33 - Slaying Moloch | Ameen Soleimani & Kevin Owocki

welcome to bankless where we explore the frontier internet money and internet finance this is how to get started how to get better and how to front run the opportunity this is ryan sean adams i'm here with david hoffman and we're here to help you become more bankless david i know you love this episode did you love it as much as i think you do absolutely we have a common enemy in moloch and we need a nation to to help

slay him right and so we brought amin soleimani and kevin owaki two individual moloch slayers to come onto the bankless pod to talk about what moloch is and why we are trying to slay him and what is different this time now that we have ethereum and all the tools in the ethereum tool belt to help slay moloch so that's what this episode is all about and i'm pretty passionate about getting this message into as many years as possible well i'm i'm passionate about it too because i think that um

you have correctly identified in your past writings and as have others as have you know many in this kind of moloch slang tribe that moloch is really i mean he's the god of coordination failure is really the biggest problem that humanity faces and maybe the the only problem so if we are going to have an enemy as the bankless nation it should definitely be moloch yeah i really like that phrase i think we can we can all label some problems

that we have in our lives and i think if you keep on pulling back the layers every single problem that we have moloch is at the end of it right so to some degree moloch is problems right and and to some degree it's also the the most relevant problem that we could ever face but i think he's specifically rearing his head lately right like 2020 is a year of of many different crises and i think it's pretty easy to connect every single crisis that we have be it the lack of our ability to coordinate around

coronavirus or the lack of like the the polar opposite ends of the united states to be able to coordinate in politics facebook is tearing us apart from our communities and making us believe different things you know at the end of the day like i feel like 2020 especially is the year that moloch is rearing its head and we need more help to slay this beast because he is he's approaching from all sides yeah he's he's really a common enemy for all of us you know i think also what

you're saying is once you see moloch in things once you see human coordination failures like you see them anywhere everywhere you begin to be able to identify the root of uh so many things that seem like they're individual caused or human caused and they're really systemic flaws they're they're problems with kind of the you know the game theory or the the coordination traps that we all fall into so it um there's actually hope i think here um and particularly at the end of the

episode where we talk about humanity some of humanity's big problems once you can identify what the problem actually is you can also start to plan a solution and a way to create this sword that can actually attack and slay the coordination problems and propel humanity into the future so this is um this is definitely a very hopeful uh hopeful episode and i think ethereum at the core and bitcoin and crypto and everything that that we talk about uh

every week on bankless it's a hopeful technology i mean that's that's why we're here yeah it's the technology that makes me optimistic every single morning when i wake up it's like oh thank god you know the world's on fire there's smoke outside my window but at least ethereum is here right at least i have this this common group of people where we can all collaborate and coordinate as to what the problems actually are because like you said we can't solve the problems unless we can identify them and moloch is the problem of all problems

right and and we are all here to help to help slay moloch if you guys are confused perhaps as to why ryan and i are saying this moloch word or or who molock is or what this moloch thing is all about there's a lot of other content available for context and we we start to talk about that what that context is in the very beginnings of the episode but there's going to be plenty of resources also in the show notes to get you up to speed as well and we discuss some of that context right at the beginning of this episode so let's just go ahead and get right into it but first we're going

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amin kevin welcome to the bankless pod today i hope to inspire a bunch of people to join in a long journey of slaying moloch and i think you two individuals are perhaps the best inspiration for encouraging people to go on this journey so amin welcome to bankless thank you for having me kevin also thank you for coming on this journey as well thanks for having me excited for the conversation i mean back in 2018 2019 uh

it was the bear market gang right at that point in time the people that had came in through 2017 to join in you know the ethereum fun times of getting rich quick had then therefore left right and so the the 2018 2019 bear market crew were the people that were left behind that you know kind of by definition were interested and incentivized for ethereum to fulfill the vision that we all wanted it to but it wasn't there yet and you gathered everyone around to hear about

the story of moloch let's start there i mean what is moloch why are we talking about the canaanite god of child sacrifice maluk i like to say is why we can't have nice things malik is a it's a pattern that helps us make sense of the world um and so when when we want to build you know societies want to build schools and hospitals and infrastructure but instead build guns and bombs and planes it's because they can't effectively coordinate together to disarm

and that's because the dominant strategy is to get everyone else to disarm and then secretly keep your weapons and that is molok and so malik defines these like prisoners dilemmas that lead to uh unfortunate equilibriums that either the players want like can't uh get out of or they don't know enough about it or they just can't coordinate enough to to change the equilibrium and it was encoded uh very nicely in a rationalist blog post called

meditations on malloc and so the idea behind malak dao was largely to try and bring some of the teachings of meditations on malik to the ethereum community and in order to understand what happens essentially when coordination breaks down and what what is ultimately at stake uh with ethereum yeah i mean i think that meditation's on malloc is a super inspiring blog post and uh the problem with it is that it's 25 pages long and

so i have to admit that in 2018 when people were passing it along and they sent it to me i opened it up and read a couple paragraphs and i was like i'll come back to this later but i i think that one of the cool things about what you're doing david here is making the 25-page blog post into something that can be consumed in a few minutes with the bankless podcast and consumed in other venues and it's a super important message so would encourage people to read the post itself but if you can't the bankless material and some

of the material that we're putting out here will be also a good summary that is absolutely the goal of what we're trying to do here today so i just want to reiterate one of some of the things that amin was saying where he said it's these prisoners dilemmas that result in these coordination failures right and at the heart of every single instance of coordination failure is the basic principle of the prisoner's dilemma where you have two rational actors who if they knew what's best for themselves they would both choose to

coordinate with each other but because each one has their own individual incentives they end up both defecting from each other which ultimately creates worse outcomes for both and in the meditations on moloch blog post there's this very short two paragraphs which i think really illustrate what we're really talking about here so i'm going to read that out loud and then we will go from there so imagine the possibility of a dictatorless dystopia one that every single citizen including the leadership hates but which nevertheless

endures unconquered it's easy to imagine such a state imagine a country with two rules first every person must spend eight hours a day giving themselves strong electric shocks second if anyone fails to follow a rule including this one or speaks out against it or fails to enforce it all citizens must unite to kill that person suppose these rules were well enforced enough and established by tradition that everyone expected them to be enforced so therefore you shock yourself for 8

hours a day because you know if you don't everyone else will kill you because if they don't everyone else will kill them and so on every single citizen hates the system but for a lack of a good coordination mechanism it endures from a god's eye view we can optimize this system too everyone agrees to stop doing this all at once but no one within the system is able to affect the transition without great risk to themselves that's the end of the passage what we are seeing with moloch is that you can take this basic principle and

apply it to any sort of you know rationally bad outcome such as war for example and apply a moloch principle to it so the project that i work on in the space is called git coin and it's a place that you can get coins if you're a software engineer and the specific mission that we set out to solve back in 2017 when we started the project was to create economic incentives for open source software uh open source software creates 400 billion

dollars per year in economic value uh that was a study that was done in 2010 so before blockchain but the people who are working on open source software are just working on nights and weekends and not able to pay their mortgage by working on open source software and that is a coordination failure in that our digital infrastructure goes underfunded that git coin is setting out to solve so i think that uh that's another tangible example of from a god's eye view a system that is is sub-optimal but the

individual actors have no incentive to maintain open source and so we can't really increment our our way out of it molok dao is similar to git coin in the sense that it was designed to help solve these collective action funding problems uh where there would be something that we would all benefit from if we could only all fund it together but because not enough people are funding things together then none of it gets funded uh and so get coin has acted as this like great uh signal to attract a lot of

uh projects that are up and coming in the space and can receive broad community support molok dao and metacartel dao also helped to solve some of this by allowing people to pool money and spend it together and the the reality of ethereum is that you know it sort of takes this kind of collective action because we don't have any inflation mechanisms we don't have any sort of taxes or any of the the normal mechanisms through which public goods are funded

uh and so we we sort of had to roll our own um the the malloc situation is that like of course it would benefit everybody on ethereum if like we had a little bit more money to pay for devs but like it's you know too difficult for any actor to like try to put that into place into ethereum uh because you know of the coordination effort that it would take to like convince everybody to accept block rewards for devs and figure out how to govern it and da da that like we've you

know started off by just completely going around that and using voluntary donations from uh you know people who are aligned with the long-term success of the platform yeah these public goods have this this uh this problem called the free rider problem which is that public goods like open source software are non-excludable and non-rivalrous which just means that when you create a public good like open source it benefits everyone so why does anyone have an incentive to give back their rational economic incentive if you

look at it narrowly is to just free ride on the system and the cool thing about ethereum is that it introduces this transparent economic coordination layer where the rules can't change on you so it's a transparent economic layer where the rules can't change on you and so that allows a project like moloch molok dao to to to basically create collective action based off of ethereum and and as i understand it the game theory of of multial is that

i am going to fund project x but only if a hundred other people in molok dao also fund it so it gets over that free rider problem of of why should i be the only person that that funds this and get coin grants uses this thing called quadratic funding which gets over the free rider problem by providing a matching bonus for every single contribution that goes over to bitcoin grants but the cool thing is that that we now have ethereum and those are just two instantiations of coordination games that can be played on the ethereum network in order to support

public goods and i think that git coin and molok are both early examples of coordination games that solve public goods problems but i hope to see hundreds more coordination games built on top of ethereum and i think that that's how we're going to build the momentum to slay molok david absolutely and and the end goal of this conversation is to talk about the strengths of ethereum as a technology as a platform for why it is particularly well suited to aiding coordination among humans right in in a in an adversarial

environment but first before before we get there i kind of want to go through some historical and first principles conversations of moloch right i mean before this episode we were talking uh in in twitter dms about um how groups coordinate and how uh the status quo emerges based off of uh coordinating groups right and you said uh that as the status quo of the world right like the whole entire world changes it's because uh groups tend to

coordinate better than whatever the status quo is when we think about at a very high level the systems that govern our reality right like uh the coordination mechanisms uh you know you could go super high level and and start with like time uh but if you you know like without time things would be a lot harder to do together uh and then you you can go a level down and and you know have like names uh of people and like conventions around naming you could go a level down and then be like you know what what story

are we all participating in right and it's like the nation state story uh and and this has actually not always been the case right because before there were nation states there was you know uh empires and before there were empires there was like feudalism and uh you know then back to empires and so forth um and and the interesting thing is simply that you know whatever system dominates whatever coordination mechanism dominates like had to have out-competed all of the previous coordination mechanisms so like there was a point at

which you know feudalism was harder to maintain than it was to compete against uh and there will probably be a point that like maintaining a nation nation state is harder than uh competing against it uh and the role of any coordination platform is is sort of to enable these kinds of uh you know transitions as facilitated by technology and the bet is that the people who are able to most effectively use these coordination platforms are going

to be the ones that out compete uh over time so i wrote this article way back when that kind of instantiated the metaphor of the bankless nation in and it was just a kind of an iteration of this where i claim that we started with i mean in the article i said we go even further back than religion but i use religion as like this first example of a coordination substrate a coordination tool where you know somebody on one side of a continent could coordinate with

somebody on another side of the continent if these two other people ever met because they understood that they both uh used the same story the same coordination tool of like christianity or or you know insert your religion here right and so religion first and foremost was a coordination tool and the reason why court religion was successful was it allowed coordination across a wide variety of people right and what you're saying i mean is that you know religions were useful and and maybe they're still useful to some degree for coordination

but eventually that the nation-state came and that turned out to be a much more scalable infrastructure much more scalable scaffolding for people to coordinate with and so you know for for better or for worse for for more more morality or less morality it doesn't really matter the morals or ethics of these coordination tools it's just that one of these systems can coordinate better than the other and therefore that new system comes to dominate and becomes the new status quo uh yeah that's right um malik is

ultimately about like what thing you're willing to sacrifice to get ahead uh and like the reality is that anytime you know a group can sacrifice something to get ahead they do it and that's what drives these sort of equilibrium and and so like uh you know if i can sacrifice my morality uh for some sort of advantage then like i'm likely to do that uh if i can uh sacrifice you know my belief in the nation-state for some sort

of advantage then i might do that uh the issue is like you know that these opportunities uh don't present themselves there's no way for a bunch of people in like a country for example to uh coordinate against all nations at the same time uh the interesting thing with uh you know network-based monies like bitcoin and ethereum and and others is that you know for the first time like anywhere you are in the world you can be on the same team

and that's a really powerful uh you know state of affairs um and and i just i can't i i would expect that to continue to um to uh propagate because uh the ease of recruiting and the ease of um winning people over and uh you know could see that nation states which are bound geographically are going to have a hard time keeping up can we go back to i guess um talking about like

coordination failure like so so um i remember reading the the blog post you guys referenced a while ago um but it's not i it might not be immediately obvious to everyone why human coordination is so hard right so like why do we have to invent all of these things all of these technologies do you consider like you know you know money and nation state is sort of a social technology to help us coordinate why why is it just so hard is it because we're all kind of greedy and evil

or is there something more pernicious here i mean i think it's it's it's a it's a question of what you're optimizing for um and and to me these the the reason why coordination is hard is because we're all arbitraging between different incentive gradients that were that we're all climbing so we're all optimizing for different things um and ryan if you and i were to be put in a game together like an economic game in which i could cheat in which i could defect and get some gain

for myself and you would pay pay the cost of that i could externalize the cost to you then you and i would have to have pretty high trust in order to both play the game and not do that to each other because there's an incentive gradient that i'm climbing that uh that basically you're you're not on and and so i think that there's a question of are our incentives aligned and are our individual incentives aligned with each other and are they in aligned with the broader group and what is the cost to

to to create create value for yourself relative to others and do we trust each other to do what's best for the group as opposed to all go our own separate ways i think trust is what it comes down to so that's fine kevin because you and i you know we're friends and i trust you right so uh it's not a not a big deal i i would trust that you wouldn't cheat but maybe somebody that i don't know that doesn't have a reputation as uh as esteemed as yours kevin is that sort of where the the trust breaks down

when it gets outside of kind of your social circle and your reputational knowledge circle yeah so i mean the way i think about it is that like if it in and bear with me but if you go back far enough in time the way humanity organized has changed a lot and i think of the main epochs of human organization as being the hunter-gatherer age in which we gathered around in small bands hunting game and sharing it with each other then the agricultural age in which humanity in went through a stepwise increase in complexity which transcended and

included the hunter-gatherer sort of epoch and we all settled on lands and started farming and there were towns in which you had to interact with more and more people and then the industrial age where you can move to new york city and there would be eight million people in your local area that you would have to coordinate with through city government as david noted that the nation-state is prominent during the industrial age and now we're in the information age where we've all been thrown on twitter together and we're all from different parts of the world don't trust each other partially because it's hard to

build trust in 280 characters but partially because we've never been in this online first environment with people of different backgrounds or and all sorts of uh different priors about the world and so for me it's a question of dunbar's number back in the hunter-gatherer age you could trust everyone around you because that's how human society had evolved but if you pay it forward to the information age in which we're all regularly interacting with in some way 8 million 8 billion strangers then dunbar's number our ability to trust the

rest of humanity has not caught up with our ability to communicate with the rest of humanity and so that's what's so powerful about ethereum for me and gives me so much hope about the ethereum space is that we can build trust into our systems by putting them on top of this transparent economic substrate that cannot change the rules on you so i think it's all about trust in the number of people you are interacting with are they inside your dunbar's number or are they not so for people who haven't heard of dunbar's number that's kind of like a like an upper cognitive limit on the amount of people that you can trust

right mm-hmm exactly well how how what is that number something like 150 180 it's 150. i think it is basically you have like your kin which is five people you have your inner circle which can be 10 or 15. and then like the outermost ring is around 50 or 150. so and the the story of humanity right is finding newer and improved mechanisms to scale up dunbar's number right and so and and uh for what it's worth like dunbar's number is also different for every single species right

because it's totally dependent on brain size and in brain capacity right so you know the the reason why dunbar's number for humans is 150 is because that's about the number of relationships that you can hold in memory so like it's not just your relationships with you know your friend joe but it's also joe's relationship with joe's friend fred and your relationship with fred and the intersection between all of these things right and and when david when you say when you say relationship david like uh

you could kind of boil that down to trust right yes exactly it's kind of like this mental picture that i have of you and your reputation and like a relationship is whether if i do this like i know i can trust david to do this right right so initial societies scaled up to about 150 people because that's how much trust that you could have in memory right and in hunter-gatherer societies when it started to uh get larger than 150 we would start to see these hunter-gatherer societies split

into two and because trusk wasn't able to scale that far so in order to solve that problem the society of greater than 150 people split into two societies of like you know 70 yeah and then i think that you know this is where a steve jobs quote comes to mind for me he he used to say technology is a bicycle for the mind so if you think of someone who's running you can use a bite a bicycle to go faster and so technology is a bicycle for the mind and so

as technology advances we're not going to be able to increase the cognitive limit of how many relationships you can hold in your head but we can augment the mind's ability to have working relationships with all of these people by hopefully using technology in a way that increases trust in and doesn't erode it yeah so like to bring this to the bitcoin example like what git coin accomplishes is making you feel like you're part of something even though you're playing by yourself so like i donate to a bunch of stuff but

like i rest assured that you know my donation's going to be matched and i'm playing as part of this game and i can use my signaling to get other people uh to also donate and so it's really like bolsters the the individual action uh by connecting it to the larger hole molok dao does something similar because you can vote on something but you know it'll it'll only uh it either passes or fails and if it passes everybody's spending money on it um and the reason that you feel

confident you know putting your money down with a bunch of strangers on the internet is because you know you can take it out at any time and those rules uh like kevin said can't be changed on you kevin i'm really happy you brought up that steve jobs quote uh technology is a bicycle for the mind because the first instance that we saw a society start to exceed dunbar's number and stay as one whole society was when the ancient sumerians were invented writing right and

as people may know writing the first iteration of writing was just a ledger right it was a list of numbers next to like a list of nouns right and like numbers next to some animals merchandise names or dates right and so what people were doing at this time were tracking the ownership of items right they were making ledgers which i think is actually fascinating because that's kind of the industry that we are in now right like you know distributed blockchain networks