The Dutch Boy Problem and Web 3

Abstract:

One of the most encouraging aspects of the new grass roots models for economics is the agility that they have tended to enjoy. It’s encouraging because it equates to dynamic systems; that can adapt to the trials they face, as they continue to develop. Web 3 is suffering a similar issue that the traditional derivatives market suffered; that resulted in a rigid system that is hostile to it’s own future development. This is the Dutch Boy Problem. By solving for more discrete, systemic issues, one is essentially putting fingers in a dyke; and the system becomes reliant upon those implemented finger pokes. As the number of discrete ‘solutions’ increases, the system dynamics decreases; and the system thus loses agility. A possible solution to this issue may be accommodation of normative influence with tools for checks and balances. This would allow the collective intelligence of the community to solve for issues as they arrive; with intrinsic, human, game theoretical behaviors.

Trustless models and humanity as externality:

Trustless models intend to remove the human factor from the equation. This has been demonstrated; in the cat and mouse games, to be a somewhat fruitless endeavor. Gaming of the system has been historically observed to be a constant; regardless of intentions to prevent it. This is the fatal flaw of considering the human factor to be externality. There is absolutely no reason to think that it will work “this time”.

Not only humans, but all forms of life, have intrinsic strengths for dealing with economic issues. This has been demonstrated with behavioral studies in Game Theory. Recognizing these behaviors and anticipating them can help to produce models that are coherent; with respect to expected behaviors. Rather than responding to discrete issues with rigid systemic amendments, one might instead create tools for normative influence; that are contextually appropriate to the expected behaviors. This would allow the community to coordinate and address issues. Degrees of success and failure would thus be the metric for measuring the coherence of the tools.

John Danaher and Algocracy:

Governance by algorithm has had many consecutive failures. This appears to be because those who intend to exploit the system tend to be much more intelligent than the algorithms that stand in their way. It’s of course wise to assume that the end game is likely to be a game of cat and mouse; however a rigid system that is at a disadvantage is likely to allow more gamesmanship. There is no reason to assume that algocratic models will become successful until algorithms become as intelligent as humans. The data that we currently have demonstrates it’s continuing failure against exploits.

Vlad Zamfir and Cyberpunk Politics:

Vlad has been a very vocal opponent of systems thinking. In his defense, some of the systems thinking begs opposition. This notion of algorithmic governance is a clear hindrance to all political influence. I myself loathe politics; however I have an interface, in my own project, to accommodate it. This is required for genuine governance.

Agility and Distributed Intelligence:

The agility of systems is in essence distributed intelligence. It’s the ability of communities to respond to the issues that they face; with a dynamic system that allows it. This isn’t likely to be the case with an algorithmically controlled, tiered system that essentially ties their hands; to create another insufficiently intelligent algorithm to address the problem. Rather, tools for game theoretical responses can allow the community to address problems with their understanding of them. This is Participatory Democranomics; as opposed to ineffective algorithmic dictatorship.

Is the Crypto-Community really decentralized?

There is a wealth of evidence that suggests that it is not. Much like traditional models, there is a distribution of top down models; that do not allow the system to respond to bottom up pressures.

The Open Source Pyramid:

Open Source wares are developed in a pyramidal structure. The development moves up the pyramid from a large distribution of prospective developers. This structure is however not so rigid that it doesn’t respond to upward pressures. The upward movement of developments in some way ensures that the top of the pyramid can respond to the bottom of it.

David Brin’s Pyramid on it’s head:

A pyramidal structure can be democratic; if it is accompanied by one mirrored on it’s head. This creates a give and take between top down and bottom up pressures. This requires the system to be dynamic; in order for the top of the pyramid to respond to the bottom up pressures. This is what keeps the Open Source Pyramid democratic.

Insurance Contracts as an example:

Insurance contractor options could be a very helpful tool for the community to address the pump and dump schemes that plagues it. There is no requirement for trust where one is obligated to allow others to bet against them. This would allow the community to hold those who game the system accountable; by making it cost them coinage. The compensation for being an insurance contractor is of course the coinage return.

Closing Remarks:

Allowing the community to do more than pump up the support of the currency is probably essential to the survival of nascent stage tokens. As the endeavor as a whole develops, new solutions should be expected to drive the previous ones into deprecation. Understanding that a Web 3 will lead to a Web 4 of sorts should create some degree of preparedness for it. For tokens that have a will to survive in the long, this probably means dynamics. One should expect more dynamic tokens to ‘emerge’. DAOs exist for a reason.