GM! We’re back again with another article from the Flipside executives, this one by our GM of DAOs, Daphne Kwon.

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Don’t be a Paul Krugman. 

Yeah, I mean, go ahead and win a Nobel Prize in economics and study at Yale and MIT.

But a short while ago, I read a New York Times piece by Krugman titled, Blockchains, what are they good for? (You can read it here, though it’s paywalled by the Web2.0 NYT).

In the piece, Krugman dismisses blockchains as useless and efforts to explore them a “waste on an epic scale.”

So by “Don’t be a Paul Krugman”, what I mean is, don’t finger wag at nascent, revolutionary technology with that economics degree and a “get off my lawn” attitude. Know your limits.

To be fair, it might have been a good critique if he stuck with his analysis of cryptocurrencies. The bad actors attracted to loose money will be endless in any industry.  Unfortunately, he went too broadly and started opining about blockchain as a technology. 

Ultimately, his dismissal was built in ignorance and even he couldn’t avoid it: 

 “These protocols are, everyone tells me, extremely clever. I’ll take their word for it. The question I’ve never heard or seen satisfactorily answered, however, is, ‘What’s the point?’

His tactic is, in other words, “I smell change that I don’t understand.  Rather than spend the time to learn about it, I’ll just try to stop it” 

To prove it is better to stop blockchain, Krugman notes failed projects of OG conglomerates as proof there is no value in the technology.  He cites the blog of a former employee of AWS, in which the employee describes how Amazon couldn’t find a profitable reason to switch to blockchain.

Yes, Amazon’s attempt to integrate nascent technology into their centralized ecosystem is his proof that decentralized technology is worthless.

So, I’d like to take a shot at giving Mr. Krugman the explanation he deserved. If any part of his doubt resonates with you, I hope you’ll find this helpful. 

Progress isn’t always cost-effective

People resist change when the status quo is in their favor and the proposed change is less favorable. Nothing surprising, just a simple mathematical equation we all use to aid decision-making in our daily lives.

But once in a while, there is innovation, invention, discovery that upends natural evolution. When the current system can be upended, and the people resisting that change because it’s more profitable or comfortable for them to do so will try to kill or slow down progress. 

That time is here. Digitally-native generations are pushing for change in organizations

Most spaces on the modern internet are facilitated by a select few mega-corporations — all activity, transactions, and data at some point can be traced back to Amazon, Alphabet, Meta, etc. 

This means that the people who spend most of their waking lives on the internet (which is mostly everyone, now) have very little influence over the spaces they’re in the most. We learn, work, play, create, and socialize on the web, and yet we have no real ownership or autonomy in these digital spaces we give ourselves to. 

In Web1, we began as “users” of a product called the internet.

In Web2, we are the product. Our attention is purchased and sold on the marketplace that is the internet — with just a few companies owning the majority of the stalls. 

Centralized databases and corporate technocracy have created a digital environment in which all decisions are ultimately made by the few, rather than the many. In its extremes, it becomes exploitative and undemocratic, with companies (and whole countries)building private algorithms to shape internet behavior. 

It’s more cost-efficient and profitable for a single company to own non-redundant servers and have sole discretion over what people do on the internet.

What Krugman failed to consider was the possibility that short-term profit measurement is not the most important result to test blockchain’s importance or value. Maybe, to do the right thing, Amazon would have to lose some money. 

Web3 is full of shady opportunists, too. But remove the get-rich-quick shills that leech on every movement that captures money and attention, and you’re left with the core ethos of Web3 — a desire to build digital systems that are equally accessible and equally-influenced by all participant-owners.

Web3 done well is an effort to rebuild organizations from the ground up, not in favor of those who can make the most money from the people using it, but in favor of the billions who use it every day.  And in that way, will create the most value.

But, grand ideals are never very specific, are they? So, let’s take a look at what I do as General Manager of DAOs and DAO Strategy at Flipside, as a concrete example of blockchains in action.

DAOs: How blockchain changes us

Decentralized Autonomous Organizations (DAOs) are a new way of organizing to make things happen — whether as a company, club, co-op, or community —  in which hierarchies are eschewed in favor of a network of co-contributors (decentralized) who self-direct (autonomous) their collective efforts (organization).

Decision-making is shared democratically, and execution is left to whichever individuals or protocols in the DAO are best suited for a task, with the individuals benefiting from their individual work as well as for the value their work creates for the whole organization. 

My job is to help investigate the merits of DAOs and experiment with them, creating a playbook to help future DAO builders and participants work better and more efficiently.

DAOs are one of the most comprehensive examples of blockchains being useful, because everything that stems from blockchain tech is a part of what makes a DAO a DAO;

Cryptocurrencies facilitate the economic layer — funding, payment, and transactions. 

Voting on proposed decisions is executed with tokens earned by participating (or in some cases, purchased, though that ends up severely narrowing the scope of representation in the DAO). 

Roles can be managed with reputational non-fungible tokens (NFTs), which enable gatekeeping of certain functions for qualified individuals, and which is especially useful in sensitive professional settings. 

Valuable actions are recorded immutably; remuneration is released automatically.

And all of that is built atop a distributed ledger maintained by participants of the network, called a blockchain. Each block is a brick by which the cities of the future are being built, and DAOs are the organizations by which the people will govern those cities. 

MetricsDAO

According to some reports, there have already been over 4,000 DAOs of various sizes and purposes.  Our niche in Web3 is data, so the DAO I’m currently helping to build is focused on decentralizing data analytics. 

It’s called MetricsDAO, and it’s a decentralized labor marketplace. Think gig economy meets crowdfunding meets data meets democracy.

People or companies looking for data-driven insights can request on-demand analytics. Analysts can accept these requests and earn reputation tokens as well as cryptocurrency as payment. Analysts also earn the right to vote on decision-making for the future of the marketplace. 

MetricsDAO is analyst-focused, but the concept of decentralized labor markets can be applied to all sorts of use cases. And it’s not a hypothetical, either. Thousands of analysts are already active, and the infrastructure and tooling are being built out actively. 

What we learn building MetricsDAO can help set an example and create a safer path for organizing like this across industries and society at large. 

It’s a massive paradigm shift, and it won’t be easy. But it’s already changing the real world, digitally and physically. 

Times change. Change with them.  

Blockchain tech is reinventing process by leveraging the power of community. It’s rewiring brains for collaboration and individuality/autonomy. It’s changing the nature of transactions, work, and play. Put simply, it’s restructuring society. 

What Paul Krugman wrote was fearmongering, but it was understandable. Our industry is not perfect, and our players are…sometimes the opposite of perfect. But, change is hard.

It’s also inevitable. 

So, get off my lawn.

Or get out of the way.

— Daphne, GM of DAOs at Flipside.

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