andrew beal talks governance 2.0 (an interview)

Welcome to the Armada Podcast, where we are focusing in on DAO governance. Let's hop into the show. If you could start with who you are and what you're working on.

Sure, thanks for having me. My name is Andrew Beale, um, and I've, I've been in the crypto space for about 8 years as a lawyer and consultant. Most recently, um, uh, was the strategy lead for EY's blockchain team and, uh, recently stepped away from that post and currently focusing on, on DeFi. I also write a weekly newsletter at 30,000 Feet on Substack.

Yeah, and that's actually how I found Andrew's work. I— there was, I think, your post number 13, and it was just really awesome thinking about the kind of Governance 2.0, and I really wanted to talk to him about that thinking and kind of go a little bit deeper. And so I appreciate you taking the time and writing. It's super awesome to read your newsletter.

Thanks for reading.

So let's talk a little bit of a curveball, but I'm doing a tradition on the podcast, which is which fictional character would you like to have dinner with?

So I'm a, I'm a huge fan of The West Wing, which is probably dating myself, but I guess for listeners who aren't aware, this was a, you know, a political show that sort of featured the, you know, the White House administration. And I believe it started maybe in the late early 2000s, perhaps maybe late '90s, and went for, you know, 7 or 8 seasons. But I found it later and, you know, bought the box set and watched the episodes once it had gone off the air. But my answer to this question is I would love to have dinner with the president in the show. His name is Jed Bartlet. He's played by Martin Sheen. And I just, you know, I found his character to just be somebody that's, you know, high integrity, you know, but also very worldly. You know, I would love to, you know, love to talk to or have dinner with, you know, several heads of state. This is just my favorite, you know, fictional head of state. So, so yeah, Jed Bartlet from the West Wing.

Such an interesting choice because it is a, you know, a real person, but it's like a caricature of a person. And so it's like, that's such an interesting choice. And I love I love the question because I think it highlights elements of our personality and our character. So appreciate you kind of going down that rabbit hole.

Oh, absolutely. It's a fun one.

So for listeners who haven't read your work and specifically this kind of Governance 2.0, and I believe you had a slightly different topic, I think it was collapsing and expanding, but how would you describe what Governance 2.0 means to you?

I guess to set the backdrop here, governance is a critical component of distributed systems, decentralized systems, right? So it's a topic that's been front and center in crypto since the beginning, right? Even blockchains and assets like Bitcoin, right, have a governance component to their their network. Some governance processes are just more robust than others, right? And I think as the technology has evolved over time, the need for more robust governance mechanisms has grown with the tech. So that's, you know, that's sort of the general backdrop of this. Now Governance 2.0 implies that there was a Governance 1.0, so maybe I'll walk through that sequence first. So the goal for, you know, a lot of these decentralized networks is to operate in a decentralized way, and the prominent way that's, you know, that has governed a lot of these to date has been passing voting authority control over the network over to the token holders, right? Mm-hmm. I think anybody that's either involved in this space or invested is aware that a lot of these tokens are quote unquote governance tokens, right? And so holding those tokens entitle you to, on some level, participate in the governance process, right? The decision-making of the network, right? And the analogy here is, as a As a citizen of a state or a country, right, you have the right to vote, to elect your leaders, you can vote on issues. And so a similar thing exists here for these decentralized networks, right? And so for a long time, the governance mechanism was fairly crude and it was all decisions are made by the token holders. And I call this Governance 1.0 because while that is sort of the first iteration of decentralized governance, it's by no means the end state and it's not particularly efficient. And so I guess maybe let me unpack that a little bit. When you— well, let's, I guess, let's talk about just sort of corporate governance generally, I think that's probably a good foundation here, right?

Yes.

So if you just think about a company, and so think about a large organization, right? Like Tesla or Apple or Microsoft or Facebook, right? One of these large companies, they have a very established governance structure. And to put it simply, right? It's a hierarchy. Employees and managers that make a lot of day-to-day decisions, very functional-specific decisions, right? If you look at an org chart, you have, you know, your finance department, your operations department, your technology and product and engineering and legal, and most major companies are structured that way, sort of functional division. And you have your employees and managers that are making those day-to-day decisions. And so that's one tier. So you know, think about it as a layer of this governance structure. So the first layer is, you know, your employees and managers, and then above them you have your executive team, right, that is overseeing those day-to-day functions, right? People are reporting up to them, and— but they have outsourced a lot of the day-to-day functional-specific decisions to those respective teams, right? And that's a much more efficient way of doing it because one person, the CEO, so just simply cannot make all those decisions, you know, on a daily basis. And above the executive level, right, you have the board. And the board is generally tasked with overseeing the performance of the executive team and the management team, right? Mm-hmm. And they do not usually make day-to-day decisions, right? They make quarterly decisions. They'll make you know, sort of broad, high-level, you know, strategic decisions. And then above them, you have shareholders, right? If it's a, you know, if it's a company that has shareholders, and shareholders vote on very specific things, things outside of the ordinary course of business, right? They'll— shareholders will be able to vote on new directors, for example. They'll be able to vote on a merger or an acquisition, right? So things like that, right? Things that are big, high-level, outside the ordinary course decisions. Right. So to summarize, right, companies have a very tiered structure of decision-making and it's evolved this way because it's proven to be the most efficient way of decision delegation, you know, right? One person at the top of the food chain, like a CEO, just cannot make all these decisions on a daily basis, right? So they've built almost like a pyramid, right? And the decisions cascade down to the different people below. And so that's the governance structure that exists in corporate America today. And if you compare that to the governance structure that has existed in the past in the crypto industry for these decentralized networks, right? There's really just one, there's one layer of decision-making and it's token holders. And so I think, you know, you can, you can, you can look at how different those are and, and very quickly see where token holder-based decision-making is going to break down. Right. Because all decisions that need to be made rest on the shoulders of this one layer of stakeholders. And if you dive into, you know, who is actually in that token holder group, right, well, it's certainly the founders and employees of the protocol that developed it. You usually have investors, right, and probably some advisors, but you also have a lot of speculative investors who have purchased the token after it's been released. And, you know, that group looks very similar to the makeup of shareholders in a publicly traded company, right? You know, it's sort of a grab bag of all those people, and a lot of them, you know, outside of the core team, have no interest in participating in governance, nor have the time to do it, right? So there's actually a small group of people who are really interested in making these decisions and are actually in a position to make informed decisions about the future of the network, right? You know, I don't think anybody that's listening would agree that it would be wise to delegate decision-making about the future of a large DeFi protocol to a group of speculative investors that don't have insight or the background or the specialized knowledge to, you know, to make that decision, right?

Right.

So you want the decisions to rest on the shoulders of people who are in the best position to make them. And when you have just a single layer of decision-making, like a lot of these protocols have had, you don't have that. So that's Governance 1.0. And Governance 2.0, circling back to your question, sorry, this is a long loop back.

No, and it's important because your writing is very comprehensive and lengthy, and I'm asking you in short format. So like, by all means, yes, Like, yeah, take your time. And yeah, so let's talk about then Governance 2.0 in that regard.

So Governance 2.0 is the next, what I consider to be sort of the next phase of this decision-making structure for a decentralized network, right? So, and again, I think, you know, if for listeners here, just imagine, you know, one of the more prominent DeFi protocols, if you, if you're, if you're, if you want to think about this in the context of an example. So Governance 2.0 is the expanding of that decision-making structure back towards something that resembles the corporate structure that I laid out a minute or two ago, right? So you have multiple layers of people and decision-making, and there is some amount of delegation that happens. And so here's a great example that you're seeing in the market today, grants committees. So protocols for years have issued grants to their community, usually to developers, right, who are building tools or applications or building on the, you know, the technology using APIs, right, that add value to the ecosystem. And now we're seeing protocols form specific committees to manage the grant-making process, right? Which, you know, if you just sort of read that headline or hear it, right, it sounds pretty benign, maybe not that interesting. But if you think about that in the context of this sort of Governance 2.0 evolution and analogizing it back to how, you know, more sophisticated corporations make decisions, right, you start to see that, okay, we're now— we're adding another layer of decision-making here, right? So the token holders have decided that, okay, the grants committee, and whether it's 5 people, 7 people, 9 people, We are delegating decision-making over the issuing of grants to the community to this group of people, and that's all they're going to focus on. And they will request a budget, we will grant them a budget, and then they can spend that budget without coming back for additional approval, right? If you think about that, that sounds very similar to how a specific function in a company operates, right? If you're the marketing team at a large company, at the, you know, towards the end of the year, you're gonna put together a budget for the next year. You're gonna submit that budget. It's either gonna get approved or, you know, or tweaked. And then at some point your budget's gonna get allocated to you and you will have X amount of dollars to spend in the next calendar year, right? And so the, you know, we're, The grants committee, I think, trend that we're seeing very much resembles, you know, that, and, you know, it's worked really well for the protocols that have rolled that out. And so I think we're gonna see more and more protocols start with things like grants committees. Where does that go? Well, the next example that we're seeing in the market, there's a few of these, not as many grants committees, but a few of them are treasury management committees, right? This is another function that has, has not been optimized to date. And so I guess for the listeners who aren't aware, a lot of the DeFi protocols have sizable, sizable treasuries at their disposal, and the treasuries are generally comprised of the native tokens of that protocol, right? So if you're Uniswap, your product, your treasury largely consists of UNI tokens. If you're Compound, it largely consists of Compound tokens. The same for other protocols, right? Um, and that is their purse that they can use to continue to fund the development of their respective ecosystems. Um, and for the last few years Those treasuries, I think folks would agree, have not been managed or used as wisely as they probably could have. And I don't say wisely to say that they've spent money on the wrong things. They actually just, they probably haven't been spending as much money as they probably could have, right? Right. I think they can be a lot more aggressive, but being aggressive with with all that money requires you to have a plan and a strategy, right? And so we're seeing the introduction of these treasury management committees who, just like grants committees, will be comprised of, you know, a group of individuals, 5, 7, 9, 11 people, and they will be responsible for first, you know, coming up with a strategy for managing that pile of assets and then executing on that strategy, right? So, you know, just to put some, just to put some, you know, some meat on this bone here, right? You know, one, you know, if the strategy is we need this pile of money to last as long as possible, right? So it needs to exist in perpetuity because we believe our protocol is going to be around for, you know, decades and decades and decades. and this treasury needs to continue to fund the maintenance and development of the protocol, right? Well, we need a strategy that's going to, you know, if we have $1 billion in our treasury today, we need a strategy that's gonna, at a minimum, preserve that value over that time horizon, or if possible, invest it in a way that actually increases the value of that over that time horizon, right?

Right.

So another great, I guess, another way to think about it too is, you know, it's sort of the same approach that universities have to managing their endowments, right? They have a bunch of money in their endowment. It's used for scholarships and other things, but, you know, that is very much of an asset that they want to maintain and invest and grow over time. And I think a lot of protocols are going to take the same approach with their treasuries. So, you know, sort of zooming out, right, we have— first thing we saw was grants committees introduced, and I think it's— I think there's broad acknowledgement that those have been successful and we'll see a lot more of them. We are also seeing more treasury management committees, and I think, you know, assuming they, you know, sort of follow suit, right, those will be successful, and I think we'll see more protocols adopt adopt that structure. And then, you know, those are 2 dominoes that fall, but I think there's a long chain of dominoes after that, right? And so what is, you know, what is the rest of that governance 2.0 domino chain look like? I think you will see more and more of the functional areas of sort of protocol management, right, get delegated down to a specific committee, right? So you may have, you know, a technology committee, you may have, you know, you will still have your grants and treasury management committees, but you may have committees for talent, right? Sort of the equivalent of like an HR function for these protocols because they need to hire people and contractors just like companies do, right? So for anyone who is interested in, in, you know, getting a glimpse of what this could look like, the Yearn protocol proposed a structure very similar to this a couple weeks ago. And it will have a A governance structure looks very similar. Holders at the top, and then you have a series of functional, very specific things. You know, and I think this is really seeing the sort of recreation of a lot of things that exist on, on the smart contracts. Managed by, you know, this company that has, you know, that, you know, where everybody comes into the office and, right, you know, seeing each other face to face, right? You really can accomplish a lot of this stuff in a, in a very distributed way leveraging this technology. So yeah, I think it's a really exciting development. I think it's probably one of the most exciting developments in DeFi right now. And, you know, for no other reason than it's going to make these protocols more efficient. And if they can operate more efficient, they can grow faster. And, you know, I'm— I think these are the future of financial utilities, the future financial global utilities out there, right? And but to achieve that scale, in that footprint, they need to operate very effectively. And I think this is just— this is one of the missing pieces, and I think everybody's, you know, moving in the right direction.

Yeah, how would you— like, I totally agree with your general kind of view of how we're progressing, and the thing that I keep kind of hearing in the back of my mind is this sort of like cynical voice as it relates to DAOs. And I just can't help but think, like, is this humanity trying to take an existing model, kind of holding on to what we know and mapping it onto this new toolset? Whereas I felt like DAOs and kind of the principles and the inspiration that's behind that vision is sort of being slowly eroded away with this hierarchical structure. Do you feel like those are at odds? Is this a process of efficiency and we strive as humans to drive efficiency into our organizations and this is sort of the natural flow? It's almost an entropy of sorts. Or is this a cynical bet that, you know, hey, DAOs are aspirational, and there's probably some key use cases around co-ops or nonprofits or something like that. But the general, the big bulk, 80% of, you know, institutional money processes and sort of these digital organizations will have the structure that's sort of in this Governance 2.0 world.

That's a great question. I think the— well, the, you know, the genesis of DAOs, you know, and I think folks in the, you know, a lot of folks in the Ethereum community might not know this, but I think DAOs, you know, DAOs were originally proposed by Daniel Larimer, right, who originally, you know, was the founder of BitShares and then associated with EOS. And I think it was back in 2013 pre-Ethereum, pre-smart contracts, Daniel proposed this idea of a decentralized autonomous organization, or I think he called it corporation, so maybe it was DAC back then, right? So the acronyms changed a little bit, but the idea— Sure. The idea was the same, and it was really the principle behind a DAC or a DAO is really how can we create a decision-making structure amongst a collection of people who are unknown to one another in a way that, you know, allows us to sort of not trust each other and still make decisions, right? Mm-hmm. Which is, you know, Which is very ingrained in distributed systems and blockchains anyway, right? So to me, you can remove the ideology out of a DAO or a DAC, right? And just look at the value proposition of it, right? We're trying to take a group of people who might not know each other and might have different interests and are trying to create some sort of structure so that they can make decisions in the context of blockchains and protocols, right? It's about sort of managing and evolving these systems. And I think if you look at it from that standpoint, ideology removed, right? This is a DAOs and you know, the smart contract versions of them, which we have now, right, are really— I think about them as just sort of, you know, this almost like a framework, right? And we can apply this framework however we want. I'm a pretty strong believer in, you know, the decision-making hierarchy though. I think it's proven to work very well for companies, you know, traditional corporations, and in particular large companies, right? You know, if you have hundreds of people or thousands of people that are all, you know, working towards a common goal, you have to have some specialization. you have to have some delegation, some division of responsibility, some reporting structure, right? Otherwise, it's very, very hard to— it's very, very challenging to make decisions quickly and move fast. So, you know, I think that's why our governments resemble that structure. It's why our largest companies, you know, resemble that. that structure. And I think it's why, um, I think it's why a lot of these protocols have— are starting to adopt this structure. It is— it's the, the flat approach has proven to be problematic the larger that you get and the more decisions that need to be made. Um, you know, you can look at a startup and I think understand, um, understand why some structure is helpful, right? Um, if it's just you and a co-founder Starting out, right, you can be flat and you can still be very efficient, right, because there's only 2 voices in the room and it's easy to come to a consensus, right, and pick a path. As you start to grow though, right, whether you're 10 people, 20 people, 50 people, 100 people, that flat structure starts to become challenging because incorporating everybody's voice and opinion, and then if there's no single person making a decision, right, then you have you know, you have to rely on the crowd to sort of come to consensus and, you know, sometimes that just doesn't happen, right? So it's nice to have, you know, one person or a group of people who are tasked with, you know, sort of making a final decision and getting all the information they need to make that, right? So I'm optimistic that if protocols do adopt more structure and do implement this sort of decision-making hierarchy, that they will be able to make decisions faster. Those decisions will be made by people that are in the best position to make that decision, right? Like, they have— they're— they can specialize, right? We can, we can have, you know, people who, who know about treasury management make decisions about how to spend the treasury. We can have people who've managed grant programs, issue grants to the community. We can have, you know, HR professionals, you know, manage the talent component of this, right? And so, you know, you would think that decision-making would improve if you have more specialized people making those decisions. You can also do it more efficiently, right? We can make hundreds of decisions at a time as opposed to maybe just 5. Right?

Right.

If we have— if we're delegating it, you know, to a group of people. So, and I think specialization and that ability to scale decision-making allows these protocols to get really big and still be efficient, right? You know, and I have this I think a lot of people share this vision, right? Which, you know, whether it's Uniswap or Compound or Maker or, you know, pick your DeFi protocol, right? Some of these are going to become trillion-dollar organizations. You know, and I think it's almost inevitable, right? They provide so much value. They are so critical to this financial system that's built on top of these public blockchains, right? That they really do become a a utility. And for them to really be trillion-dollar organizations and manage a community of thousands of stakeholders, right, and manage hundreds of millions, if not billions of dollars of revenue, which a lot of these protocols are already generating in fees, right? You have to have scale decision-making and specialization. I just think these protocols will collapse under their own weight because they're going to get really big and they need to have a governance structure that scales with the size.

Yeah, I totally agree with that. I heard a good proposal, for lack of a better word, that DAOs are really sort of a limiting kind of mental model that perhaps we should actually use a phrase like digital organization or digital native organization to sort of describe that. When I hear you talk about Governance 2.0 and the scale required to get there, my mind kind of thinks of that kind of proposal of saying, yeah, perhaps DAOs is a kind of local maxima of describing this progression to digitally native organizations. And maybe we shouldn't ascribe as much to that phrasing as much as just building the most efficient, impactful organizations we can.

Yeah. And I also think it's probably helpful to— I think it's almost implied when you hear DAO that there's going to be one group of stakeholders operating within one framework, and everybody is going to make it— everybody's involved in every decision, right?

Right.

I think that's probably a pretty elementary way of thinking about DAOs, right? Because if you look at how a lot of these governance protocol governance structures are evolving, right, the committee themselves are DAOs, right? So you can have a DAO that's managed by token holders, but you can also have a, you know, almost like a sub-DAO, right, you know, that is managing a smaller group of stakeholders for a very specific, you know, function, right?

Right.

And so, you know, it's— you end up with this sort of hierarchy of DAOs, right? Not just one.

Right.

And, you know, so I think we're— we still get the benefit of of the structure, but we can also apply it to a, you know, sort of more traditional kind of governance hierarchy, right? So,

right, yeah, there's, there's like kind of 2 words that are coming to my mind, um, when I'm thinking about this sort of— I'm gonna call it the breaking down of the DAO to this digitally native organization concept. But there's still, I think, to your point, as you sort of fractalize this organization through DAOs, I feel like you're still adding transparency, accessibility, dynamicness, right? Being able to swap out a particular person on that committee, perhaps swiping out that entire committee as a whole. And that flexibility is something, to your point, we don't see in classic centralized hierarchical organizations where that is a very private process, that is a very, you know, there's a lot of different things that have gone into how to structure that. And that's often done through, you know, people's minds and paper and a CEO's whim. And you can sort of codify all of that into this world, which gains a ton of efficiencies just simply translating it, which I think unlocks these opportunities that you're talking about. So I totally agree with that.

Yeah, I think that's, that's a, that's an important point to highlight is that you can program these, even these, you know, committee DAOs, right, to follow a particular, you know, sort of process, right, or workflow. And so, you know, if you want the community to have more control over who is in that seat, then you can do that, right? If you, you know, and you rightly, you know, sort of highlighted the transparency that is sort of naturally there, right? And so I think a lot of those sort of core elements of transparency and sort of collective voting or consensus are still there, right? You know, there's, there's, it needs to, it needs to, it needs to marry up nicely with, you know, a structure that, that works efficiently, right? So.

Absolutely. And do you see a future world where this structure that we've sort of outlined throughout this podcast is the predominant way of all organizations sort of worldwide? And let's, you know, Let's put it 50, 100 years type time period out, not talking anytime particularly soon. But do you suspect that this is sort of the way we organize, just similar to now in 2021? The way we typically think about organizing is very corporation and nation-state backed and things of that nature. Do you suspect this is a full migration to that world, or do you think that there'd be kind of core use cases that we will see those 2 models existing in?

That's a fun question to think about. I think it's, you know, DAOs have found a home in crypto because they were absolutely necessary. It's the most efficient way of managing a decentralized system like this, right? Right. You know, if there are other examples out there of systems that could not operate without a DAO structure, then I think those will obviously be the lowest hanging fruit. You know, my other thought here is that if protocols continue to replace non-software-based, you know, systems or functions, right? You know, we've seen internet protocols, you know, commoditize content distribution and have an impact across, you know, media, music, news, you know, TV, movies, radio, right? And now we're seeing blockchains on top of the internet commoditize a lot of the core functions of finance, there will be other industries that are impacted the same way by the emergence of protocols, right? And it's the thesis that's championed by a16z all the time, right? Software's eating the world and we're seeing it take a bite out of a new industry sort of every decade. it seems, right? Right. So, you know, that trend will not stop. It will, it will continue. Uh, what those next industries are, um, I don't have a great, I don't have a great sense for, for that, but I'm confident that there will be many more that, you know, fall, fall victim to, um, the internet and software and protocols replicating what they, replicating what they're doing, um, now, you know, with sort of humans and sort of overall processes, right? So assuming that trend continues, right, DAOs should have a bigger opportunity to play a role in the decision-making there. So I think we're proving out a lot of the a lot of the models and frameworks and sort of building blocks today. And I think what's great about that is that we're going to have this, we're going to have this really useful toolbox, you know, almost like a governance toolbox, right, that has, you know, it has DAOs in there, it has, you know, what I refer to in the— what Orca Protocol and I refer to in the newsletter as, you know, pods, right? How do we sort of create that hierarchy of decision-making using all this technology. We have great user interfaces now from things like Boardroom and Tally and others, right? And so there's a lot of really smart people building tools just to make decisions easier and make the process, you know, more engaging. And, you know, Those aren't crypto-specific, right? They are particularly helpful in crypto, but there's no reason why that toolbox can't be applied to another industry, another use case. So I'm really optimistic that it will proliferate. Now, I don't know whether it will replace every organization. I don't know that it needs to replace every organization. You know, there are a lot of, there are a lot of sort of brick-and-mortar, mom-and-pop—

Right.

Companies out there, right, who really thrive on building a personal relationship with, you know, their customers or their community, right? You know, and so if you have a business, and this is a simple example, right, but if you have a business that's very sort of geographical, you know, geographic specific, right, like you serve this community in this city, right, you know, you may not need a DAO. If you are operating something that is intended to be more global though, where you have a lot of different stakeholders, none of whom know each other, on a personal level, then I think DAOs add a lot more value, right? Or if you have an organization where you have stakeholders, none of whom are— they're all anonymous, right? Everybody's using avatars and Twitter handles to identify themselves, then—

Guilty as charged.

Well, we're all guilty, right? We all have we all have many online personas, right? I've got a different handle and username for just about every social media platform I interact on. So I think for communities or organizations with that level, with that type of engagement, I think it's more helpful.

Yeah, I totally agree with that. I mean, the example you were kind of going down, like I was picturing like a local family restaurant, it's owned by one person, maybe the family, all works there. It's like, all right, you know, does that need to be a DAO? And one thing I was sort of like pushing my thinking on a little bit is kind of replacing the word DAO with this sort of digitally native organization. I totally agree with you, the use cases that are going to attract the most capital interest, you know, um, everything, uh, prioritization will be the ones that are naturally suited for that world and will kind of progress from there. But I was thinking in the spirit of brainstorming, like 100 years down the road, You know, perhaps that person, instead of sending a letter to the city and like filing for a license, perhaps they're building all of that on top of that structure, just very narrowly focused to like, hey, it is a DAO of one person. I'm selling zero tokens. I will own effectively one token. Uh, here is the valuation. You know, you could get into a bunch of different taxation and valuation and property rights and like all those things all packed up into a structure of a DAO N of 1 with zero sales. And perhaps that is sort of the most efficient way for those businesses to exist in 100 years, even though I think for our lens in 2021, we'd say, well, not really necessarily DAO-eligible enough. Of course, I'm very much pressing and pushing the entire definition of a DAO, but I'm sort of thinking in that reframing of the digital native organization and kind of extrapolating it almost to the entire point where now that owner, right, If they do decide to go raise funds and they do want to expand, like maybe perhaps they click a button in a dashboard at the city level, or maybe nation states don't even exist, but they click it, generate it, drive funds to go expand, and maybe they go sell the business, right? Everything's probably digital. So maybe again, I'm really pushing the definition of DAO there, but perhaps that's a world where it's an N-of-1 type operation, and maybe that is similar structurally, but Practically very much what we just described.

I think that's probably a good assessment of what may happen if you just think about sort of what the— if you break that down into components, right? More and more things will be tokenized. Blockchains will manage more assets, if you assume that more sort of commercial retail activity occurs over blockchains, then if your payments are coming in in the form of a stablecoin at some point and those are being deposited into your wallet, and, you know, a big portion of your business now lives on, you know, one of these decentralized systems. And I, you know, I don't think it's a stretch to say that, you know, Secretary of State's offices will, you know, at the, you know, or, you know, the equivalent at sort of the city level, right, whether it's, you know, they're giving permits or whatever, are leveraging you know, sort of tokenized certificates, you know, tokenized sort of authorization, you know, of, you know, your business sort of being, you know, legally able to do business in the state, right? You know, right now you have to, you know, you send in a paper form, it gets stamped, you get it back in the mail, right? Right. I can't imagine that that process will exist in the same way in, you know, 50 years and so, you know, what does it look like? You know, maybe you're getting an NFT that, you know, sort of, you know, is memorializing your approval by the state to do business. Interesting, yeah. And so if more of your credentials and more of your revenue, you know, is living on these networks, Which is probably not a stretch, right? Then maybe smart contracts at that point just becomes the most logical way to facilitate a lot of this, right? Whether it's paying taxes or—

You kind of get it like a— I'm picturing like a rounding effect in the sense of like, if you surround this object, you sort of cut off all the oxygen for it to survive on its own, right? So it's like, if you're— to your point, if your money is on the blockchain, if your property rights are like— at a certain point, it's actually adding way more friction to not run it as an N-of-1 digitally native organization, because now you've just— there's so much friction that like, um, it might— the whole thing might as well convert, right? There's like a tipping point where, uh, if the most important infrastructure pieces of our entire operating world is human beings, is in this world, uh, it probably tips and just swallows everything

over time. Yeah, yeah, that's probably not too far-fetched.

Uh, well, hey, I appreciate you joining the podcast and taking everyone through your thinking on governance. If you could remind people where to follow you on Twitter and to check out your newsletter, um, that would be great.

Sure, Commodore, thanks for having me. Uh, you can, you can find me on Twitter @ajbeal, A-J-B-E-A-L. And my newsletter is 30,000feet.substack.com.

All right. Thanks again for joining.

Thanks for having me.

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