Sept. 10, 2021

Vitalik Buterin & Karl Floersch: Retroactive Public Goods Funding

This is a conversation with Vitalik Buterin (the creator of Ethereum) and Karl Floersch (a long-time Ethereum researcher who is working on Optimism). We talk about topics related to public goods funding, governance models, and new social network designs.

This is a conversation with Vitalik Buterin and Karl Floersch. Vitalik is the creator of Ethereum, and Karl is a long-time Ethereum researcher who is working on Optimism (the Layer 2 optimistic rollup).

We begin the conversation with a focus on retroactive public goods funding - a compelling idea that Vitalik and Karl shared earlier this year. We then move onto topics like decoupling value creation and value capture, the sustainability of public goods, Ether's Phoenix (a play on Roko's Basilisk, the thought experiment which originated in the LessWrong community), and governance models as lying somewhere on the continuum from being exclusionary to being conformist. Towards the end of the conversation, we talk about personal tokens and new social network designs.

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Sina [00:00:18]: Welcome to Into the Bytecode. Today I sat down with Vitalik Buterin, who as you probably know, is the creator of Ethereum, and Karl Floersch, a long-time researcher in this space, who's now working on Optimism, the layer two optimistic roll up. We started the conversation by talking about retroactive public goods funding, which is a pretty compelling idea that Vitalik and Karl shared earlier this year. And then we moved on to talking about topics like decoupling value creation and value capture. The sustainability of public goods, Ethers Phoenix, which is a play on Roko's Basilisk, is the thought experiment that originated in the less wrong community. And we talked about governance models and how they lie somewhere on the continuum from being exclusionary to being conformist.

Towards the end of the conversation, we briefly riffed on personal tokens and new social network designs and I thought this was really fun. So without further ado, let's jump into it.

Sina [00:01:29]: I think maybe let's just start by talking about the high-level idea and what retroactive public goods funding is. I think a lot of people are familiar with it, but do either of you want to kind of provide the brush strokes of what we're talking about.

Vitalik [00:01:52]: Sure, so the basic idea of a retroactive public goods finding is that with a regular public goods funding, you look for a project ahead of time and you try to determine ahead of time, which kinds of projects are likely to be useful by some metric or some little voter, some kind of governance or whatever. And then you give money to those projects and hopefully the project as well do what people expect them to do and come up with the results. Retroactive public goods funding says to fund projects after they've already accomplished some outcome. So like for example, if someone comes up with a better zero-knowledge proof protocol, as you give them some funding after they have already released them, the paper or implementation of someone that comes up with new and better Ethereum clients then just to give them a bouncy for that after they've done that.

This is usually coupled with a mechanism where in order for a project to get funding to actually start its work ahead of time, basically there's some way to kind of invest into these projects where that investment is actually backed by the possibility of getting a share of the grant if the thing that you put your money into ends up actually succeeding. This could be done in a lot of ways, so for example, you could just say when you issue a retroactive grant you also give a reward to everyone who helps fund the project and you do it as a kind of a haphazard direct person by person thing. There's also the set concept of project tokens, where a project can just sell tokens and people can buy the tokens, and then these tokens are backed by the possibility of a retroactive brand buying up the tokens.

There are a lot of different ways to do that, but the point is basically that like the proactive funding mechanism is also kind of simultaneously a prediction market. And that if you proactively fund things that actually do end up succeeding and getting retroactive grants, then you win and you prosper and you have more money, but if you proactively fund things and never go anywhere, then you don't win any money. So it's basically kind of bringing start-up VC ecosystem-style alignment of incentives and rewards for making good predictions into the world of funding, and public goods.

Sina [00:04:29]: So where today, if you're building a public good project or you're building an open source project, you have to go to one of these grants programs, and it's just a totally different set of incentives that the people operating those programs have. Actually, I hadn't made this connection before, but it makes me think of this post that Alex Danko had written about how in Canada, you can apply for a lot of government tax credits as a start-up and the process of going through that bureaucracy can actually be nest detrimental for the start-up, trying to fit itself into this square peg in a round hole.

And whereas, they're just totally different ways of operating where an investor is attuned to high-risk reward type bets of like looking into the future. Is that part of why you think, this makes sense?

Vitalik [00:05:41]: Absolutely, I think in general it's harder to judge the future possibility of things succeeding than it is to judge whether or not something already has succeeded. And one of the key things that we want us to do here is to basically provide a pathway for projects to be able to get funding and succeed, even if at the beginning they can't actually convince a majority of people or even a majority of whatever the funding mechanism is. So, if you have a team and no one trusts you because you're 30, you're doing some completely new approach that nobody trusts, or let's say people are suspicious of your team because of your background or something but then you end up proving someone else, right. It's much clearer that you are right after you actually already have already succeeded and so you don't need to have this process of the committee judging people all the way at the beginning when no one has any information.

Sina [00:06:50]: Yeah, go ahead Karl.

Karl [00:06:53]: Sure, so I mean I can just give a little bit of story behind this. Like, this is not some theoretical magical thing that we're trying to solve a problem for. No, this is like an actual problem with people that I've chilled with and have actually experienced. So, I was working on a project called plasma group. Plasma group was a non-profit and plasma group's mission was to scale Ethereum, right? It's like using layer two and scaling it and we spent a lot of time trying to get grant funding, trying to go through this process to get enough resources and enough people to basically invest in us and push this future forward. And it's very clear there obviously needs to scale but what we were building was obviously everything is open source and public good and specifically, the way that we were structuring the company was a non-profit, which meant that there's like no shares, no upside, you are literally just asking for grants. They're like a bunch of problems with grants, one of them is like, okay, and if one person gives you a great then another grant program might be like, oh, they're fine. They don't need the money or you end up raising something like not over a million dollars, probably less than a hundred thousand dollars.

Sina [00:08:28]: It's totally different than in the VC funding dynamic, where if you successfully managed to get money from someone, it actually increases the incentives for everyone else where they're trying to get into the round as well.

Karl [00:08:41]: Exactly, so this is just a kind of broken mechanism for fundraising, and the problem is that we need to fundraise to create the public goods that are going to build and further the protocol, namely Ethereum. So then we're like, okay, well if we can't do a non-profit then I guess we need to do some kind of for-profit entity, but thankfully there is a public benefit corporation that allows you to define a charter so we can maintain fully open source and be in shiny fair access to public goods. And like that's an okay vehicle and to get some funding and so we got some venture funding for that, and that was enough for us to actually build out the team and deliver on scaling Ethereum. But the reality is that that is not a long-term sustainable vision for funding public goods that works in an industry that there's like a lot of hype for and where there are people who believe that there can be some profit motive somewhere. But the question is, this was the last resort for us, so we don't want to do that. We want to be able to raise money on being able to provide utility for everyone. Like giving people what they want and building public goods, we want to convince them we can build something really great, and that should be enough to get the funding. That's why it's like this idea of building out a system that would give open source projects which then incentivizes VC-like entities to invest and avoid that weird bad incentive of grants programs that is just so appealing.

Sina [00:10:35]: How do you think about the question of sustainability? Because that's one thing that's come up as I've been a part of the EF's grant making operations. Let's take the case of layer twos and say state channels a couple of years ago where the Turner foundation was supporting these efforts broadly across the board. But one of the questions that were always there was okay, like this can be done for two years, four years, and six years into the future. Hopefully, there is a way for these projects to become self-sustaining, and if the project internally has a business model where I can capture a value that can become an engine that helps it propel itself into the future. With this model where we're talking about that doesn't necessarily exist yet either, so how do you think about that question?

Karl [00:11:34]: So, I think that there are two key things that we need to solve. First, we need to build mechanisms that are very understood that extract value for the protocol, the protocol being the most general form, this can be any protocol. It can be block chains, it can be things on top of block chains layer, two layers, three, all these things. We need to build systems and build them well where they can fairly extract value and then repurpose that value towards funding public goods. Now, of course, the thing that I think I'm most excited about with regards to sources of funding, it's MEV. So it is, we want to minimize MEV as much as we possibly can, but there still exists some value that is fundamental transaction fees, priority transaction fees specifically. And so that is a clear source of. The fundamental value that should not go to the highest bidder, it should go back to the community. There are probably a number of those sorts of mechanisms, but now notably that's only one side of the story because that mechanism should be governed responsibly and used to fund public goods that don't have a value extraction mechanism. So we can decouple value creation from value extraction.

Sina [00:13:03]: Like there are a certain set of things that have a very broad footprint and the ecosystem let's say just transactions on their thorium maintenance and now the EIP 1559 burn being a way of capturing that value for the ecosystem or in the case of optimism, there are some sequencer auctions potentially. And so using those as kind of an umbrella external source of value that then gets funnelled into these public goods projects under its umbrella.

Vitalik [00:13:43]: I think one other way of thinking about it is that it's really important to be able to decouple public good value from the ability to get a business model. Like basically if you rely on a model that assumes that every project is kind of supporting itself independently, then the value of every project's ability to get funding is going to be dependent on the possibility that it gets the business model at some point in the future.

And now you could argue that like, oh, theoretically anything could happen with anything and what we thought Eunice swap was pure public good and it turns out they could just pump out a coin and a mental paradigm got very happy off of that. That's not something that we can really sustainably rely on in the long term, especially once the space and funding become more competitive. Like if there's a lot of people who aren't going just to be saying, oh, look at you and us well anything could happen with anything and so, therefore, let's invest in the fluffy stuff and for magic.

At some points, there are going to be a lot of things that either just has no chance that how of becoming very big multi-million dollar things like, for example, software libraries, documentation writing, a lot of different things, basic research, and or you don't want teams to feel forced to spend a lot of their time instead of working on the thing that they're best at, instead of trying to figure out how to make a business model into whatever they're doing. And so, you'll want to decouple, right? There are going to naturally project scores, the value obstruction opportunity. Either a value that they provide or even just the amounts of funding that they really need to get more to create more value. And then there's also going to be a lot of projects, whose ability to extract value is far below what they actually need to develop and far below the public value that they get per bud. What you want to do is just basically matchmaking and have the things that can extract value preferably like a small number of kind of high value, durable things that can extract value, and fund the rest of the ecosystem they can't do it on its own


Sina [00:16:28]: I totally agree with the first part of what you were saying of you can't expect every public good to chance upon a business model. That's almost like the definition of a public good is that you can't capture the value that's the whole thing. You can't exclude people from using it, therefore you can't charge them for that privilege.

And then the later part of what you said, there's something unique here where it requires there to be groups that are taking the macro perspective in mind and they're not optimizing for their own narrow self-interest, which is like every other agent in this system is basically trying to maximize its own profits. But then you're saying that there are people here, there are organizations that are taking the macro perspective and trying to match make and foregoing their own profits and giving it to other people.

Vitalik [00:17:38]: I think the sacrifice that those teams are making is actually smaller than you're implying because if a project like clearly puts its stake down and says, we're not just there for the benefit of our investors and our team that's something that's a public good for the ecosystem. Then lots of people in the ecosystem are going to be much more willing to support them. They're going to be much more excited about integrating with their plans. They're going to be much more willing to provide all kinds of free labour for it, whether it's helping people out on forums or participating in discussions or whatever it is.

And so there a lot of this kind of like very warm, fluffy, social dark matter that you cannot tap into. I mean only if you actually can convince people that like you're trying to benefit the wider ecosystem and not just itself.

Sina [00:18:34]: It's the soft, rather than the hard stuff and there can also be especially in an ecosystem where relatively speaking pretty early it can be enlightened self-interest through like giving X percent of my profits to the ecosystem, the whole thing is going to grow. Even if I'm basically being selfish, I'll still end up being more profitable in the long run.

Vitalik [00:19:05]: Yeah.

Karl [00:19:07]: I mean, I think that this is a very important point and sticking point and thing to think about, at least I want to think about it and really like understand it because, in some sense, it comes down to everyone's choice. I'll just be a little alarmist and silly, you know? So take me with a grain of salt, but I'll still do it. I make the claim that imagine we are in this moment in time where human beings still have a solid amount of bargaining rights where we're at least we've created this new crypto thing and a bunch of people got wealthy and now there's like some kind of decentralized value and people actually have pretty good say about where they are, where they're, where they're headed. We haven't created structures that are like really systems of control yet. We haven't like created the walled garden of block chains yet. So I think that this is a really important moment for us as block chain users and builders of the future to choose projects and choose systems that do promote our interest, just like our collective interest, just like the topic was saying that warm and fuzzy. I think that it's warm and fuzzy and I think it's out there. It's like dark matter that you can't really see but definitely exists. But at the same time, we have to enforce that dark matter and make sure that we all like unify behind it, because this is a great moment where we can say okay, we are going to choose projects that support public goods, over projects that are purely self-interested building private goods.

Sina [00:21:03]: It makes me think of one thing you said in your ETHCC talk, which I was watching earlier, where you called it Ethers Phoenix. I really liked that you can do a better job explaining it instead of me stumbling on myself.

Karl [00:21:24]: I'll try, so I don't know you're not supposed to talk about Rokos Basilisk.

Sina [00:21:31]: As anyone who hears that is basically cursed.

Karl [00:21:33]: But we have the reverse course, so now we can start talking about it. So basically Rokos Basilisk is okay if the evil super-intelligent AI is in the future. Then if you don't help come into existence, then it's going to, hurt you. It's going to punish you. It's going to kill you, whatever. That's the draw to the tragedy of the commons. That's like us we're like defecting. We're like, oh, we have to create this evil system that's going to control us, that's Rokos Basilisk. And then, on the other hand, this is an iterative game, this is a prisoner's dilemma that is happening many times. So we know that the Nash equilibrium in this iterative dam is let's cooperate. Let's actually work together. So Ethers Phoenix is this idea and it actually works really well with public goods funding because it gives retroactive public goods funding. Because it gives retroactive public goods funding, a bit of a salvation story, because it says, the sooner you are to collaborate and build for the public good and work towards this like collaborative future.

Well, that's a really important public good that you are providing and that's kind of the earlier do you do that, the more value you should be receiving in the future. Because the future we're trying to like create this little draw, this attractor in the future to this like cooperative land. And so the sooner we should be rewarding the people who help us get there so we can actually all start collaborating and not defecting and the sooner we do it, the more we'll be rewarded. So it's kind of like if you do good, then you go to heaven. I think it's actually legit, I actually think it is.

Sina [00:23:30]: I think so too, as you're kind of crawling back the graph of contributions of everyone who's helped some current public good that the world is enjoying. If you happen to be one of the roots, no, its 30 years ago and you happen to be alive to enjoy the rewards that are going to be given to you, that's a very positive thing. And I feel like to some extent it already happens, especially inside Ethereum where people who have been doing good things for the ecosystem with no expectation or desire for being rewarded. I mean, one person is Austin Griffith, who's just helped a ton of developers get into Ethereum and he's got random airdrops because projects just appreciate him and wanted to help so it's cool seeing that in action. I wonder if this does make me kind of have one question though, which is, that there is a difference between someone working on a public good because they're drawn to doing that work versus doing it with the expectation of profit.

Again, from the perspective of the Ethereum foundation, when I thought about public goods, there's like kind of two amongst probably other ways of approaching it. One is making people realize that this is something they want to do. Through setting the cultural norms and the vibes in the space of no, it's good to give back and say something like Bitcoin grants, is that, a distillation of it. There's no profit motive in there you're giving to these projects because you want to support them, but then a part of me also thinks that I think Karl  you say that's not going to scale, that's not truly sustainable. And so the other path is how you do take things that are public goods and kind of try to inject the market-based profit-seeking dynamic into them with the least amount of loss possible of like the true kind of genuine thing that's going on and help them grow using that engine.

Vitalik [00:26:13]: I think having that component is definitely important because the set of people who can do the good work that needs to be done on the public goods especially in the early stages like it definitely does not overlap perfectly with the set of people that are willing to sit back and hope that that Phoenix is kind to them five years in the future. This is the motivation behind investments in general, if someone is willing to go ahead and just to fund the projects in the early stage and pay those expenses like that's also a type of contribution, it's a type of contribution if you had a project turns out to be really important should be rewarded too.

Sina [00:27:07]: So you were saying that investors even are kind of doing service within this system.

Vitalik [00:27:14]: They definitely are.

Sina [00:27:16]: There is a coordination game here too, people need to know that the exit is going to be there at the end. What is the order of operations here for actually getting this thing to work?

Vitalik [00:27:35]: I guess like spin up a DAO and figure out exactly what the governance is and actually like launch the first version of the thing and actually connect a stream of funding of some kind. So people can be confident that, Hey, this is something that exists. I personally think that like the DAO should just start handing out retroactive grants immediately just so that people can see how the governance works and people can see that it works. People can see what kind of outputs it has and just verify that the outputs are reasonable and then once people see that there is a pattern and that there is continuity for some period of time, there was just going to be more and more confidence that it will continue to exist going forward.

Sina [00:28:27]: I mean, the funding can also come from anywhere, right? It doesn't even need to come from a continuous source to start, these can be decoupled as well.

Vitalik [00:28:41]: I think the possibility is that we have in the crypto space aside from like individual and institutional donations because we have those already. One is the stream of funding, so some percentage of transaction fees or MEV would be one example. Another is the issuance from buying new coins, like new coins that are launching do have this problem that they need to have some kind of initial issuance and that initial issuance has to go somewhere. So, why not have it go to a credibly neutral pool of community contributors. A third would be, well there's ongoing coin issuance, there's a new coin issuance. You can sell NFTs obviously, who wouldn't love to have the NFTs. You can give them fancy names, like in the world of Warcraft, like the scale of Ethers Phoenix. Collect all 10 of them, you've got your red scale of Ethers Phoenix, you got your prismatic scale of Ethers Phoenix Prismatic is what you get when you combine red, green, and blue together. You can make a whole game out of it.

Sina [00:30:07]: What is the status of this, Karl is this something that optimism is thinking of building or you guys are working on?

Karl [00:30:20]: We have 1001 things that we need to do but indeed this is something that we are thinking of building in a very vague sense that is more amorphous than Morpheus. But generally, it is definitely real, the specific thing that is most real is all profits that are made when we run the sequencer. So, a little background, we have a deployment of optimistic rollup and there are transaction fees on that network and some of those transaction fees go to the sequencer. And so all transaction fees that go to the sequencer, all the profits will be used for retroactive public goods funding. So that is a credible source of funding and in fact, that is something that should indeed like persist and be something that roll-ups in general as any role of that we contribute to, we won't have, we won't know for sure what the future holds, but they should fund public goods. `And so I'm hopeful that if we build good roll-ups, we make it easy to deploy them so that there are low switching costs, we do everything we can, then it will maximize the amount of retroactive public goods funding that can be credibly committed to building up the protocol. So anyway, long-winded way to say we love retroactive public goods funding, and all the profits will go to that.

Sina [00:32:01]: It really feels like people can really attempt to do this in many different ways and the different pieces of it can be plug and play of how the voting is done on what projects have been valuable or where the funding is coming from and just every part of it.

Another thing I was curious about to talk about was something you talked about metallic of conformism. Maybe the Meta question is, many of the decision-making mechanisms and Ethereum are kind of tending towards DAOs and discussion in a public forum to decide how to proceed with something. I guess what you're saying which is something that makes sense is that they're conformists, it's hard to make decisions that are controversial with many decision makers involved.

Vitalik [00:33:25]: Basically it's hard to make any governance that is not either conformist or exclusionary if it's centralized and it's exclusionary and like whoever the guy at the centre is can make plenty of controversial decisions as we've learned so many times and in history but no one else can. And if it's decentralized then basically the decisions that get made are just going to be decisions that have some appeal to the entire group, in either of those cases, there isn't really much room for things that come from outside the system, but then it ends up being successful to succeed and prosper. In the realm of private goods, this is the thing that markets are so wonderful at. Anyone can just start a company and it doesn't matter how many people believe or disbelieve in you at the beginning, as long as you find enough people who believe in you that there are enough resources you can actually get your thing off the ground and running.

If you end up succeeding, then whoever was right ends up prospering? So it's an incentive not to target scan of conformity and the presence. It's an incentive to create something that will be recognized as valuable in the future. Now, of course, this is not perfect and there was definitely a kind of public delusion that can persist for decades or even centuries. And the retroactive anything is not necessarily going to capture that, but it's still a significant improvement over the status quo. I think this is even a larger point that can go beyond ends up public goods funding, like think about social media, for example. There's very little incentive or kind of pressure and social media to say things that will continue to make sense two years from now. And the pressure is to just say things that like give you the warm and fuzzy Roz among your peer group in the moment. And if it turns out that your peer group at the moment is like completely wrong a year from now, there actually isn't that all that much accountability. We've been seeing that the COVID situation happened over the course of the last year and a half, one of the fascinating things about the COVID situation is that it's so effective at showing these dynamics happen in real time.

Like normally, when one of these professional political blabbers makes some blab you don't actually know that they've blabbed something dumb until like five or 10 years in the future and by then everyone forgets. But here for just this one brief moment, somebody you have professional blabbers makeup blind, but they get proven to within three weeks. Sometimes its three weeks, sometimes it's three months, sometimes it's an entire year but I mean, you can see how the dynamic works. There are plenty of predictions that got made both by mainstream public health authorities and by kind of various tribes that each claim that they're better than mainstream public health authorities and we see how all of them kind of fall flat on their face very publicly in a lot of situations. So I think there is this kind of a broader question, even going beyond crypto and going beyond the retroactive public goods funding specifically. Can create systems that give incentives not even necessarily thinking about it in terms of incentives, but even like create selection pressures that amplify things that are not just attractive to people at that particular point in time, but things that actually do stand the test of time and that don't look ridiculous at least one or two years in the future, hopefully, five or 10 years.

Karl [00:37:43]: So this actually, interestingly relates to what you were saying before Sina about some people just wanting to work on things that are good for humanity, and then there are some people who want to like make profits and like these aren't always the same things and this is a problem because you can't rely on just people wanting to do the right thing. I think that this is why my new favourite thing is that what we are all working on is a social network. We are working on building a new way to bring a signal to one thing and reduce the signal of another thing and give money to one person that is actually producing a value and not to another. So this is all about the fact that there's a difference between doing something that you think is going to be impactful and good, and doing something that you think is going to be profitable. The fact that those are different things is literally the sickness of our collective society.

Sina [00:38:52]: There is a bug in the system.

Karl [00:38:53]: That's the bug, that's what we need to bring into alignment and so just like I'm a news reporter, that's saying, oh, COVID, it's not a problem, and then it blows up. That is the same issue where you need to be in alignment with what is actually the long-term correct thing. You want to amplify the good signals and reduced the bad ones, people spend too much time on their social media. They spend more time than they want to, that's a misalignment. All of these things, we need to work on them.

Sina [00:39:27]: Well, I feel like some of these things are just very deeply embedded into human nature or maybe just growing up in like the waters of our culture. They kind of seep in very deeply but it really feels like it comes back to being self-centred and wanting to not feel secure in the world. Wanting to accumulate enough resources so you can survive or I feel like it's those individual impulses that you put together into a system of people that results in these outcomes.

Karl [00:40:07]: It feels like there is a cultural war and market design that needs to happen. And maybe the market design, we can use the markets to fight the cultural war. I really do think that there are many frontiers of problems and we have to choose which ones come first. So I do think that something as simple as promoting open source software over closed source software I think is a big one that will go a long way. Things like what the Vitalik said. What exactly is the mechanism for incentivizing that long-term social media posting?

Vitalik [00:41:05]: I mean, theoretically you could just do something literally similar to retroactive public goods funding. Like you could give people karma for their posts two years inthe future.

Sina [00:41:20]: That would be very interesting because I feel like we also have very short memories. We literally forget what happened, but if baked into the system, it's like how Google photos show you like two years ago on this day, this is what you did. The system is reminding you to think about the past and if that is baked into the dopamine hits that the social media system is giving you, like how what you said two years ago has aged that would be very interesting. Maybe let's just think through the ramifications of that bug, what that even look would like if Twitter was going to in the future reward good posts today.

Vitalik [00:42:09]: Interesting, I guess the one simple option is, that Twitter would just sometimes show you posts that people made two years ago. And it could give you an upload and a download button and when you like a post or someone else tweet then they're like two years from now we'll see if your likes kind of correctly predicted the uploads and down votes and if they did then your likes become more powerful or something that's one way to do a prediction. It needs to think more about this, there's also the question of like, is there an intention of making an absolute score, or is it a kind of community by community thing or emerges out of graph structure somehow I don't know.

Sina [00:43:09]: Another idea that came to mind was if your reputation on the site how prominently you feature and are recommended as an account to follow for other people is a function of how many, how many likes and retreats you've gotten. But these likes the more time has passed between that the more value they have. So they start out being a very thin lightweight if you get it five minutes after you posted, but if you get it two years down, the line it's worth way more. People would abuse that in all sorts of ways as well.

Vitalik [00:43:52]: Yes, we know from our discussions about collusion resistance.

Sina [00:44:00]: Have you seen any recent social media experiments that you're excited about?

Vitalik [00:44:07]: Let's see here, so I know that there are multiple projects that are interested in this like person token thing. And this is something that I view with a combination of excitement and apprehension, so I think that bid cloud is the most public one of this example, but the results they're far from the only one. There are plenty of others that are trying to do person tokens of various kinds. I guess the excitement that comes from it is kind of a retroactive thing where if you buy into a rising star and then end up becoming a risen star, you get a reward out of that, and by buying into a rising star you are in there and helping to kind of push their token price up to and helps more people see them. The worry that I have with these schemes in their current form is that I think the average social media blabber does not realize the extent of the moral responsibility that they're requiring when they basically start a profile and open up a personal token that anyone can buy into.

Are people going to understand that they're basically creating this crowd of fans that's buying into like basically their futures and that's expecting them to continue pumping out content on this platform and working hard to improve themselves within the context of this platform, over the context of some other platform that honours projects tokens, and that they might get really angry if you just get bored and decide to go do something else. Like these are things that I think there hasn't even been enough time for. Like there hasn't been enough time yet for like this full cycle of excitements and disappointments to happen and so we don't really understand the social dynamics of this sort of thing. In general, I believe in experiments and I also hope that the experiments don't grow too quickly before they're kind of one full round of Bremen bus can happen to see how they actually work both in good times and bad times. I guess welcome the existence of different models, but we'll see.

Sina [00:46:34]: It's like the vitriol that token projects get when the price goes up and down targeted at an individual.

Vitalik [00:46:42]: Totally.

Karl [00:46:43]: Sounds terrified, oh my gosh.

Sina [00:46:49]: I mean, some people have that today, like influencers or athletes.

Vitalik [00:46:57]: Right, but you don't have large numbers of people buying, I don't know what the name of an athlete.......

Sina [00:47:15]: It's a totally different ball game if it's tradable 24/7.

Vitalik [00:47:20]:  And then the other fun thing is like, if it's trainable it's 24/7 and then, w let's say LeBron makes a comment on some political issue and you get to see in real time, how is providence on political issues the fact that price it, is that going to just terrain a little broad to have political opinions that purchase still goods?  I don't know, such a thing required time to figure out the consequences.

Karl [00:47:44]: One funny thing that I think we are moving towards and I don't know if we like really think about it too much, is just the mutability or the concept of identity not being tied to a person is just becoming more and more visceral. As time goes on it's like more and more a brand of LeBron, like LeBron coin is not investing in LeBron James's wellbeing, you know what I mean? It's investing in a particular identity like all-star basketball player, or a funny guy on videos. We're already getting to this point and then the movement into like avatar, influencers, and whatnot. It's like really creating that very visceral and very real thing that is like, oh yeah, all of our attendees are kind of made up and we're just kind of playing different roles at different times.

Vitalik [00:48:50]: Well, TIL what sports LeBron is part of.

Karl [00:48:55]: Okay.

Vitalik [00:48:56]: The pseudonymity and the kind of like multiple identities thing is definitely very interesting and I definitely expect it to like keep growing over time. I think grown a lot just within the crypto space and outside the crypto space as well already. I think people are going to realize more and more that having like one face attached to everything they do can often mean even more liability than it is an asset. One other fascinating thing that might change things is, what your knowledge proofs will do? Could zero-knowledge proofs make reputation portable without revealing the source of the reputation?

Karl [00:49:41]: That would be so cool and if you do some like bad thing, then your reputation can be reduced from the global scale, I guess. Or like global from a community's perspective at least we don't want to like judge people's lives objectively.

Vitalik [00:49:56]: I know Barry Whitehat is coming up with a model that allows negative reputation while still preserving privacy, which is a fascinating,

Sina [00:50:06]: Wait, which one is that?

Vitalik [00:50:08]: It's an ether research post somewhere. I forget the name and isn't everything any research somewhere that we forget the name of.

Sina [00:50:16]: That seems like a very powerful idea because it kind of allows people to shapeshift and to take on popular opinions, it's a force against the conformism that we were talking about because you can kind of like disappear here and appear in another skin and just say something that the crowd doesn't believe with all of the reputations behind you.

Karl [00:50:44]: Fascinating.

Sina [00:50:45]: I mean, it's also happening on crypto Twitter today where some of these unknowns say things that the known people don't say. They just express their full opinions because they're not afraid. We can close it here.

Vitalik [00:51:09]: Sounds good.

Karl [00:51:10]: Thank you.