Post #16: Creating An Ideas Market
Howdy. Let’s see if we can start to build ourselves a new economy on this here piece of internet paper.
This post focuses on making an “Ideas Market” happen using web3. In the last post I called this Ideas Market an “Ideas Economy.” I changed the name in this post since the proposed upgrade is really more of a market than an economy for now. I also tweaked the COS architecture image to place this “Ideas Market upgrade” alongside the economy as opposed to a completely new segment. Semantics. Moving on.
We’ll explore how an Ideas Market could enable civilization to focus its energy on the most existentially relevant ideas. With the current economy, many people are incentivized to focus on work that isn’t so relevant or they’re driven towards not focusing at all. While The Next Economy post proposed the high-level idea that we could improve the economy by better leveraging computers, this post will go into more detail of how we can use this computer network called web3 to usher in a better dynamic.
Since this post starts to propose how this new economy could work in more detail, it’s more ripe for feedback than most of the higher-level posts. Share your feedback in the comments, text me at 954-two53-1777, or join this new Discord server called RelevanceDAO for a chattier back and forth :).
Quick Recap of an Economy’s Goal
Economies are meant to coordinate valuable work. We developed these complex global economies with customs like money and ownership so we could work together in building a better future. Whether that’s creating food supply chains, healthcare systems, or running internet cables…there’s possibly an endless array of valuable work the 8 billion of us can do together.
If we play our cards right, the valuable work we’ve done so far will represent a rounding error on what’s to come. In 2022, we generated $100 trillion in economic output as global GDP crossed $100 trillion for the first time. What would civilization be like if we generated 10 times that in valuable output or $1 quadrillion? What about 10,000x current global GDP or $1 quintillion? Here’s what a quintillion looks like: $1,000,000,000,000,000,000.
How do we both ignite that type of creation while ensuring that the zeros we’re adding to symbolize our output accurately represent relevant value?
We can use web3 to create a factory of value creation that would make our current economy’s 100 trillion dollar output seem like a drunk frat party in comparison. Nothing against drunk frat parties, other than everything.
To make this factory, we need to know which ideas to pursue and then we need to get the right people to trust each other enough to collaborate.
The current economy has a variety of features that enable people to come up with ideas and then trust one another enough to work together on them. These features include a shared belief in money as a symbol of value, a shared belief in property ownership, individual histories or resumés, reasonable legal processes, and organizations including governments and banks who can typically be trusted to uphold the legal processes.
How do we trust that an idea is good enough to work on?
If the market supports the idea, then the idea is good enough. Because of our shared belief in money as a symbol of value, when other people are willing to put their money towards something, ipso facto that thing becomes valuable. Since it’s infeasible for all of us to sit around a table and decide what’s valuable to pursue, we use the “market” as our mechanism to have a conversation with each other to determine what to focus on. Whether it’s general consumers, businesses, governments, or investors putting their money into an idea- as long as people put enough money towards an idea, we decide it’s worth our energy.
The next question to ask is ‘how do we decide if we can trust each other enough to work together on a good idea?’ I’m going to leave that question on the backburner for now and keep this post focused on figuring out which ideas are worth working on.
So how do we use web3 to get a more valuable set of ideas to work on?
A Parallel “Ideas Market”
Imagine a fully digital market where you can submit an idea for something you’d like to see done- it could be a product, a service, a policy change, or something else entirely. After you submit that idea to the market, it enters a speculation process inspired by this Futarchy concept- not unlike the stock market- where anyone on the internet can evaluate your idea and choose to buy “shares” in it if they think the idea is valuable. If your idea receives more positive speculation relative to the other submissions, your submission is marked as good enough to work on. That prioritization is signaled by placing a bounty on your submission relative to the amount of speculation it received. Then the bounty incentivizes builders to pick up your idea and get to work on it. And to ensure high quality submissions are incentivized, you, as the original ideator, get a small cut of the overall bounty. Speculators are also rewarded with a fraction of the overall bounty in order to incentivize their rigorous evaluation.
To translate that process into web3 terms: we can use a smart contract to programmatically incentivize a person to submit an idea they think would be valuable to pursue, mint that submission as a utility NFT, subject that NFT to a global speculation market to financially incentivize good judgment, programmatically prioritize that submission with a token bounty commensurate with its speculation, release the bountied submission to the existing economy to be picked up and worked on, and then reward both the submitter and the speculators with a percentage of the overall token bounty to incentivize quality submissions and rigorous evaluation.
To be clear, the devil is in the details. The flow I propose above is a functional minefield. To name a few: spam submissions, speculation collusion, determining the bounty amounts, controlling for inflation, ensuring the existing users perspective is weighted more heavily, respeculation on past unbountied submissions that may be relevant now, combining overlapping or complementary submissions, breaking bounties down into milestones, verifying work done before paying out a bounty- to name a few mines…
Putting the minefield aside for a moment, it’s likely that at some point in the near future we’ll be able to handle the proposed “Ideas Market” flow, or some version of it, programmatically via smart contract. If that’s right, then we can create a parallel market that acts as an ideas feeder into the current economy, improving our collective focus. Idea generation and prioritization would become a new part of the economy. People would be able to accrue wealth for contributing valuable ideas to civilization and they would be able to accrue wealth for helping the rest of us recognize an idea as valuable. A person’s job could be “Ideator” or “Speculator.”
The role of ideator is currently done by a small group of people who want and are able to build new products or pursue other entrepreneurial activities like original research. By creating a mechanism to compensate people just for their ideas, it would decouple the idea from the act of creation, dramatically increasing the number of ideas that civilization has the opportunity to benefit from.
And the role of “idea speculator” is currently handled by investors who evaluate whether an idea is worth our attention. It’s a relatively small group, but based on the large financial returns successful investors receive, we’ve correctly decided that speculation is a valuable task for civilization. In an Ideas Market, we would dramatically increase the number of speculators. While this would disrupt the investment industry, it would increase the probability that we recognize a valuable idea.
What Would A Future With An Ideas Market Look Like?
We’ll make a few assumptions to answer that question:
The goal of an Ideas Market is to: get civilization focused on more relevant work
Building an Ideas Market as roughly outlined above is technologically possible
The Ideas Market would more effectively direct our attention towards valuable work than our current system
If a functioning Ideas Market sprung up overnight, civilization would still be focused on many projects that wouldn’t be determined as valuable by the market. That’s ok.
There’s a lot of not-so-relevant work, including no work at all, that the current economy incentivizes. That state of affairs will continue for a time. But after some decades go by with the Ideas Market effectively prioritizing valuable work, people would come to expect that the work they are doing went through the most trusted system to determine its relevance. Over time, less relevant work would fade away as our trust, and our attention, shifts towards work recommendations coming out of the Ideas Market.
I’ll get deeper into the weeds of building this Ideas Market and start to address the minefield I mentioned earlier.
What’s this substack all about?
We need to upgrade our civilization’s operating system [COS]. This newsletter is a research project that explores how our current operating system came to be, which improvements would be helpful, and how we can make an upgrade happen. This substack’s goal is to land on a project that can be built to upgrade our civilization’s operating system.
I chose to write this publicly to get feedback on these ideas. Don’t hesitate to get in touch. You can join the Discord server called RelevanceDAO to share thoughts. Upgrading our COS and building our future is a team effort.
Implementing Web3 will define ETH's role beyond money as the monetary glue holding together a DAO. Crypto as a currency will stabilize to exchange rates, compared to today's birthing issues. The Humanist Union Society I am founding now will morph into a DAO Hus .Eth as it comes up to scale and into focus as a truly decentralized institution, for its own integrity, for sure..
In the short term, it will be interesting to balance the "existential relevance" and capital requirements. For example, say we all believe a World's Fair is existentially relevant and the bounty, through contributions, is $10M but it requires $100M to pull off - stalemate?
A venture capitalist has two roles - educated speculation (do I think there's a market for it aka will people buy it) and resource allocator (can I provide enough capital to make a difference).
Distributed bounty system provides the first, but not the second. But maybe it's the "seed" rounds to get going and we have some ultra long term LPs as they get traction.