IEEE Blockchain Podcast Series: Episode 10

A Conversation with Dr. Paul Dylan-Ennis
Assistant Professor of Business, University College Dublin

Part of the IEEE Blockchain Podcast Series

Episode Transcript:

Brian Walker: Welcome to the IEEE Blockchain podcast series, an IEEE Digital Studio Production. This podcast series entitled Research Notes in Blockchain is hosted by Quinn Dupont, former assistant professor at the University College Dublin School of Business and founder of Alumni, a Web3 startup with the mission of putting university diplomas on blockchain. Quinn is also the author of cryptocurrencies and blockchains. In this episode, Dr. Paul Dylan-Ennis, Assistant Professor of Business at University College Dublin provides his perspective on Web3 and shares insights on the positive and possible negative impacts of monetization within the art world. He also discusses his research into the political aspects of the cryptocurrency ecosystem and the importance of Web3 governance.

Quinn Dupont: All right. Thanks, Paul, for joining us today. I really wanted to speak with you today specifically because your work goes beyond some of the now older discussion around bitcoin and crypto as forms of payment and these kinds of traditional discussions and get us a little bit up to speed on questions around Web3. So, why don’t we just start right there. What do you think Web3 is? What is it doing and where is it going?

Dr. Paul Dylan-Ennis: I think this is one of the most complicated and contested terms that I’ve encountered in quite some time. It seems that Web3 means something different to different factions, let’s say. From my perspective, Web3 is the-- in its cryptocurrency sense, in a sense of Crypto with a capital C, it means the more progressive or creative wing of crypto, especially the creator economy, so nonfungible tokens, social tokens, places like Friends with Benefits and Seed Club, which are essentially places that creative artistic people who use blockchains tend to congregate online and so, the term as I’d first encountered it usually meant a demographic that was more liberal minded and less interested in, say, the traditional cryptocurrency focus of money, finance, so, opposing centralization, meaning in that regard opposing monetary mismanagement by the Federal Reserve or things along those lines. Whereas this community seemed to me less interested in that and what they were more interested in was finding-- using blockchain technology in interesting ways that help them to, say, monetize artworks, that kind of socially oriented approach and then there’s maybe a slightly more political angle to this, which is the idea that they were trying to reclaim the web. So, they saw that centralization to them didn’t stand for or against central banks, but stands for Web 2.0 companies-- so, Facebook, Google, Amazon, what used to be known as the FANGs. So, these companies essentially engaging in surveillance capitalism, monetizing your data, and not really giving a fair shake to artists and creative people and so, there would be maybe some potential in blockchain technology to break free of that mindset on the internet. So, that’s how I first encountered the term. There was an earlier version of this that goes all the way back to Gavin Wood and Ethereum, but I’ll leave that aside. What then became apparent very quickly-- and this is something that’s really only happened in the last two or three months-- is that there is a lot of criticisms that are coming essentially from people who see Web3 and particularly the venture capitalists who are sometimes funding Web3, but not always-- it seems to be overblown a little bit-- these critiques look at Web3 and they see it as effectively some vague marketing term, a hype term that there’s really no decentralization going on, that actually when you look into it, there’s lots of infrastructural weaknesses. So, Ethereum relies on something called Infura a lot for running nodes or most art is sold on a centralized company’s servers called OpenSea. So, there’s a stretch-- imaginary stretch term, where more traditionally minded people see it as an exercise in marketing and think it’s an empty concept and then I would say for me, Web3 is more of the authentic, creative, social, progressive wing of cryptocurrency, which is currently under a lot of stress because they feel that they’re battling to, I guess, keep their version of the term alive.

Quinn Dupont: So, this is interesting. So, it’s social media, but not social media at all. It’s maybe the next generation or a new configuration of that.

Dr. Paul Dylan-Ennis: I would say it arises from a dissatisfaction with the configuration of Web 2.0, where you’re in a walled garden scenario. There’s a sense that you don’t really have much ownership of anything, including your own data and then there’s no real way to monetize your work. So, you might be dependent on streaming services and this kind of thing, whereas with tokenization, with the possibility of establishing a DAO, a decentralized autonomous organization, and then having a community treasury that you can put to good work based on what your community is interested in, whether that’s music or art, or else by selling nonfungible tokens, NFTs, and raising money that way. So, I think it’s a new type of social media where people have a more direct say in the direction of that experience and also, the ability to monetize it in some manner.

Quinn Dupont: This monetization issue seems to be bubbling up in, as you mentioned, this renewed set of critiques. I say renewed because old timers like you and I, we’ve seen the critiques come and go with every boom-and-bust cycle. But monetization, I think there’s something significant there, right? This is-- I think a lot of people, the critics worry that maybe things are transactional. Do you feel like when you’re deep in Web3, are you engaging in transactional activities here or is there something authentic or is it just too early to see what that looks like?

Dr. Paul Dylan-Ennis: I think the fear is understandable. So, there’s definitely a tendency in contemporary society toward the financialization of everything. So, whether that means young kids who are suddenly trading stocks on apps or suddenly your uncle becomes very interested in some obscure cryptocurrency on Binance Smartchain and you have to rescue them from a very bad decision, there’s this sensation that money is seeping into everything, including, in this case, it’s seeping into quite creative worlds and quite creative lifestyles. So, my experience here is somewhat shaped by my experiences in the past of being involved in the traditional visual arts world, where I would often see people struggling to get any kind of funding and often being in dependency relationships with the government in particular and kind of hoping through grants to sustain themselves on really, really small amounts of money and so, creativity always has been financialized in that way. There’s always been the artist quite close to the precipice of financial ruin, in effect, and that’s something that I got to witness with quite a lot of people that I knew. So, when I’m in that world, I do feel a tension. I do feel on one hand, it’s really exciting to see people finally be able to monetize their work on their terms and also, the excitement of just seeing people becoming fabulously wealthy just is always exciting and it’s always interesting to watch based on, say, producing an NFT that becomes popular. However, it does seem to generate, let’s say, a lot of complexities in terms of, let’s say, “What is the ambition or what is the aim of art?” So, in my mind, the aim or ambition of art is almost to try to produce something that isn’t connected to, let’s say-- like isn’t shaped too much by financial concerns or isn’t shaped too much by the current configuration of society, that it’s some way branching out. So, my main worry in what I see is just that by making finance-- like financial wealth be in such close contact that you can almost make it, it does seem to push the art in the direction of trying to attract investors and speculators. So, it’s hard to tell. You could probably say there’s always been a class of artists who have made money in this way. They used to target wealthy benefactors and now, they target wealthy whales in the Ethereum ecosystem.

Quinn Dupont: Right. I think that’s a well-put historical point about exactly the relationship of art and money. I just would like to go back a little. You mentioned the technological underpinnings in blockchain technologies and specifically a lot of the activity in the Web3 space comes out of the Ethereum platform. This makes me think about the role of decentralized autonomous organizations or DAOs, which is something that we’ve spoken many times about before. Where do you think DAOs fit into Web3? Is this something that’s here to say? Is this something that needs a lot of change? Tell me a little bit about that?

Dr. Paul Dylan-Ennis: My own definition of a DAO these days, because of course they’ve evolved, is a DAO is a community or a decentralized community, not always, that uses blockchain technology to self-organize or self-govern and at this point, I’m more and more convinced that the DAO or DAOs are the primitive. They are the most fundamental thing that people should be really focused on. In fact, most academics I know at this point are essentially DAO researchers or trending in that direction and I often forget to explain to newcomers what a DAO is, and I’ll find myself very casually using it and having to remind myself that it is not something that’s super well known throughout society, even though I do like that definition that says a DAO is just a chatroom with a bank account. I think that’s a pretty good encapsulation. So, in the past, of course, DAO advocates and the media, let’s say-- and when I say media, I don’t mean this as some distant thing. I’ve written articles in the media quite a bit. So, I include myself here-- focus on the second part. So, it's the autonomous, self-executing autonomous code, but of course-- and you know this better than anybody-- the DAO hack basically put an end to that. So, it was a very brief flirtation. It still pops up from time to time where the autonomy in DAO is associated with kind of self-executing code. it almost seems a little bit surreal these days to remember that that’s how we thought things would play out, that everything would just be self-executing. These days, I think the autonomy has shifted and many people say this. So, this is not something I’m putting out there as if I invented this idea, but the autonomy has shifted away from like the autonomous smart contract toward basically the autonomy of the members. So, the DAO, when you point to it, you don’t point to toward the smart contract. You point toward the community members as a collective on how they make use of the technology, so, organization in this way would be more of a social process and when I’m in DAOs today, the on-chain or blockchain votes, they’re used pretty sparingly. So, when I’m in, say, a Friends with Benefits or Gitcoin or Forefront-- I mean, DAO voting is-- it’s not super common and most members don’t even engage in it. Only the more kind of invested in the social sense members really do so and when it is used, it’s usually just to allocate funds, but other than that, yeah, used pretty sparingly. So, most of the DAOs’ work and most of what a DAO is these days, I would say, is off-chain and especially by these small groups, so each DAO will be broken up into sub-DAOs or guilds and then they get some of the treasury and they go work independently on different matters. So, we don’t even have that sense of the DAO being led by some benevolent dictator, although that’s sometimes the case. Probably the most shocking thing for people when they first encounter a DAO today is that it’s essential just a DAO server in maybe 80% of the cases and then there’s just these background infrastructural blockchain tools-- Snapshot, Coordinate, Gnosis, or Collab.Land and they might turn up from time to time. But yeah, Discord, where they’re using a blockchain to manage the treasury, where they’ve made a token sale at the beginning equals a DAO today, in my mind.

Quinn Dupont: So, this really goes to your point of the essence here is this creative and social component rather than a blockchain that’s very inhuman and sort of sterile. This phrase, this autonomy of members as the newer kind of version of what a decentralized autonomous organization really inhabits, I think this is really compelling and it makes me wonder about new forms of organizations, new kinds of work, and then politics and new political changes and I know this is a big part of your research in particular. Could you tell me a little more about how you see that part of this changing?

Dr. Paul Dylan-Ennis: This is my personal interest, I would say, and I also think it’s one of those things where it’s not necessarily central-- the political part is not necessarily central to a fair chunk of the current landscape. So, one of the more interesting developments, I guess, in contemporary, say, Web3 culture is that there are lots of people who are apolitical. I’m often cautious about overstressing how much politics are at the heart of it. But I would say in the kind of middle, in the real, let’s say the influential people who are building out Ethereum, Ethereum particularly being my focus-- that they do have something along the lines of politics and if we look at the literature on, say, bitcoin up until 2017, most of it really focuses on bitcoin’s politics. Lana Swartz says bitcoin is a theory of society about the collapse of fiat monetary system. We have the classic distinction between the cypherpunk and the cryptoanarchists. So, the cypherpunks are the infrastructural mutualists. Brekke calls them the hacker engineers, the hacker engineer disposition, so, building all the open-source infrastructure. So, that was part of the early bitcoin culture. Another nice phrase of this is algorithmic authority from Lustig and Nardi, which everyone really likes, and then there’s the cryptoanarchists, which is the libertarian, the digital gold, the digital mentalism, all that aspect of it. So, all the academic literature, Maurer and Dodd, all these different people, the social scientists who study bitcoin, they really give you a comprehensive understanding of what bitcoin is as a political project and when you’re teaching it or when you’re introducing it to new audiences, explaining bitcoin is sort of easy in the sense that you can give people a very clear articulation of what the end goal of bitcoin is, which is something called hyperbitcoinization, where we transition from a fiat system to the bitcoin system, but how that bitcoin system will really play out is ambiguous. We might see how El Salvador goes as an example. But we don’t really-- we do know that that’s what they want. So, we know that that’s like the end goal and so on. With Ethereum, the politics are way less well-articulated and even what Ethereum is-- so, the definitions of bitcoin, they typically focus on the ledger. In Ethereum, you can go to many different sources, whether it’s books about Ethereum, whether it’s the website, the official website, blogs by Vitalik, the whitepaper-- the whitepaper doesn’t even have a definition of Ethereum-- and they all will give you a different image. So, sometimes it’s a computing platform, infrastructure, sometimes it’s the world computer, probably the most well-known, and so on. There’s all these different variations-- operating system is another one. Then that’s just the image of what Ethereum is and then there’s not even the long-term goal about what it’s supposed to bring about. There’s been some attempts, in particular, radical liberalism. There was a flirtation with Vitalik and radical liberalism, which didn’t really go anywhere. It did give us the quadratic funding mechanism, which is quite important in a different sense. The other part he pushes at that time is this idea of reimagining corrupted democratic institutions. So, that was at least some political angle. But other than that, I’ve always found it curious that it’s not really super apparent what the endgame of Ethereum is, even though Vitalik uses that term for technical stuff. So, I’ve tried to point toward what I think Ethereum’s politics might be. I’ve tried to use the term hyper-governance. So, some bitcoin researchers, they discuss bitcoin as a hyper-narrative. It’s this collective act of writing the bitcoin ledger and so, I try to think maybe Ethereum could be seen as an attempt to introduce collective decentralized hyper-governance. So, we’re trying to conjure up new ways of governance around the regulative ideal of decentralization. But the difference, I think, that’s interesting, like a subtext is that with Ethereum, there’s way less of a confrontational part. So, bitcoin is very confrontational with the state. It’s classic libertarianism, but Ethereum, there’s a more subtle sense that what I think they’re doing is they’re creating surrogate state functions, so, trying to be-- or perform the functions of a state without actually being a state. There’s an old philosophy called agorism, which points out a similar tactic. Essentially, we could imagine it as well, we create a shadow finance system, so, decentralized finance. We create shadow forms of organization, social coordination, so, DAOs, and then we create shadow creative outlets like the art world. So, it’s something I’m trying to work out and the term I use for this is decentralized analogs to state functions, but it is a little bit of a work in progress, but I find that yeah, particularly curious that we don’t really know what Ethereum is for or what its aims are.

Quinn Dupont: This hyper-governance phrase, I think, is a really telling one. Maybe we could just back up a little and talk about governance a little bit more generically. Why is governance so important in Web3?

Dr. Paul Dylan-Ennis: I think governance in general in, say, Ethereum-based culture seems to stem from-- there’s a little bit more of a managerial, I guess, mindset. So, one of the major differences between Ethereum and bitcoin-- and this is an argument that I really picked up from the more contemporary bitcoin maximalists-- is that in bitcoin, the ideal outcome or the ideal state is this algorithmic purity, where essentially the system would never change. So, things would just continue to play out forever, where the developers only on very rare occasions introduce some, let’s say, technical upgrades, but they don’t actually ever interfere with the monetary policy. So, what’s sacred to the bitcoiners is almost an anti-governance. So, it’s the idea that there’s no human intervention is desirable. So, it’s a really interesting non-interference approach that they’re trying to take. So, the opposite of this is found in Ethereum because Ethereum doesn’t have this valorization of the hands-off governance. They are very much managerial interventionist and I think this is where we can probably say something that the one thing we could say the Ethereum political philosophy does make clear is that if there needs to be changes, including changes to the monetary policy, such as the recent EIP 1559, which introduces some inflationary pressure, kind of. It’s a little bit ambiguous. But if there’s a feeling that the, let’s say, the managerial class of Ethereum, the governors, feel that they can like improve the Ethereum world computer to use that image or even change the monetary policy, then they will go in and they will do that and I think that filters throughout Ethereum discussions, the idea that there’s always a group of people who are leading the charge, even in supposedly the completely decentralized cultures. There’s usually a figure operating the position of like super governors. So, say Andre Cronje at Yearn is in that role, where every so often, he’ll come in and intervene and revive the project. So, governance is a little bit of a motor of the Ethereum ecosystem’s mindset.

Quinn Dupont: So, if you’ve got a managerial-- you used the word managerial class-- if you’ve got some sort of management process, maybe some bureaucratization around this, this leaves this big open question, at least to my mind-- and it’s something I’ve been thinking a lot about-- around leadership and really setting strategy. How does Ethereum move forward? Do you have any thoughts on that?

Dr. Paul Dylan-Ennis: Yeah. I think this is where the managerial technical developer-first mindset becomes a little bit of a trap or a little bit of a danger for Ethereum in that the expectation is that the direction of what Ethereum should be or let’s say governance when it comes to more complicated issues that are definitely going to begin to arise as, let’s say-- let’s say if Ethereum really does begin to develop, let’s say, public goods via Gitcoin, so, Gitcoin is an infrastructural public goods funding project, which has the potential to become a little bit of a challenger in, say, areas like open source development, but also beyond that, where they are funding projects, which traditionally would have been funded by the state. It’s something I think might be happening also with some of the more NFT creative artistic DAOs, where they are funding the artist that traditionally would have been funded by the government. So, I think as that begins to happen, more and more, it will be important for people to begin to articulate what the purposes of decentralization are or to at least try to explain when it’s okay to have, say, centralized governance and when it’s not okay. Does everything have to be decentralized? You get a little bit of the debates around this. Of course, most DAOs, they wouldn’t be decentralized in the sense of like literally every member is going to be voting on everything. Instead, we break it up into these small sub-DAOs where there are small leadership positions directing things and I think we are a little bit tending in this direction, say through research groups, like the Other Internet, where people are-- and other theorists who are basically broaching this question and filling in the gap and what I like about this is that a lot of it is coming from academics. I think academics are in this very, very unique position, which I don’t really recall seeing in any other place where I’ve seen academic study, where they are able to actually jump into the conversation now and fill the role. So, they’re actually participants whether they like it or not when they write these articles. So, it’s a very interesting dynamic and I think yeah, it’s a little bit up to us. It’s a little bit up to the academics’ research in these communities to fill what are blind spots and gaps.

Quinn Dupont: Right. This is a big change, though, because you’ve been studying this for quite some time and academics have not always been both warmly welcomed into the crypto space, but conversely, crypto has not always been warmly welcomed into academia. So, maybe as a kind of way to wrap up, do you have any thoughts on how that relationship can be improved and what we can expect for driving innovation and creating this leadership and these kinds of activities with that relationship between the crypto community and the academic community?

Dr. Paul Dylan-Ennis: One of the more interesting or one of the more fun things for those of us like myself and yourself who have been around a long time, we know that there is a-- there was traditionally an undercurrent of, say, anti-expertise or suspicion toward elites, something that cryptocurrency, especially bitcoin earlier projects shared with contemporary alt-right populists, not making like they are to be compared, but they did both have this undercurrent of disliking elites and universities were a part of this and the media was a part of this as well and I think a lot of that did have to do with the fact that the writing was, let’s say-- let’s say the critiques of bitcoin that were coming from academics, I would say, were harsh and warranted. So, it actually made sense that that early community didn’t like the academic attention because they do have a pretty aggressively individualistic, trending toward unequal vision of society, where if you’re living in the citadel and you have your bitcoin, then everything is fine. But I do think there’s a different atmosphere that you find with younger academics. When I look at younger academics, PhD students who are studying, say, decentralized autonomous organizations and DAO, they’re much more immersed and they’re much more mixed in and they’re also supported very often. So, sometimes they’re like given funding, so, Metagov is a good example. It’s funded by Gitcoin, various different projects actually funded by Gitcoin. I know there are different people I know who are either working for various different cryptocurrency projects as their side gig while doing their PhD. So, I think it’s simply a case that the current Web3 culture is friendlier. It’s easier going. The aims are less-- sorry, are more desirable, are more-- are closer to the university research mindset. It’s people who are curious about the world and exploring the world. It’s just that the-- and then there’s also the ability to simply jump in. So, familiarity helps a lot. The other day, I saw a tweet from a Friends with Benefits member, and he said a lot of academics were looking to talk to him to do interviews and he said “Well, just join. Just come into the group,” and I think that speaks to the fact that there is a-- yeah, instead of looking at this abstract community of, say, a reddit board that you can’t really interact with and that you’re a little bit distant from, with a Discord DAO, you just click in, you join, you begin asking questions and it’s just like a friendlier atmosphere. So, I think it’s just down to familiarity.

Quinn Dupont: On that, I think, cautiously optimistic note, I’d just like to thank you for your really deep insights into something that I think we’re going to see a lot more of and so, thank you very much.

Dr. Paul Dylan-Ennis: Thanks.

Brian Walker: Thank you for listening to our interview with Dr. Paul Dylan-Ennis. To learn more about the IEEE Blockchain Initiative, please visit our web portal at blockchain.ieee.org.