Ep. 561 How do Web3 DAOs Work

Ep. 561 How do Web3 DAOs Work
August 29, 2023 #CRYPTO101

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In Pizza Mind’s last episode as a host of Crypto 101 he has a solo episode with Maria Gomez to discuss all things DAOs. Learn about how DAO projects bring a unique aspect of control to the people with distributed decision making amongst owners and how that opportunity brings a unique landscape to certain Web3 Projects.  Finally thank you to Aarone “Pizza Mind” Malone for being an amazing Co-Host over the years and we are excited to have him come back on to be a guest soon!

 

 

— TRANSCRIPT —

 

SPEAKERS

Aaron Malone

 

Aaron Malone  00:09

All right, everyone. Welcome back to another episode of the crypto 101 podcast. I just saw your host pizza mind. And I’m flying solo today. And but not by myself, because I have the beautiful and talented Maria Gomez, the managing director from one of my favorite groups and all the crypto space, the interchain. Foundation, Rio, welcome to the crypto on one podcast.

 

00:32

Thank you so much. It’s a mine, or inviting me here.

 

Aaron Malone  00:37

Well, I couldn’t have asked for a better tag team partner while we’re on the podcast today, because there’s so much to be excited about in the cosmos ecosystem. And it’s been a little while since we’ve had someone on to kind of talk about it. So if you would first let’s get to know you. What were you doing before you join the inner chain Foundation? And what was it about the inner chain foundation that attracted you there?

 

01:03

Yeah. Before the interesting foundation, I was working in a project in Aetherium, that was building tools for the house, that project was called Aragon. And my background is in law, I used to be a corporate lawyer. So when I started working in crypto through Coinbase, that was my first work in within crypto coming from the traditional world am I and I started learning about a Ethereum and like the Dow project. I was very, as a lawyer, I was I was very interested about Dow OHS and what they were and how different they were from traditional organizations. So yeah, before coming to the to Cosmos, and to the interchange, and in the in the, in the foundation, I was very involved in, in the house. And, and like, for me, my world was mainly Aetherium and Aetherium ecosystem. And I knew some things about other ecosystems like cosmos. However, at the moment that the opportunity came to join the foundation. You know, like there was a lot of conversations and discussions around the future of Aetherium. And the scalability of Aetherium. This was like, more or less a two years ago, two years and a half ago, about the scalability of Aetherium. And like, their change to POS. And then I started like looking at other ecosystems that were already having that. And, and for me, I was like, yeah, it looks like cosmos is gonna is going to be the future of Aetherium. And, and Cosmos is already, you know, like the things that I was, I was seeing that they were going to move towards those things had already been applied in, in the cosmos ecosystem. So for me, that was interesting enough to join the foundation. Yeah.

 

Aaron Malone  03:06

And there’s so many interesting things going on there. What is the role of the interchain foundation within the cosmos ecosystem?

 

03:14

Yes. So we are one of the entities that we are focusing on the funding of public goods. So we have a stack, and we call it the interchange stack. Previously, the cosmos stack, we’re trying to change more to, like, you know, talk about the interchange, rather than cosmos. So we have this interchange stack, which is a set of tools and technologies that are that people can use to set up their own blockchains. And those sets of tools are like the IBC protocol or the in inter communication, inter blockchain communication protocol, then the cosmos SDK and a consensus engine, which is common BFT, previously known as known as a standard mean. So we make sure that those public goods, they don’t have a business model and in there will always be free and open source. They keep running and they keep evolving. And so yeah, so So that’s our main mission, making sure that this stack is innovative, and is well maintained. So so the cosmos ecosystem can flourish.

 

Aaron Malone  04:30

I think it’s really cool how you’ve built that out in such a modular way, where someone can have a cosmos chain, but they don’t have to have it IBC connected, or they don’t have to use the tender mint algorithm. They can have proof of work if they want to, or anything else that makes them comfortable, but they can still be part of this much larger ecosystem. So I’ve been very, very impressed with all the different groups that are contributing to Cosmos over there. No, but let’s talk about Dows at a high level, what makes a Dao different from a normal LLC or C Corp?

 

05:07

Well, you know, through my experience, my years of, of experience working with the DAO tooling, you know, in the beginning, like we, we, the project was launched, the Aragon was launched, like around 2017, even before, those were so hot as they are right now, that my learning was that in, you know, a real Dow is a real decentralized autonomous organization. And, right now, people don’t really know what’s decentralized and what’s autonomous, what that really means, in a lot of the entities that are being called out, or not different than any, there are actually most of them are legal entities, so there is no different whatsoever. And in all, some of them are not even incorporated. So they they are just, you know, like, sort of unincorporated organization that sometimes don’t even use the smart contracts to operate like it’s it’s a I say that currently Dows are having a fuchsia identity crisis and this is very problematic, because it’s very risky for people you know, that they join a Dow or what is called a Dow with an understanding that like, you know, like things are transparent and open and and trust minimize any reality does not, does not what is happening. But so for me to go back to your question, yeah, decentralized autonomous organizations are totally different than legal entities. First, they are the autonomous that means that they are self regulated, they are trust minimized, the trust is based on the system or the the encoded rules open in open source at that open source rules that these systems have. And also they are they are not there are not as strict as strict extrinsic powers that can control the systems. That’s what it means to be autonomous, and then they are decentralized, meaning that these individual powers of any group or any person or any jurisdiction are really minimized among a sea of of contributors among a sea of participants. So yeah, nobody there really control the full picture, you really can interact with those doubts, according to the the encoded rules, and and yeah, there is no one person that can control that system. So for me, a Dow is like something like the Ethereum blockchain or the Dow is, is a really decentralized protocol on top of the Ethereum blockchain that’s what for me is a Dow and like, in they are not legal entities is is a is yes, is a is an incorporated entity that has to be attached to a specific rules in certain jurisdiction, and in these entities need to follow those, those rules that are set up by people. And, and yeah, in, in the difference with the with a Dow would be that the rules in in these systems are our software.

 

Aaron Malone  08:30

Okay, so what is the right use case to form a Dow over a legal entity? I mean, I know there’s not, not every organization is big enough where they need to incorporate or doing as important things where they need to have an EIN number here in the States or a bank account. You know, can we operate as a Dao? Or will some government jurisdictions view that is doing business illegally? What have you seen so far, and being in the data space for like five years plus now?

 

09:01

So yeah, so I always say it depends on like, what is it that you’re trying to do? And if you’re trying to do set up, like, like, an automated system, like blockchain, for example, or a specific protocol, and if that is really going to be decentralized? Yes, you don’t have to incorporate that thing is an entity, however, you’re like you’re contributing to the system. And it’s good that if like, if you are, for example, part of the team of the developers that are setting up law blockchain is better for you to incorporate, but you have to make a difference between what is it that you are incorporating is is a the organization under which this group of humans are going to be working for that, that that Dao that they are building on that protocol or that blockchain that they are building? So yeah, so so if you what you’re doing is just, you know, forming an organization Full of humans to, you know, collectively go and buy a house go and buy a golf thing, like, you know, there are now a lot of like social dollars called Social doubts and they are just a bunch of humans using a multi SIG. So yeah, if these are the cases where you see that technology is not going to play a big role role within that entity that you want to, or system that you want to organize, you should incorporate Yes, you should incorporate technology is front and center of the house in front center of a system like the blockchain, if you go and see other types of what people call the house, or just, you know, like, yes, they can use a multi SIG, and that’s a piece of technology, but they use that just to keep their funds, which are tokens, and then But then their, their main their main activities are always like off chain, you know, like, set up a group to go and buy certain tokens or, or buy certain house a house or or, or, or a land to build a golf course or something like that, you know, the tests in this, in those cases you should incorporate got it.

 

Aaron Malone  11:18

So what kind of tools out there are there to serve Dows right now, because it’s very, very difficult to run any kind of business without the right kind of tools and software, is it just a multisig wallet? Or are there other things as well like analytics and hiring platforms, accounting etc, etc.

 

11:38

Yeah, so, for me, as I said, for me, one thing is is is this really decentralized and autonomous organization like the blockchain or a protocol and then there are other entities that they like that they can contribute to these to these systems to these blockchains and we are seeing it already. These are the ones that are wrongly called out. However, what I believe is that these really these entities are our legal entities that can be used is not only multisig, but they can use the smart contracts, they can also be a go when at some point by the blockchain system or token holders themselves, for example, so they can set up a foundation where the multi SIG is is the is the tool for holding the the assets of the foundation. However, for example, the token holders can decide through a connection with the multi SIG and the blockchain. They can decide who are the signers of the multi SIG and yeah, they also can even keep the Monte signers accountable. So, I think that there is there are a lot of tools starting with the smart contracts itself that can make these entities which are not a Dao because they are just a legal entity, but they can be very normative as well because they will call there is a lawyer call them as cybernetic entities or civil unethical organizations or Borg’s. So yeah, they can they can also have their operations automated, for example. And, and, but yeah, and they will be contributing to the system, through many ways hiring the developers or that one of the group of developers that are maintaining and, and development the developing the software of that blockchain. And yeah, it’s, it’s things that you can the tools that you can use for those automated or like more technological entities are unlimited. One of the features

 

Aaron Malone  13:55

of Dows is voting with different tokens and you have an on chain record with a vote was it’s transparent. But is that vote enforceable on chain with code where you could transfer ownership automatically through the smart contracts? If that’s how it’s voted? Or do you still need human recognition of the vote, and willingness to hand over some of these things? For example, we saw in 2017 tezos, which is a smart contract platform that really pioneered on chain governance. Their entire treasury was basically held hostage by one of their founders for several years. And they had to go through all kinds of lawsuits, just to get them to give it over because they were basically creating a solution for a problem that they themselves had, which was the irony of the whole thing. Where’s that today? Not necessarily tezos But just in general? Yeah, no,

 

14:52

I think today in general, you can, you can have on chain enforcement in That’s, that’s a, that’s a, that’s a very good thing because you don’t have to go to the traditional legal system to enforce any decision. However, I know that like also the blockchains. And the systems right now are very limited. So there are certain things that you could automate, like, for example, they vote on it on the upgrade of of the system itself, right, like a software upgrade of the system itself. That can be once a vote passes, that that can like immediately be enforced to the we have the blockchains. And the different tools have that capability. However, there are other cases where the automation is not about the tooling, if it does possible or not, is about if that makes sense or not. And I think one of the biggest example for that is like, for example, when the community or the token holders are voting for grants program, you know, it’s very difficult to automate this, like decisions like what team to find or what not, this is still very human, that there, there are activities around these blockchain ecosystems that are still very human and like it’s important for humans to to participate rather than automate those things. Because they are very subjective. It’s subjective, you know, like, you cannot, it’s very difficult to set up objective rules around like allocations of funds, for example. So yeah, so I think today you can, you can have a automated enforcement, but sometimes it’s best not to have that automated enforcement. Another another thing is that, as I was saying, you can have our foundation legal entity, in certain parts of that foundation can interact with with a blockchain and also can be influenced or directed by the token holders, like I said, like a foundation that has a multi SIG, and their funds are, even though the foundation managers that the funds, the token holders, keep these people accountable the signers of that multi SIG accountable. And the thing is that yes, you can do that through like, a totally on chain and, and say that, like, if the participant do something that specific, I don’t know, move beyond a certain truss hole, for example, and move assets beyond a certain transfer without the following the specific processes, then through our vote, the the token holders could change those signers or like leave those signers out of of that multisig. However, in terms of like, if something things happen, if some of the things happen in the community was not like, aware of those things, and they could not act before those facts, then I think it’s also useful to have some legal system in place, like, for example, there are jurisdictions that are are starting to recognize blockchains. And so you can say, you can put in the bylaws of that foundation, that the multi SIG is, you know, that they automate directors of that multi SIG are these token holders, and that that multi SIG is just a set of code that is deployed in this blockchain address. And so already certain jurisdictions have, of course, not many are recognizing those things. So it’s also good to have certain protections, legal protection whenever and a humans are involved

 

Aaron Malone  18:40

Canadel have a legally enforced contract, or is it still this kind of a ethereal creation, that’s not really recognized?

 

18:49

Because for me, Dows are truly blockchains or protocols are, are more close to my chin or to a computer than to a corporation, like the ones that we know, today is best that Dows don’t have, you know, I see these systems as an illegal thing, and is not because of our revolutionary thing. Your legal system doesn’t apply to us. And we’re not it’s just because there are there is no need and we have examples of systems or like EU restriction, recognizing that it’s not, there is no way for them to come and try to regulate that system or control that system. For example. You have seen the SEC, as saying that, you know, like the bitcoin is not a security. They don’t try to regulate that blockchain. They don’t try to to regulate the Ethereum blockchain either. They consider those things truly decentralized. There is no one group that they could regulate it they couldn’t quote go and like, try to read they can regulate and you know, the people that are contributing To the blockchain to the Bitcoin blockchain and there are based in, in the US, but beyond that they can take in too much. So I think, yeah, having saying that blockchain has has a legal enforceable contract, it doesn’t make sense. There is no need for that. And also, it’s like, there are two different different systems, that they can complement each other. However, you we shouldn’t, we shouldn’t confuse them. And this is why they currently there is this tau identity problem? That, yeah, people are depending who you are talking to. For, for a specific person, or Tao is one thing in for another adult is another thing.

 

Aaron Malone  20:46

Yeah, it’s hard to get our head out of the traditional mindset of an organization. You know, when I’m thinking of, okay, I want to start a Dow, and I want to have a team under me, you know, I better come up with an employment contract, or, you know, I better have articles of incorporation, if I need to get an on an exchange, because they’re gonna ask for it. But a Dow wouldn’t have any of those things, would it? Yeah. So how do you how do you like literally join a dowel? Like, do I need to like send someone an invite code? And they log in with their wallet? Like, what is the actual step by step process of joining a dowel?

 

21:23

Just have to follow the rules of that town? So for example, in again, I go back to the biggest examples for me, which is the the Bitcoin Blockchain on the Etherion blockchain, if you want users, if you want to push some code, you have to follow the rules of that system. And of course, I mean, I imagine that also, you know, like, you should join the core, some of the core teams that could that have that the power to push code to the system and upgrade the system and change the rules. However, this group of developers, they per se, on their own, they cannot change the rules, you know, in Bitcoin miners have to accept those things, and also the nodes that are on the blockchain as well. So yeah, it’s like for you to participate in Dow, you should be following the encoded the software rules that are that are public and knowledgeable by everybody that can be part publicly auditable, and in open source. And so as soon as you do that, you can become a core developer, you can become a miner, you can run run notes. For the blockchain, you know, in proof of stake, you can you can be a validator, following the rules of that system that how you participate in the house. Got it.

 

Aaron Malone  22:51

So if we’re thinking, like, like a decentralized exchange, for example, they’re pretty much the same. Whether it’s, you know, your swap, or pancake swap on BNB chain, or osmosis on Cosmos, you know, one, you know them all, there 99%, the same features? Are all dowel tool suites, the same just on different chains? Or is one more robust than another? Where should we start looking if we want to start researching and getting our hands on actual Dell tools?

 

23:23

Yeah, I mean, that depends, like you said, you said, you put us an example, the DAGs depending on on what is it that you’re looking for, for example, it uniswap Is that is a good example of. For me, it’s another Tao even if a lot of people criticize it, yes, that is decentralized, as a centralized system doesn’t mean that there is not centralized participants, right. And so and so but the thing is for it to be decentralized, it means that these centralized participants, they might have control over a piece of the picture, they don’t have control of the whole picture. So in in terms of a Yoni swab, I think the protocol every time that they want to, they need to upgrade the system, come up with a new version of the protocol, they have to deploy a total new version and the community has to, like the previous version, the community can still use it. It’s like, is the social consensus, the one that they find that was the latest version and the version that they understand and identify as the as the as the uniswap protocol? And so yeah, on tooling, I think, right now, for for, for, for the system sees, like, mainly the smart contracts in cosmos is, you know, like I said, we don’t have as smart contracts in Cosmos, but there are other tools like Excel like our stack, and, but in terms of like, a tooling for entities to interact with them. Right now in Cosmos there is something called doubt doubt. So it offers a lot of toolings for for the connection between blockchain and then and then these entities that are in the, in the periferia contributing to the dowse and so, yeah, I think, I think right now, no, no, I have to say there are not a lot of doubt toolings or, or toolings. For for for these entities. I think the most things that we have are like payments solutions, which at the end of the day, or multi six, and like automatic payments, for example, to pay. There, there is a default protocol, I think, right now, I can’t remember the name in Aetherium, where what happens is that that is out of the out of the inflation of the token, they there is part of that inflation goes to, to a multi SIG and then the token holders, they decide to allocate in allocate funds, for example, to pay that the developers are developing the protocol. And those payments are are automated according to also certain rules that contributors need to follow, they need to go and present certain proof that they have, they have deployed, so some code or and they have worked, and then the payout will, will will go almost automatically.

 

Aaron Malone  26:31

That sounds like an amazing system. I’ll have to look it up and find out what that is. There’s so many things that seem to

 

26:39

go to the MAPE is the name of that coordinate? Coordinate? Exactly.

 

Aaron Malone  26:44

Okay. Awesome. Oh, there’s so many things that are built by Aetherium on default, but the Ethereum blockchain is so bogged down already. It’s got most of the defy, it’s got most of the NF T’s. It’s going to have most of the real world assets that are being minted now, this thing’s going to be really, really heavy. As we get into the next Bull Run. What are some of the things we should look to offload to the cosmos ecosystem instead? Is there enough stable coin liquidity for defy to come over? Or, you know, what should we really look into? What are some of the bright spots of cosmos?

 

27:20

Right? Yeah, the brightest part in cosmos is the IBC protocol. And is a inter inter blockchain communication protocol. The thing is, in Aetherium, all these elders and enroll apps, they are chains. You know, they are just another chain. Currently, there are a system for these chains to communicate with layer one, in the case of the theorem, the Ethereum blockchain, but there are no systems to for these elders to go to talk to each other. And in that same, that’s a huge problem. And I think even in Aetherium, they are starting to see that there is need for that communication. And so I think the brightest spot in cosmos is that we have solved already for that problem. And However, right now, I have to say, in order for people to use IBC. Alone, it’s, it’s like IBC, right now is somehow tightly coupled with the cosmos SDK. However, we are also in the process of looking at ways to you to do not for the system not to be so couple and like for people to be able to use IBC, even if they don’t use something like the cosmos SDK. So yeah, this is the liquidity among these chains are really going to be very, very important.

 

Aaron Malone  28:50

Give us the latest update on what was the biggest topic of the year in the cosmos community. And that was the vote for interchain security, and the potential change in the big inflation of the atom token. Where are things out with that today?

 

29:09

Well, thanks into two I think you’re talking about atom 2.0. That proposal. That’s not something that makes me very, very happy about like, it’s really something to show off for several reasons, even though if that proposal didn’t passed, and I am one of the persons that believe that the technology describing that proposal was was amazing. It’s amazing. The ideas describing that proposal were amazing and RMAc even though it didn’t it didn’t pass it is it shows how you know how the hub is decentralized, in the sense of like, many of many people that were employed by the ICF. They were working also on that Paper, a lot of us wanted for that paper to pass, but it didn’t happen. You know, we don’t control that blockchain. We are just in entity that funding the open source technology. So yeah, and the validators today, it really is, it was a good example of participation, governance participation. Normally, governance participation is very low. But here, the validators they really and token holders, they really do their homework did their homework of reading that proposal and pointing out the problems with our proposal and what I believe one of the main problems were like that a lot of different ideas were proposed at once in the same paper. And so what even even though it didn’t, it didn’t pass, what we have today is that, so different teams, independent teams are working on on on different parts of that proposal. And they are going to come in and present those proposals to the, to the community again, independently. And I think at the end, those that atom 2.0 is going to be a reality is just that not everything at once is going to happen. And, and like yeah, the community and different teams are organizing around, like all the different ideas that were packed in that proposal.

 

Aaron Malone  31:26

That’s great to hear. It was such an amazing proposal that other teams are now trying to copy it throughout the crypto ecosystem. So I think when that happens, you know, you’re really on to something. So hopefully, these teams continue to build that stuff out. And the community will accept it, what were some of the problems that people weren’t comfortable with at first that are probably going to be modified before things get re proposed,

 

31:52

the thing that I more or less already mentioned, which is that it were like a lot of things proposing in one huge, just

 

Aaron Malone  32:02

too much. At one time,

 

32:03

it was people were like, This is too much, it just I just this is too much you should have presented, they were telling that the people that that, that contributed to that proposal that they should have presented like focalize in proposals instead of like, try to bundle everything at once. It was too much for for for for everybody in and I actually kind of agree with that, uh, you know, because there are, some of those ideas are very experimental. And so to do everything at once, it could be complicated as well, yes. And the community needs to feel safe and comfortable to to, to support experiments. And so I think for for them, for the community in general, in this word, the things that we heard the most was that it was it was just too much all at once there was

 

Aaron Malone  32:58

a lot packed in there. Either kind of person that loves massive progress and change overnight. So I thought it was great, but I could definitely see how any amount of change is scary. And that amount can be very, very scary for a lot of people. But it’s great to know that these proposals are not dead. They’re just getting chopped up repackaged, and hopefully a little bit easier to digest in the future. I’m a huge believer in the cosmos ecosystem. Now and especially going forward. So I’m very grateful to the interchain foundation and all the other major contributors going on to make this thing possible. It’s my biggest regret that I won’t be able to attend Cosmo verse this year in Istanbul, I was around for last year in metazine and just had the time of my life. Where should people go to learn more about what’s happening to interchain? The cosmos community? If people are, you know, finally sick of Aetherium after the latest curve hack, and they need to change, where should they go to get started in the cosmos community?

 

33:57

Yeah, they can go through our website intuition.io. But also they can follow several Twitter handles in, in, in, in Twitter, they can they can follow add Cosmos, or as at Cosmos hub, as well, or they they add interchange.io on Twitter. In order to go and learn in our website, we have links to the blog leads to different documentation about all the different parts of the stacks that we’re finding.

 

Aaron Malone  34:35

Fantastic. Well, maybe you can give a couple of shout outs some of the big contributors and personalities in the cosmos space that have really made it what it is today that people may not know unless they’re already involved.

 

34:47

Yeah, um It’s like a several people several teams that are working on on developing the different parts of the stacks for example in formal we Cheese, they are maintaining and developing common BFT. These are, this is the main thing that they do for for for the ICF. And decent this team is, is co founded founded by Ethan Bookman, one of the co founders of the cosmos project. Then also a team called binary binary builders, they are the ones that maintainers of the cosmos SDK, and then our own team, our internal team, the IVC. Team, their maintainer, so and in the ones that are developing the IBC protocol and the Go implementation, I think, you know, and I also like, yeah, several say, I think the good thing about cosmos is that there are not like one central figure that has good and bad things. But the good things that are that it’s like, you know, if people are interested about this, and in are keen to contribute, it is very easy. It’s very easy to, to get involved to reach out, people are very approachable. So yeah, I would say you go to the documentation, go to the discord channel, as well. Everybody’s very approachable.

 

Aaron Malone  36:13

That’s awesome. And lastly, if this is the first podcast, someone was listening to wanting to get into this space, who wanted to start a Dow, you know, wants to participate in the future of technology, finance, organization, what’s a couple of words of wisdom that you’d like to leave with them?

 

36:33

That don’t think it’s too late. It’s only 23. I think we are really, really at the beginning of this, of these things. And to be curious, you know, to not to be afraid of, of knocking doors. People in crypto I have to say in in I love both ecosystem as a human in cosmos. People in crypto are very approachable. Don’t be afraid to ask dumb, quote unquote, questions. You know, we are all learning. Also, don’t get into if you’re not an engineer. And if you’re not technical, don’t think that you cannot contribute. You cannot imagine how much good people with good operational and technical skills are needed here. You know, people that can really bring all these amazing ideas that we have in crypto into into reality. Yes. So yes, don’t be afraid. And be curious.

 

Aaron Malone  37:36

That’s a great piece of advice. Be curious. Because when you lose your curiosity, that’s when you become an adult. And that’s when you start getting old. So always be curious. And Maria, thank you so much for spending the last half hour plus with us. We can’t wait to have you back. And thank you again for everything you’re doing over there. interchain thanks to you. And thank you to all of our listeners to tuning into the crypto Annalen podcast for another awesome episode. We’ll see you again next week.

 

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In Pizza Mind’s last episode as a host of Crypto 101 he has a solo episode with Maria Gomez to discuss all things DAOs. Learn about how DAO projects bring a unique aspect of control to the people with distributed decision making amongst owners and how that opportunity brings a unique landscape to certain Web3 Projects.  Finally thank you to Aarone “Pizza Mind” Malone for being an amazing Co-Host over the years and we are excited to have him come back on to be a guest soon!

 

 

— TRANSCRIPT —

 

SPEAKERS

Aaron Malone

 

Aaron Malone  00:09

All right, everyone. Welcome back to another episode of the crypto 101 podcast. I just saw your host pizza mind. And I’m flying solo today. And but not by myself, because I have the beautiful and talented Maria Gomez, the managing director from one of my favorite groups and all the crypto space, the interchain. Foundation, Rio, welcome to the crypto on one podcast.

 

00:32

Thank you so much. It’s a mine, or inviting me here.

 

Aaron Malone  00:37

Well, I couldn’t have asked for a better tag team partner while we’re on the podcast today, because there’s so much to be excited about in the cosmos ecosystem. And it’s been a little while since we’ve had someone on to kind of talk about it. So if you would first let’s get to know you. What were you doing before you join the inner chain Foundation? And what was it about the inner chain foundation that attracted you there?

 

01:03

Yeah. Before the interesting foundation, I was working in a project in Aetherium, that was building tools for the house, that project was called Aragon. And my background is in law, I used to be a corporate lawyer. So when I started working in crypto through Coinbase, that was my first work in within crypto coming from the traditional world am I and I started learning about a Ethereum and like the Dow project. I was very, as a lawyer, I was I was very interested about Dow OHS and what they were and how different they were from traditional organizations. So yeah, before coming to the to Cosmos, and to the interchange, and in the in the, in the foundation, I was very involved in, in the house. And, and like, for me, my world was mainly Aetherium and Aetherium ecosystem. And I knew some things about other ecosystems like cosmos. However, at the moment that the opportunity came to join the foundation. You know, like there was a lot of conversations and discussions around the future of Aetherium. And the scalability of Aetherium. This was like, more or less a two years ago, two years and a half ago, about the scalability of Aetherium. And like, their change to POS. And then I started like looking at other ecosystems that were already having that. And, and for me, I was like, yeah, it looks like cosmos is gonna is going to be the future of Aetherium. And, and Cosmos is already, you know, like the things that I was, I was seeing that they were going to move towards those things had already been applied in, in the cosmos ecosystem. So for me, that was interesting enough to join the foundation. Yeah.

 

Aaron Malone  03:06

And there’s so many interesting things going on there. What is the role of the interchain foundation within the cosmos ecosystem?

 

03:14

Yes. So we are one of the entities that we are focusing on the funding of public goods. So we have a stack, and we call it the interchange stack. Previously, the cosmos stack, we’re trying to change more to, like, you know, talk about the interchange, rather than cosmos. So we have this interchange stack, which is a set of tools and technologies that are that people can use to set up their own blockchains. And those sets of tools are like the IBC protocol or the in inter communication, inter blockchain communication protocol, then the cosmos SDK and a consensus engine, which is common BFT, previously known as known as a standard mean. So we make sure that those public goods, they don’t have a business model and in there will always be free and open source. They keep running and they keep evolving. And so yeah, so So that’s our main mission, making sure that this stack is innovative, and is well maintained. So so the cosmos ecosystem can flourish.

 

Aaron Malone  04:30

I think it’s really cool how you’ve built that out in such a modular way, where someone can have a cosmos chain, but they don’t have to have it IBC connected, or they don’t have to use the tender mint algorithm. They can have proof of work if they want to, or anything else that makes them comfortable, but they can still be part of this much larger ecosystem. So I’ve been very, very impressed with all the different groups that are contributing to Cosmos over there. No, but let’s talk about Dows at a high level, what makes a Dao different from a normal LLC or C Corp?

 

05:07

Well, you know, through my experience, my years of, of experience working with the DAO tooling, you know, in the beginning, like we, we, the project was launched, the Aragon was launched, like around 2017, even before, those were so hot as they are right now, that my learning was that in, you know, a real Dow is a real decentralized autonomous organization. And, right now, people don’t really know what’s decentralized and what’s autonomous, what that really means, in a lot of the entities that are being called out, or not different than any, there are actually most of them are legal entities, so there is no different whatsoever. And in all, some of them are not even incorporated. So they they are just, you know, like, sort of unincorporated organization that sometimes don’t even use the smart contracts to operate like it’s it’s a I say that currently Dows are having a fuchsia identity crisis and this is very problematic, because it’s very risky for people you know, that they join a Dow or what is called a Dow with an understanding that like, you know, like things are transparent and open and and trust minimize any reality does not, does not what is happening. But so for me to go back to your question, yeah, decentralized autonomous organizations are totally different than legal entities. First, they are the autonomous that means that they are self regulated, they are trust minimized, the trust is based on the system or the the encoded rules open in open source at that open source rules that these systems have. And also they are they are not there are not as strict as strict extrinsic powers that can control the systems. That’s what it means to be autonomous, and then they are decentralized, meaning that these individual powers of any group or any person or any jurisdiction are really minimized among a sea of of contributors among a sea of participants. So yeah, nobody there really control the full picture, you really can interact with those doubts, according to the the encoded rules, and and yeah, there is no one person that can control that system. So for me, a Dow is like something like the Ethereum blockchain or the Dow is, is a really decentralized protocol on top of the Ethereum blockchain that’s what for me is a Dow and like, in they are not legal entities is is a is yes, is a is an incorporated entity that has to be attached to a specific rules in certain jurisdiction, and in these entities need to follow those, those rules that are set up by people. And, and yeah, in, in the difference with the with a Dow would be that the rules in in these systems are our software.

 

Aaron Malone  08:30

Okay, so what is the right use case to form a Dow over a legal entity? I mean, I know there’s not, not every organization is big enough where they need to incorporate or doing as important things where they need to have an EIN number here in the States or a bank account. You know, can we operate as a Dao? Or will some government jurisdictions view that is doing business illegally? What have you seen so far, and being in the data space for like five years plus now?

 

09:01

So yeah, so I always say it depends on like, what is it that you’re trying to do? And if you’re trying to do set up, like, like, an automated system, like blockchain, for example, or a specific protocol, and if that is really going to be decentralized? Yes, you don’t have to incorporate that thing is an entity, however, you’re like you’re contributing to the system. And it’s good that if like, if you are, for example, part of the team of the developers that are setting up law blockchain is better for you to incorporate, but you have to make a difference between what is it that you are incorporating is is a the organization under which this group of humans are going to be working for that, that that Dao that they are building on that protocol or that blockchain that they are building? So yeah, so so if you what you’re doing is just, you know, forming an organization Full of humans to, you know, collectively go and buy a house go and buy a golf thing, like, you know, there are now a lot of like social dollars called Social doubts and they are just a bunch of humans using a multi SIG. So yeah, if these are the cases where you see that technology is not going to play a big role role within that entity that you want to, or system that you want to organize, you should incorporate Yes, you should incorporate technology is front and center of the house in front center of a system like the blockchain, if you go and see other types of what people call the house, or just, you know, like, yes, they can use a multi SIG, and that’s a piece of technology, but they use that just to keep their funds, which are tokens, and then But then their, their main their main activities are always like off chain, you know, like, set up a group to go and buy certain tokens or, or buy certain house a house or or, or, or a land to build a golf course or something like that, you know, the tests in this, in those cases you should incorporate got it.

 

Aaron Malone  11:18

So what kind of tools out there are there to serve Dows right now, because it’s very, very difficult to run any kind of business without the right kind of tools and software, is it just a multisig wallet? Or are there other things as well like analytics and hiring platforms, accounting etc, etc.

 

11:38

Yeah, so, for me, as I said, for me, one thing is is is this really decentralized and autonomous organization like the blockchain or a protocol and then there are other entities that they like that they can contribute to these to these systems to these blockchains and we are seeing it already. These are the ones that are wrongly called out. However, what I believe is that these really these entities are our legal entities that can be used is not only multisig, but they can use the smart contracts, they can also be a go when at some point by the blockchain system or token holders themselves, for example, so they can set up a foundation where the multi SIG is is the is the tool for holding the the assets of the foundation. However, for example, the token holders can decide through a connection with the multi SIG and the blockchain. They can decide who are the signers of the multi SIG and yeah, they also can even keep the Monte signers accountable. So, I think that there is there are a lot of tools starting with the smart contracts itself that can make these entities which are not a Dao because they are just a legal entity, but they can be very normative as well because they will call there is a lawyer call them as cybernetic entities or civil unethical organizations or Borg’s. So yeah, they can they can also have their operations automated, for example. And, and, but yeah, and they will be contributing to the system, through many ways hiring the developers or that one of the group of developers that are maintaining and, and development the developing the software of that blockchain. And yeah, it’s, it’s things that you can the tools that you can use for those automated or like more technological entities are unlimited. One of the features

 

Aaron Malone  13:55

of Dows is voting with different tokens and you have an on chain record with a vote was it’s transparent. But is that vote enforceable on chain with code where you could transfer ownership automatically through the smart contracts? If that’s how it’s voted? Or do you still need human recognition of the vote, and willingness to hand over some of these things? For example, we saw in 2017 tezos, which is a smart contract platform that really pioneered on chain governance. Their entire treasury was basically held hostage by one of their founders for several years. And they had to go through all kinds of lawsuits, just to get them to give it over because they were basically creating a solution for a problem that they themselves had, which was the irony of the whole thing. Where’s that today? Not necessarily tezos But just in general? Yeah, no,

 

14:52

I think today in general, you can, you can have on chain enforcement in That’s, that’s a, that’s a, that’s a very good thing because you don’t have to go to the traditional legal system to enforce any decision. However, I know that like also the blockchains. And the systems right now are very limited. So there are certain things that you could automate, like, for example, they vote on it on the upgrade of of the system itself, right, like a software upgrade of the system itself. That can be once a vote passes, that that can like immediately be enforced to the we have the blockchains. And the different tools have that capability. However, there are other cases where the automation is not about the tooling, if it does possible or not, is about if that makes sense or not. And I think one of the biggest example for that is like, for example, when the community or the token holders are voting for grants program, you know, it’s very difficult to automate this, like decisions like what team to find or what not, this is still very human, that there, there are activities around these blockchain ecosystems that are still very human and like it’s important for humans to to participate rather than automate those things. Because they are very subjective. It’s subjective, you know, like, you cannot, it’s very difficult to set up objective rules around like allocations of funds, for example. So yeah, so I think today you can, you can have a automated enforcement, but sometimes it’s best not to have that automated enforcement. Another another thing is that, as I was saying, you can have our foundation legal entity, in certain parts of that foundation can interact with with a blockchain and also can be influenced or directed by the token holders, like I said, like a foundation that has a multi SIG, and their funds are, even though the foundation managers that the funds, the token holders, keep these people accountable the signers of that multi SIG accountable. And the thing is that yes, you can do that through like, a totally on chain and, and say that, like, if the participant do something that specific, I don’t know, move beyond a certain truss hole, for example, and move assets beyond a certain transfer without the following the specific processes, then through our vote, the the token holders could change those signers or like leave those signers out of of that multisig. However, in terms of like, if something things happen, if some of the things happen in the community was not like, aware of those things, and they could not act before those facts, then I think it’s also useful to have some legal system in place, like, for example, there are jurisdictions that are are starting to recognize blockchains. And so you can say, you can put in the bylaws of that foundation, that the multi SIG is, you know, that they automate directors of that multi SIG are these token holders, and that that multi SIG is just a set of code that is deployed in this blockchain address. And so already certain jurisdictions have, of course, not many are recognizing those things. So it’s also good to have certain protections, legal protection whenever and a humans are involved

 

Aaron Malone  18:40

Canadel have a legally enforced contract, or is it still this kind of a ethereal creation, that’s not really recognized?

 

18:49

Because for me, Dows are truly blockchains or protocols are, are more close to my chin or to a computer than to a corporation, like the ones that we know, today is best that Dows don’t have, you know, I see these systems as an illegal thing, and is not because of our revolutionary thing. Your legal system doesn’t apply to us. And we’re not it’s just because there are there is no need and we have examples of systems or like EU restriction, recognizing that it’s not, there is no way for them to come and try to regulate that system or control that system. For example. You have seen the SEC, as saying that, you know, like the bitcoin is not a security. They don’t try to regulate that blockchain. They don’t try to to regulate the Ethereum blockchain either. They consider those things truly decentralized. There is no one group that they could regulate it they couldn’t quote go and like, try to read they can regulate and you know, the people that are contributing To the blockchain to the Bitcoin blockchain and there are based in, in the US, but beyond that they can take in too much. So I think, yeah, having saying that blockchain has has a legal enforceable contract, it doesn’t make sense. There is no need for that. And also, it’s like, there are two different different systems, that they can complement each other. However, you we shouldn’t, we shouldn’t confuse them. And this is why they currently there is this tau identity problem? That, yeah, people are depending who you are talking to. For, for a specific person, or Tao is one thing in for another adult is another thing.

 

Aaron Malone  20:46

Yeah, it’s hard to get our head out of the traditional mindset of an organization. You know, when I’m thinking of, okay, I want to start a Dow, and I want to have a team under me, you know, I better come up with an employment contract, or, you know, I better have articles of incorporation, if I need to get an on an exchange, because they’re gonna ask for it. But a Dow wouldn’t have any of those things, would it? Yeah. So how do you how do you like literally join a dowel? Like, do I need to like send someone an invite code? And they log in with their wallet? Like, what is the actual step by step process of joining a dowel?

 

21:23

Just have to follow the rules of that town? So for example, in again, I go back to the biggest examples for me, which is the the Bitcoin Blockchain on the Etherion blockchain, if you want users, if you want to push some code, you have to follow the rules of that system. And of course, I mean, I imagine that also, you know, like, you should join the core, some of the core teams that could that have that the power to push code to the system and upgrade the system and change the rules. However, this group of developers, they per se, on their own, they cannot change the rules, you know, in Bitcoin miners have to accept those things, and also the nodes that are on the blockchain as well. So yeah, it’s like for you to participate in Dow, you should be following the encoded the software rules that are that are public and knowledgeable by everybody that can be part publicly auditable, and in open source. And so as soon as you do that, you can become a core developer, you can become a miner, you can run run notes. For the blockchain, you know, in proof of stake, you can you can be a validator, following the rules of that system that how you participate in the house. Got it.

 

Aaron Malone  22:51

So if we’re thinking, like, like a decentralized exchange, for example, they’re pretty much the same. Whether it’s, you know, your swap, or pancake swap on BNB chain, or osmosis on Cosmos, you know, one, you know them all, there 99%, the same features? Are all dowel tool suites, the same just on different chains? Or is one more robust than another? Where should we start looking if we want to start researching and getting our hands on actual Dell tools?

 

23:23

Yeah, I mean, that depends, like you said, you said, you put us an example, the DAGs depending on on what is it that you’re looking for, for example, it uniswap Is that is a good example of. For me, it’s another Tao even if a lot of people criticize it, yes, that is decentralized, as a centralized system doesn’t mean that there is not centralized participants, right. And so and so but the thing is for it to be decentralized, it means that these centralized participants, they might have control over a piece of the picture, they don’t have control of the whole picture. So in in terms of a Yoni swab, I think the protocol every time that they want to, they need to upgrade the system, come up with a new version of the protocol, they have to deploy a total new version and the community has to, like the previous version, the community can still use it. It’s like, is the social consensus, the one that they find that was the latest version and the version that they understand and identify as the as the as the uniswap protocol? And so yeah, on tooling, I think, right now, for for, for, for the system sees, like, mainly the smart contracts in cosmos is, you know, like I said, we don’t have as smart contracts in Cosmos, but there are other tools like Excel like our stack, and, but in terms of like, a tooling for entities to interact with them. Right now in Cosmos there is something called doubt doubt. So it offers a lot of toolings for for the connection between blockchain and then and then these entities that are in the, in the periferia contributing to the dowse and so, yeah, I think, I think right now, no, no, I have to say there are not a lot of doubt toolings or, or toolings. For for for these entities. I think the most things that we have are like payments solutions, which at the end of the day, or multi six, and like automatic payments, for example, to pay. There, there is a default protocol, I think, right now, I can’t remember the name in Aetherium, where what happens is that that is out of the out of the inflation of the token, they there is part of that inflation goes to, to a multi SIG and then the token holders, they decide to allocate in allocate funds, for example, to pay that the developers are developing the protocol. And those payments are are automated according to also certain rules that contributors need to follow, they need to go and present certain proof that they have, they have deployed, so some code or and they have worked, and then the payout will, will will go almost automatically.

 

Aaron Malone  26:31

That sounds like an amazing system. I’ll have to look it up and find out what that is. There’s so many things that seem to

 

26:39

go to the MAPE is the name of that coordinate? Coordinate? Exactly.

 

Aaron Malone  26:44

Okay. Awesome. Oh, there’s so many things that are built by Aetherium on default, but the Ethereum blockchain is so bogged down already. It’s got most of the defy, it’s got most of the NF T’s. It’s going to have most of the real world assets that are being minted now, this thing’s going to be really, really heavy. As we get into the next Bull Run. What are some of the things we should look to offload to the cosmos ecosystem instead? Is there enough stable coin liquidity for defy to come over? Or, you know, what should we really look into? What are some of the bright spots of cosmos?

 

27:20

Right? Yeah, the brightest part in cosmos is the IBC protocol. And is a inter inter blockchain communication protocol. The thing is, in Aetherium, all these elders and enroll apps, they are chains. You know, they are just another chain. Currently, there are a system for these chains to communicate with layer one, in the case of the theorem, the Ethereum blockchain, but there are no systems to for these elders to go to talk to each other. And in that same, that’s a huge problem. And I think even in Aetherium, they are starting to see that there is need for that communication. And so I think the brightest spot in cosmos is that we have solved already for that problem. And However, right now, I have to say, in order for people to use IBC. Alone, it’s, it’s like IBC, right now is somehow tightly coupled with the cosmos SDK. However, we are also in the process of looking at ways to you to do not for the system not to be so couple and like for people to be able to use IBC, even if they don’t use something like the cosmos SDK. So yeah, this is the liquidity among these chains are really going to be very, very important.

 

Aaron Malone  28:50

Give us the latest update on what was the biggest topic of the year in the cosmos community. And that was the vote for interchain security, and the potential change in the big inflation of the atom token. Where are things out with that today?

 

29:09

Well, thanks into two I think you’re talking about atom 2.0. That proposal. That’s not something that makes me very, very happy about like, it’s really something to show off for several reasons, even though if that proposal didn’t passed, and I am one of the persons that believe that the technology describing that proposal was was amazing. It’s amazing. The ideas describing that proposal were amazing and RMAc even though it didn’t it didn’t pass it is it shows how you know how the hub is decentralized, in the sense of like, many of many people that were employed by the ICF. They were working also on that Paper, a lot of us wanted for that paper to pass, but it didn’t happen. You know, we don’t control that blockchain. We are just in entity that funding the open source technology. So yeah, and the validators today, it really is, it was a good example of participation, governance participation. Normally, governance participation is very low. But here, the validators they really and token holders, they really do their homework did their homework of reading that proposal and pointing out the problems with our proposal and what I believe one of the main problems were like that a lot of different ideas were proposed at once in the same paper. And so what even even though it didn’t, it didn’t pass, what we have today is that, so different teams, independent teams are working on on on different parts of that proposal. And they are going to come in and present those proposals to the, to the community again, independently. And I think at the end, those that atom 2.0 is going to be a reality is just that not everything at once is going to happen. And, and like yeah, the community and different teams are organizing around, like all the different ideas that were packed in that proposal.

 

Aaron Malone  31:26

That’s great to hear. It was such an amazing proposal that other teams are now trying to copy it throughout the crypto ecosystem. So I think when that happens, you know, you’re really on to something. So hopefully, these teams continue to build that stuff out. And the community will accept it, what were some of the problems that people weren’t comfortable with at first that are probably going to be modified before things get re proposed,

 

31:52

the thing that I more or less already mentioned, which is that it were like a lot of things proposing in one huge, just

 

Aaron Malone  32:02

too much. At one time,

 

32:03

it was people were like, This is too much, it just I just this is too much you should have presented, they were telling that the people that that, that contributed to that proposal that they should have presented like focalize in proposals instead of like, try to bundle everything at once. It was too much for for for for everybody in and I actually kind of agree with that, uh, you know, because there are, some of those ideas are very experimental. And so to do everything at once, it could be complicated as well, yes. And the community needs to feel safe and comfortable to to, to support experiments. And so I think for for them, for the community in general, in this word, the things that we heard the most was that it was it was just too much all at once there was

 

Aaron Malone  32:58

a lot packed in there. Either kind of person that loves massive progress and change overnight. So I thought it was great, but I could definitely see how any amount of change is scary. And that amount can be very, very scary for a lot of people. But it’s great to know that these proposals are not dead. They’re just getting chopped up repackaged, and hopefully a little bit easier to digest in the future. I’m a huge believer in the cosmos ecosystem. Now and especially going forward. So I’m very grateful to the interchain foundation and all the other major contributors going on to make this thing possible. It’s my biggest regret that I won’t be able to attend Cosmo verse this year in Istanbul, I was around for last year in metazine and just had the time of my life. Where should people go to learn more about what’s happening to interchain? The cosmos community? If people are, you know, finally sick of Aetherium after the latest curve hack, and they need to change, where should they go to get started in the cosmos community?

 

33:57

Yeah, they can go through our website intuition.io. But also they can follow several Twitter handles in, in, in, in Twitter, they can they can follow add Cosmos, or as at Cosmos hub, as well, or they they add interchange.io on Twitter. In order to go and learn in our website, we have links to the blog leads to different documentation about all the different parts of the stacks that we’re finding.

 

Aaron Malone  34:35

Fantastic. Well, maybe you can give a couple of shout outs some of the big contributors and personalities in the cosmos space that have really made it what it is today that people may not know unless they’re already involved.

 

34:47

Yeah, um It’s like a several people several teams that are working on on developing the different parts of the stacks for example in formal we Cheese, they are maintaining and developing common BFT. These are, this is the main thing that they do for for for the ICF. And decent this team is, is co founded founded by Ethan Bookman, one of the co founders of the cosmos project. Then also a team called binary binary builders, they are the ones that maintainers of the cosmos SDK, and then our own team, our internal team, the IVC. Team, their maintainer, so and in the ones that are developing the IBC protocol and the Go implementation, I think, you know, and I also like, yeah, several say, I think the good thing about cosmos is that there are not like one central figure that has good and bad things. But the good things that are that it’s like, you know, if people are interested about this, and in are keen to contribute, it is very easy. It’s very easy to, to get involved to reach out, people are very approachable. So yeah, I would say you go to the documentation, go to the discord channel, as well. Everybody’s very approachable.

 

Aaron Malone  36:13

That’s awesome. And lastly, if this is the first podcast, someone was listening to wanting to get into this space, who wanted to start a Dow, you know, wants to participate in the future of technology, finance, organization, what’s a couple of words of wisdom that you’d like to leave with them?

 

36:33

That don’t think it’s too late. It’s only 23. I think we are really, really at the beginning of this, of these things. And to be curious, you know, to not to be afraid of, of knocking doors. People in crypto I have to say in in I love both ecosystem as a human in cosmos. People in crypto are very approachable. Don’t be afraid to ask dumb, quote unquote, questions. You know, we are all learning. Also, don’t get into if you’re not an engineer. And if you’re not technical, don’t think that you cannot contribute. You cannot imagine how much good people with good operational and technical skills are needed here. You know, people that can really bring all these amazing ideas that we have in crypto into into reality. Yes. So yes, don’t be afraid. And be curious.

 

Aaron Malone  37:36

That’s a great piece of advice. Be curious. Because when you lose your curiosity, that’s when you become an adult. And that’s when you start getting old. So always be curious. And Maria, thank you so much for spending the last half hour plus with us. We can’t wait to have you back. And thank you again for everything you’re doing over there. interchain thanks to you. And thank you to all of our listeners to tuning into the crypto Annalen podcast for another awesome episode. We’ll see you again next week.

 

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