface, like, the actual, like, day to day sort of working conditions of people in the industry. So we took that upon ourselves, did a thing that is called workers inquiry, which is just like a research method, a Marxist research method that, you know, was developed to surface insights about what's it like to work at the factory from the perspective of the worker. And, yeah, adapting adapting that method to surface what it's like to work in Web three. And then, obviously, our ultimate goal, as I said, starting out was not just to say, oh, work here is great or work here is shit, but to to kind of propose viable mechanisms and specify them, to argue, this is what we need to do as an ecosystem to improve working conditions, to retain, talent and, yeah, kind of, like, ensure that this whole, mad endeavor continues, but in a wholesome way. Right. So and we did that by taking our insights from that from that empirical research and, discussing it with a bunch of experts, including yourself. I think along, along three lines that are like three angles that we thought or found were important to improve that was, psychosocial, stability, financial security, and, regulatory clarity. And, yeah, sort of the the insights that emerged from both the research and these discussions and, you know, further specification, what is summarized, in this paper, which we were very much hope that others will take and and implement. Yeah. And then maybe just like, how does that so I did that. It was not, it is related to my PhD because so one section is as very much that I argue that when you transition from a founder led founder and investor led startup that is maybe incorporated as like a company somewhere. And you have all these employees that have been helping you build it, that when you transition into, a community owned and governed DAO, in, in many cases that I research, one of the key priorities should really be that the people who are working, at this organization should not be terribly worse off. Mhmm. So yeah. And kind of, like, identifying so what do we need to do? Was was this, research informing,
my thinking there? Yeah. So just to, like, kinda make the connection of, like, this this thread that I think we're pulling on is that, we we we've noticed that, of course, big tech has kind of, been able to utilize kind of transnational infrastructure in order to upkeep itself and regular use regulatory arbitrage or whatever else, in a way to, main maintain its power. Platform cooperatives are an interesting potential alternative or using exit community to create a platform cooperative from another from a tech start up, is an interesting kind of, compromised solution in order to, like, build an alternative infrastructure. Crypto is interesting in that context because it allows for a kind of transnational form of of coordination. But what that means, because laws are written at a national level, means that those who work in, for example, in DAOs that, are transnational, they don't have necessarily because a lot of DAOs are not legally, incorporated. They don't have the kind of, like, worker protections that are standard for those who have, like, an employment contract with a company that is based in the country that they may be in. So there is this kind of, I think what what I've seen at least is a lot of people in Web three who do work in DAOs, experience a lot of burnout and experience just kind of like, they don't really have the same benefits as they would if they were in a, in a company that was, you know, with an employment contract, which can be good. I mean, for for some people, it's okay because maybe they get paid a shit ton in tokens, but then they are very, like, exposed to market swings and and and volatility. But, yeah, you don't have this you don't, like at least if you're in The US, you don't get health insurance through your DAO employer necessarily. There are, of course, other kinds of solutions to get to get around that. But a lot of these things that are kind of, like, taken for granted in employment contracts, you don't really get. And so there's I think the question that you guys are kind of also approaching it is how do you then, build in maybe certain kind of, like, labor protection that is native to the medium that people are kind of relying on in these, organizations?
Yeah. Health care. So I think I mean, yes. That that is precisely sort of the the question that we explored, and we came at it, and it's important in my perspective now to explore it from these various different angles. The first one being, so people experience a lot of burnout. What can we do about it, especially if they don't have health insurance or standardized employment contracts and potentially also not a shit ton of tokens. Mhmm. So the first thing that we can do, I think, is prevention. And that's very much also on the psychosocial stability angle that we went in from. So this is all about building healthy norms within our ecosystem. We don't need regulatory approval to, you know, say, hey. One day a week, we're just gonna, like, not be on Discord. Or, you know, and it it was, like, one one idea that always came came up. Like, what if we coordinated sort of, a proposal, cross DAO proposal, where contributors just say, okay, here, we're gonna put it to a vote, like, in this DAO, it's gonna be a Tuesday, and this one is gonna be a Sunday or Friday or whatever. We don't, expect anybody to reply to our messages. And and it's it's not a hard enforcement. It's just something that we agree to collectively do because we think it is, our rights. Or, you know, like, we're gonna make sure to check-in with, like, one person in the DAO once a week, and tell them to stop working right now. Or, you know, anyway, so there's all these sort of, like, norms that we can build, around creating better working conditions, and we can do that either by just doing it or by putting it into DAO legislation, for example. There's another aspect of, then maybe on the regulatory side. So when it comes to the fact that you are sick or you are burnt out, what can we build to allow you to access, you know, national healthcare services is, the interesting aspect, is for example, previously worked out and Tokyo or Opolis and in The US, right? How do we build these intermediaries or interfaces that kind of allowed our workers to do whatever they want in the web three space, but then, you know, kind of take care of the of the bureaucracy that needs to happen to translate whatever's happening web three, into something that is acknowledged and can fit into, these people having access to to health services in various places. So I think, like, building out services like Opolis and Toku, in a more ubiquitous, way, making them cheaper, that's something that we heard that's still quite expensive for contributors to to buy into them. These interfaces, I think, is a is a really important thing that, again, we can start doing. We don't need outside permission or consent, and it can tremendously help people and, simplify things. It's also not a new idea. You know, there's been freelancers, freelancer cooperatives, and, like, freelancers banding together, to make invoicing, and tax payments and insurance payments easier, for a long time. So, like, learning from that and building that in our, in our space. So now I've spoken about prevention, plugging into, you know, state based or, otherwise based, health services or security. And the third one, I think, that that also came out of this paper, is the idea of using the these technologies and tools, that we've created to sort of set up our own, security systems. And here, I think what was very interesting, we spoke a bunch, to people from the protocol guild, And they're already doing, something that I feel very much resembles anything that would be like web three native security, funds and grants in that you have a list of people, who have access to this pot of funding. You need a mechanism to fund that pot of funding, and then you need a way to spend it. And this pot these pots of funding could be a multisig or, you know, some sort of smart contract based account who's, who have different purposes. So one could be something like, oh, you know, when you have certified burnout, you get access. Like, the fund pays for your, for your therapies or yeah. I'm yeah. I'm not sure exactly or your your your sick leave, etcetera. So it's just like an insurance part. Obviously, all of these funds, like, it could be parental leave, mental health, sick leave, unemployment, what have you. All of these funds have, like, the same fundamental requirements is that we need a mechanism that somehow people believe is just or fair that, specifies who gets on the list and who doesn't. Mhmm. So who has access to that? We need a funding mechanism. Right? Like, is this this, insurance fund gonna be funded by part of the income, like a percentage of the income of the of the people who are on the list? Is it something like a protocol tax? We I just mentioned, you know, the sequencer revenue, for example, and the public goods network or, optimism or the layer twos. Is it does it come from validators? Does it come from there's a smart contract secured revenue, I think is an interesting sort of model to explore. So, you know, transaction fees from from, or fees collected by a smart contract, flow into this part anyway. So you need to find out who gets on the list. How does it get funded? And then the last one, how does it get distributed? Right? What is sort of like is there what is what do I need to prove in order to have access to how much of this this part? So I'm sick and I can't work for six months. Yeah. Sort of which proofs do I need to give? How do we do that in a privacy, dignity, preserving sort of, way? These are questions to discuss that are, that are interesting, but, you know, not impossible. And we have split contracts. We have, multisigs. We have funny money on the Internet. Like, it's it's cool to think about these things and also think about these things in a way that ultimately, like, if they work, can we open them up to other people, you know, who also not because they work in web three, but for various reasons, do not have access, to to, like, good, security mechanisms and standards and social protection. So, yeah. Maybe a last one, that I wanna mention, that could also help if we don't have the interfaces. Right? That was the sort of, like, plugging into regulatory things. What, or it goes between them is an idea of, like, what could a standardized contributor agreement look like? You know, and how do we enshrine that maybe both off chain and on chain? We heard from a lot of contributors. Some are just contractors. There's some who are full time employees depending on the legal wrapper. There's some, who have no agreements. Some know they should be paid. Some are like, I don't know. I just did this thing. Maybe I'll you know, who knows? Yeah. Yeah. How do we standardize that? And is there a way if we standardize it in a well that, external regulators will recognize it, you know, as a Right. As a work contract? And then without these intermediary organizations like, Opolis and Toku, can you plug into, I don't know, income tax schemes and,
social security schemes. Yeah. Yeah. No. I think it's it is an interesting, problem space. I think, like, if if, you know, Web three wants to continue to exist, these are just, like, very serious problems it has to contend with, which I find, yeah, sometimes the the solutions are are, are far and few between. But also I also want to say, that I'm very appreciative that you guys took my concept of solidarity primitives, as part of as part of the research. Because that was that's a concept that I just kinda, like, I couldn't I I created for, you know, what we're building with with Breadchain as a way to kinda describe it and use just like a play on, you know, the the use of financial primitives in in DeFi, to kind of just, like, explicitly talk about, yeah, that in fact, we are, like, encoding, something political in smart contracts that are, you know, moving real economic value to people, to places, that have consequences that we have to that we have to deal with. And so
that was very cool to see that, I suggested that on Slack. And No. We loved it. And I think I think Laura brought it up first. She was like, let's write a white paper of solidarity primitives for for Web three. And we were like, yeah. Amazing. And then, I don't know, like, you know, obviously, I've been following the Bradshank Cooperative and all these blog posts around that very much informed the thinking. Although our take was then, I think twofold, like, the the term primitive. Mhmm. Somehow, we intuitively understand in the financial Mhmm. Space, at least in Web three, that's what it feels like to me. Why is it so hard to imagine in other places where it still has, like, some fuzzy edges on, like, the definition? Is this a primitive? Is this mechanism? Is this, like, what is it? Mhmm. And how do you know the difference? I know you define it as, like, very underlying sort of concepts that can be implemented various ways. And then, also, the idea is is does these are these just technical primitives? And, obviously, through, you know, talking to yourself and others and trying to explore, like, what can we do, realizing very fast that no. If if it's about social security and creating good working conditions, these primitives need to think broader than the the technical realm and plug into all these other
domains. Yeah. Yeah. I mean, I think I think the reason it's more apart I mean, part of the reason why it's a little bit more difficult, is that, like, with financial primitives or DeFi primitives, like, there's always there's already, like, an assumption. Like, this is made to make money. And that's not considered, like, a social thing. It's just considered as, like, a fact. You know, it just like it it pervades everything, and so you don't have to, like, think about it so much that that's just, like, given versus, with the concept of solidarity primitives, like, you have to be because we're saying we're not profit oriented, it requires a caveat. It requires, like, an intentional, like, rejection of the behaviors that are encouraged under capitalism, I guess, is kind of how how I see it. Because then because there are all these projects, I mean, that that kind of co opt kind of progressive language or, like, small things that then that makes them look like they're actually really, really good people or whatever. That are just sort of, like, I don't know, funneling money towards charities, which, I mean, you know, to maybe someone who's more of a liberal listening to this, like, oh, but isn't charity, like, a good thing or it's, like, a solidarity? Whereas, I think, taking the more radical approach, my feeling is that I would rather there that charity not exist. Like, charity is not even a useful, thing in our world because we've already like, we have we have it ingrained in our society that, these are not problems that we have to just, like, donate money to because donations is just not like a it's not a sustainable system at all. And so, like, by, ingraining it into, into technical code, like a Blockchain or a smart contract where it is it is going to, run no matter what, you know, theoretically, then it's it's more than just like a you can you can do things more that are not just, like, charitable donations. Because, like, the security of, you know, people who are workers cannot run on just donations, and they don't run anywhere just based on donations. They run on largely kinda like state legislation and state institutions or other types of institutions that have some sort of sustainable way to keep itself.
Yeah. And that's why I think this whole, I mean, in crypto, we call public goods funding is so like, it's so important, and it's so interesting because, charity is not a sustainable Right. Business model. And, you know, I don't know. Sanctions come in, interest is lost, etcetera. I've been I you know, I have also half of my background in South Africa, and recently learned from people running the, it's a it's a great initiative. It's around, it's a law clinic in, in Johannesburg that is protecting the right to protest. So they provide legal services for anybody who is protesting. South Africa has one of the highest protest rates in the world. And anything, you know, any incident that happens during a protest, like protecting these people, from it and providing legal services. And one of the big, you know, foundations, and we don't hear about these things much, that used to support this legal, law clinic is the Open Society Foundation. Right? But Open Society Foundation recently, changed their mind. There was more pressing issues, and they've decided to retract all of their grants from, from South Africa, at least in that region. And this sort of project is very much dependent on being independently funded, like, is part of their need and, you know, maintaining legitimacy. And I think there's a big question, and it's not just the Open Society Foundation. There's a bunch of big US foundations that have decided, no. We're not gonna fund this anymore. Wow. Which, you know, goes beyond charity, which sometimes I think is like the little basket that goes around church or, you know, and a kind gesture. It's the philanthropy, which is like institutionalized charity that is just not, not reliable and secure. And, Can't depend on just, like, the generosity of a billionaire. So Yeah. Exactly. So, going beyond those models, I think, is so interesting. And, I love this whole idea of, like, hard coding it. On the other hand then, you know, with Gitcoin and and whoever else, we've seen that there's so many people who have need and rely on charity or philanthropy or grants. And and Gitcoin, you know, used to be great and projects lived off of it. And, like, in the last rounds, I've heard from so many people who spend all this time and effort and energy, for their Gitcoin grant. And then just because there are so many people applying, right, it's, it's a similar chunk of money that gets distributed into smaller pieces. So yeah. How how do we counter these models? Maybe again here, there's a is an interesting overlap. Of course, I think about exit to community all the time, so I see it everywhere. But, it's really the idea of building, civic or public infrastructures through, the for profit model, is something that I've been talking about a lot, especially in my working group. I'm doing this fellowship at the Weizenbaum, Institute in Berlin right now, where a lot of people in my working group are thinking about civic tech, like, not in web three, but that is a, a topic. And, one of the big questions is the survival of sustainability of civic tech initiatives. Now in many of the cases that they are looking at, it's maybe like, you know, community air, quality sensors or, any any sort of grassroot movement that uses digital technologies and platforms. Many of them are grant funded. They run for a few years. There's this evaluation period. Maybe there's one follow-up grant or something, and then and then they stop. And then what happens there I mean, what remains is sort of networks and ties be be amongst the people, but the thing itself just ceases to exist. And I see, for example, Open Collective very much as an, opposing model to that where the Open Collective platform is also something that many collectives, grassroot organizations, etcetera, rely on very much. For me, it is an open source piece of civic technology almost, but that was built, not through public grants or donations, but as a as a business. And now there is the question of how to ensure the sustainability of this piece of civic technology where this for business, like or the the business sort of model just has way more options than if it had just, you know, if this had been, run by, by a public leave funded or, donation based, approach. So I think that's very interesting to think about the sustainability of public goods, of civic technologies, of, whatever else. And that requires both building them differently maybe from the start with, financial sustainability also in mind, plus thinking about, like, mechanisms that go beyond, the the the whims of billionaire Right. Funders. Yeah.
Yeah. Yeah. Yeah. Yeah. There's, yeah, there's, like, Bitcoin is nice, but clearly there's a need for, you know, more types of solutions. And Protocol Guild, I think, is one of them that is that is quite interesting. And they've been able to I think because they focus specifically on Ethereum core infrastructure and development, which includes a lot of people who, like, know that that is key to the continued existence of Ethereum, that's, they've been pull off they've been able to pull off quite, some pretty pretty cool things. I hope to have Trent on soon to talk about it. I look forward to listening.
But I think even in the protocol guild. Right? Like, the approach to funding the protocol guild right now is a is a little bit setting a social norm that it is the right thing for you to do. That if you're building on Ethereum and you're raising capital or you have all this revenue, you should
Right. Right. Donate.
You know? But these social norms can They can just be there quick. Exactly. Especially in bear markets, especially when there's high pressure. And for that reason, you know, I think, things like yeah. The the I'm I'm very curious about how the public goods network and, like, optimism sequence of revenue, etcetera. These, like, protocolized income streams, how they play out and if they matter.
Right. And yeah. I have yeah. And then whether or not I mean, sometimes just like the the of course, we've talked about this, but, like, the public goods narrative tends to be a little bit of a cooptation of, like, as if they're doing something good, or something, like, very helpful to the to the community, but ends up being to where, for example, you know, we're funding public goods, but only for if you use our product, you know, which is not at all what then what public goods are. But, yeah. Yeah. Yeah. No.
I mean, I I think we agree on, like, this this term is just being, stretched very, very thin, I think, in our community. But on the other hand, it's also it's, it feels like it's gone so far that you just say this public goods, and there's this association that pops up in everybody's mind. And then it's very easy to move on, I think, like, from from my own experience of being like Right. Yeah. Public goods funding. And then we get into, like,
The real stuff. Yeah.
Yeah.
Cool. Well, it's been about an hour. So is there anything else that you wanted to, plug or that you wanted to share with people?
Nothing specifically, for now. I I would like to reiterate to check out that white paper or the that piece that I'll link it. Thank you so much that, yeah, Nick, Laura, and myself wrote and, really, really encouraging and calling, people to pick up some of the suggestions. Please reach out if you have questions. But, you know, ultimately, the impact that I would love to see with this work is that people start building some of these primitives or mechanisms. And, you know, working on them, that's that's something that, as a PhD student, it's beyond my means or, expertise. But, as a PhD student that hopes to graduate one day and maybe start working. You know, I I have a very keen interest. Tara's future employer. Yeah. This is enough. These are the mechanisms I need. Right. Right. But yeah. No. That that would be fantastic. Like, that, I think would be so meaningful. And it's also it's a great service and something that we also spoke about that, it's not just cool ideas of products to put out for the web three space that people need, you know, like contributors have told us that they want this. I think it's also a move towards, a time where this space is definitely facing a huge crisis of legitimacy Yeah. Across the world. And people are asking, what is the use case? What is what is the good thing that Web three is doing? And, you know, it's it's hard, to show. But I think if we show that we have goodwill and we have mechanisms and very clear ideas of how to improve working conditions for people that are freelancers in Web three and beyond, then then that is something that, like, regulators and policy makers can agree with. This is one of their core, tasks. Right? So I think it's also just opening a conversation around legitimacy and being a space that cares about people that regulators also care about. Right? Mhmm. So so yeah. I think picking up some of the ideas in there is a is a is a business opportunity, a great service to me, and maybe also the broader ecosystem.
I hope this is a hard sell. Yeah. Yeah. Actually, I have one more question, but I know it's gonna open a can of worms. Oh, no. Should Web three workers start a union?
Oh.
Based on your your work and research, I know you have some thoughts on it.
Yeah. So I think, like, that it's been a really interesting question that's come up a lot, and I think one of the the, the nicest thing about about it this is the question that comes up most, and people are enthusiastic about it. And people are like, let's start unionizing. And this is something that I love, to have that resonance. But personally, I'm skeptical that unionization is the right way to go at the moment based on this research, for various reasons, like the first, most obvious reason is that unionization, in many cases, will very much depend on contributors coordinating. And they do it. Right? Like, they start the union. It's not gonna be a company coming in and doing it for them. And coordinator, contributors, like, one of the key findings that we had, like, they are they are overwhelmed with the amount of coordination that they're doing all day. They are, in in many cases, burning out. They know people who aren't burning out. Placing this added burden on them to improve the working conditions is severely gonna not improve working conditions, I think, at least in the beginning. And it's it's just a burden. It doesn't seem like the immediate thing to do. Like, you know, we're making things things perhaps we do first. Exactly. We're making things worse for for the the people that we're trying to make things better for. And we're also placing the burden of making their own lives better again on that same people. Whereas I think, you know, a lot of other stakeholders, can have a lot of impact, before that. So so that's the first reason. Like, let's not put everything on the on the contributors and communities organizing. The second thing is the idea of unions is very much the idea of workforce is antagonizing their employers. So Amazon efforts of unionizations would be workers uniting together to antagonize Amazon, the company, in order to collectively bargain for better working conditions. Now the question is that if you work for a DAO or a protocol or a smart contract or just an open source project in the ecosystem, who is that stakeholder that you're antagonizing? It becomes very, very murky. So maybe, yeah, to close off the this kind of worms, and not spend too much on it. One interesting alternative idea that, you know, we've been exploring and coming across is the idea that instead of unionizing, what would a guild model for, contributors look like? And and yeah. So so looking more down the guild route, which is just like skilled work people or like, who see themselves as the skilled workforce, for hire, for various services, how can they collectively use their power to set prices, conditions, you know, engage with regulation, etcetera, is is an interesting alternative approach to the unionization. So I really appreciate the enthusiasm around it, and Yeah. I love it in so many contexts. In the right place. Yeah. No. And I'm, yeah. I'm I'm so for it, but, I'm not sure it's the most impactful thing to do in Web three at the moment. Meet a smart contract developers guild, community manager guild.
Yeah. Yeah. Exactly. That as a as a starting point where at least there's a a place where people can can talk about their their working conditions in the first place. That's, yeah, as a as a stepping stone perhaps to if it makes sense.
I mean, exactly. It's just it's a different form of collective bargaining as well. Yeah. Right? Yeah. That does not assume this, this employer to, for example, antagonist.
Yeah. Right. When your employer is, like, an anonymous group of kind of token investors, then it's it's hard to there's no central point that you can kind of attack necessarily to induce higher wages. I mean, I think in a lot of DAOs right now, there is, but ideally, there is not. Sure. For sure. Yeah. Yeah. Yeah. Yeah. Yeah. That's true. I think part of I think, actually, if I think if there were to be labor unions in Web three, it would disprove the decentralization.
That's an interesting question. But yeah. Yeah. Yeah. No. For sure.
But yeah. Alright. Thanks so much, Tara, for coming on. And, yeah. Is there do you wanna plug, I don't know, your, your social media or anything?
Sure. I'm terrible at it, but I do, from time to time, try to repost things on Twitter, at m p g underscore d d.
So yeah. Cool. Thanks so much.