Fracton Ventures Research: Building the Positive Sum World

Coordination is a game, but not one that is played to win. Coordination is more like tending a garden, where one works only that the garden may continue to thrive.

-　Ethereum Foundation

Source: “Nurturing The Infinite Garden”

We will start a new journey for coordination. We originally looked at coordination mechanisms, positive-sum game, regenerative economics, the state of public goods in the crypto space, and DAO governance though we have contributed to expanding the crypto ecosystem by providing our incubation programs and hosting a global conference. However, our activities to date have focused on getting knowledge for our incubation program and education for them. Today, we create "Fracton Ventures Research," a Research & Development team focusing on coordination design for the positive-sum world. From now on, our work will not be limited to spreading the latest information and knowledge, but also generating insights through experiences from fieldwork and onchain / offchain data analysis.

Our Motivation

Why are we working on coordination mechanisms? Public goods including FOSS (Free Open Source Software) benefit all and without excluding anyone. However, supplying public goods is generally considered to be difficult under market principles due to the free-rider problem which is a type of market failure that occurs when those who benefit from resources, public goods and common pool resources do not pay for them or under-pay. Historically, governments funded public goods through taxations, but they are inefficient at funding internet-based digital public goods that are global in nature, often involving actors from different parts of the world. While it is uncommon for any individual government to fund digital public goods, there exists no efficient method for governments to coordinate among themselves to support such initiatives.

We believe that such public goods may be efficiently funded by commons in another way. Scaling of traditional commons is limited by the Dunbar's number which is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships in which an individual knows who each person is and how each person relates to every other person, it is difficult to coordinate within the commons as it scales, and even more difficult to do so in an online, global community. About 10 years ago, people expected new ways of coordination by leveraging social media, but this hope failed in the context of the 2016 U.S. presidential election, as AI-based targeted advertising by huge platforms provided by big tech companies. Also, it is not only on a global scale that government intervention has failed to work. This is also true for local communities that share certain geographies and interests; it is commonly referred to as the “tragedy of the commons”. We seek ways to coordinate for global or local communities that are considered difficult to approach either by markets or by governments.

We need to pursue, study, and experiment with new ways of coordination to enable the sustainable provision of public goods. We believe that blockchain is a tool with the potential to solve this coordination problem.

On top of the non-rivalrous and non-excludable properties that public goods possess, it is desirable for goods to produce positive externalities in a positive-sum game. Stemming from the regenerative economy on "having a positive impact not only on the community that supplies the goods, but also on other communities", we would like to extend it to coordination mechanisms that produce positive externalities for a positive-sum world.

Our Focus

Our research & development is interested in coordination design are threefolds: Protocol design, Social design, and Funding design.

Protocol design

Many protocols are inherently permissionless as OSS, but other properties such as security, privacy, decentralization, and credible neutrality must also be considered. Traditional public goods including OSS, exhibit non-rivalrous and non-excludable characteristics. However, these factors present opportunities to rethink the concept of public goods. Indeed, when discussing public goods in the crypto space, we often refer to characteristics that diverge from the traditional understanding. Thus, we might have already ventured into new territories of OSS or, more broadly, new public goods.

Moreover, beyond these foundational aspects, it is crucial to architect the protocol to promote a positive-sum game. In general, OSS produces positive externalities. This positive externality will be generated more as more people use OSS, and this positive externality will need to be generated more widely and more persistently. Our research endeavors aim to explore protocols that amplify these positive externalities for the positive-sum world.

Social design

As much as we would like to minimize human participation through Governance Minimization, Hyperstructures, and Trustware, individuals play an essential role in the management of protocols. Asynchronous decision-making remains important, and in the context of global online communities, Dunbar's number continues to limit scalability.

At present, open-form dialogues and token-based voting dominate decision-making paradigms. However, despite many efforts, voter apathy and plutocracy remain to be substantial challenges. Our research will explore these challenges and other aspects of human coordination, beginning with the decision-making procedure. We shall embark on investigative pursuits related to novel decision aggregation mechanisms, divergent from prevailing norms. By supporting systems that foster inclusivity and genuinely reflect the collective will, our purpose is to establish foundational principles for enhanced decision-making, including a broader spectrum of societal segments, inclusive of future generations. It is our conviction that a world where different values coexist will likely lead to plurality.

Funding design

As previously mentioned, public goods including OSS are commonly perceived as challenging to monetize and posing difficulties for sustained provision. Nevertheless, there's an imperative for the continuous supply of OSS. Consequently, the promotion of public goods supply has conventionally been driven by financial support from governmental entities or third parties, such as foundations or universities. Within the crypto space, leveraging its programmable and borderless characteristics, numerous projects exist aimed at the persistent provision of public goods. These initiatives manifest either as donation platforms (e.g., Gitcoin or clr.fund) or as Decentralized Autonomous Organizations (DAOs) that redistribute their own treasury funds.

These fund allocators face challenges in areas such as securing consistent funding sources, measuring the impact of funded projects, and implementing more diverse methodologies. Undoubtedly, there exists room for further discourse regarding these funding allocation mechanisms, especially when aiming to foster broader public good funding.

Finally, we don’t contribute to "Web3", but we contribute to "coordination". We will use blockchain as tools for approaching coordination mechanisms. Our focus area is not just Web3, but open source software and digital public goods. Our walking on story has been a problem for a long time, so it is difficult to achieve coordination problems. Rather, we will tackle this problem.

Ethereum aims for “the infinite garden”, so we will also be contributors to build “the infinite garden”.

For Positive Sum…