In bear markets, blockchain cultures are starkly confronted with what they are. The recent crash revealed decentralized finance (DeFi) markets as a labyrinth of complex financial instruments with contagion properties. DeFi did not lead to an open, permissionless alternative to the inherited financial system, but instead an accelerationist mirror image of it. Casino capitalism through a MetaMask extension.
People naturally pegged the responsibility to irresponsibly overleveraged hedge funds and lending platforms. The problem is centralized finance, or CeFi, cosplaying as DeFi, they said, and there are no issues with DeFi proper. However, the idea that “this time will be different” and that financial actors would all act sensibly once DeFi “wins” is the deluded logic of the addict.
The reality is it will happen again because the political endgame in Ethereum, home of DeFi, remains ambiguous. Ethereum has a technical endgame – an open, transparent world computer – but nobody knows what Ethereum is for. The point, the rationale, why we are here. A big question mark.
Compare the situation to Bitcoin where the political endgame can be summarized in one word: hyperbitcoinization. Bitcoin’s goal is to transition from a fiat monetary system to a Bitcoin standard.
What is the equivalent one-word term in Ethereum? To find it, it is important to understand the contemporary Ethereum political landscape. The spectrum contains the following:
- Cypherpunk: Ethereum is rooted in an earlier tradition of privacy and tech advocacy, which thought coders should use encryption and computing to build neutral infrastructure others can imbue with meaning. Ethereum’s politics is its apolitical stance, a position sometimes called algorithmic authority, and the only focus is to create open source tools that requires little human mediation. Associated with the Ethereum “core” developers.
- Experimental liberalism: Ethereum’s combination of experimental governance (e.g., soulbound tokens) and market-making (e.g. Quadratic Voting) can generate new liberal democratic political innovations. This position is associated with the network’s founder Vitalik Buterin and Microsoft’s Glen Weyl.
- Solarpunk: The social coordination enabled by decentralized autonomous organizations (DAOs) can create positive externalities on wider society, with a warm ambient humanism embedded in its aesthetics. Gitcoin’s Kevin Owocki and Scott Moore and DoinGud’s Manu Alzuru are examples here.
- Lunarpunk: The privacy enhancements afforded by zero-knowledge proof variations on Ethereum-native technologies (DAOs, DeFi, NFTs) are necessary to protect crypto culture against contemporary surveillance capitalism, typically taking an agorist, or left libertartian stance politically. This philosophical movement is associated with DarkFi’s Rachel-Rose O’Leary and Amir Taaki.
- Degens: Ethereum is a platform for the construction of financial instruments with highly speculative characteristics and the only goal of its users is to accumulate wealth, possibly even in amoral ways. Essentially a form of market nihilism.
Is there some common thread running through these positions that would correspond to Bitcoin’s compact hyperbitcoinization?
Let’s exclude the market nihilists since their view is short term and with no real interest in what Ethereum is long term.
Across the spectrum, Ethereum’s goal is to transition from a deteriorating inherited financial system built on unsustainable practices. But also from the internal variations on these practices found in degen culture and their enablers, venture capital firms and hedge funds.
My contention is these diffuse points on the Ethereum political spectrum could be rolled into one overarching answer to the question, “What is Ethereum for, anyway?”
Without an answer to the question, suspicions invariably arise that the answer is: to pump ether, to generate yield, to flip NFTs, etc.
This does not mean we need to collapse the diversity of views under one, cohesive meta position, but only that it would be helpful to have an answer that we could all roughly agree on, rough consensus and running code.
Seeking consensus across the spectrum, the political endgame of Ethereum can be summarized in one word: hyper-regenization.
- Regenerative economics rather than illusory limitless growth: Ethereum offers retroactive and proactive public goods funding through the Quadratic Funding (QF) mechanism. It contains the potential to expand the cypherpunk mechanism of neutral public goods beyond Ethereum and Web3, into the traditional political world, as the solarpunks suggests with their focus on positive externalities. Ethereum could then become a minarchist alternative to state provisioning built along liberal and humanist principles.
- Regenerative citizenship rather than soulless individualistic speculation: Ethereum could reward good citizenship through retroactive airdrops, such as participation in Gitcoin rounds, governance voting, testnets and community channels. The activities of the citizens of experimental liberalism could be captured in soulbound tokens that grow over time, and we could ensure the privacy-oriented mindset of the lunarpunks enables citizens to “selectively reveal” themselves (or not reveal themselves at all). Secure social or community recovery methods will need to be established for this to flourish.
- Regenerative decentralization rather than centralization atrophy: Ethereum is an information commons or common knowledge pool. Transparency allows us to recognize, albeit not without its challenges, when centralized clusters are emerging. Recent efforts to re-decentralize client diversity and current efforts to re-decentralize staking reveal the cultural instincts to disrupt centralization atrophy are intact. This will require a “night watchman” mentality on the part of the cypherpunk developer culture.
What is Ethereum for? To bring about ever more hyper-regenization.