podcasts

Engineering token economies for success, Angela Kreitenweis of Token Engineering Community

podcasts

Engineering token economies for success, Angela Kreitenweis of Token Engineering Community

August 2020

Posted by

Jamie Burke

CEO and Founder

As an early investor in Bitcoin and Ether Jamie went ‘all in’ during 2013 founding Outlier Ventures, Europe’s 1st venture fund and platform dedicated to blockchain and Web 3....read more

Angela has a rich background in data led digital product design, venture and business model innovation, founding the global Token Engineering Community and Academy which is now reaches audiences in over 50 countries. It brings together a rich and diverse braintrust of; systems, electrical, robotics & controls engineers, as well as Behavioural & Ecological Economists, Researchers and AI experts dedicated to creating a formal ethic and practical methodology for the development of safe and resilient new financial public infrastructure to handle trillions of value in economic load.

Posted by Jamie Burke - August 2020

August 2020

Posted by

Jamie Burke

CEO and Founder

As an early investor in Bitcoin and Ether Jamie went ‘all in’ during 2013 founding Outlier Ventures, Europe’s 1st venture fund and platform dedicated to blockchain and Web 3....read more

Key Themes:

  • Introducing engineering ethics to token design
  • Tokens as business model innovation
  • Tokens beyond speculative asset

Listen on iTunes

Transcript:

Jamie Burke
Welcome to the founders of web three series by ally ventures and me Your host Jamie Burke. Together we’re going to meet the entrepreneurs that backers and the leading policymakers that are shaping web three. Together we’re going to try to define what is web three, explore its nuances and understand the mission and purpose the drivers founders. If you enjoy what you hear, please do subscribe, rate and share your feedback to help us reach as many people as possible with the important mission that is web three.

Today, I’m really happy to welcome on Angela crighton, Vice co founder of the token engineering community and token engineering Academy. Welcome Angela.

Angela
Hi. pleased to be here.

Jamie Burke
So the token engineering community He is dedicated to the field of crypto economics. And we’re going to get into exactly what that means. I would describe it as how cryptographically secure programmable tokens can be used as incentives and disincentives to coordinate these distributed or decentralised systems. How the hell would you describe it because everyone has their own kind of interpretation sex?

Angela
Absolutely. Basically, yes, this is about tokens. But since we consider tokens as the atomic unit of state in the system, that is describing a system tokens can also make all socio economic interactions in the system, make it visible, and then also steerable. And this is why we consider token engineering not only as designing tokens and incentives, but designing the entire crypto economic systems with all Its value flows with all its policies, restrictions, limitations, the action space, the incentives that are optimising towards a certain goal. And then also the steering of such systems, applying systems engineering, complex systems science and economics when it comes to economic mechanisms, Game Theory and so on. So it’s actually as being a counterpart in software development, the code systems engineering and token engineering developing these economic systems and the science of it.

Jamie Burke
Yeah, and I, you mentioned a number of different disciplines there. So this is a cross disciplinary field. And one of the things that makes it both complex and also quite intimidating to a lot of people trying to navigate the space, but I think the thing that really stands out for me, I think it was explained to me by Trent McConaughey of ocean protocol. Also one of the kind of early leaders within a token NGO community that the reason why engineering principles are important is we need to begin to think of this new financial infrastructure as public infrastructure and therefore it needs to be as safe as a bridge or a road or any of these things were, from a safety perspective, you need to kind of minimise risk. And that kind of really brought home to me why? Why just applying startup principles, lean startup principles, and this kind of move fast and break stuff might actually be quite counterproductive in this space? I don’t know. If you sit in the same way.

Angela
Yeah, totally. So basically, we are drawing a lot from engineering disciplines, it mechanical engineering, electrical engineering, and then also robotics and dynamical systems. So those disciplines have been familiar Worth public infrastructure for not only decades for centuries, so so the there are scientific societies who established ethical codes, engineering ethics in the 19th century. And this was because you need a certain expertise for building a bridge and for making sure that bridge is safe for the public, basically. And you need knowledge and you want to make sure that people are building such infrastructure, have the appropriate knowledge. Now, in the past, it has been national authorities also such societies establishing such codes and regulation around it. But in web three, it’s it’s different, right? We want to have those permissionless networks and we want to have also use the agency but what does it mean when we talk about user agency if systems are so complex and so interconnected, look at divide and conquer posability risks, what does it mean to maintain ethics for the safety, for pop for public good without having these national institutions. So we need new social institutions. And therefore the aim of our community is not only to build tools and to programme, but also to discuss and establish a new engineering ethic for crypto economic systems. And there we actually can draw from a wide range of processes methods, for example, simulating edge cases, stress testing that have been applied for decades and which we can now again use for crypto economic systems.

Jamie Burke
I need this is going to be a fascinating podcast. We’ve not even really got started yet, but I think that thinking that if we are really building a parallel alternative or emergent financial system How we don’t build in systemic risk that could collapse the whole global economy, right? If it becomes big enough should be the mindset that people are bringing into the space when they’re thinking about these tokenized systems, which perhaps, has not always been true. So again, I think this is a really good example of why we’ve got you on the show. So you’re at the heart of the European ecosystem, in particular, the Berlin ecosystem. But of course, you know, the token engineering community is very global now. And then, of course, blockchain and decentralisation is is too. But I think you’ve really been at the core of building out the European community around blockchain, predating even specifically what you’ve been doing with token engineering. And you’ve got this really interesting and rich background in helping enterprises and startups with both business model innovation and design. But also this data led approach to product development and I can see How a lot of that becomes very relevant in this emerging field of crypto economics. I’ve had the privilege to engage with you through a number of different things, some of which we’re going to highlight a little bit later. And of course, outlier helped to participate in some of the things that are going on with tech since its inception. But the key reason why I wanted you on the show was, you know, we’ve got this accelerator, we have 10s of startups going through it each year. And all of them are as they’re entering web three are debating, you know, should I use a token or not? If I should win, and you know, what process might I apply to both design, test and then launch and of course, then iterate. It’s not an easy thing to answer. So I really want to kind of pick your brains on some of the methodology and thinking to help founders, you’d be listening to this navigate the space. And it’s incredibly daunting and complex. And I spoke at your tag conference, I think it was last year or the year before I can’t remember. And you know, I’m often on stage thinking, why the hell am I here, you know that the brain trust that’s in that room is is very intimidating. And the complexity through which they understand or exploring the domain is often well above my paygrade. So hopefully we can make this accessible to to startups and especially kind of non technical founders.

Angela
I think we are now at a stage where, luckily enough, tokens are not only considered as an instrument for crowdfunding your project, but way beyond it and at the same time, then there’s a lot of say uncertainty on okay, how to exactly do that. Yeah, but happy to provide an overview.

Jamie Burke
So before we do that, let’s just get some context to who you are and your background because again, I think it will become obvious why you’re Very well positioned, I think, to be representing this domain and potentially What led you to become co founder for that community. So as I understand it, you’re kind of educational background, I’m not even going to try to pronounce the institution that you came from. But back in I graduated in 2002, and you are working on human computer interaction and human user centred design. Could you pronounce the name of that institution for me to save me embarrassing myself?

Angela
It’s a was the whole Schaller intro basement.

Jamie Burke
Thank you for saving me. And you did a number of things. The first kind of main big project that you did 2004 when he came out, that was the hearts for calculator, which was working for one of Germany’s most important labour unions in a period where reforms were happening in the labour market and you help them develop a calculator, which ended up being nominated for a German Design Award. Then in 2003 to 2012, you did a number of user experience design and product management type roles with increasing seniority kind of ending up at D labs, Hasso Plattner venture founded in 2006. And this was really where I guess you started to work with a lot of enterprise but also startups around these kind of design thinking methodology and I believe it was one of the first organisations in the world to apply design thinking methods to digital product. So you worked with a number of clients SAP zing, Aeon, and you kind of kept that pathway. So you went to Axel Springer plug and play accelerator, Axel Springer’s, the largest I think still largest media player in Germany where you were startup mentor. Again, focusing on customer research and applying data to Solve for problem solution fit but also monetization. You then did a lot of work around as a UX consultant, again with a mixture of startups and large enterprise. And then you ended up continuing to do some starter mentorship stuff at name hub round. And I think that that was the first time I can see a crypto blockchain project on your resume. So it was Satoshi pay micropayments was that was that the first exposure to

Angela
and I remember our conversation on user adoption for these crypto thing and I think at that point, I didn’t even realise what this exactly is. True, but it was my my actually my first project I was collaborating with

Jamie Burke
somewhere between 2013 2018 I’m sure probably as much of a blow for you as it as it was for me. And he then went on to work kind of this Community role really building a number of community initiatives and events, increasingly around blockchain and crypto. So I think the first one was the startup energy transition tech festival. I believe I was at that one in Berlin, I can’t remember,

Angela
I think was there and we had really in 2018, we had the first workshop on the potential of tokens. And I invited people like trend and a lot verb and we power Noy fund at this point. And I was expecting that they can, literally that we have this discussion around, okay, the from zero to 100 potential off tokens. And everybody was telling me, really, we had our first Icos, and it’s just, we don’t know that much about how to do it, actually,

Jamie Burke
very early days. But what was amazing was it that wasn’t just like a general initiative around tokens. It was you basically mobilise the energy industry, you had very little Number of energy companies there, which was quite amazing that of all industries, you managed to get the energy industry to be in a room talking about tokens. And you did. We are Developers Conference after that 2019, which is a major developer web developer conference. And then the first tag conference, so token engineering global gathering happened in 2019, which was a modest affair, but still, you know, I think really showed the depth of the brain trust of disciplines. So 2018 you formed the token engineering community 2019 was when you did the first conference, right?

Angela
Yeah, right. And 2019 was actually the for the third global gathering of token engineering people. And so there have been the first one in New York in 2018, and then a second one in October. And the aim there for the tag is to bring together Other people in the crypto space working on token economies and then crypto economics in academia. So crypto researchers, behavioural scientists, economists, so complex systems people, and our goal is to bring together research and practitioners. So the field of the areas, the disciplines that need to come together is really wide. And also practitioners need to draw from scientific research and vice versa. If academia wants to keep pace with technological developments, they need this input and inspiration from from the practitioners in crypto.

Jamie Burke
So what was it that when did that shift happen, where you dedicated yourself specifically to take an engineering because it seemed like in a relatively short space of time you went from working with your First blockchain project to not only being involved in that ad Ico mania, which is where most people’s attention went to. That’s where all the money was flowing to. But you you went down the rabbit hole of wanting to kind of have a more considered approach to tokenization. Can you just talk through that journey? How did you arrive at that? That point?

Angela
Totally. I mean, as you mentioned, my background is UX. And I have been for years I have been working in early stage projects and startups, defining the value proposition finding problem solution, fit and product market fit. And whoever has experienced this journey knows that that this is really it’s a hard nut to crack product market fit. And there are many surprising twists along along this journey in okay how users react. In First you thought it it’s a b2c product, you end up with a b2b product you need to reshape your strategy. This to me was always interesting and exciting. So when when technology meets human behaviour and how how it also influences our, our perception of the world and our own capabilities. And so I did this for four years. Then also for energy innovation hub where we had venture development and then also startup investments. And so I was well very familiar with this early stage and with this value proposition thing exploring Yeah, how are your future customers react on your product? When I saw tokens first for this was for me as for for anybody else. This is the new technology blockchain. And then I think a little bit into it. So two people speaking about it. And then I guess I heard also trends talk on blockchain. go rogue and blockchains as an incentive machine and then looking at this, okay, you could have tokens you are able to design incentives, you are able to shape a system in a way that it’s automatically optimising towards a certain purpose. And this purpose can go beyond profit maximisation, it can also include and cover sustainability. It can cover appreciation for value contributions that are beyond money, like knowledge, like coding, or like connecting people. This is an entire new universe and this is so far beyond what we can do with digital products today, having this bilateral relationship of okay buyer and seller. This was mind blowing to me and from you then This was clear if with everything I’ve learned so far, it, okay, I can apply it to digital products. But what if I apply it to tokens? And this was the moment where I decided, Okay, I want to go 100% in and out. I also want to see this discipline, then I realised, okay, we are at the very beginning. And it’s not, I think you don’t have the chance to take part in creating a new discipline in your lifetime frequently, right? Perhaps not only once, and this was when I thought okay, now I’ll never write. And yeah, so we started the token engineering community in 2018, started with meetups, then did this global gatherings. The community was growing really quickly. At some point, we had 18 meetup groups in 13 different countries. At the moment. We have meetups where we have people from 70 countries participating. And it also goes beyond blockchain with this vision of what about the economies of the future? And this is also really inspiring and encouraging.

Jamie Burke
Yeah, and I think what I mean, first, I’m glad that you did take that journey because it’s really given a shot in the arm to the space. It’s acted as a kind of lightning rod for a lot of the community to mobilise around. And the kind of global nature is also really encouraging because I think, you know, we’re thinking about creating systems genuinely about inclusion, then they need to be more diverse, not just in terms of the people that use them, but the people that are designing and building them. So if you could talk about you know, that that kind of mission around diversity that’s also at the heart of the community and how you’re seeing that manifest.

Angela
First, I think diversity in terms of the disciplines as we already mentioned, there is technology involved engineering, economics, human behaviour that we have also, let’s say the wider area, we need to cover with token system when it comes to law, and new definition of global contracts and agreements and also those new institutions. I was talking about this, these are philosophical questions. These are questions of forming new kinds of organisations, and governments. So this is the area of variety in terms of disciplines. Then, of course, we have the variety of challenges we observe in this world. I think it’s already pretty obvious for blockchain, that we have different let’s say a different mindset of perhaps a different flavour in the ecosystems like looking at us, East Coast finance sector defy space. Europe with I’d say a little bit different wider definition of use cases. And then, of course, we have a really active community and South America and Africa working on community currencies, new for new currencies that are dedicated to spur of the economic activity and sustainable in in particular communities with particular challenges and then also combining them for making them more stable. These are typical challenges there and then we have the gaming sector and Asia and and so on and so forth. So, in terms of challenges, we have a broad variety and then also in terms of people in our community. So I realised just recently, we were running our first course for the token engineering Academy and people noticed that we have to take my myself as being the organiser there. It’s the women and the the kids instructor Shabnam again, a woman. This is unusual in this sector. And what I think we have a nice mix in our talking engineering community of all genders, also bringing their point of view to the sector. And this is not only let’s say the okay the soft stuff is provided by female contributors. We have brilliant math people, legal people like Nina sitla working on legal questions for blockchain sruti Appiah. She’s a data scientists and complex systems engineer working on the Hot nuts to crack in math. Then Cassie Cassidy Daddy, she’s a token engineer and cryptoeconomic researcher at centrifuge and Shabnam and Chairman fossil Mia, not to forget founding the crypto economics research lab. So I think we have a great mix of people And a great mix of perspectives. And I think that, that you can see it and feel it. I also hope that we will be able to leverage this in the future.

Jamie Burke
Yeah, I mean, I think it’s really important because if you look at how, you know, Silicon Valley and this kind of free market libertarianism that has been at the centre of how many of these the ethos of many of the companies that have come on to dominate global economies and societies, I think the idea that there could be alternatives to that, that might emerge through these tokenized systems is really interesting, rather than, you know, the entire web being driven from one ecosystem with kind of one one philosophy or approach to markets and society. So let’s get into maybe some of the methodology so we kind of understand some of the disciplines that are involved. But in terms of the methodology that’s being developed within the token engineering community, could you talk us through the steps and processes and stages of that plan? And I guess towards the end of that, it’d be good to start to understand, as a founder, you know, how I engage with this methodology and begin to determine whether a token is relevant for me or not,

Angela
maybe First, let’s start with an overview on a typical token engineering process, because I think that that helps to understand when you do what, so first you you start with I think that’s, that’s happening in all kinds of projects. You start with defining your ecosystem, design your ecosystem, who are the stakeholders, what are the interactions, what are the assets that are brought into the ecosystem and exchanged between stakeholders? What are the capabilities? And last but not least, what are the motivations of stakeholders that I can foster with intent I wouldn’t say you can create motivations but you can support or leverage motivations. After your your initial design that feels, I guess, pretty familiar for people who have ever used the business model canvas, or platform design toolkit. So after you have this first vision of your ecosystem, you start then with developing a dynamic model because you need to define the interactions in detail what’s happening, what’s going on, what is transferred between stakeholders in what events So, these are the policies, the rules of your game in a way and also the economic mechanisms. What are the incentives, Game Theory, also the financial and the monetary policy of your system. So building on taxes, betting on dilution, what is the initial distribution of your token, and so on and so forth. And once you’ve sorted out this, you go back to first first iterations, you go back to your ecosystem design and see, okay, can this work out? Ideally, you validated with your stakeholders. And and this is the moment where you perhaps would have a better version in place where you can work and simply validate. Does this work out? Do we have gaps, weaknesses, things where where this doesn’t work? Or is it simply Can Can I really gain traction with this proposal? Anybody interested?

Jamie Burke
Do you mean validation in a lab environment or out in the wild, would you? Because I guess the big question. I mean, this is just one part of the process. Right? At what point does this move from being theoretical to actually being tested or validated somehow in the wild?

Angela
Yeah, at this early stage, as we see With with early stage startups as well. So there is unstructured validation I’d say where you can see if how your community reacts also conversations with your future use as not only an excited blockchain community but your actual use it in the future, the businesses speed individuals, how they react. And then there is, of course, this is still a lab situation and it’s hard to create the real conditions in at this stage. But we found interestingly enough, role games game like local Sure. It’s it’s kind of a very flexible game set up where you can play out the rules if designed in the first place, with your stakeholders and this this is beneficial for both sides. So you can get feedback for from stakeholders on their behaviour on how Also how they understand those rules and their own role in this setup. And on the other hand, in the game, you’re forced to define the rules of your game of your crypto economic system. And this helps to be clear about what you are designing here, where you still have gaps. So, you can there are tools or frameworks that that help to verify and validate in this early stage. And And still, which is a particular challenge here. Keep get a handle of complexity, which means you have various components, you might have various components in your system, a range of stakeholders or various mechanisms that are common to play and you need to zoom in and zoom out to verify your assumptions on your system.

Jamie Burke
One of the things about this is where one of the ways and Engineering comes into play is that you mentioned complexity, you’re looking to remove complexity. So actually, you’re looking for a simplicity that you can optimise for like an optimization function.

Angela
Now I wouldn’t say remove complexity because of that get rid of complexity. That’s actually not the point. It’s rather embracing complexity. So first, if you’re a token engineer, you need to accept and basically you need to love complexity. Because look at the systems we already have today in crypto, there are I mean, we have basic mechanisms like a market making mechanism, then you have various stakeholders around it with or trying to achieve particular goals, and then adding or combining various systems not only your own product or your own system, but external ones, then Adding, let’s say, bots and certain behaviour that you can’t control. Then in addition to that you have a market environment and all kinds of trends around it. You have additionally regulation, second party markets, and so on, so forth. So I think this reducing complexity is actually the opposite we want to achieve. It’s rather how to handle complexity, how to handle interconnectedness. And I think this requires tools, frameworks, and also it requires a certain mindset. And it requires, let’s say, methods and a way a certain culture I’d say, a certain culture of developing such systems and then being aware of risk, being aware of complexity and deal with it in active way. And so

Jamie Burke
is a token ever complete? Or is this idea that you would be constantly iterating? And then does that then require the appropriate governance to allow for that iteration?

Angela
Yes and no. So as we have decentralised systems, running automatically, it doesn’t really make sense to launch MVP tokens. Because you first you might not be aware just launching it, you might not have any tools that help you tracking what’s going on. And you might not be aware of things that go wrong. Until it’s it’s really worst case. And second, it’s hard to change them on a daily base like you can update the digital product customer interface on a daily basis for protocols. It’s different in person stickler for permissionless protocols. And then you can also say, but yeah, now, governance turned out to be quickly in emergency cases as well. But still how to prepare for governance decisions, how to make sure that people are really have all the information they need to make a good decision. So I’d say updating tokens is harder and takes longer than updating an MVP. And therefore, it’s, I’d say, okay, make your token design at a single point as complete as possible and as bulletproof as possible. And on the other hand, any token will emerge over or emerge that particular attributes of a token will emerge over time, the utility of a token will emerge over time. So you might start with a very limited functionality, and then add additional functionality or ecosystem have additional tokens around it. Like, I guess in 2018 was more about Okay, you have you. This was also about investing in a token, then betting on growing utility. And that’s growing value. So this was the philosophy to have one token and a lot of utility piled on it. But then you’re also very, let’s say, you are building very complex dependencies in a single token, whereas today, we see trading tokens or work tokens, and then governance tokens, enabling different different kinds of utility and being separated from another from each other. So I think,

Jamie Burke
yes, a token, the attributes and the utility of a token will grow over time and it makes sense to start small and then evolve it over time. But once you are launching a token or a version of a token, you need to be very clear about the system design and the design of this, of this piece new piece in your system. So as you said, you kind of alluded to this distinction between a token that operates at the protocol layer versus elsewhere in the stack. So I guess that could be middleware. It could be the application layer. As you say, previously, there had been a lot of focus or at least momentum primarily around that protocol layer. And there was a lot of faith put into this idea of the fat protocol thesis that somehow more value would accrue at the protocol layer versus the application layer compared to the inverse of web two. Now, of course, that’s evolved is a gross simplification and everything anybody took it literally. But how do you see this playing out now? What do you believe that there is a role for token at the application layer? And if so, is it more limited? Would it be as easy to roll out as a digital product? What are the nuances between deeper down in the stack and higher up?

Angela
I think I mean,

I don’t see that there is particular reason that the the token capabilities are limited on the application layer side in general. But I don’t see that much interesting concepts at the moment for application layer tokens and the concepts I see are pretty much replicating tokens as a voucher tokens to get a discount. So typical web two concepts. I think what we are seeing on the protocol level, or let’s say dedicated service layer protocols, where we have a token design and a protocol that is designed for a Particular, let’s say maybe emerging industry like data, or like defy, or others, hopefully, in the future there, I think, at least what I’m seeing today we have the opportunities, and the ambition to design really mechanisms beyond what we are already familiar with in web two. And this is what I’m talking about this, you can design a system that optimises towards a particular goal. And this is not necessarily profit maximisation.

Jamie Burke
And I think that in most people will think of tokens in the context of crypto. And this is really just a speculative asset. I think there’s still a large amount of people that rightly or wrongly will dismiss tokens largely because they see what’s evidence around them rather than necessarily potential. But what are you seeing what are the use cases today where you can find kicks off that scepticism and you can point to a functioning token economy.

Angela
Now you’re pointing to okay. Show me user adoption and I believe if then I’ll understand if token engineering or token systems can be a relevant thing in the future. And I think I think a lot of the activity is currently eaten up by defy and okay. There are interesting experiments going on, also for token engineering, to see how how governance can be designed in the future, or how also token launches and adoption distribution can be designed in the future. However, I don’t see at the moment in terms of adoption. I think we are, yeah, it’s not the most exciting time at the moment. And I also think this is particularly hard for protocols. With really, really visionary and and great ambitions, they might be struggling. But what I like to give me one example where I see where this could lead to, I was in touch with a really great startup in the last couple of weeks, it’s called batteries. It’s really great startup great founders with perfect background for this case. And this is about the second life cycle of car batteries he vehicles for you know, there’s this range anxiety and coproducer guarantees that if your storage capacity drops below 70%, then your battery gets replaced. But what to do with all those batteries, they have been removed. These are valuable resources. I think 2025 storage capacity is beyond 200 gigawatt hours. So it’s just too valuable to dispose and their vision is to have the second life cycle of a better And to use them to replace for example, diesel generators or small vehicles to extend the reach of mini grids and so on. Now, we will have been discussing how could a token based solution look like? And they say okay today we would simply we would buy the batteries from a cop producer, and then we would sell it to the Second Life Cycle users. But everybody who’s active in his sector developing countries knows Okay, this buying and selling it’s hard to gain traction and there you have models like paper use. Now, how could a token solstice, first of all, the car producer would be able to remain the owner of a battery and therefore throughout the lifecycle benefit, for example from carbon offset credits, benefit from the paper use or finally benefit from recycling the raw materials, which will become a business or which is actually a growing business. And then the second life cycle user there you have rental models and you can design incentives to recycle. And then suddenly you are looking at business models or ecosystem models that are covering an assets, whole lifecycle. And it’s connecting the various stakeholders in the system and then can drive activity, secure transactions and push out incentives to Ward’s optimization for example, on Okay, we want to do so the final goal is to recycle this battery and get the raw materials into the life cycle starting from step one. And designing such business models wasn’t possible without tokens. And if I say, Okay, what what are really interesting models and it’s exactly this, you can design entirely new kinds of economic ecosystems. And in areas where we really need that we can’t make progress anymore with with our current means. And this is the most exciting feels my point of view. And then of course it, it makes sense to use blockchain. And then of course, it makes sense to build on everything we’ve learned so far in crypto, but also go beyond what we might see today in projects.

Jamie Burke
So let’s just delve into that use case a little bit more and try to unpack exactly how, what a token unlocks that previously might might not have been possible. So I guess the starting point is, is that something like this is a really good fit with blockchain generally because of its ability to account for value Flow an accrual in a distributed system, people that might not trust one another. And that can be auditable, as you say for tax credits or whatever else other kind of incentives that the government might want to roll out there. But could you talk about? So in this example, is that one token? And that token is a digital twin? Or could you see the multi token system how I know it’s theoretical, but how might that look?

Angela
Yeah, of course, on one hand, you need this unit of for accounting, the, let’s say, the battery capacity to be able to monitor it throughout the life cycle, when you’re driving the car when you are charging, also to track capacity. And then for the second life cycle, and then also you need to track look, rotation or ownership in a way that might be combined. And then you might have paper use and this can also be tied to a token But perhaps not the same token, because there you have different requirements, right? It’s not only about tracking it’s also about stability and value about exchange rates. It might be tied to a certain community, so it a limited way of using it, then you need to define should it be tradable on secondary market? Should it not be tradable? Is it a global unit like Libra? Or is it a unit to pay in a certain ecosystem for for these batteries for examples only, these are the questions that you have in this area. And then, of course, when it comes to incentives, for example, for the raw materials, you might need a combination right to you need to have this accounting and tracking of the batteries and the materials, but at the same time, you might need to own board additional services. Is industries with their own dynamics, to then incentivize the recycling of such of the raw materials and bring it back to the first life cycle. So, I mean, just just from discussing those three levels, you see, okay, there are certain dynamics, you might want to separate them, rather have different tokens. And then there are other goals you might want to achieve where it makes sense to combine it in one token. And so presumably,

Jamie Burke
you’re taking that market design approach. So you’re looking at the marketplace, you’re looking at the stakeholders, you’re looking at the interactions, value flow behaviours misbehaviors. Presumably, there would be a starting point. So you would identify the most base function within that system, and then you then might add functionality, but that functionality is likely not going to be added. To the token, it will be added by an additional token. Is that,

Angela
okay? It’s all referring to Okay, how could this development process look like just shooting some scenarios? I would here we would definitely start with the users and and this basic Second Life cycle use case of, let’s say, place a diesel generator. And there you you need to sort out, okay, if we have a pay per use model, would there be a deficit? Who are the users using using these battery packs? Can they handle a token not only in terms of are they able to handle their private keys, but also smartphones, access to the internet transactions, the number of transactions performance, and most likely this would be the first area of exploration and then design the token when to pay wat pricing, maybe you need to have kind of services around in for maintenance. And then building revenue streams. And then you start with the second area that might be the car producers and then this accounting from the first life cycle to the second lifecycle. So, like you, okay, you start with the centre of your ecosystem, and then build additional layers around it. And then there might be the third layer with with the raw materials. So over the years and not only months or weeks, this will be a development and verification of, Okay, this is the design, these are the mechanisms, these are the stakeholders, is this working well, product market fit and then build on top of it. And this is why also because I haven’t had the chance. I mentioned two steps in the process, totally engineering. What we do dynamic and economic model design is then building the digital twin. So, you build a digital representation of your system and most likely not the entire system. This is way too complex the key parts of your system and you build it in like this awesome framework, we have available today open source Cat Cat, you supply some base framework, you run then simulations of your system design adding agent behaviour and try out okay this is my this is my action space these are the rules. Now if I add agent behaviour, where does the system break? How can I optimise it? Do I need to refine the policies and only then you implement it and run it in production and then are able This is there’s also a very nice thing. You’re able to collect data real world data and feed it back into your digital twin to refine it. To have, again, as a new, I would say, a key asset for a web free startup, have this digital twin of your system and refine it over and over again, to have this version to test your system that is customised, and that represent basically, the essence of the value of your system in terms of knowledge and experience. And this can’t be this can’t be duplicated, and this can’t be easily copied. This is just unique.

Jamie Burke
Yeah, it’s really interesting. And I guess, ultimately, that digital twin, the most refined, almost, the more massive, it kind of builds up its gravity creases, and it’s likely to kind of pull in more more value flow and as you say, you have these kind of layers that grow around it or on top it from ecosystem perspective. So I mean, I I personally totally buy into this idea of Almost a token for everything optimising for very specific things, but interplaying in a in a much kind of bigger complex system.

Unknown Speaker
But

Jamie Burke
for me, the only way that can happen is if we increasingly devolve responsibility. So we should have an agent based system. We actually devolve agency to the digital representative to act in our interests on our behalf in an automated way because otherwise the complexity of interacting with all these tokens as a person, the overload, the mental load is too great right for it to be convenient. You say

Angela
okay, there there is a spot the vision of the bots operating and representing their let’s say, the individuals objectives and then acting in a certain system.

Yes, I

mean, Okay, blockchain systems are perfectly suited for all kinds of automated and AI bots activity. And thus, it’s it’s a great playground for the finance sector because they already have those tools. Fine. And in, I think in many cases, for example, in particular for steering the systems for saying, okay, we will not only try to optimise it, but also to dynamically and autonomously adapt

in certain circumstances where we need to be really quick. And it’s it’s on a global scale. There it makes sense.

Nevertheless, I think they

I see a certain tension with use an agency because then number one, there might be cases where a bots reaction is simply not appropriate, because all kinds of unforeseen cases a bot is not programmed for In this what happened on crypto black Thursday to give one example? And this is number one and number two, I’m not sure if if we then talking about representing individual users agency,

because

I’m not sure if we, if every individual is able to run about in the near future is able to programme and optimise about the future. And then this is again, limiting adoption and limiting. Also this this vision of having a permissionless system,

Jamie Burke
maybe to kind of wrap up Do you think that the one of the constraints to the complexity that we could see in token economies is is the ability for any individual or organisation to interact with it, it can only be as complex as it is possible from a UX perspective to tightly manage

Angela
Think I see it like this, I love to see

really making web free available and valuable for every single individual. At the same time, we need to handle complexity. And yes, there is complexity there is much more complexity than in traditional digital products. But then this is about governance and new social institutions. It is also about responsibility. And I see new social institutions that are securing those system and making them valuable for as many as possible. This is the new role of the dows and the decentralised systems in the future. This is not only about it’s fun to make decisions, it’s really about bridging this gap between complexity He and an individual user.

Jamie Burke
Well, what a great way to end the mean. This is one of those podcasts that we could have done for two, three hours and we’re just gonna have to get you back on to go into some of the specifics like a Dao or governance, but people can engage with you. You also founder CEO of name, name, concept topia.io, which is where you engage consult with blockchain projects on partnerships, funding, presumably crypto economic design, so people can contact you there, Angela, it’s been great having on the show, we’re gonna have to get you back on again soon.

Angela
Thank you. My pleasure. Thanks for having me.

Jamie Burke
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