COMMUNITY BUILDER

Allergy Shots

I’ve embarked on a campaign to cure my seasonal allergies. Trying to understand the details of this immunotherapy reminds me how clarity effects confidence.

With allergy shots that require weekly visits for the first several months, then monthly visits for 2-5 years, you’d think there would be a sharp collection of resources to highlight treatment options, insurance codes linked to cost of care, and benefits/risk comparisons.

Proactively investing in your health is hard enough. Feeling like you’re taking a gamble without clarity on how a long-term effort may (or may not) come together, makes it way harder. I understand that healthcare is complex because everyone’s body and health habits are different, but there’s seemingly enough commonality to allow for a solid base of standardization, paired with different options and disclaimers to keep the variables in focus. Wish me luck, but this decision-making process has been cloaked in fog.

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“Imagine life as a game in which you are juggling five balls in the air. Work, family, health, friends, and spirit. And you’re keeping all of these in the air. You will soon understand that work is a rubber ball. If you drop it, it will bounce back. But the other four balls – family, health, friends, and spirit – are made of glass. If you drop one of these, they will be irrevocably scuffed, marked, nicked, damaged or even shattered. They will never be the same.” –Bryan Dyson

As we look through the lens of entrepreneurship, delivering fearless clarity may put you on the hook and will turn some prospects away, but it adds efficiency to the sales process and leads to more satisfaction from better customers.

This does not mean we simplify everything. Simplification is polarizing, so delivering confidence through clarity is more about sequencing. Try delivering less information to ensure clarity, then support a well communicated slowness with connected resources to meet a prospect’s specific needs. This sequenced effort gives people what they need, when they need it. When everyone feels informed, confidence increases and the opportunity for more lasting collaboration is refined.

By Ben McDougal, ago

Pebbles

If you’ve ever attended a live sporting event, you’ve heard Sandstorm jam through the crowd. This 1999 track was spun by the Finnish DJ and record producer, Darude.

When this EDM icon visited PLATFORM in Des Moines, I said “yes” to adventure and was rewarded with a memorable moment. I was capturing some loud video from the front and all the sudden, Darude called for my GoPro! Footage with a DJ on stage is crazy enough, but having a world-renowned artist grab your camera to shoot their own video is something a bit more epic. Of course, this meant I had to mix up a fresh edit.

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Darude 🪩 Des Moines on YouTube

Before the set even started, everyone knew Sandstorm would be played. Darude delivered his classic, but the build up was perfect. The tiny pebbles he stacked into his set kept the crowd teeming with anticipation. Each time he dropped hints from Sandstorm, the crowd went wild and when his hammer finally dropped, the place absolutely shook. We’ve all enjoyed concerts where sequenced sound brings everything together. These impeccable build ups remind us how to stay juicy.

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My latest innovation drops April 1st, 2023. Here’s your sneak peek!

When delivering your best becomes a habit, it’s easier to remain consistent. As persistence deepens loyalty, connection leads to more connection and trust leads to more trust. Within such abundance, a lasting appreciation remains on tap for what you’ve achieved in the past, while also brewing fresh intrigue for whatever is next. This makes your work feel like play and as we dance to the endless beat, individual notes align to define your music. Over time, artists can blend these pebbles into an extraordinary wall that’s unmistakably you.

By Ben McDougal, ago

Organizational Shift

DAOs are a revolutionary way for connected humans to organize, coordinate, and pool resources without the need for centralized authorities or intermediaries.

These community-led groups transparently establish operating agreements and manage a shared treasury. By leveraging smart contracts, all decisions made by a DAO (“Decentralized Autonomous Organization”) are recorded on an immutable blockchain and governance tokens are used for gathering consensus.

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This caffeinated contribution was written by Alex Myers. This certified futurist is a DAO Agility Coach at Aragon, a web3 platform for building DAOs on open-source infrastructure with governance plugins. Alex is also a web3dsm organizer who believes the more we teach, the more we learn.

There are over 11,000 DAO’s in operation, encompassing $11B+ in treasuries, varying widely in size, scope, and AUM (“assets under management”). All of DeFi utilizes DAOs to govern their treasuries, yet many are simply small groups of like-minded individuals who want to quickly gather, pool capital, and make decisions. 

DAOs, like companies, come in many forms. Venture funds, investment groups, grant committees, philanthropy, media, and more. Here are the world’s largest DAOs and here are different types of DAOs.

Besides a wallet and owning cryptocurrency, no technical skills are required to create a DAO. Several no-code operating systems (Aragon, Tally, Colony, DAOHaus, and others) enable anyone to create a DAO in minutes by simply selecting governance capabilities, funding options, and voting requirements. Given many DAO operating systems are open-source, custom smart contracts and powerful plugins can add tailored functionality without additional cost as well.

To join a DAO, new members go through an onboarding process. Once confirmed, members can be given a digit asset, such as an NFT, to verify the details of their participation. Members are then granted access to a communication tool (like Discord, Telegram, or Slack) to collaborate with other members as decisions are made on which projects to pursue.

DAOs are different from traditional companies in that there is no hierarchy and decision-making is done through pre-set protocols and smart contracts. This decentralizes power and allows for more operational versatility. Members can work from anywhere and focus on work management rather than people management. Contributors can work in multiple DAOs and choose to remain anonymous or more identifiable within the group.

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Cheers to this web3 series brewing on the future of how we connect, communicate, and collaborate online!

As hype cycles and funding began to deteriorate in 2022, due to (mostly) macroeconomic forces, DAOs realized that community over performance was unsustainable. Today, sustainable DAOs utilize battle-hardened methodologies like Agile and KPIs to enhance coordination and productivity, while still maintaining a sense of community.

While all DAOs use crypto-assets to establish themselves, the size and scale of a DAO can impact its operations. Larger DAOs require more planning and coordination around governance optimization, commonly breaking into smaller, goal-oriented teams to define their own budget proposals, objectives, and success metrics. Since treasuries are often much more significant, DAOs members expect historical performance and analytics before voting to allocate funding.

DAOs are built on open, borderless, neutral, and censorship-resistant blockchains. This distribution is paradigm-shifting and a big reason for DAO growth. However, such dispersion also exposes DAOs to legal ambiguity. Since DAOs aren’t beholden to country-specific laws backed by traditional business structures (LLC’s, S-corps, C-corps, etc.), they must consider incorporation to minimize liability for members. Smaller DAOs with reduced financial capital are not as complex and more nimble, which allows them to define budgets, proposals, and goals with less effort.

Depending on the size, composition, ongoing activity, and how a treasury is funded (seed funding, ICOs, airdrops, grants, etc.), taxation and regulatory compliance is another presiding element for DAOs. This is especially true if a DAO is generating revenue by charging fees and distributing them back to token holders, as they could be redefined as securities and create taxable events. In short, the larger a DAO becomes, the more professional legal support, financial strategy, administrative attention, and overall leadership is required.

As we consider the future of work, DAOs have the potential to revolutionize the way organizations are structured and operated. DAOs re-imagine human coordination to be more equitable and transparent. With exponentially improving blockchain technology, alongside network effects, joining and contributing to DAOs will become a self-sustaining cycle of growth. As the world digitizes and becomes more decentralized, DAOs are poised to become a powerful force for change, disrupting traditional institutions and fostering a new era of innovation.

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You’re now ahead of the curve! Welcome to Web3 is a shareable reference and follow the Web3 tag for more reflections flavored in futurism.

By Ben McDougal, ago

Non-Fungible Fabric

Ownership is a fundamental principle of web3. NFTs (“non-fungible tokens”) are digital assets supported by smart contracts that connect to a blockchain. Each NFT is unique, which allows code to autonomously apply, track, and transfer digital signatures and verifiable ownership.

With cryptocurrency supporting the economy of web3, NFTs can be thought of as property within this space. Leveraging the immutable nature of a blockchain, NFTs allow anyone to instantly verify authenticity or trace provenance through the history of ownership.

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This caffeinated contribution was written by Will Schneller. This artist turned founder, graduated from Iowa State University and is now an Entrepreneur-in-Residence at Drake University. As a curious creator, volunteer organizer for web3dsm, and owner of Totality – #14, Will has been exploring web3, AI, and how community brings it all together.

The hype of Beeple’s $69M NFT sale led to an explosion of interest in 2021, but the first NFT-like implementation can be traced back to Bitcoin’s Colored Coins Project proposed, in-part, by Ethereum co-founder Vitalik Butrin. Within this 2013 project, the process of making something distinct, like a fungible Bitcoin, was scrutinized by adding metadata into a coin. Smart contracts that include trackable metadata has become a critical component of NFTs. The most common standard for representing ownership of non-fungible tokens, is ERC-721, which has been battle-tested with the most recognizable NFT collections and is continually being refined.

There are two main misconceptions with NFTs. The first is that an NFT is only digital art. This overlooks one of the most powerful attributes of NFTs — flexibility. NFTs are web3 primitives that can represent nearly anything. They allow us to weave together a future that removes the barriers between the physical and digital worlds. The second is that an NFT is only a URL. While some NFTs use generative algorithms to write an image or other types of data directly to a blockchain, most NFTs reduce computational costs (which translates into higher gas fees) by innovating around the theory of ordinals or hosting larger elements of the asset on a decentralized storage system. The token itself goes beyond simply being a pointer and acts as an immutable record of ownership on a decentralized ledger. In an environment where code is law, the entire network recognizes and enforces your ownership via consensus.

Each NFT has no exact equivalent, but they can still evolve. How a token is organized within a collection, where it’s created, who collectively governs the network, and what future states may unfold, gives each NFT its own life cycle.

Before creation, NFTs are often organized into collections, regardless of how many tokens are minted. A blend of “token” and “economics”, tokenomics determine issuance, supply, and any mechanisms that will either reduce supply or incentivize holding. Since NFTs are immutable, a collection’s tokenomics should be carefully considered. Testnets allow for experimentation in the development stage, which aids in NFT development. While coding smart contracts directly into a blockchain is the most powerful, cost efficient, and flexible way to create NFTs, platforms like OpenSea, Thirdweb, Crossmint, and Manifold aspire to make NFT management more accessible.

To begin life on a blockchain, an NFT first needs to be minted. During this creation process, smart contract functions are executed. This assigns token IDs from the collection and may perform metadata randomization before broadcasting the ownership record over the blockchain. Mints can be public, or limited to allow lists. To reduce the potential for scams, allow lists (also called “whitelists”) collect, prioritize, and manage interest using wallet addresses from potential NFT buyers. The release of NFTs within a collection can be done all at once, scheduled over time, or perpetually open. Highly anticipated collections can cause congestion on a network, creating gas wars in which buyers can push their transactions to the front of the queue by paying higher fees.

Once minted, NFTs can be exchanged in many ways. They can be bought and sold using cryptocurrency on marketplaces like OpenSea, Blur, SuperRare, or Foundation. Marketplaces provide key infrastructure which, in addition to facilitating trade, aids in collection discovery. They can also be transferred via an airdrop, which is when NFTs are gifted into a digital wallet. Airdrops provide a creative way to share assets with each other, with senders usually paying any gas fee.

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Pay close attention when using your wallet to complete signature requests. Signing a malicious smart contract can grant token approvals for all assets in a wallet. One common hack is packaged in NFT airdrops. If you receive an unknown NFT in your wallet, do not interact, transfer, or sell it as these actions can activate unwanted access. There are many stories of epic heists, so do your research and stay vigilant.

Once acquired, you’ll receive the NFT at your wallet address. Despite the token appearing in a wallet, it’s not really in your wallet; your wallet is like a web browser for the blockchain. Using a wallet address, you can see NFTs you own, and due to the transparent nature of public blockchains, you can also see other people’s collections.

While creator compensation and basic commerce has been the most publicized aspects of NFTs, with over $40B in transaction volume in 2021 alone, there are also ways to extend the life cycle of NFTs. Concepts like “burning”, and “staking” create extensions to what an NFT can become. When an NFT is burned, it’s sent to a null address for which nobody has the private key. Burned tokens are effectively removed from circulation and reduce the initial collection’s supply. This action can support the tokenomics of a project, while also adding depth to ownership within an NFT collection. Another concept is staking, or the act of locking an NFT in a specialized contract that prohibits transactions. Staking also reduces the circulating supply, but does not permanently reduce the size of the collection, as an owner can reclaim the token. Staking is often used as a way to incentivize holding for long periods of time and often yields rewards.

Alright, we’ve covered what an NFT is and how they work. Let’s pour into some current applications of NFTs, such as digital art, curating collectables, celebrating ownership within video games, administering membership benefits, managing events, enhancing security, and even raising financial capital for a new business.

To date, digital art has emerged as the most common use of NFTs. Artists can now monetize their work, push creative boundaries, and even earn royalties on secondary sales. Platform take rates have thankfully plummeted, which further extends the runway for artists to stay creative. Art buyers also appreciate fewer intermediaries, verifiable provenance, and new ways to connect with the creator. Along with access to art, NFTs can also help identify authenticity alongside the dynamic rise of machine learning and generative AI.

Collectables are also being enhanced with NFTs. Sports memorabilia, trading cards, toys, clothing, accessories, or classic cars can now be supplemented with digital assets that go further than a linked QR code. NFTs can add discoverability, more ways to socially trade with fellow collectors, and have enabled creative ways to digitally interact with physical items. For example, imagine buying a fresh pair of shoes that come with an NFT. Whether you decide to wear this prized possession IRL or not, using the connected NFT, your upgraded character can now rock these collectable kicks in your favorite video game. This is just an example, but the convergence of online status and identity makes NFTs a prime way to create communities where people feel a sense of belonging.

Speaking of gaming, NFTs provide a natural fit for gamers to celebrate ownership and authority in video games. Currently, in-game items, whether consumable or cosmetic, are effectively rented by the players. If a game developer shuts down the servers, these treasured items would vanish. In a web3 world, NFTs would support more lasting ownership. A few early examples are blockchain-based games like Cryptokitties and Axie Infinity, but consider when in-game items in Minecraft, Fortnite, or Call of Duty, are NFTs that can be transferred between players and different games. Web3 is inherently permissionless and interoperable, so innovative tools and conventions need to be created to foster these harmonious initiatives. While there’s more to be done, we are seeing more trust-minimizing technologies championed by industry leaders like Yuga Labs and Polygon, who are focused on unlocking such compatibility at a fundamental level.

Beyond entertainment, NFTs offer a decentralized method to managing memberships and associated benefits. A few examples include NFTs that grant access to events with commemorative NFTs, such as POAPs, serving as artifacts to mark the moment. Like a ticket, NFT ownership can also grant access to communication platforms like Discord, decentralized autonomous organizations (“DAOs”), and commercial copyright licenses, enabling token holders to create products or services with built-in network effects. Founders can build real-time brand equity in a crowdsourced startup and established corporations like Starbucks, Lowe’s, and Reddit are inventing new ways to add value, enhance security, and deepen brand loyalty using NFTs.

If we accept that our world is becoming increasingly digitized, there’s a natural fit for NFTs to enhance products, services, and verifiable value. In the neon future, it’s not crazy to think NFTs may soon power simple assets like concert tickets, but also critical belongings such as birth certificates, college diplomas, real estate titles, and more. As web3 matures, the challenges of digital money, property, ownership, and commerce may introduce new barriers, but mainstream adoption into more advanced economic constructs can seamlessly reshape today’s barriers into tomorrow’s non-fungible future.

By Ben McDougal, ago

Mechanized Money

What enables us to have truly programmable money? After your Welcome to Web3, let’s keep curiosity fed with hot sips on crypto and how decentralized finance (“DeFi”) galvanizes web3!

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This caffeinated contribution is by Scott Herren, a blockchain developer building at the forefront of web3.

Blockchains

As we dive into web3, we must grok the traditional finance world. One of the primary challenges that bitcoin and blockchains seek to solve is the double spend problem. Double spending occurs when digital tender/fiat/currency is sent to multiple parties simultaneously or after a sender’s balance has elapsed. (There’s a ton more to learn about consensus and the Byzantine Generals’ problem, but we’ll leave that for another cup.) This, effectively, creates money from thin air and is what banks and the central banking system have helped prevent for the last few centuries. This power can be abused, so bitcoin looked to democratize the process of approving transactions by folks called miners.

The Bitcoin network went live in 2009. Initial traction was modest, but the “unspent transaction output” (UTXO) model for tracking transactions and balances proved to be groundbreaking. Bitcoins are “fractured” from their initial whole. These fractions are used as currency, which makes accounting inclusive, verifiable, and very transparent.

Blockchain technologies have evolved toward mainstream adoption, but cryptography has been studied since the 1980s. Bitcoin was first to crack the code, but different blockchains and more on-chain layers are being combined in powerful ways. Today, there are four main types of blockchain networks: public blockchains, private blockchains, consortium blockchains, and hybrid blockchains. It’s impossible to count private blockchains, consortium blockchains, and hybrid blockchains, but there are hundreds of public blockchain that are permissionless, meaning they are fully decentralized and anyone with an internet connection can equitably access the blockchain as an authorized node. Bitcoin and Ethereum are the two largest, with 10% of the global population owning some form of over 2,000 different cryptocurrencies.

Within each blockchain, layers provide infrastructure for web3 developers. Hardware, data, network, consensus, and application layers make blockchain technologies more usable, with each layer offering unique functionality.

The last ingredient in the blockchain recipe is hashing, which gives blockchains verifiability. With hashing algorithms, miners are assembling a historical ledger where any tampering of previous transactions will disrupt current calculations. With verifiable ledgers storing only valid transactions, the next cool thing we can do is automate value.

Smart Contracts

Smart contracts allow us to program, exchange, and intermediate value using the storage mechanisms first introduced by Bitcoin.In 2014, Ethereum introduced a new programming language called Solidity, which allows smart contracts to store value and other data. Gas is paid in Ether, the native token of Ethereum, for transactions that interact with smart contracts. Computationally intensity and network activity determine gas fees at any given time. These primitives have helped developers explore a vast array of mechanisms for coordinating value. Some have been successful while many others have taught us valuable lessons about this antifragile system.

One of the earliest successful smart contracts of Ethereum, The DAO, had a catastrophic contract bug (flaw in the programming) which we now refer to as a Reentrancy Attack. The DAO had coded a “shared bank account” where stakeholders could deposit Ether into the contract and receive a proportional share of tokens back. The goal was to collectively fund projects via token-weighted voting. While tokenomics and technical improvements have addressed many of the early missteps,  the major mechanisms are still widely used in token governance today.

Tokens & Standards

As the Ethereum Improvement Proposal (“EIP”) process matured in 2017, smart contracts began conforming to implementation standards. ERC-20 was the twentieth iteration, which included a request for comment offering a fungible token standard. To support an endless variety of projects, this token standard became the default for initial coin offerings (ICOs) that were sourcing funds to solve blockchain challenges. The power of this mechanism led to many overly ambitious projects that damaged trust with unfulfilled promises, but some of the powerhouses of today were launched during the ICO bubble.

Some other notable token standards are ERC-721, the non-fungible token,, and ERC-1155, the semi-fungible token. The adoption of these standards across the ecosystem allows for tight composability and interoperability across protocols. These “money legos” act like building blocks for DeFi, but before we get to decentralized finance, let’s first cash in on the most prolific tokens within our global economy: stablecoins.

Stablecoins

Stablecoins peg their value off another asset, generally something stable like the US Dollar or gold. Stablecoins can also derive value by being fiat-backed, collateral-backed, and algorithmic. 

Fiat-backed stablecoins are backed by fiat money in an auditable bank account. Fiat money is a government-issued currency not backed by a commodity such as gold. Popular examples are Circle’s USDC, Gemini’s GUSD, and Tether. While fiat stablecoins are quite easy to scale they also have trade-offs with their decentralization properties. The blocklists of these stablecoins are growing as more projects comply with jurisdictional requirements.

Collateral-backed stablecoins are backed by assets that are locked on-chain and transparently auditable at any time. The largest of these, Dai, is mostly backed by Ether. When done right, these types of stablecoins have great decentralization properties, but are much more difficult to scale and can have liquidity issues from a market squeeze.

The final type of stablecoin is algorithmically balanced with a system known as “seigniorage shares”. It’s important to mention “algo-stablcoins”, as implementations have not been successful to-date, so you may want to avoid these types of stablecoins until technology can unequivocally support the ideology. Alright, with tokens and places to store value, let’s look at innovating within traditional financial exchanges.

Lending & Exchanges

After the rush of late 2017, the buidl market set in. Organizations committed to building, have delivered on overcollateralized lending and borrowing on-chain. Lenders can lock their collateral to earn from borrowers, but borrowers need to be lenders of another token and ensure their loans remain sufficiently overcollateralized. Lending and borrowing rely on asset prices to determine liquidation thresholds, but if these can be manipulated, then the system is vulnerable. The Oracle Problem is one that doesn’t often get surfaced, but is becoming more crucial as the value of attacks increases.

Early experiments around what order books looked like on-chain were clunky. Each bid, update, acceptance, or cancellation required another transaction and gas. This changed in 2018, when Uniswap used the Ethereum blockchain to provide a simple interface to swap tokens. Uniswap flipped the concept of traditional order books on its head. Instead of creating offers to buy or sell, a market maker can provide two tokens in a pool and the protocol holds the ratio of the tokens in the pool equal. These pools are called automated market makers (AMMs) and the pools leverage the equation  k=x*y, generally referred to as the constant product market maker (CPMM). You’ll see AMMs often, with the CPMM formula occasionally cited. This supports a very simple token swap without accepting a costly series of orders. Being a non-custodial, decentralized exchange you also never give up control of your tokens until the swap actually occurs.

As crypto is managed, liquidity incentives were initially implemented by Yearn Finance, a protocol that automates the lending process to earn yields from on-chain assets that could be held or traded on the market. Many incentives came from token inflation that hadn’t found value loops and proved to be unsustainable. Since 2020, years of rapid experimentation has revealed innovations that are continuing to push DeFi forward.

DeFi’s Destiny

This magical dark forest can be treacherous, but system level engineering takes time and it’s liberating to build with so many intrepids learning together. As we complete this download, here are a few interesting use cases to keep us thinking about what’s possible beyond traditional finance.

  • Instead of getting paid every two weeks or each month, smart contracts can create payment streams. Instant access to financial capital furnishes more financial freedom, while still maintaining refill or cancellation options. Along with incoming compensation, outgoing subscription fees and self-repaying loans are also use cases where automation can further optimize financial control.
  • Also known as no-loss lotteries, prize-linked savings accounts, are not uncommon in the traditional finance world. Local municipalities and credit unions have generally handled them. Pooling capital and lending it to others is also used in smaller communities to help with small, low-cost loans. With an end-to-end process, smart contracts enable little to no overhead, which makes nearly all of the earnings available to participants.
  • The most magical of our new tools! Flash loans allow for borrowing a near-infinite amount of a token, given the loan is paid back within the same transaction. This visualization of a flash loan transaction will add clarity, but in short, if there are transactions that require more capital and can be facilitated within one block, they have been democratized to anyone with access to a scripting language and a relaying node.

DeFi provides composable tools for traditional and innovative finance primitives. Being able to mechanize your money and the value it delivers within a network is super powerful. When web3 concepts hook into the financial primitives of crypto, the global economy can leverage faster, more equitable, and safer peer-to-peer commerce.

By Ben McDougal, ago