Revolution, DAOs, Acemoglu

What are the worst trips of 20s century? Lenin’s 1917 train from Switzerland to Russia, and Khomeini’s 1979 flight from France to Iran. Both had very harsh impact on the life of ordinary people in these countries, both stagnated forward thinking, misused the ability to allocate resources and they did centralized planning. One of them collapsed, the other one will.

Growing up in Iran, I had lived how central planning can affect the way I was living significantly. There is free oil and gas in the country? let’s make it free. You want to attack Israel? Let’s print some money and make people poor overnight. You want your proxies in the region to start wars? Sure, nationalize every single industry, make a monopoly, push the price up and the quality down, send the surplus to Yemen, Lebanon, Iraq and all the other terrorist hubs.

As a teenager who just started university, I was thinking about these problems and trying to find out what is the main reason that a teenager in other parts of the world are having a significantly better life than what I had. I did CS but I was reading more in economics and political science.

I was believing that the main pillar of a better society is freedom, the Islamic government is taking away freedom from every aspect of life, Thus, to make a better life we need to first abolish the government and then start a new government from scratch, that is going to respect people’s freedom. Then I started to participate every single gathering that I could find that they were thinking about making a revolution. From normal friendly gathering to talk about political and economical systems, to going to protests, getting arrested, seeing people getting shot, and eventually making this.

But is this approach going to actually ‘work’? or is it just a mirage? Even in case of success, how is it possible that it doesn’t turn into a tyrannical government again? I doubted and later I found that I was wrong, the ‘tool’ to make a better society and economy is not making a revolution and starting building from scratch. With high chance it will turn into the same problem. My ‘approach’ to reach more freedom was wrong. Then I started to look somewhere else

I started to carefully read the history of U.S as a society that was built somehow ‘from scratch’. I started to track some patterns. They looked important but I didn’t have any concrete reason why. Institutions, Foundations, Corporations, etc. a group of people with a shared purpose whom work together, with money incentives, profit, and innovation, which makes the work sustainable and not a pop-up/fade-away thing, like the CCP’s ghost cities.

Then started to look carefully, I looked at the work of Daron Acemoglu. It looked verifying that someone else has put his life to deeply think about the same problem and he points out this ‘trustworthy’ institutions, organizations, whatever you want to name it, are the pillars of a strong economy and not the other way around. He got a nobel prize for it.

You want to mow your lawn, how could you make someone do it for you? either by love, force or money. The first one is not scalable, second one didn’t work, the third one works, and works good. Back to lawn. You can trust a kid in the neighbourhood, and pay them money. They’ll deliver something to you which is not probably optimized. Or you hear about a guy who casually does the lawn, you call, he may be available, maybe not. They may overcharge you since they need to pay back more interest to the bank that they didn’t expect. Or it can be an institution, with a history of doing things right, you can see the history since they are transparent, they won’t overcharge since they know they want to last longer. Briefly, you can expect X that they claim they will do with the initial terms.

Hum, what should be the next stage of thinking? well, can we mass produce trustworthy organizations? But for making an organization you need to deal with the government for the structure, and banks for a bank account. Then you need to pay formation fee and maintenance fee every year (to do approximately nothing). Seems like something you can mass produce? I doubt.

But how about having this organization, institutions, foundation, charity, etc. on a different rail, I mean, blockchain? this way no one can shut it down, or seize the incentives (money). It is low cost, portable, transparent, the owners have true ownership, upgradable, global, and most importantly, it’s software and alive!

Then we started to build zroapp.xyz, to mass produce this trustworthy organizations. Think of it as a DAO, but not as rigid, machiavellian, with different flavours. What are the candidates for trustworthy ‘in the sky’ organizations? startups, VCs, local micro-lenders, retailer, companies, non-profits, universities, insurance companies, etc.

Let’s go through an example. Imagine there is a local startup in Rwanda, namely Zipline. I want to be able to invest in this company as they are still in private, and park my money there with the hope that it will be worth way more in 5 years. It shouldn’t be like prehistory to try to go and talk with hundreds of investors, prominent ones can just lead and people on the internet can follow up if they want.

This way VCs can somehow hedge their risk, scale, create more templates of investment than a simple 0.5M pre-seed. You don’t have trust that some team in [some-country-that-you-don’t-trust] maybe just not do the work after getting the investment? no worries, put the money in their organization, delegate your rights to another onchain organization that keeps track of expenses. win-win.

Or build a foundation that grants political science students, or a prize for the best thesis. Or start a marathon to raise fund to develop water safety in a remote village, transparently and without beaurocracy. You care about helping small businesses to get better loans? well, lend your money to a trust worthy local lender that acts as an onchain organization (something like community banks in U.S before, but transparent and without a physical place and beaurocracy) and give a better deal than banks, and of course, get a return.

Onchain organizations, now beginning to emerge, have the potential to make the world more connected by enabling seamless, transparent, and borderless value exchange. Perhaps the mass production of onchain organizations can tame and slowly cook the corrupt governments around the world.