Episode 6: Jack Du Rose | Colony - DAO Governance and member reputation
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A discussion and Q&A session with Jack, Co-founder at Colony. Recorded on August 10, 2021.
What do ants and Colony have in common? Jack du Rose, Co-founder of Colony, joins us to explain the system of rules that allow ants to work together and produce sophisticated problem solving, and how that inspired the development of Colony. We explore the DAO framework that allows you to start an organization, give it structure, incentivize contributors, award reputation, and manage funds - all without writing a single line of code.
Resource links:
Colony makes it easy for people all over the world to build organizations together, online.
https://colony.io/
https://twitter.com/joincolony
Connect with Colony Co-Founder, Jack du Rose.
https://twitter.com/jackdurose
Full Transcript (from Descript) (published episode)
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[00:00:46] Hi everyone. I am your host Humpty. And today I'm talking to Jack Touro's co-founder at colony. This incredible conversation starts the next iteration of a system of rules that allows ants to work together and produce sophisticated problem solving and how that is an inspiration for colony. We continue with a conversation about the open and flexible framework that allows you to start an organization, give it structure, incentivize contributors, award reputation, and manage funds all without writing a single line of.
[00:01:19] Let's get started. So the way that I like to kick off these discussions is to learn a little bit about yourself and to learn about your crypto journey. Cool. Yeah, so I had a, I think most people come to crypto from sort of funny random places. Um, in my case I used to be a jewelry designer. I made super high-end super fancy jewelry for super high-end, super fancy people.
[00:01:44] Um, the most well-known thing that I did, which some people may have seen, um, was a hundred million dollar diamond skull for the artists, Damien Hirst, which I think at the time, maybe still is the costliest piece of art ever made. Um, and so it was a pretty, it's a pretty random, uh, Johnny I supposed to get into, into group site, which was really just that, um, I was always a nurse working in the sort of luxury industry.
[00:02:13] Um, so I was working on computers all the time and therefore. I discovered tall and the dark web Bitcoin, um, full about all that stuff was, was very interesting, but I couldn't see something I needed before that time. I wasn't planning to get a hit on anyone or anything like that. So, um, I. I pretty much forgot to buy Bitcoin for a little while, until I saw the price had gone from a few, a few cents.
[00:02:40] I think it was when I first saw it a few dollars and then thought, ah, I missed the boat and so forgot about it again. And then, uh, sort of gained and got up to 30 days. And, uh, again, I'd missed out and see my journey with it continued until eventually I did actually buy into Bitcoin, uh, which was at the very top of the market for that, that point.
[00:03:03] I think it was up to $267 when I bought it going. And then it promptly crashed back down to $70 or so really, as soon as I bought it. So, um, I got, uh, You know, the, the traditional sort of, uh, introduction by fire to the crazy roller coaster, crypto speculation. Um, but at the same time, I was also trying to get myself out of my jewelry business.
[00:03:29] I realized that, um, I enjoyed this problem-solving. So for my work and that I was making really complicated things that were intellectually stimulating, but I got to the point where I was, I was running my own brand, basically, which revolved around me doing a lot of salesy type stuff. And I'm an introverted nerd.
[00:03:53] I'm not good at being there in the world, dealing with fancy people like ladies who lunch and a. And I just couldn't stand it. I needed to get out, but at the same time, I didn't want to get. Time went back and really entirely because it had been sort of hard won to get to that position. Um, so I was trying to figure out whether I could find a sort of software approach to making my company self-organized.
[00:04:21] So I was kind of unpacking all of the reasons why it was hard, all the reasons why I didn't like it, how it could get rid of some of those things and, and really sort of fade away into the background because I I've made this sort of, it was really reliant on me. Um, and that was. Really my first thinking around it was just solving my problem.
[00:04:39] And then gradually over time, as I tried to solve this problem of causing a P a bunch of people who don't have aligned incentives to be able to work together without needing to trust one another, or even necessarily know one another, I kind of realized that I was onto something much bigger than my I enjoy business.
[00:04:58] Cause this was like back in 2013 and, um, That there was real potential for this as a, as a concept to grow in the world. And, um, and so I ceased to care about whether I throw away, but previous yes. Of, of work of setting up my business. And, um, because this was just so much more rewarding. Um, And, uh, and yeah, and then I discussed, and then I think it was December, 2013.
[00:05:28] I read metallics white paper for Ethereum. So it was really hot off the press at that point. It's like a month old. Um, and that was really the point that crystallized everything in my mind. And. And made me confident to throw everything, throw caution to the wind and, uh, back myself in this, in this endeavor, because I could see the other people in the world were starting to think along the same lines.
[00:05:55] It sounds like even from the very beginning you were coming at, you know, Bitcoin and all of this space, blockchain cryptocurrencies from the technology angle, right. You were interested in how it could. You know, in terms of its development, technological development, uh, and help people. And it sounds like even back in 2013, when you were planning this shift, right from, I guess your real world, or this long career that, that, that you, you, you developed in it and that you kind of grew into, um, you had an idea.
[00:06:32] What colony could be in terms of coordination. Right. Um, so I, I really do want to come back to that because I, I, I'm always interested in learning that aha moment, that inspiration, right? Like that source where, where things culminated, it was like, you know what, there's a need for. And I don't know what this is going to be, but I need to at least start working out this problem.
[00:06:55] I think that's really cool, but let's rewind and go back to that school. Cause I did just pull it up and that is incredible. That, I mean, and talk about challenging stuff that seems extremely complex and beautiful for something so McCobb right. Yeah, that was, it was, um, it was definitely difficult. It was.
[00:07:19] Nobody had any idea how to make it, which is why they eventually came to me that basically the artist Damien Hurst had gone to a, uh, a jewelry shop on bond street and in London, which is kind of the, the, uh, all the ride where all the really super expensive jewelers are. Um, and they had obviously seen. Uh, pine science fresh up before their eyes, the prospect of this.
[00:07:47] And so obviously took it, took it on, but then panicked because they didn't know how to do it. And so there was a, a series of phone calls. I'm there to understand around the jewelry industry and been trying to find somebody who could figure it out and. I eventually came to me as somebody who might be able to, and I had no idea how to do it, but I knew that I had the Moxie to figure it out for anyone who knows me.
[00:08:10] That is one of the things that I live by is figure it out. Right. I mean, life is just a series of challenges and it really is a matter of how you figure those challenges out and find solutions that work for you. Okay. I think there's definitely like two kinds of people in the world. There's the people.
[00:08:27] Who just go, well, I haven't been trained to do that. I've done that. I had to do that. I can't do it. And then there's those who just say, well, I, I will figure it. Well that's entirely. Yeah. And that's a philosophical thing, right? I mean, I think a lot of times maybe we just subscribe to methodologies that have been, uh, either assigned to us or that we've been trained to follow.
[00:08:49] And it's difficult to per perceive of any other way, because you're like, well, this is just the way I go to school and I'm trained for this. Then I specialist specialized on that. And then. Keep focusing on that and you don't see how it's possible for you to be able to actually take on some of these challenges and find solutions for yourself, which I think is that's, that's the incredible part of just this entire space is everything is a challenge.
[00:09:15] Everything is new and as new solutions are discovered, new challenges come up to, I feel like dye was kind of the, um, what's the word I'm looking for? Maybe, maybe almost a symptom of. A change in the way the world is thinking about, about work and about livelihoods and about how we find meaning in our existence and how we find, um, um, sort of, uh, value in, in what we do in, in Korea and in identity and all of these kinds of things, because for the longest time people had.
[00:09:55] People were on rails in their life, in their career, right. You go to school, you do well at school. You then perhaps go to university and do well in university. And then you get to go and get a good job. And then you are on that career path to the point that you have saved enough money that you can retire and then that's it.
[00:10:13] You die. And, uh, it's a strange linear existence that I think. Terrifying actually, and it seems like more and more people are rejecting that, those rails, that sort of constraint one's life and, uh, you know, yearning for freedom and yearning for choice and yearning for the ability to. To be a full person and express their interests and capabilities fully in the way that they work as, uh, as well as in the way that they sort of live other areas of their lives.
[00:10:47] And that's, that's not being something that, um, careers have traditionally been set up for your cogs in a machine. And that machine is optimized for production and how you fit into that is kind of. Immaterial light side of the fact that you're doing your job sufficiently well, yeah, no, certainly. I think it flips it on its head.
[00:11:06] Right. Oh, awesome. Well, so I think we touched on a little bit about yourself, which I thank you for that for sharing your story. Um, and you also touched a bit, like I said, in terms of the inspiration moment that like, you know, here's a problem. I think I find incredibly valuable. It, it speaks to me, right.
[00:11:27] And that is coordination. Uh, and then how can this technology potentially improve that? You read the white paper and that kind of inspired you to take that leap of faith of you will. Um, so how, how did that idea continue to evolve? Because 2013 was quite a bit ago and, and, and crypto years, I mean, that's like, you know, prehistoric times.
[00:11:51] So how did that, how did that keep like eating at the back of your brain? And as technology continued to evolve became. Or at least inspired what a colony has become. Yeah. Well, we got started on that pretty early, actually we, myself and my co-founder Alex who joined me after his astrophysics, PhD at Cambridge.
[00:12:14] Um, uh, he. Yeah, he and I started working on the initial prototype, um, way back when presented it at Def con one in London, which was a radically different thing than we've gotten. I was incredibly naive actually. Uh, someone embarrassing, a place. Nobody can take that out on YouTube. Um, but, um, yeah, I mean, I think it mentioned in one of our earlier conversations, The extent to which elements are in inspiration for colony, which, which they absolutely are.
[00:12:45] Um, because for avoidance of doubt, um, the name colony is about ant colony is not about colonialism, which is, is definitely not our jam, um, because actually ants, uh, um, a really good example of what is actually the dominant organizational and coordinational paradigm of, of the universe really, which is something called complex adaptive system.
[00:13:10] And a complex adaptive system. You have a series of relatively simple rules, which when put together, um, cause complex, sophisticated, uh, behavior to them. So in the case of things like ants, even though no individual ant is, uh, has any intelligence really much the same as no individual neuron in the brain has any intelligence.
[00:13:35] It's the system of rules that allows those ants or neurons to work together that produces the sophisticated problem solving of which they capable. So for example, uh, are able to solve. 1 0 9 is NP hard problems, um, such as the traveling salesman problem or finding or finding a way to, uh, effectively thermoregulate their nest by creating, um, um, systems of, of events and heat captured, um, areas.
[00:14:10] Uh, so it's really fascinating to me that they're capable of doing that as a S as a result of the system of rules. So really that was the inspiration for colony. And can we, can we, um, put together a piece of software, which constrains people's behavior, such that they are able to effectively collaborate together effectively control funds together.
[00:14:32] Sort of consequential, ultimately financial decisions together without anybody needing to know what trust one another, just as ants don't need to know what trust the other ants in the colony. Um, they just need to know that the rules aren't well, they don't even need to know that the rules are in place that, um, causes their existence to be secure as it is.
[00:14:54] Well, that's, that's incredible. I mean, I mean, there's something to be said in terms of the collective intelligence as, as you are, uh, explaining this. Um, and yeah, I mean, answer, answer pretty cool. So it also, I think in terms of, in terms of, you know, reinforcing that, uh, connection to ants and separating it from colonialism, which it's not, yeah, I'm a big fan of.
[00:15:20] Uh, you know, products. So like, uh, our naming convention, so maybe the token is just ants and people just go, oh, I get it. There's a connection there. You know, it's colony, but it's all about ants. So, um, you, you brought up another, another point that I've heard you talk about before, and I think it's worth, uh, exploring a bit in terms of this whole, um, you know, idea of.
[00:15:45] Uh, aunt's play into this and the, the actual problem that's being solved in terms of, you know, in terms of what colony is, and that's a traveling salesman problem. And I, and I, and I've heard you also use, well, maybe not this word, but, you know, I have heard from this like optimal routing, right. So can you talk a little bit about that and what that means generally and how that, how that is solved through.
[00:16:10] Okay. I do think it's really solved through colony, but it's interesting. Nevertheless, so I'll explain it, which is that, and S are able to find the optimal foraging path, uh, when that, when that searching for food. Right? So they do this by a really, very simple but effective mechanism and this traveling salesman problem.
[00:16:39] It's actually a hard problem with computer science. It took quite a long time for computer science to solve. And ultimately I believe it was done by, um, by, um, simulating ankle knees. And so what ants do is they go out wandering around randomly, um, looking for food and as they are walking anywhere, they are laying in Fairmont and trail dime.
[00:17:05] And that phentermine trial decays over time. So they randomly woke finding their way to food. And then once they find food, they travel back on their farm and trail. So what that means is that the shortest path is going to have the strongest Furman trail because they are laying the Furman trail back as they walk back to them.
[00:17:30] And because that's the strongest one that attracts other ants to it. That again, reinforced that FOMO trail by, by walking along it and laying it down and strengthening it. Um, and so once that is exhausted, then by the same mechanism, they move on to the next nearest, uh, to their nest. Um, so it's just, it's a very simple mechanism, but it works really well.
[00:17:52] And it was. That that is not a mechanism, which has meaningfully implied anywhere in colony, but rather simply these generalized principles of simple rules leading to complex emergent behavior, um, was the inspiration for colony almost selfless. Sounds like one of the challenges within that and that behavior in terms of the shortest path wins is about efficient.
[00:18:22] Right. And so in my experience, working with colony and with my conversations that I've had with you and with Daniel in the past, I think that. Colony was built to be efficient, right. And that plays into, uh, you know, how it works in terms of governance, uh, both in terms of voting, uh, and also in terms of how individuals can set up payments and all of that, which we're going to dive into.
[00:18:49] Uh, so I think that that's, that's, that's really interesting too, although it's not necessarily playing directly into that, the traveling salesman problem isn't necessarily solved or it's not being, uh, You know, trying to be solved through colony there's that inherent, you know, uh, issue, which is how can we find the best, the way to be the most efficient and colony has then chosen to go a certain path, which I think is an interesting one, because I think you've mentioned it before in terms of voting, that's probably something.
[00:19:21] Can be, uh, done in a, in, in, in a, in a, in a, I guess lazier way. And I think that's your word? So not mine. All right. Cool. Well, I don't know if I think the answer truly efficient. I think there's, I don't know that that has really can be truly efficient because I think that there's a certain amount of chaos, as I mentioned.
[00:19:44] There's this one random wondering that that is the precursor to finding these optimal routes. Um, and I find, I think that's kind of the strength of them as well, um, is that they are sort of very resilient to any of those, any of the individual parts of it being, being interfered with as I think dies will ultimately prove to be, um, But they are, they are effective.
[00:20:14] And that's what I think I'd rather hope that Connie flavor dyes will prove to be as effective rather than cause you know, there's not a whole lot of dicking around in, in a, in an uncommonly, but from what I've seen of many dives, there's a huge amount of dicking around. There's a huge amount of bike shedding that goes on, particularly around decision-making and there they are.
[00:20:34] Uh, a lot of, a lot of time and energy gets made into making decisions. Um, they can be made a lot more quickly and efficiently and without, you know, hurting all the cats to participate in the vote. Yeah, no, I think, I mean, if I guess the, what, what it's trying to achieve is it's trying to get some efficiency in an, a very inefficient environment because decentralization is very inefficient, right?
[00:21:00] These are the dowels are going to be inefficient. So it's a way to. Bring some of that efficiency from these centralized systems into these decentralized systems, at least that's how I see it. Yeah. And even without the benefit of, of sort of decentralized software to, to mediate it, actually the kinds of organizations that we're talking about here on, on not really anything, particularly new, there's all sorts of organizations that are already operating in ways, which are rather similar to die.
[00:21:33] Uh, in ways that many people might find surprising. So actually Google is one of them. And if you go and work at Google, one of the things that you'll be told as you discovered that this is not the place of, um, unbelievable efficiency and, and hierarchy is actually an extremely disorganized, uh, and jumbled place, um, is that, uh, I think I'm quoting here, um, that we will tolerate a surprising amount of.
[00:22:01] To eliminate a surprising amount of bureaucracy. And I think that's kind of the benefit that we hyped to see in, in load dyes as well as, yeah, there'll be a lot of, Kate's getting made by a lot of action going on, but, but also that, that sort of lack of, um, uh, oversight or the lack of structured hierarchy is what will enable us to avoid a lot of the bureaucratic nonsense.
[00:22:29] Well, so I guess we we've now kind of touched on a lot of the abstract of what is colony in a few words, how would you explain to someone who has never heard of, you know, it called colony and about what it is and you know, this, the problems it seeks to solve? Okay. So this is. This is a really hard question.
[00:22:56] And this was the question I was repeatedly having to answer in the early days, um, before anybody knew what a dye was. And, uh, and now I can just say what is dire framework? And that makes, uh, that makes sufficient sense to enough people that it makes my life easier. But, um, before it was, it was very much.
[00:23:16] Kind of going, uh, I was having to explain from first principles, you know, what is a blockchain, what does that mean that you can possibly do? And how could you create organizations as a result of it? But, but yeah, that's what comedy is. It's a framework for organizations and that, um, and it's intended to provide all of the tools that an organization would need.
[00:23:39] To operate without anybody needing to know or trust one another and importantly, to do so in an effective fashion. Um, and to kind of unpack, I thinking there a little bit, I just want to sort of take a step back to economics 1 0 1 and, um, the theory of the firm, which is sort of an explanation of why organizations existed.
[00:24:04] Which is the principle is possible for you to, um, coordinate supply of anything entirely via the market. Seven tiny by finding different suppliers out there in the world that can do different parts that you need. Um, the reason why firms exist or organizations exist is because of something called transaction costs.
[00:24:28] So these are all of these. Sort of implied costs of having to specify what you need to have done, go out and find suppliers compare the funny proposition of those different suppliers, um, agreed to terms manage the delivery of these things. Um, manage changes in the specification, uh, agreed to contracts, manage disputes, all of these kinds of things that you wouldn't really need to do when working with an outside contractor.
[00:24:59] Um, and yeah, so there's a point at which it makes more sense economically for you to have all of the factors of production or, or certain of the fences of production inside the organization that they're available to do, or they need to do, um, on an as needed basis versus going and doing this, um, discovery and contracting process all the time.
[00:25:23] And then, and then we've got dyes and dyes are sort of inherently. Having to coordinate supply via the market mechanism. So what's very important is that a dial has the requisite tools to be able to decrease those transaction costs as much as possible, because as it stands, if in that sort of naive sense, all of those transaction costs would apply all of the time.
[00:25:50] And that's absolutely what we don't want to. We want to get it down to being as efficient. Uh, from a traditional organization, could be whilst at the same time, providing all the flexibility and, um, and, uh, openness that we want both of modern organizations and of decentralized. So that's what calling is designed to do.
[00:26:11] That's what that's kind of the bedrock of our thinking that we, we test against when designing any particular mechanism for anybody who's explored. What I'm seeing is almost a product that puts together the framework for the operation of an organization, uh, where individuals can be empowered to take on certain roles and then for an organization to be able to in as much of a decentralized way to then, uh, incentivize the participation in the court or the contributions of individuals, uh, for the growth of.
[00:26:51] Uh, of, of that, of that doubt. So I think, and you know, and I think what I'm seeing is it's almost like, I guess what you would see in a traditional business, but it would be a lot more centralized with what only a few have access to those roles. And only a few have access to that information. It's not very transparent, whereas, you know, in a Dow and through colony, you're able to operate.
[00:27:18] Similarly, um, but you know, in a decentralized way, uh, and in an organized way, well, I actually, I think that there are many, many, uh, existing non on a sort of off chain, ordinary organizations that are trying to operate in this more responsive, uh, paradigm of distributed authority. So it's not something which is in any way, unique to dives and actually many of these, uh, Most of these companies that are operating this way are doing so in a far more sophisticated fashion than any on chain organization is.
[00:27:57] But the thing that makes an on chain organization particularly special is that, whereas in, um, in an off chain organization, the authority vests within people in a sort of, um, By agreement, right? It's because everybody is accepting of the rules and an on chain organization. It really is baked hard into the process.
[00:28:26] And if you want it to be the raw, there are no exceptions to it. There's no fallback to, to somebody with more authority does only fall back to the rules of the protocol enables. And so the authority is true. And transparently distributed amongst the organization. And I think that that the concreteness of that is really compelling.
[00:28:51] So let's walk through. The product itself. Um, and talk about some of the, I guess, organizational features that are built into it. Um, and, and how that facilitates this coordination. Yeah. So can you introduce maybe some of the very high level, what some of these, um, you know, features are and how they facilitate that organization, uh, between members?
[00:29:18] So I think. Well, the several important facets. Of course, the first is the token. So the token is, uh, every colony has its own native token. You can either easily create a new one when creating a Coney dial, or you can bring one that you've already got. And that token is what confers reputation on people.
[00:29:40] So when you get paid out in that colonies native title, You receive an equal number of reputation points. So receive a hundred tokens. You receive a hundred reputation points in a other diaphragm mix that I'm aware of the challenge of you only having, um, tokens as the basis of decision-making is that it is homogenous in the can't differentiate between people.
[00:30:06] You can really only have proposals. Kind of have proposals about different things that address a different subset of token holders, because all you really know about and the characters that it has a certain amount of token, and that's therefore the basis upon which you, uh, whites decisions. And we just generally don't think that that is adequate for most organizational decision-making.
[00:30:33] Most organizations don't make the older operational decisions. Um, by the shareholders voting on things. So economy, what we're trying to do is to replicate the executive authority that you would, you have in traditional organizations by virtue of the seniority that you have within the organization in particular spheres.
[00:30:57] So if you are, you know, you've worked your way up to, you know, being the head of design in an organization, you have a lot of influence over what happens in design. But you don't have a great delivery influence about what happens in the CA in the accounting departments or in the HR department, because you haven't demonstrated that, you know, and think about those areas.
[00:31:17] So again, that's how it works in colony, and it works that way because we have something else called domains or teams as they are in the app. Um, and a domain your team can be, or whatever you wanted to be in the context studio organization, it could be. The engineering team or department, it could be different projects that you work on different circles.
[00:31:40] However, your organization chooses to compartmentalize its activities. You can create a domain for that. And when you get paid in that domain for having done something that was valuable in that domain, you receive, um, an equivalent number of reputation points and that reputation is. I guess for lack of a better word accessible or relevant, uh, only within that domain.
[00:32:08] That's right. But it sums up the organization. So if you mentioned, if you imagine it as looking down on it as circles, so you've got the big circle, which is the organization overall, we call that the root, uh, well, that's four decisions which pertain to the organization as a whole things that matter to everybody.
[00:32:28] I suppose you could think of it as like the board. Well, something like that, the organization, and then within that, you'd have sub cycles perhaps for engineering design, marketing, research, whatever it is. And then in the future, you'll be able to have, um, teams within that. So you'll be able to nest them arbitrarily deeply within one another as well.
[00:32:48] Okay. Cross functioning teams. I imagine it could be totally. Absolutely. And so yeah. You and reputation. In any one of those teams. And if you were in reputation in a child, you also in an impairment. So imagine if you've got roots as in the organization overall, and then you've got design within that, got illustration with that.
[00:33:09] And then the mango within that, let's say, uh, if you're particularly niche organization, um, you would be adding if you've done some mango illustration, you would, uh, have a reputation in manga and in illustration and in design and in the organization of. Um, so it, it, it works upwards in that, in, in, in that graph or however you want to talk about that.
[00:33:35] Okay, great. That makes sense. Wow. That's incredibly. Yeah, that, that adds a ton of value for individuals, both, uh, pertaining to just their, you know, very, very specific, uh, contributions. But you know, it doesn't exclude them from the overall, um, I guess, mechanism of the group as a whole or the Dallas whole.
[00:33:58] Right, exactly. And so all this reputation that people are running by, by doing these things in these different systems, Um, sub-teams of the organizational subsidizes. Some people call them, um, enables you to have a really sort of heterogeneous organization where there's a lot of going on, separate from one another, which don't really need to bother.
[00:34:21] The other teams, because, you know, if you're, if you're a developer, you probably don't care too much about what's going on in the illustration part of the organization or the know creating memes or whatever those guys need to get on with what they're doing on their own isolation. From the depths of doing, you don't need all of this to be jumbled together and having.
[00:34:42] Bothering everybody with it. And the general thinking is that the further down you go, uh, down there sort of domain hierarchy, the less consequential it is. So the faster things can be. So I would imagine that you would have, um, the root of the organization, ultimately in most dire as being a place, which is relatively cautious and, um, um, Then you have an increasing sort of permissiveness the further to the edges of the organization.
[00:35:15] You go because the stakes are just getting lower and lower, the further the funds get divided. So it couldn't be that you have, um, in a hybrid way to decision making, taking place in the roots, which is what we call both the reputation holders and the token holders. For instance. So, so sort of super conservative and then at the edges of the organization, perhaps you just don't have any formal consensus mechanism at all, but rather in these sort of peripheral teams, people have the full permission to access those funds because it's that completely trusted to.
[00:35:57] To manage those smaller amounts of funds. And that enables those decisions to take place at the very edges of the organization who are really doing the work instantly without you needing to go through any, um, any voting process or any on chain governance process at all. I really think that's what we need to get to is dies.
[00:36:17] We need to be able to combine both agility and security of widespread concern. Yeah. And I think it's important to clarify how that reputation is earned, because I don't think we've touched on that. Yeah, sure. So it's on anytime you payment from the colony. So right now we've just got a simple payment mechanism, um, which is, you know, just like sending it from a multi-sector.
[00:36:46] Um, but this feature functionality coming along, which is for both more sophisticated types of, um, of expenditures of payments, um, but also for tasks in which you have got people who were assigned as the project managers task to ensure that there is delivering. Somebody who's assigned to be, uh, the work of the task, delivering the actual work and somebody who's assigned to do QA on the work to determine the quality standard of it.
[00:37:17] And I also think it's important to note you, you make sure you talk about this, that the reputation is at the token itself, right? That's simply an attribute. That's rewarded to you through that contribution or through that, uh, you know, uh, token, uh, remuneration, if you will, tokens can be transferable, but the reputation is non-transferrable is an attribute associated with an account and really importantly, the K's over time.
[00:37:45] So this, this decay function is. Well, I think is one of the most important things about how decision making takes place in colony, because it really helps to ensure that the authority within an organization stays decentralized and therefore stays autonomous. Um, because with, with token away to decision-making, the tokens tends to go to the earliest and largest token holders by virtue of them being.
[00:38:16] At least largest investors and the finding teams. And then you have a sort of power law distribution of tokens in which the long tail over time gets longer because the smaller token holders become more numerous. Um, but it's much harder for a large number of people to coordinate than a small number of people coordinate, but with reputation, decay, and.
[00:38:41] If you have done something three months ago and then have done nothing else in the intervening period, your reputation is going to be worth half as much as it was back then, because it's decade away assuming that everybody else has continued to contribute, you're going to have less influence. Um, or indeed as more people start to contribute, the reputation becomes more diffuse throughout the organization.
[00:39:07] So, uh, This, this makes it possible for people who come later to the organization to earn a fair amount of, and I think that's a particularly important for something like, um, well, I mean, I think bank of star is a great example of it because of people coming and going all the time and you never know when the next great talent is going to show up.
[00:39:30] Um, and I think for things where the decision-making. So frictional. And so it's just difficult to get into, it's an incredible disincentive to people paying any attention because they can, they can never really get any influence. Um, in the case of, um, a token based decision making, because they would have to have so much money to be able to buy that and that that decision authority.
[00:39:59] But in, in colony, that's not the way it works at all. And just by somebody who's really good contributes to law, um, you'll be able to earn a fair amount of influence because the amount of influence that people have is always sort of normalized or sort of recalculating to, to, um, represent people's recent contributions.
[00:40:20] And I think. It's valuable to recognize, you know, the contributions of early founders and early members. But, you know, if we going back to like trying to replicate the way the real world works, you know, as a startup grows, develops matures, it attracts. Talent a lot of times better talent that was there when you first started.
[00:40:45] Right? So is it most successful? Right, exactly. Because I mean, this initial talent really is just executing on initial ideas, but it doesn't mean that. First ideas are going to be what differentiate and catapult that organization into long-term success. It's the continued generation of ideas and execution, um, and then innovation and then adapting to, you know, market situations.
[00:41:17] Allow that to become a valuable organization. And so I think what you're saying, and in terms of what colony recognizes is, how can we continue to incentivize the growth and membership of these organizations? Right. And then. You know, and then lit and, you know, and value their voice, like make sure that they, their ongoing contributions and participation is recognized and the decision-making that affects this organization moving forward.
[00:41:48] Absolutely. And I think you made a really good point in the boat that the initial finders, um, other ones on the initial. Take the most risk because there's nothing there to begin with. Um, and so taking a very large risk by putting that time and energy of that one human life into this, this thing. Um, and so they should be fairly compensated for it.
[00:42:12] So I think that works perfectly well in colony because the assumption is that the token is relative with relatively little to begin with. And then over time as the organization becomes more successful, presumably and generates more revenue, presumably, um, the taken will appreciate in value. So what you got paid in the token for doing the work, uh, in the early days is going to be far more tokens than you would get paid in the tech three years later.
[00:42:42] But, uh, and so they, you are, you're compensated for the, uh, early risk that you took. But after three as, and you know, somebody else coming in when the token is a hundred eggs, um, because you're not going to be adding, adding, taken down reputation on that a hundred X price, um, everybody's reputation is going to be sort of normalizing to represent the recent, um, value of the token.
[00:43:12] So everybody gets to have an appropriate amount of. Even though you, by virtue of the greater risks took us, uh, as a founder have many more tokens, right? Yeah. So it's almost like a counterbalance, right? The like quantity versus quality in terms of the quantity of tokens versus the quality of your contributions and your ongoing contributions.
[00:43:33] Yeah. Certainly. Uh, maybe just briefly or as briefly as possible talk about voting within colony and how that works because we're talking, we're talking currently about reputation and, and remuneration and how that's an incentive, but then how does all of that play into the voting mechanisms within colony?
[00:43:57] Sure. So yeah, as a system is what we call laser consensus, which is a term that we took from. Uh, who also in that community operate by lazy consensus, which basically just means that people can get on with the work. And, uh, you don't have to get consensus for everything. Um, but people can object if they really, if they really disagree with something and don't think it should happen, then they can object to it.
[00:44:24] Um, and that's what we have seen is, is, uh, a more useful approach for most. So consensus formation tends to happen. In most days off chain people are having conversations, um, team meetings, discussions in the forums or, or discord or whatever, um, and agreement about certain things emerges in there. And then with the current diet frameworks that people are using.
[00:44:54] There is then a whole cat herding process that takes place of getting all the token holders to participate in the vote, to get, to call them, to enable something to happen. And that's just a lot of wasted energy. So in colony, we really lean into the decision, make the, the, the consensus really forms off chain and the on chain processes are really just there to ratify a decision that's already been done.
[00:45:21] So in colony, we imagine that the vast majority of decentralized decision making takes place, um, at least in a, in a healthy organization without any votes ever taking place. So that happens by somebody creating what we call emotion, which is the same as a proposal. Um, and then that's it. Somebody prints a proposal.
[00:45:42] They stake it to say, to put their money where their mouth is, that this is something that should happen. Incidentally, that state can be provided by many people. It can be crowdsourced if you desire it to be. Um, and, and then as long as nobody objects to it within the sort of security delay, period is taking phases because the call it then the emotional paths and.
[00:46:08] Um, the action can be taken. So if you say decided to pay a thousand dollars to somebody for having done some piece of work, as long as nobody objects to that person getting paid this amount, then after seven days, let's say there'll be able to just claim those funds. So this is very, very simple. Um, however, if somebody does make a motion that you think is inappropriate, perhaps it's not what has been agreed or.
[00:46:38] It seems malicious potentially you can object to it. And people are incentivized to be, to be inspecting everything, all the emotions that are being made and fishing for things that seem out of place. Because if you find something that you think seems like a spacious, um, motion, you can stake against it.
[00:46:59] You object stake against it. And that will cause a vote to take place. And then if you're writing. You will be earning, you'll be winning, um, a share of the stake of the person who created the motion. So you're incentivized to go and find these things that seem out of place. And you're incentivized to make sure you put forth good motions, right?
[00:47:22] There's a pet, that's a penalty mechanism. So the penalty is proportional to the outcome. So if it was a landslide in favor of, of the person who came in. Find something that was obvious, obviously malicious and everybody agreed. Then the person who created that emotion blew all of that. If it was more contentious and let's say it was 49 51, then the losing side, it gets loose.
[00:47:50] Just a very small amount of this. Yeah, I'm, I'm a huge fan of penalty mechanisms or, cause I think that for, for the longest time, it's, it's been really open and, um, you know, in terms of that, uh, the ability to do things without any accountability. Um, and a lot of times it isn't the dangerous yeah, yeah. To go shed funds, you need to, uh, you need to have accountability for.
[00:48:21] Well, um, I wanted to thank you Jack so much for your time. First of all, for coming in here and talking with us about, you know, what is colony and sharing your story, um, introducing the product. I think that this is a wonderful tool just based on my experience. I think that there's a ton of, uh, use case and, uh, I do foresee a good growth and adoption for colony into the future.
[00:48:47] Well, thank you for having me. This has been always a pleasure. That's it. I personally found this discussion incredibly inspiring as it provides a high level perspective on dhows, including emergent behavior. In addition to a deep dive into the inspiration per colony and how it can facilitate the organization of web three communities.
[00:49:08] If you'd like to learn more about colony, go to colony.io and on Twitter at join. Thanks for listening to crypto sapiens. If you enjoyed this discussion, please give us a follow like and a five star review wherever you enjoy your podcast and stay tuned for our next discussion.
Episode 14: Frogmonkee | Bankless DAO - From Zero to Bankless