lego dao & prediction markets w/ ezra weller

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.

My name is Ezra, or Mozrat on the internet sometimes, and I'm working on LegoDAO. It's one of the things I'm working on right now, and we're kind of a dev shop slash DAO group that is trying to Trying to take a slightly new approach to DAO infrastructure where we're just trying to support standards and build for specific projects and kind of let the standards evolve from adoption rather than trying to shoot for the moon right away.

So if I have to like play that back, it's like, hey, we think we can add value to this. And instead of us sort of architecting this master plan and going out and trying to make yet another thing to kind of go guide everyone. We're going to kind of take a little bit more supportive role in helping the ones that are starting to emerge and the ones that are interested in the help to kind of just work collaboratively on that mission as opposed to sort of like vision or dictatorial style. Is that a fair assumption of that?

Yeah, that's, that's absolutely right. We, we think that there are some standards emerging and we just want to help that along, basically. If you don't take what's there and help things get connected, help flesh things out, help things maybe get a little bit generalized where they're still very specific, and help where the pain points are for the— I mean, we're in the privileged position now where there's a bunch of communities and organizations that are really trying to make decentralized governance work in a practical way day to day. And No, not, not to say that centrally coming up with ideas and then putting them out there is bad, but there's probably more space for just following what these projects are asking for right now than people are actually working on or have been working on up to now.

Yeah, I buy that. I mean, it certainly, it goes counter a bit to your point of, you know, classic Silicon Valley approach of building companies, but These DAOs by nature are collaborative and they're open. And so, you know, I could imagine that your guys' model is super interesting and successful in this new paradigm. And so it's certainly when I, when I was reading about what you guys are doing, which I want to get into in a minute, it's certainly really interesting and I think novel and has a high probability of being great for this exact use case. Maybe not work great for a startup, classic startup, but for these use cases, I think it's super interesting.

Yeah, because we're really thinking about ourselves more as a dev shop than, you know, a startup. Right. So we are a dev shop that just has a specific type of work that we're trying to do, which is, which is to work on DAOs basically. But if some kind of framework or standards or, you know, some, something that resembles more like a, more of a product suite emerges, that'll be, it will, it will be emergent. It'll happen over time. And, you know, maybe at some point in the future that becomes its own thing and maybe there's a governance token for it or whatever, but we're not going to push towards that for its own sake. We're going to push towards making sure that projects really have what they need and being part of those communities and part of helping them evolve their governance. And just, we think that standards will emerge naturally from that. And I think that's already happening. So.

Interesting. So which fictional character would you like to have dinner with?

I saw this question and I had to look it up a little bit. So this— I didn't know the name of this character, but so I looked it up. The name is Funes the Memorious, which is totally arcane sounding, but it's a story from Borges, who's an Argentinian writer— Argentine writer, I guess is how you say it. And He's a person that has an accident and then as a result of the accident can remember everything. So, so like instead of counting the normal way, like in like base 10 or something like that, he just remembers a unique number for every single number, you know. So it's just base like infinity, or he remembers every memory he's ever had perfectly. So that, I mean, that sounds like an interesting person to talk to, right? Totally.

Yeah. Wow. Yeah. I don't even, I, I totally, though, A, that's the, the, the most obscure answer we've gotten thus far. Uh, and it might be, uh, the winner, uh, for that. Um, and then B, I have no idea if this is legit or not, but there was, I think, a TikTok or an Instagram account or something like that. And it was this, this young woman who had some sort of, um, kind of neurological condition that she could remember basically everything. And she was talking about her earliest, earliest memories as like a 2-year-old, 1-year-old. And it was just fascinating, especially as a new parent, to kind of hear her talk about her memories as related. So I'm thinking about this person, right, is a little bit on steroids in that regard of like, yeah, there's incredible things that you can learn about very unique situations that most people would just either forget or not catch or whatever it may be. Certainly some interesting stories in there.

Yeah, totally. And this is It's such an extreme that I think, like that example with the numbers, it's like, means that this person sees the world in a completely different and alien way to you or I. Because we take all these shortcuts because we can't, you know, you can't just remember everything, right? Right. Like, you can't just remember, like, for example, language as well, right? We have like alphabets, or every language has at least some repetition in the way it's written down. But this person could just remember a unique symbol for every, every word, right?

Right.

Just every single word is, is a completely unique thing. Yeah. Just how would, how would that, how would a conversation with a person like that be?

Fascinating. Fascinating. So let's talk, we got a little bit into this before that hypothetical question, the icebreaker. What, but so why do you think this kind of Lego DAO is the right approach? And maybe alternatively stated, Like, why are you guys choosing to do this model as opposed to some of your other— like, why not just join something specific or why not? You know, we talked a little bit like, how do you guys think about why this approach is the right one for you guys?

Yeah. And I mean, I'm definitely not— and I guess this is, this is part of our approach too. I'm definitely not trying to claim that people shouldn't do things any other way or that this is the capital R right approach to building DAOs. But I think that this is a good approach right now. I think, like I said before, there are now really a pretty good number of projects that are actively trying to do governance this way, and they're, they're fairly diverse, right? It's everything from like Uniswap or Compound where they really did start out like a startup and then for, for legal reasons basically have quote unquote decentralized their governance. Mm-hmm. To, products on the other end, which were maybe nothing but a chat room, and then they added a token and they're kind of evolving towards a DAO. But in both cases, you know, they are actually doing something and they actually have needs right now. And it's very appealing, I think, just to us on a personal level to just solve problems for people today and to do that as a group, you know, so we wanted to rather than just me going and joining one of these communities and just working on governance there. You know, we can, we can go to different projects and, and pick and choose a little bit more and, and get involved as a group and build something as a group and as, as a team, which I think is appealing as well. So yeah, I don't think that, it's not that you can't do things other ways and, and I think great ideas do come from, from people just, you know, sitting in their, in their bedroom and like coming up with a totally new idea and then just going and trying it out. But I think for us, We see an opportunity to do this kind of work now, and it was also just appealing to us to do it.

Yeah, absolutely. Yeah. And one thing that I'm, as I was listening to you kind of talk about that path is there's a very classic pattern here in Silicon Valley around, you know, acquihiring existing teams or, you know, founders kind of, you know, the PayPal Mafia type idea where you have this group of people who like working together. And what you don't hear as you experience in kind of the Silicon Valley world is that there's all the people sort of beneath that in the subteams. that are effectively doing a little bit of what you guys are doing in the startup space, right? They're all working at Facebook, and then Facebook becomes not what they will— not kind of the thing they move to Uber or whatever it is, right? And there's sort of these managers, team leads, coworkers, or whatever that are sort of moving around from team to team because they love working together and they like working on this particular space. And one thing I'm just excited about as I think about your guys' models, you're also a little bit of an experiment just sort of for any group of people that enjoy working together to be able to move around and work on things, which with DAOs and the structure that you guys are pursuing is like, it's just fascinating experiment to me to kind of watch that play out. And I'll certainly be keen to kind of watch it play out and how it goes. But it's a, it's a really cool structure that, again, repeating myself, that we've seen in other worlds that doesn't really get talked about. We talked about at the founder level often, but not necessarily at that sort of, you know, team contributor level and super exciting, super exciting.

Yeah, I have no idea, and I'm not sure if it's even useful to speculate on how things are going to work in the future, but I can definitely say that how it feels right now is that to some degree, this is kind of how everything has always worked, that you have your kind of close group of people that like working together, and you probably end up working with those people almost on everything, and that group shifts over time, right?

Yes.

And you might be members of a few different groups like that. But the main thing about it is that it's actually a really small group, right? It's not 150 people. It's like 10 or maybe 15 people at a time and it shifts over time. And there's little mini groups inside of that that like working together on different things. And you do end up going from project to project. Maybe you start a thing together or maybe you go work at a thing together. And I think that that's kind of just getting brought out here because the way a lot of these, the larger projects and these larger communities work is that you just have to come in and kind of engage with it and work on something there. And it's helpful to have kind of a small group of people that are going to propose something together to a DAO or to a community like, hey, we've got this idea, we want to work on it. And so you end up really depending on that small group anyway. And now it's just giving that sort of a name. Right. Right?

Yeah.

Like, there's this essay Squad Wealth that I think is quite related. They're maybe going for like a slightly more general concept of just small groups on the internet. But this is definitely a feeling I've felt throughout my life of working in like lots of different areas. I've always had this group of people that are always referring each other to things and choosing to work together on things. And it's just an extension of that.

Yeah, I love it. So let's talk about why is it important to have an unopinionated governance tool in your opinion?

Right now, so in the long run, I don't know if it's useful to call something unopinionated or opinionated, but more like just in the long run, it's important to have the right tool, right? The thing that actually does what projects like this need. But right now, we're still very much in the space where we don't really know, you know, we don't really know what these projects are going to need in a year or in 2 years or in 3 years or in 5 years or in 10 years. We don't really know what the world is going to look like. And so you can try to just guess, right? But you don't have to do that, right? You can also just say, let's build for the needs that exist now. And right now, if you want to do that, it's a really big disadvantage to go to a project and say, hey, we've got a thing that can work for you, but you need to completely switch everything you're doing to this particular kind of closed governance ecosystem. And that's going to be really high friction for them. And especially if it's a big project, it's probably a no-go because it's, it's also so risky. So it's just better to be in a place where you can work with the tools that are, that are already there. And I think that applies beyond governance too. Like if you just look around crypto, the things that are really getting adopted are things that tend to be pretty unopinionated, like ERC-20 or ERC-721, right?

So when you guys think about, this is kind of a dumb question in the sense that like when you think about the Lego pieces of LegoDAO, which you guys are working on, the Lego pieces sound really small and I don't know how to describe this in a way, but like you guys, it sounds like you're really thoughtful about Being quite granular on it as opposed to maybe template-driven. Or, you know, I have a young child that has, you know, these big like Duplo box, right? And they're like these massive Legos and you can build some cool stuff, but really it's a restricted scale, right? And like it's intentional because, you know, he's still developing his motor skills. So it sounds like it's a very granular, like, hey, you literally, if we build out all of these little Lego pieces, we want to build a world where you can build, you know, a castle, a boat. an island, like whatever it is, right? And be very detailed in that journey. Is that a fair caricature of that?

I don't think so, actually. I mean, I think you're right. You're definitely right in some sense, but I think it might be more right to say that we're just, we're not trying to choose the Lego pieces. We're trying to let the ecosystem choose the Lego pieces, right? So Lots of projects are using Gnosis Safe, right? So maybe there's some opportunities to connect things there. Lots of projects are using the Compound governor contract and forking that. Lots of projects are using ERC-20s or derivatives of it for governance tokens. So there's a lot of patterns you already see and those are the Legos, right? So it's just like about making sure they connect and then maybe there's some missing pieces that people need and making sure to build those things in Unopinionated is maybe the wrong word. It's like what I want to avoid building is something that creates barriers, right? Where like once you're using this tool, you now can't use this whole set of other set of tools, right? There's very little reason to do that unless you've already set yourself up in some kind of incentive trap where you've got your own token and you're, you know, forced to try to get everybody that's using your your tools to use that token and now you need to kind of separate yourself from the rest of the ecosystem. And we want to try to not do that so that, you know, it doesn't matter. Like if you're using Compound governance and a Gnosis Safe and contracts from a bunch of other projects, as long as they work together well, you know, you shouldn't have a problem doing that, you know, just because different people built those original contracts.

I see that, that's a good framing. I think it's a good way of articulating is like, here's what I'm, what we're not trying to do, and that is helpful kind of anti-pattern for what it is. That's super helpful. So do you suspect that prediction markets are going to be sort of standard in DAO governance? And I know it's a little area that in your guys' documentation, which I'll link in the show notes, talks a little bit about, but can you kind of talk me through how you think about prediction markets in DAO governance?

Yeah. So I'm uncertain what the role will be, but the idea has been around for a long time. The idea that prediction markets can be useful for governance, like the first instance of it that I'm aware of is from Robin Hanson and Futarchy, which I think the original paper's from around the year 2000 or something like that. And there's a bunch of reasons to think that it might be useful. One of the reasons, and the one that has been most relevant most recently in DAOs, and this is something that we did in DAOstack that I think really worked and more people should look at, is, you know, Matan Field, one of the founders of DAOstack, came up with this holographic consensus idea, which basically applies prediction markets to trying to scale up DAO governance. So right now, if you look at an on-chain voting system, it has to move really slowly in order to stay secure. If you made it too easy to pass the proposals, then people would be too worried about passing bad proposals. So it has to move slowly. And one way to deal with that is to add a prediction market to every proposal that predicts if the proposal is basically good, if the voters will like it. And then if the prediction market rates really highly that voters will really like it, then you can basically speed it up. I see. And that can let you do governance faster. So prediction markets can let you scale up governance. That's one thing that could be good. Another use case that I think is a little, goes a little bit more back to Robin Hanson's way of looking at it is what I like to call like the expertise problem, which is the problem that you might know like what your problem is, like, oh, I need more water, or it's too hot, or my car is broken, whatever, right? And you, you're good at identifying your pain points generally, but you might not be good, and you're probably not good at solving most of them, right? Because most of those things require some pretty expert knowledge. Like how do you, how to, how to fix some particular problem with your car might not be something that, that you know about, but you know you have the problem. And that happens a lot in, in any governance where there's like many people voting. Any given problem, probably most of them are not an expert in how to solve that problem. So, if it's up to them to vote for the right solution, you know, what are the odds that they're going to vote for a solution that looks right to a majority of people but is just not actually a good solution, right? And prediction markets are a way of bringing in kind of so-called experts, or really they're self-identified experts. So, the original idea of Futarchy would be you just ask the general voters a very general question like, you know, how good is your life right now, 1 to 10 or something like that?

Right.

That's— I think that's sort of how he did it in the original paper, which might be way overgeneralized to ever work in real life, but it's a good example. And then let's say people, you know, let's say the answers average out to 5, then anybody is allowed to just make a proposal that they think will raise that rating the next time people get asked. And then anybody can make predictions with real money on those proposals about how much they think the rating will go up if that proposal gets executed and—

I see.

Gets put into practice, right? And so now people that have the specific knowledge that would give them, you know, a better, better odds in making those bets, they have a pretty strong incentive to, to make big bets, you know? So if, if, if you say my problem is that my car is broken, And then someone proposes to fix the car in the wrong way, and someone else proposes to fix the car in the right way, and an expert can differentiate between the 2, then they might bet really big on the right way. And then they'll, they'll win out from that. And that's a way of kind of bringing in an expert opinion without just giving experts way too much power directly in the system. So that, that might be like a bit of a, a long-winded explanation, but that's a really interesting use case. And it's a problem that really isn't solved very much in in any of the current systems. What we have that's closest right now is these delegation systems, but those don't really solve this problem because— Right. They just bring in politics, right? So it's, to be a big delegate is the same thing as being elected to, you know, a governing body in like a state government where sure, maybe, maybe you can convince people you're more eligible by saying, hey, I'm an expert at, at making new laws or something. But really you're just convincing people that you're an expert. You're not actually proving that you know how to do it well, right? You're just convincing people to vote for you. That's what it's selecting for. And the same thing is true for delegation, right? So that's probably why you're going to see like big social media influencers be the biggest delegates, right? Like, how is anyone, no matter how expert, going to compete if they have 20 Twitter followers or however many, right? So that might be something that over the long term, people figure out how to integrate this stuff in a way that actually improves things. But it's also, I mean, you can tell from my explanation, it's pretty convoluted, right? It's pretty hard to figure out how to add that in. And we're still at a pretty like basic level when it comes to these decentralized governance systems. So it's probably a bit too soon to worry too much about exactly the right ways to do those things when, you know, we barely have on-chain governance working. We barely have— Right. You know, delegation working. The bigger— the thing that I think is really coming next is like fractalization or like subsidiary systems where a larger governance body, like say the Compound governor contract with all the COMP holders, finds more ways to do what they're doing with grants where they basically delegate a certain amount of the budget. to a smaller group that can act quicker that is supposed to do a certain thing, right? So in this case, they're supposed to give out grants and doing that a bunch more. So if you're looking at like what Yearn is doing next, they've got a similar thing where they need to split things out into teams to basically reduce the burden on their central governance group from doing every single thing every day, which is this huge bottleneck to just delegating some responsibility out. And we need some more systems and tooling to support that. So I think that's like the next practical bunch of Legos that will probably get made.

I 100% agree with you on that. I have so many thoughts on so many things that you touched on there. But one of the things I do want to highlight before talking about Yearn and kind of thinking about getting these grants out is I feel like you highlighted a little bit, you know, of course, of US politics, type issue and in global politics, really anything in the democracy republic era of we're seeing these influencers being able to drive votes to your point of like, as long as I can convince my following through my brand, my social media following, I can win a presidency, I can win a governorship. And like, we're certainly seeing a trend that is exactly what you're talking about in just simply being a popularity contest and not in a kind of old school way. Not that the old school was a perfect solution either, but in a way of just like, hey, I've drummed up the support and here's what I have. And I have no expertise aside from what I've claimed as an expert. Right. And my massive following, by the way, to get me to this position. And so I love the prediction markets to try to squeeze at that. And one question that was coming up to my mind in that particular part of the conversation is then the kind of the leadership or the governance body or however you want to kind of think about sort of the system that is going to make prioritization. I mean, it strikes me that you could then use sort of the market cap of each one of these sort of smaller betting markets to then also try to figure out which ones to prioritize, which ones to go deeper in, which one— like, how to think— it's like if you had 10 betting markets out there and all the money's flowing into this one, and maybe that market's settling to a distribution of, you know, 4 solutions at 25% each, but the amount of money that's being traded in that space is so much larger. It certainly feels like an interesting way of governing an organization to say, like, let's spend our time and energy and our kind of research into that particular market. Is that like a secondary kind of effect of that, or are these timeboxed at like in a one-off type, you know, a series situation as opposed to a parallel?

Yeah, I think the answer— like I said this answer a lot, but the answer is basically nobody knows what the right way is to do that. But I can speculate on it. And my speculation would be that you don't want to ask the, like, the people who should be responsible for prioritization or like budgeting proportionally at least are, should be the voters, right? The voters are the people that the system is supposed to serve. So you wouldn't necessarily want to go on the market cap or like the TVL in DeFi lingo of Like a given prediction market to understand how much budget should go to that topic. Because those are, that's the TVL you'd expect to go up as like competition between the predictors.

I see. Right.

So, but it's still actually, I mean, maybe it, it might be really highly correlated for all I know. So it, it could work. I, I don't know. But, but my first thought of where, where it should be is actually on the, on the first layer. I had actually, this is like almost 3 years ago now. I, I had proposed, this is almost before I really got involved in DAO governance when I was thinking about these ideas. I had proposed a structure where it's a lot like Futarchy, except instead of asking that one kind of naive question, like, how good is your life, 1 to 10? You would just let people ask whatever they wanted, basically. But then you'd use some kind of simple grouping mechanism to group people's thoughts together. So you'd end up with something like a Reddit, like a subreddit, where you end up with just a list of topics, but they're, they're curated by something like the interest of the people in that subreddit in that topic. In a really, a really, you know, simple way. But there's a number of ways you could do that. One could just be like just voting, right? Maybe people are just voting for— maybe they get a certain number of votes and they can just vote for the different problems they want solved, and they can vote for 4 things or something like that. Or maybe they have each 100 votes, and if it's a If it's a simple resistant system, then they could, they could vote quadratically with their 100 votes or whatever. But basically they're voting for the different questions that they want solved, you know, which could be like, we want the schools to be better, or we want better marketing for our project, or, you know, whatever, whatever people you would let them group it basically.

Right.

Based on what they're interested in. And then those would lead to the prediction markets. So if the top thing that most people were voting or devoting their voting tokens to was We need better marketing, then that would lead to, you know, a proportionally large budget going to people making proposals on that topic and then people predicting on those proposals. And then what they'd be predicting on is basically something about how much, how many people in the next round would take away, like, is that, is that, is the budget for that going to grow or shrink? Like, is the priority for that going to grow or shrink? Something like that. Right. that would be a little bit more granular than just that one giant question, which I expect would be really hard to correlate with anything, right? Like, imagine asking all the people in the United States, like, how good is everything right now? And then asking a year later and then trying to understand causally what had caused the change in answers. Yes. That sounds insane. So I think you need something a little more focused than that. So I think something like that maybe, but I'm not going to be proposing to any of these DAOs that system right now, right? Like, it's cool. It's a novelty. And maybe I think eventually we might get to the point where that level of optimization might be the right next step. But I don't think we're there yet.

Yeah, I like your pragmatism of sort of saying like, where are we today? Where are the Lego pieces required for this next phase? And one of my kind of favorite articles right now is by Andrew Beale, who I had on the podcast earlier, and he kind of talked about this Governance 2.0, which you also use that same phrasing of sort of saying, hey, we're really thinking about governance right now, saying, hey, here's a proposal, goes out to the entire token holder community. Let's make the— let's do a vote and let's go. And sort of how much inefficiency is in that process of being able to make decisions rapidly and kind of talking about these, these sub-communities and whatnot to be able to make that. And it sounds like you also think that that's probably the phase that we're in now is just sort of Adding some hierarchy of some kind to that process. Is that fair?

Yeah, definitely. And I, and I think that, I think that one of the reasons it makes sense to, to think practically here is that whenever you're, you're considering these more complicated features and systems, it's really hard to predict the trade-offs that you're gonna have to make in terms of usability in order to build those systems. And in the end, I think nothing's going to work that doesn't engage the group of people that, that's, that's involved, right? So I think the tools, the tools people are using now are, are pretty overwhelmingly really simple, right? Like just using snapshot for voting, multisigs, like relatively few proposals and just talking in forums, right? Like there are a lot more sophisticated economic tools out there. that have been proposed in papers and, and, and whatnot. But unless those can come in a form where communities can understand them and, and feel like they're useful, they probably won't get adopted. You know, you can come up with all these super sophisticated things to do with smart contracts, but, you know, if, if the trade-off is too strong against usability, then it might not work. And it's, it's hard to— this world is so new, it's hard to understand what those trade-offs, where those trade-offs are. Right?

Yeah, absolutely.

Some things that seem super unusable have gotten to the point where they've kind of been normalized, but it takes a long time and a big push for that to happen. And it's hard to bet on, you know, it's hard to bet on prediction markets even today, even with so many people having been working on them for years. If you go look at them, still the biggest prediction markets on those platforms are like, who's going to win the US presidential election? Right.

And that's the biggest of topics, right?

Yeah, that's been the case for like the entire 30-year history of prediction markets, right? It's been like sports betting and politics. And so even though there's this promise of the usefulness of prediction markets for all sorts of questions, um, it still hasn't proven that it can get past that usability barrier.

Yeah, one of the things I've been thinking a lot about is mapping the mental models of the contributors, token holders, everyday people. And one of the things I'm really struggling with is this balance between classic centralized organizations, where people, at least in the past, they're going to work, they're in this environment, they're listening to these meetings, and they have these thoughts and these frustrations and excitements, whatever it may be. And by virtue of being immersed in that culture for 40+ hours a week, you sort of like, that radiant energy is sort of going to be captured in one-on-ones. Like, there's sort of this natural process of, and even just griping at a simple level, right? Is sort of captured in this feedback loop of going there. And there's so many downsides, obviously, to that structure. But you're sort of almost getting forced participation by the people who care. And then there's certain people who don't care. And, you know, it is what it is. And then there's sort of this DAO world where I'm kind of observing, almost something similar, but you're really only capturing the highly engaged, which it might be totally fine. And maybe that's like the totally the right model. But it does strike me that there's like some loop that's missing that I suspect that in the old school kind of centralized world, you would be able to get some feedback loops. And an example, I don't know if you've heard of it, it was like Ray Dalio's hedge fund Bridgewater. Like they built this software where the idea was any meeting, anytime anyone's talking, you can vote and rate them in real time of their trustworthiness and how much you believe their particular plan. And his whole idea was building this hive mind within that centralized organization. And it strikes me that some of the principles that he was driving at are some of the same principles, obviously, that DAOs are driving at. But he had the benefit of capturing people in that centralized physical location to drive that behavior, to be like, I'm paying you to be here and to be thinking about this and giving me this feedback. Which feels just very different than the current DAO structure that we currently have going on. I'm not saying either one's better or worse, but it just strikes me that there's some really interesting things missing that I think Ray was able to tap into, at least from a marketing perspective. But are you familiar at all with what he was trying to do with that? Or am I kind of going down a—

That's new information for me. But it's— but I, you know, it's— I have thoughts for sure. It's, yeah, like, This stuff is really complicated.

Yeah.

Because it gets into like psychology and also like in the nature of kind of information, right? Like another thing it reminds me of is if you've ever participated in like local governance in your town or something like that, what you'll find is that there are like, the town feels obligated to hold these like meetings for feedback. I guess cities do this too, but it's such a bigger system. It's hard to— it's harder to get your finger on it. They'll say like, oh, we've got this new zoning proposal, you know, so come to this meeting and give us your feedback, and we'll change the proposal based on your feedback. But of course, what happens is that the same tiny minority of people come to all these meetings, and they're really vocal, and they drive the, you know, the public officials crazy because they tend to be people that are like super adamant about one particular thing. Exactly. Really, really, you know, really, really harping on it. And so the question is, you can kind of take 2 perspectives to this kind of thing. One is, you know, it's really a problem that more people aren't participating because, you know, we're supposed to represent everybody in the town, but we're really only representing this vocal minority. And that's, and that's bad. That means we're making decisions that aren't, you know, really serving the interests of the town, which is going to lead us in the wrong direction. Over time. But the other perspective is that, hey, if those other people cared more, if, if, if, you know, they had more riding on what the local government did, they would come, you know, they would do it right. And this is kind of the argument in general for like participation, right? It's like, well, you can't— you shouldn't complain about participation rates in national elections because that just shows that for most people, the outcome doesn't matter very much. It's not even worth a trip to vote to them. Like, their vote is not worth it to them, and that's just okay, right? Or it's not okay, and it's really hard to form a really clear opinion about it, to be honest. And I think you see the same thing in these communities where there's really this question of how much participation is the right amount, you know? And one thing that I think is clear at this point is that even in large communities like this, The, like, the sort of Pareto principle of like, you know, 80% of the work is going to get done by 20% of the people. It's probably, it's actually definitely more extreme than that. You know, there's going to be some small group of people that almost self-identify as the people that really want to be the core team on this thing. And they're just going to end up doing a lot of the work and everybody else is going to end up kind of defaulting to them and trusting them because They don't want to spend the time on it, right? Like they're just a token holder or something. And then if you extrapolate that to a world where, imagine all the products you're using on the internet are co-owned in this way, how much are you going to participate in the governance of all of them?

Exactly. Right.

Almost none, right? So there's almost no world where you can expect a very high participation rate. And the question is like, how hard should, how hard should we even try to get people's participation? Because there's this sort of Chicago School argument of like, people are voting with their time and their wallet already. Exactly. And you don't need them to vote in another way. And I don't know what the answer is to that. I don't completely agree with the Chicago School thing because I do think that if you distribute ownership to a more representative group of stakeholders, like if you've got a company that's owned, quote unquote, not only by the financial stakeholders, but also the people that have like a utility stake or like a livelihood stake, like the workers and the users that I think you will end up, and you can run that efficiently, as efficiently as a shareholder-owned company. I think in the end you will end up with a more competitive company. You know, you'll end up with a company that's more popular, I think in the end. Yeah, I agree. You have to represent all the groups and you have to do it the right way. And that's just a theory, I think at this point, But there's some, you get 2 really big advantages from doing that. One is that ideally your decisions are gonna be more well aligned with the actual people involved in your thing. So like you can still keep the financial stakeholders fairly happy, but you'll keep the workers and the users or the customers, depending on what kind of business you're talking about, way happier, you know? And so, you know, that's just gonna be way better for your business over time. But then second is you get this huge new growth incentive of telling your customers and your workers that they're getting significant amount of ownership in the thing just by participating. And that's a huge advantage at the beginning, which is, I think, one of the big things driving the, this movement in crypto is that it's suddenly become much easier to distribute that ownership in some form than it is to do that with a traditional company. So, so I, I do think that that part of it, I think, is, is starting to shift. And I, and I hope that it continues to shift because I think that maybe is a, is a better world. But I'm not sure about this participation rate thing. I, I think there's a decent chance that, that it stays with really, really minimal participation from most people just because it's hard to, it's hard to imagine a path where people are just like spending all their time, you know, participating in governance.

Right. Yeah, yeah, I think your, your point is, is well taken that, you know, it's, it's a, it's a holistic decision. It's a better holistic kind of process to bring in more stakeholders and be able to give them actual shares. And, you know, we've seen it time and time again where the, the financial group is the, is the only representation, uh, of the governance, which then leads to all sorts of, uh, kind of terrible global outcomes, maybe maximal outcomes for that group, but for the whole entity, suboptimal outcomes. And one thing that did strike me is that I'm realizing one of my personal rants around politics, not to get into politics too much here, but is this idea though of allowing people to vote in through like a value stack system, or how do I represent my values or my principles through a democratic process that are a lens onto governance as a whole so that I can sort of be a participant in a non-direct way. To your point about that local election, right? It's like, I might be able to vote. I support environmentalism. And you do that right now by voting for a particular candidate who then says that they're going to represent those values on your behalf, right? But like, that it's a human-driven process as opposed to value, a principle-driven process. And this is probably much more out there and, you know, vision than pragmatic. But how do I get representation? Say, I don't want to get involved in every single decision. But annually, I just want to say that this is sort of the value stack that I think we should make decisions against, right? And, you know, it's like people first, the environment second, and profits third, right? Like, that's a very simple structure that I feel like DAOs might be able to start to programmatically put into some of these structures to say, okay, yes, we don't need high participation from every single person on every single issue. But what we want is high participation, high participation on a regular cadence against this value stack. Now we have the value stack, allow the value stack to filter in or prioritize against our day-to-day decisions that a small amount of people can influence. And that strikes me as maybe a path that we can get there, at least one that I can, I can go to bed at night getting excited about.

Yeah, definitely. And that's kind of what I was going for with that. with that older prediction market related proposal where the idea was like, for, for the average person, the only thing they would need to do is like every few months go in there and say, these are the 3 things that I care about.

I see.

And, and review, you know, and, and then the next month you, you're the, in 3 months you go in and you change your answers or whatever, or, or you can do it however frequently you want, something like that. Even that might be more than we can expect. And you could say, well, what if, what if there's a central place where I just say, these are the 4 things I care about in general, and then that filters out to everything Interesting.

Yeah.

You know, but then you run into, again, the problem of like, how are you going to really correlate anything? Because it's like so generalized.

Yes. Such a nice point.

But the other thing that you made me think of that I think is, is makes me very optimistic, even though it's a, it's kind of a pessimistic mechanism, is there's a lot of power in the threat of power without it ever actually having to be used. Right. The, the people that end up on these core teams feel a lot of pressure to represent their token holders. Even if most of the token holders are never saying anything because they know they could, something could happen, right? Or like, even if you've got a system like Yearn and many, many others that are like this, where actually the token holders have no power, you know, it's ceremonial or it's social, right? Like, there is no purely on-chain voting system that lets the token holders actually control the system right now. It's just a snapshot. disconnected from a multisig and the multisig is just expected to listen to the snapshot. But if the multisig just went rogue, they could fork the system and everybody would just move their liquidity. And unless they could, you know, do it before everybody was able to remove everything, they would still get punished for that. And to generalize from there, I think like if, if you or I had governance power in like 1,000 things, you know, whatever number of things we're customers of, we could actually not use it at all 99% of the time. But then in that rare case where there was something that one of those projects was doing that someone felt was really against the interests of most users, they might start making a big stink about it, like on social media or something like this. And then you might see that. And then you would get this little movement that would appear emergently and say, okay, go stop the Starbucks CEO from instituting this policy.

I think you just tokenified cancel culture.

It is almost, it is almost like that, except, you know, not really towards specific people. Right.

Right. Yeah.

More like policies.

Yes.

But it would be like, you know, you, you only need to mobilize everybody when, when something important needs to be done. And the rest of the time it can just be the threat of that happening that kind of gets the— incentivizes the core team to try to represent the people, you know, like to try to think about it because they want— they know that something could happen. So they want to try to preempt it and understand those interests just for their own sake, you know? Yeah. So that's— it is a little bit pessimistic sounding, but that might actually be the answer, you know?

Yeah, it gives you, I think, to your point, an asymmetric kind of power balance to allow low participation rates while still having a balanced system. And I think that, you know, US politics— I'm in the US, and so I'm biased in that regard. But it's this, this element that you often see politicians as they're up for reelection at the end of that first term, sort of all of a sudden, they're very, you know, they're very adaptive to a whole bunch of different cases that they were completely ignoring for a most of their time to try to drum up those like, oh, well, actually, I voted for this particular thing, and I'm actually very blended and trying to maximize. And so you sort of see a little bit of that, but it's like, could you take that element and try to drive good faith behavior throughout an entire term by having something like that asymmetric kind of threat of power, to your point, might be an interesting governance pattern that we don't often see.

Yeah. Yeah. And I feel that A lot of the problem in, in traditional representative governance right now is actually, it's actually an epistemological problem. Like, if you really knew whether the person you elected was representing your values well, then you could, you know, you would just know when it comes time to the next election, like, do I want to reelect this person or not? Right? But if you think about how you're actually making that decision, it's probably based on what they're saying on the campaign trail and their ads and everything much more than their actual actions. Exactly. Because it's too difficult for you to understand their actual actions. Right. And that, that is where a lot of the corruption comes in because there's this huge space of freedom that they have between what they're actually doing and what they tell people they're doing.

And to your point, even down to the bill, right, a party will say this bill supports environmentalism and they'll say, well, I actually voted no for it because it doesn't do enough for environmentalism. Right. And it's like, how does a voter know?

is 1,000 pages long. So what are you going to do as a voter? Even the people voting for the bill didn't have time to read it, you know? And that's really a problem of just how do we know things these days about politics? How can you tell if the person who's supposed to representing you, supposed to be representing you actually is? Right. It sounds stupid, but I personally, I find it very difficult. You know, I just have no idea basically for the people that are representing me. Like, I don't know what they're doing. You know, I would have to sit on their shoulder and watch them every day, what they say, how they vote, what, you know, to know whether they reflected my values or not.

Absolutely. So before we keep going down, I am enjoying this rabbit hole with you, but let's, let us stop and end the podcast. But I really appreciate for you for joining, and I really enjoyed our conversation. And so if you could just remind people where to follow you or where to check out LegDAO, I think LegoDAO would be super awesome.

Yeah, definitely. I'm— my name is Ezra, but on Twitter you can find me @mozrat, M-O-Z-R-A-T, and you can also find LegoDAO on Twitter @lego_dao. And we've got, we've got other places to find us, but that's probably the best place for now because we're not, you know, we're not marketing a big public group. We've just got groups with the various projects we're working with at the moment. But, um, yeah, we'll see where it goes from there, but that's, that's where it is for the moment.

Awesome. Thanks again for joining and be well.

You too. Thanks for having me.

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