About me: Sydney based human. Passionate about social change at scale. Dreams of grokking the full stack of human experience...
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26.10.21 Pitch for community-owned event space
24.10.21 Dancing is a coordination problem
Exploring an intersection between blockchain and raving
Forward:
This post started out as a message to a friend, then became an exercise for me to delineate my own understanding of decentralized autonomous organisations, and has now become a strange hybrid of idea pitch and explorative article. As such, the article structure is somewhat confused. The pitch part starts around the fifth section so feel free to finish there if you do happen to be interested in the prospect of a community owned event space! Next post will be a far more lucid overview of the molochDAO.sol smart contract :)
Many people have explored the below concepts more comprehensively and “correctly” than me (as in many of the article links). However in the spirit of the new Web 3.0 era - I’d like to share my take. Let’s all buidl together!
Also: Economics isn’t my strong point and rigour (especially surrounding the idea of public goods) is lacking but I think the gist is clear. If anyone has feedback or is interested in bringing the event space to life please reach out!
With thanks to: Oliver Alexander, Mark Singer, Daniel Kostoski, Luke Turner, Ryan ORourke for their feedback
Dancing together is a coordination problem
It is becoming apparent that blockchain technology will drive a paradigm shift in the way society functions comparable in significance to the introduction of the internet. Like any paradigm shift, it is hard to characterise it as entirely good or bad, and current applications of the technology reflect this complexity. While most are aware of cryptocurrency - the apparent dreamchild of individualists and libertarians - more recent applications demonstrate that blockchain technology can do far more than just undergird “digital money.”
I’m particularly excited about the use of this technology to enable more efficient cooperation between individuals towards shared goals, such as the molochDAO project (https://github.com/MolochVentures/Whitepaper/blob/master/Whitepaper.pdf) which shows how the blockchain concept of a “smart contract” (https://ethereum.org/en/developers/docs/smart-contracts/) can be extended to provide public or quasi-public goods through the creation of a “decentralized autonomous organisation.”
This post explores these ideas in the context of creating a community-owned event space in Sydney.
Fanciful dreams of a young raver in Sydney
I’m quite certain that anyone who has put on their own rave in Sydney has at some point dreamed of managing their own event space. Options for accessing space short term are suboptimal - there are bars and clubs (which come with a lot of aesthetic baggage) and there are a limited selection of warehouses (which are beautiful but generally expensive to rent for a night).
Unfortunately, land and property is very expensive in Sydney, and certainly out of reach for most budding party organisers to rent direct. Ravers - and artists in general - are not known for their affluence.
Can we team up to share costs? Brief exploration suggests that the logistics of co-renting event space with other party organisers are not encouraging. Some envelope calculations: A dedicated organiser probably puts on a party every quarter (it’s hard work!). If a property cost $100,000 per year to rent, the simplest approach would see 25 party organisers each committing to 4 Friday or Saturday nights over the course of the year, totalling 104 nights at a cost of ~$961 per night.
Historically, $961 per night is a great price to rent quality event space. Unfortunately, in my case, it would be an effort to find 25 party organisers to trust me with their savings. I could probably find more people wanting to put on an event once or twice a year - but however it was cut, I’d need to convince a lot of people I didn’t know to give me money. This unwelcome marketing challenge didn’t seem worth the trouble especially considering it wasn’t a profit making venture.
Culture and scale
Huge teams - companies - form all the time. What makes this situation different?
Generally, individuals have an inclination to cooperate towards shared objectives. Cooperation leads to economies of scale, but it costs the cooperative in the form of increased time to come to consensus on decision making. Most organisations deal with this through delegation - where individuals pass their decision making power to someone more or equally qualified than them - and form a hierarchy of delegation. In this way all individuals can benefit from economies of scale while continuing to make decisions quickly.
However, if an objective is abstract- such as “produce good art”- it is harder to qualify each individual's ability to achieve this objective. As ability is unknown, delegation makes less sense, and flat organisational structures form. These structures are harder to scale as more individuals must be consulted per decision.
Any organisation formed around abstract objectives suffers from this issue. Bringing it back to the event space, this makes intuitive sense: if a complete stranger asked me to give them $4000 so that they could create an event space for both of us, I’d assume that they’d bugger it up. If they had the same aesthetic tastes as me, they’d be at the same parties as me, and we’d have at least mutual friends - so their idea of a good event space was probably different from mine. Even if they assured me that they’d take my opinion into account, I’d expect my opinion to at some point be unconsciously sidelined in favour of the other 24 people that might know them better, and the cost of checks and balances (e.g. taking the stranger to court because they didn’t consult me on the type of speaker system they installed) would likely outweigh any benefit of cooperating in the first place.
DAOs, not delegation
First introduced with the Ethereum project, blockchain technology has found a role in enabling the concept of “smart contracts”, which can be understood as programmatic agreements of value transfer. While initial use cases of smart contracts have focused on “simple” problems - e.g. providing extremely trustworthy escrow services - it has since been shown that these smart contracts can be extended to define more complex agreements of value transfer between multiple parties - i.e, what we might think of as an “organisation”.
An organisation built on this technology is known as a decentralized autonomous organisation, a novel kind of “governance technology” able to speed up decision making processes without relying on delegation (https://ethereum.org/en/dao/).
A brief overview of DAOs
In this context, a smart contract looks like a very specific set of rules - a procedure - for collecting and storing resources from individuals, recording opinions from those individuals on how their share of resources should be used, and then dispensing shared resources from the store towards some end based on aggregated opinions.
Carrying out this procedure using blockchain technology provides key benefits. After a procedure it is uploaded to a blockchain it cannot be changed by anyone - even the people that wrote the procedure in the first place. Likewise, resources committed using the procedure are in a sense “owned” by the procedure, and cannot be accessed by anyone in a manner not specified in the procedure*. The upshot of this is that individuals can have extremely high confidence that their resources will only be used in the manner specified by the procedure, rather than in someone’s interpretation of the procedure (like a CEO or some central committee in a traditional organisation).
Procedures can also be made arbitrarily complex - allowing for the fine-tuned opinion-interpretation rule sets required to maximise satisfaction across groups of diverse individuals - but as computers can intake the opinion of any number of individuals simultaneously and process code very quickly, procedures of any practical length (procedures are typically kept as short as possible to remain human auditable) will take largely the same amount of time to carry out regardless of complexity or number of individuals consulted**. While there is a large amount of time required to specify how a procedure should handle every possible decision making edge case (humans are messy) this is a flat cost, and could be seen as front loading all future decision making time (e.g. consulting opinions, dispute resolution) - with every “instantaneous” decision reached through the procedure drastically reducing the cost in time per decision.
The end result, and the goal of decentralized autonomous organisations - is to replicate the outcome of an organisation that has full trust in one another to work on mutually agreed outcomes: a mobile organisation of arbitrary size without reliance on delegation.
* The way this works requires some understanding of blockchain technology - and is also a gross simplification of the actual state of things - but is correct for practical purposes.
** There is of course a time increase with increased complexity but it scales MUCH slower relative to the equivalent procedure in a traditional legal framework. Also procedures may deliberately introduce delays, e.g. providing a set time for individuals to respond to polls.
Caveats and the case for a DAO managed event space
DAOs are pretty great. I have full confidence that in the not-too-distant future, all companies will leverage at least some of the technology. However, because of its newness, there are two main caveats to its use. The first caveat is that because the market is still growing for blockchain infrastructure providers, there is a reasonable financial cost required to use this infrastructure. The second caveat is that the technology is unfamiliar to a lot of people - which creates trust issues of the kind that the technology is supposed to circumvent. If you can’t audit the procedure yourself, you have to trust someone else to audit it for you.
Of course, costs incurred are balanced against costs saved - and some types of organisations have greater need for the technology than others. In short, any organisation that aims to provide something in the vein of a public good has no reason not to use this technology. These organisations typically produce something that is accessed very cheaply by a large number of people.
Event space as a starting point
An event space could be the perfect starting point for a DAO focused on providing a whole set of public goods that Sydney is desperately in need of - accessible infrastructure that enables diversity in all kinds of cultural production and consumption. One only needs to look at how many of the top listed pubs, clubs, restaurants are owned by Merivale to appreciate that beyond state-led projects, high profile cultural infrastructure in Sydney is largely the domain of the centralized elite and has stagnated accordingly.
Addressing caveats
Focusing a DAO on the initial objective of providing an event space also has a number of advantages to addressing the caveats just specified.
As previously mentioned, the DAO must be large and flat enough to justify the costs of using the technology. In order to scale, one needs exposure and resources and to this end, I would argue that the narrative of DAO event space - a novel application of the technology in Sydney - is naturally marketable. Adding to this novelty, the nature of the DAO procedure’s extensionality has endless potential to create interest, especially in the context of an event space - e.g. it would be trivial to allow club night attendees to use quadratic voting (https://vitalik.ca/general/2019/12/07/quadratic.html)- to meritocratically select the best performers, or enforce quotas for what type of artists can perform (e.g. 15% must be from First Nations, 50% must be non-male). The ability to preserve core values at scale by encoding them in the procedure may also make the event space an attractive investment prospect for institutional patrons of the arts who seek to fund high quality cultural development in Sydney.
In addition to the size requirement, there is the challenge of unfamiliarity with the technology. As a DAO can be seen as a mechanism for gathering and redirecting resources from multiple sources towards a common end, most of the well known DAOs present themselves as grant making bodies - the most straightforward framing of this mechanism. But I would argue that those most likely to benefit from public goods provision (“normal people”) may be unfamiliar with the concept of participating as an investor in a grants making body - an activity typically the domain of rich investors. On the other hand, they are likely to be more familiar with renting space to put on parties even though the flow of resources looks the same from a high level viewpoint. In short, most people aren’t interested in fancy investor schemes, they just want to put on a rave. Framing the DAO in a conceptually familiar way lessens the number of mental leaps required as people can make use of natural expectations around how resources should be shared and governed (e.g. in the context of an event space, showcasing different aesthetic tastes on different club nights). This lessens the mental load for DAO members, allowing them to focus on understanding the new technology. It is worth noting that a large organisation also helps with the technology trust issue as at a certain scale individuals develop the belief that some other participating individual other than them has verified the procedure (few investors today probably check the Bitcoin source code).
Other benefits
Beyond addressing caveats, there are also a number of key reasons why it makes sense to focus on an event space. There is already a dedicated existing pool of potential investors - the underground rave scene is small but passionate, demonstrated by the success of Soft Centre (https://www.softcentre.com.au/)- a decidedly grassroots festival that attracts thousands of attendees annually since inception. Anecdotally I can attest to the appetite for cheap event space - as a party organiser myself, I am continually on the lookout for new options, and as soon as a small event space in Alexandria began hosting parties early this year, it was immediately booked out for the foreseeable future.
In addition, as the main cost of acquiring the property for the event space is flat and very high, efficient utilisation of the asset drastically reduces cost per individual. The challenge of efficient utilisation of assets (e.g. developing it to operate as a cafe by day so it can run 24/7) may be too difficult to organise for small groups - but with a bigger team and the efficient coordination capabilities of DAO procedures, this kind of efficient utilisation would become far more achievable..
The DAO approach is also well suited to addressing any concerns around the future of event spaces in the pandemic era, as it is easy to provide very clear guarantees that address what will happen to organisation funds in the event of another lockdown.
The main drawback of the focus on an event space is that real-estate is an “off-chain” asset and in order to interact with such an asset the DAO requires some kind of interface with the outside world (such as entering into a legal agreement with a trusted entity to legally hold the property title, or a security system monitoring property access). The use of such interfaces can reduce the “trustless” quality of the DAO approach.
Where could this go in 10 years?
There are a whole variety of ways a DAO event space could develop in the short term, as the potential to continually adjust the objectives of the decision making procedure to better reflect the needs and wants of its members is unparalleled when coordination is cheap and desires can be endlessly queried and adapted to.
These could include such features as 24/7 space utilisation, sophisticated artist discovery methods, or the use of decentralized and anonymised data storage to create a reputation system to achieve the holy grail “safe space” (https://en.wikipedia.org/wiki/Safe_space) where party attendees feel safe to express themselves in a truly authentic manner.
The long term could see the DAO focus on on generalising its objectives towards providing all manner of cultural infrastructure, and once trust of the organisation is established, further decentralising the DAO by producing useful abstractions over the underlying technology so that individuals can simply access cultural infrastructure at a cheap rate without having to understand or trust underlying mechanisms.
This sort of accessibility could see the DAO experience tremendous growth - further accentuating the benefits of economies of scale.
Personally, I'd just love see the core values around what it means to create a thriving culture - such as championing artist diversity - enshrined into an organisation, and then seeing the DAO scale these values intact out of the backlanes of Marrickville, into the core of Sydney culture, and further into the world beyond. Now that would be a public good.
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