We’re joined by Ameen Soleimani, Co-founder and CEO of SpankChain. From his humble beginnings at ConsenSys, he went on to create SpankChain in 2017 at the height of the ICO boom. The project aims to create a better and safer environment for sex workers by removing the intermediaries who take significant commissions on their revenues. SpankChain’s initial product, an adult cam platform, allows users to pay performers in crypto with a native asset over sophisticated payment channels. More recently, Ameen headed a project called Moloch DAO, a decentralized autonomous organization with the goal to fund Ethereum 2.0 development. Moloch has but few simple functions: making proposals, voting on proposals, and exiting. This simple design, heavily inspired on “The DAO” of 2016 has attracted funding from Vitalik Buterin, Joe Lubin and other prominent community members.
Topics we discussed in this episode
- Ameen’s background as an early ConsenSys employee working on payment channels
- Why Ameen decided to found SpankChain and how the project has evolved since its inception
- What is Moloch DAO and why he decided to launch it
- The mechanism behind Moloch and how it compares to other DAOs
- How one becomes a member of Moloch and participates in governance
- The simplicity of Moloch DAO and its essential functions
- How Moloch DAO scales and its intended lack of a smart contract upgrade mechanism
- The attention and funding the project has already received
- Proposals already made on Moloch, including YangDAO, and their utility to the ecosystem
- Ameen’s views on the broader Ethereum space, his outlook on Eth 2.0 and the future of the project
Sebastien Couture: Hi, so we’re here with Ameen Soleimani, he is the CEO of SpankChain and also the summoner of the Moloch DAO. So we’re going speaking primarily about the Moloch DAO but also the project that he’s built SpankChain briefly. And also if there’s time, ConsenSys. Hi Ameen, thanks for joining us.
Ameen Soleimani: Thanks for having me.
Sebastien: So yeah, let’s talk about your background. How did you get involved in blockchain space and get to where you are today?
Ameen: Yeah. So this story starts as many Bitcoin and blockchain stories starts with ordering mushrooms on the Silk Road in college and doing them. They’re excellent and very mind opening. After that I built a Bitcoin Arbitrage bit, right after I graduated, it was the first thing I did when I learned how to code. I was making money between two exchanges, made a little bit of money there and then lost everything in Mt Gox. I made way more money off of the price run up that I was making with the Arbitrage but ultimately Goxed. So I took a hiatus from crypto for about two years until I discovered Ethereum and when I discovered Ethereum I joined ConsenSys and that’s sort of where this story begins.
Friederike Ernst: What did you do at ConsenSys?
Ameen: Yes. So at ConsenSys I was their state channels expert, I was the only one there who is really talking about it or thinking about it at the time and I did some research there. I also worked on the energy project which was a sort of predecessor to GridPlus it was a partnership with RWE. We were trying to build a new energy market infrastructure, I also helped launch adChain, which was the first TCR, token curated registry. I think decrypt media would put it a listicle with equity is the most succinct description I’ve seen.
Friederike: So you joined ConsenSys pretty early on, how many person where you at ConsenSys do you know?
Ameen: Yes, I joined in the summer of 2016. So I was about one hundred.
Friederike: Okay, and you also left a while ago.
Ameen: Yes. I left in the summer of 2017.
Friederike: And after that you started SpankChain, which is in an entertainment Ethereum business tell us about that.
Ameen: Well, I was sitting around at ConsenSys and a lot of people were proposing very, you know, ambitious and forward-thinking use cases that I thought would never work. And so I thought well I’m you know, where is this stuff going to happen first, who actually cares about decentralization about sovereignty about money and I thought well the adult industry, not only do they tend to be on the cutting edge of innovation, but in this specific case for this specific technology where you can, you know have access to money that can’t be frozen and the like they are the ones who are sort of ostracized by the existing banking systems. They’re the most motivated to switch to a new financial system. And so that’s what motivated us to start SpankChain and so we did an ICO, we raised about six and a half million dollars in November of 2017, put together a team of engineers and designers. We shipped the first payment channel system on Ethereum to mainnet in April of 2018. We have iterated on it since then with connects, built the Spank Card, which I think now is going to be a metaphor for channels as a sort of like fast instant, you know payment system that will be used again and again in the ecosystem, and then launched a bunch of other things and now we’ve also just launched SpankPay which is our B2B payment processor sort of like a Bitpay clone, but for the adult industry, so, you know yesterday, I’m on the phone with Naughty America CEO trying to pitch him on it. So these days I do a lot of sales and stuff like that.
Sebastien: So essentially you came at the adult industry from the technological side. So like there’s this idea that like all technologies, you know, first start and blossom technology in the industry like, you know, DVDs and the internet and VR and this sort of thing. I believe I’ve seen you speak about this, like your ambition also is to create a space where people in the adult industry could have more sovereignty like not only with their funds but also with removing middlemen and I think you also had aspirations to stop or at least reduce sex trafficking. Can you tell us about how you see that playing out now that SpankChain is I believe about a year old or something like that.
Ameen: Yeah. I think we’ve had a healthy narrowing of focus as we’ve grown as a company where you know, timing of when we raised our money lent itself to wanting to explore a lot of things in parallel, but as we’ve you know grown as a company we’ve tried to focus on just like a couple more business use cases in order to drive our initial growth, but I think that we will get to the other types of more ambitious use cases over time. So for example, you know reducing middlemen like the payment processors in the adult industry charge about 10% on transactions. Normally that’s around 3%. So just being able to offer a payment processor that charge 0.5% like that’s you know saves 10% on every transaction for businesses in the space and there’s no chargebacks which are rampant in the adult industry. And so for them like they actually need this new payment system to accept crypto and then further a lot of the payout options, so like for Spank.Live for our live campsite. We’ve been doing crypto payouts since day one, but a lot of these sites have issues with their bankers to be able to pay out their performers. And so the bank will get shut down that they use or they’ll have their accounts closed and that just, you know, interrupts the payment schedule for any of the models that they’re getting paid which is pretty important for them because you know, sometimes they’re even living like paycheck to paycheck and that can be really disruptive. And so we’re also talking to other sites, platforms to help manage them pay out their models too through crypto if they would like. As for the sex trafficking stuff, I think that’s mostly going to be like if there’s a solution to that type of problem it’ll be in like decentralized peputation systems. I’m thinking carefully about how to roll those out because they also happen to be, like if they are effective against sex traffickers, they would also be effective against law enforcement for the same reasons because they both tried to abduct you while you’re doing your job.
Sebastien: So you mention the campsite, I believe that’s like your primary product for the moment. I mean in doing research for this episode, I went on the site and had a look at it. Like it’s very nicely designed everything like it looks really cool. But there seems to be very little activity there, at most I think I saw two performers at a time. It seems mostly empty. You know, how do you see that product? You think it successful or do you think you know, there are other forces at play here that are preventing growth?
Ameen: Yeah, so I don’t consider it successful today with only a few performers, we’re not really helping that many people but the growth trajectory sort of mapped very closely on to the crypto crisis where because for the last year up until really last week we were offering only crypto payments as an option. We were excluding the other 99% of people or more who don’t have crypto. And so it also made it so that any sort of marketing we did was less worth it to do than if we could convert the other 99% of people so we have been holding back on marketing. But as of last week, we’ve both started to accept Fiat payments through one of these, you know high-risk adult payment processors that charges us 10% as well as opening the platform to international models and so I think we are going to see a lot more growth in the next couple months and we’re also starting to pay for marketing directly.
Friederike: How is this model now better than other adult entertainment sites seeing that you also have to have that 10% cut.
Ameen: Yeah, there’s a couple things that we can still do to be more competitive. I think at the beginning I was a little bit naive and I was like, okay, we have crypto payments, this is going to be a silver bullet and it will solve all our problems and you know user adoption is right around the corner for crypto like these, you know, these things ended up taking longer than we would have expected. And so as far as the advantages there’s a couple things, so one is like I said, we have crypto payouts so you can always get your money when you want it. You’re not like on its two-week schedule for the money that you’re getting and so that’s actually new for basically all models and and they value that a lot. At the same time we also have ways that we’re exploring of subsidizing our users and so with our SPANK token we’re looking at ways of distributing it for like, you know through like stream mining. So if you’re a performer and you are, you know, you make up 25% of the tips for a given hour we want to give you a 25% chance at winning some for example a thousand bonus SPANK and you can do this and spread the the SPANK token itself more broadly because it is a utility token because it’s not a security. One of the competitive edges is that you get a lot more incentive alignment and I think that it’s really powerful when you have a platform where the creators on that platform have a stake in the success of the platform and I think that’ll be pretty competitive too, but ultimately it’ll it’ll compete on merit. We will have to do many of the things that other campsites do in terms of setting up affiliate programs and we try to avoid doing that but I think that if you if you’re trying to enter new business where you know less than the other people, it would be wise to at least start out by doing what most of them do.
Friederike: A couple of months ago you started the Moloch DAO which I am sure takes up a lot of your time. So how does the SpankChain community feel about this?
Ameen: Well, it doesn’t actually take up that much of my time, people ask me that because they’re like with Vitalik and Joe and how do you know, how are you going to juggle this and I’m like so and rolling this back just a second right, Moloch took a bunch of time when I was launching it, Moloch took time when you know, we were writing the code and testing it and deploying it really organizing the first cohort of you know, co-founders to each, there’s 22 people we each put in a hundred Ether and the people came from all you know, avenues of the Ethereum community, came from Maker, Gnosis, ConsenSys, some are devs some are investors, some are evangelists, you know Connect’s team is in, James Young, Cassandra who used to run the ECF help me start it. There’s a bunch of us that really wanted to see this through and you know shepherding that along in the very beginning explaining like how it worked and getting the first couple proposals out that that took a bit of time. But then now that Joe and Vitalik and ConsenSys also joined for a thousand Ether it takes a lot less time because the pitch is a lot more straightforward. It’s hey look these guys are in this is clearly a cool thing, you should also join where it would have taken more of my time had they not joined to be able to accomplish the same types of things. I can leverage, you know their money essentially to do it. So I think that Moloch is actually helpful for SpankChain because it shows the, you know, not only the that we can ship something that you know can really coordinate a lot of financial value but also that we are part of this community that is, I don’t want to say Ethereum leadership, but you know some of the most respected people in the Ethereum community are the ones who are in it and that has earned us some recognition from people in the adult industry who are now more willing to work with us because they recognized our status in that community.
Friederike: Now that’s super interesting that it works that way around as well. So maybe let’s back up a second. So what is the Moloch DAO and what made you and your co-founders actually launch it?
Ameen: Yes, the smallest I was a grant-making organization. It is aimed at trying to solve at least some of the tragedy of the commons around funding public goods in Ethereum. So it is a smart contract, it is a way for people to deposit their Ether and then they get votes proportional to how much Ether they brought in you have to get voted in by the existing members but once you’re in you can then also vote on other proposals which can be either other new members or grants. And if at any point you don’t like how the grant funding is going or who is being admitted how the votes are going you can take whatever Ether you have left in the Guild Bank and rage quit, which means you just exit with your proportional share of all your remaining money.
Friederike: So there’s a couple of grant programs actually round and they were around at the time that the Moloch DAO was launched. So things like the Ethereum Community Fund or the Ethereum Foundation grant program. How do you see those and why did you see still see the need for the Moloch DAO?
Ameen: Moloch is faster. The voting period is seven days. So if you submit a proposal you’ll get your response within seven days that might not be enough time for everybody to do a great amount of due diligence but it does put the sort of baseline floor on you know, the responsiveness of that grant-making organization, which I think is really powerful because especially for sort of unexpected needs or you know, the grants that might have otherwise taking a long time to do through either ConsenSys or the EF it can be really helpful. Right ultimately, you know, we have the sort of Ethereum meta organization, right and like there’s a feedback loop in the feedback loop is how fast can we identify a need, find the person to do it and secure funding for them to do it and from talking to Ethereum 2.0 people for you know about a test runner that would run amongst all of the different clients and give them a way to standardize their test so that they can make sure that they’re all synchronized properly, and we you know, I tweeted about it we found the guy and then we submitted the proposal in three days. And so we had our answer in 10 days and I think that was like the fastest feedback cycle I’d ever seen for Grants organization my entire life. So that was pretty cool. The EF obviously has about a hundred times more money. So we’re not really competing with them in any sort of sense. I’m not trying to compete with them in any sense half of Moloch’s money is their money anyway not half it’s a thousand of the Ether is their money but I think it’s also helpful to have alternatives and especially helpful to have cross-organizational alternatives where the people who actually make up the decision making for Moloch. Moloch represents a new way of bringing their knowledge together, right? So there’s some people a ConsenSys who are just some you know individuals within the community who are in Moloch, but aren’t in the EF that might have something to contribute to that process and within Moloch they can all do this together.
Sebastien: Interesting, did this project come out of sort of maybe a frustration that you saw in things not moving along as fast as you have liked, could you talk a bit about the motivation behind it. I believe there was a report that was written by yourself and another organization where you guys pointed out some of those issues.
Ameen: I have gotten a grant from the EF before and it was an arduous process. So anything that allows that process to move faster is great in my eyes, I care a lot about Ethereum working and Ethereum working depends on our speed of execution and so being able to accelerate generally how fast we can you know, execute on projects is a benefit for everybody in the ecosystem. So one of the sort of easiest things for Ethereum community members to rally around is E2.0 and that was the original sort of mandate for Moloch was to try to accelerate E2.0. And so we started doing that by putting out reports, adding specs. And so it’s the first report that we put out was called the State of Eth2.0 and we just you know, I realized one day that I didn’t know really what was going on at all, if somebody had asked me how is Eth 2.0? What are they doing? My answer would have been I don’t know. I think they’re still working on it and this was like before the any spec freezes before any of that. So I organized interviews with all of the Eth 2.0 client team leads as well as Danny Ryan the researcher from the foundation and we chatted for about an hour and we had a bunch of questions and we asked them where they’re at who’s on their team stuff like that and we compiled it all into a report and tried to identify, you know, what are the most important challenges that this effort is going to be facing in the upcoming months and years, and we published that it was primarily authored by Matt Slipper who is the CTO of Kyokan, they’ve done great work in the space, Uniswap, also SpankCard on the payment channels for SpankChain. And so they, you know have been helping part time since that report also in helping sort of on a we put them on like retainer. If a DAO can have somebody on retainer. I don’t really know but we keep paying them every month and so Matt has been spending some of his time helping Eth 2.0 effort. They’ve he wrote the first draft of the networking spec which moved things forward, but then he realized that the p2p was a sort of critical dependency that hadn’t really been thought through all the way and so we actually yesterday just published a report about the p2p, how the client teams are using it how they’re able to interact with the p2p team in order to get the changes that they need included because it’s sort of become this bottleneck for the networking layer and we’re trying to move past that.
Friederike: How exactly does a DAO put someone on retainer?
Ameen: That’s a great question. I don’t know. We just have an implicit agreement where I keep submitting proposals every month and people keep voting yes, and so they keep getting paid and you know the world moves on.
Sebastien: Okay we’ll come back to the governance and Eth 2.0 and the state of Ethereum more generally a little bit later on the episode, but first I’d like to spend some time on Moloch, can you explain how it works at a basic level.
Ameen: Moloch has two contracts, there’s the sort of governance contract and then there’s a guild deck. And so when I want to join I have to get an existing member who has shares, if you have at least one share you remember if you get that member to submit a proposal and so when you submit a proposal there’s a couple fields that are important, one is the amount of tribute that I’m willing to offer in Ether and the other is the number of shares that I’m requesting and the number of shares that I’m requesting will if the proposal passes be newly minted and so the only difference between a grant proposal and a membership proposal and Moloch is you set the tribute to zero if it’s a grant. If I’m working for the the DAO then I am not putting up money. But if I’m joining as a member and then I’m coming in with capital then I offer tribute and I put up money and so when in the grants case if after a seven-day voting period where there is no Quorum the people just vote it could pass with one vote, it has in the past actually. So after the seven-day voting period there’s a seven-day grace period where anybody who doesn’t like how a vote went can leave by calling the rage quit function. Yes, that is a technical term and then they withdraw with their remaining Ether are not on the hook for for the grant but if at the end of the grace period you know the grant requested 10 shares there are a hundred shares total in the DAO then those 10 shares will be newly minted and so whoever was the recipient of that grant will now have 10 over a hundred and ten shares and this presents a way for you know grants to sort of automatically be proportionally paid by diluting all of the existing members. So sort of very simplified accounting system. And that kind of is what you would expect right? We say we’re putting our money in this together, you get both proportional to the money and we all spend our money equally based on how much we’ve put in for every time we want to make a grant.
Sebastien: Okay, so it’s just maybe rephrase this as there are two types of proposals that you can make to the organization, one is I have capital and I want to contribute capital in this grant pool. And so therefore I make a proposal to become a member of Moloch and I believe there’s sort of a there’s a referral system where you have to be referred by someone.
Ameen: Yeah, it’s essentially an anti-spam mechanism because we don’t want anybody to just be able to submit proposals. So you have to have an existing member submit a proposal for you to join.
Sebastien: Okay. So to become a member, I have to propose to the other shareholders that I want to become a member. So that’s sort of a governor’s proposal that gets voted on and I can do that by submitting a proposal with the amount of capital that I’m willing to allocate or I can make a proposal to receive grant funding. So let’s say I have a great idea and I want to build something like Ethereum 2.0 for instance, I’ll make a proposal post it on a IPFS and say hey like who’s willing to fund this and those who are funded or those who vote yes, and if you don’t want to fund it you can rage quit within the grace period and just receive your shares back.
Ameen: Right, Moloch is all about collective sacrifice, right. It’s named after the God of child sacrifice. If you want to join Moloch, you have to be willing to bleed with us. You can bleed with us by giving us your money or you can do some work. That’s how it works.
Sebastien: How much of Moloch is influenced by other DAO’s like for example, the DAO or dxDAO or even you know, I would say like Cosmos has some sort of a DAO since it has governance as well. How much how much of the work is influenced by previous projects?
Ameen: Yeah. It is heavily influenced by the DAO. The DAO kept me up at night because well the DAO for me was my first week at ConsenSys. So it’s really fun watching everyone sort of initially not know what was going on and then lose their shit and there’s like a whole bunch of uncertainty, are we gonna software? Oh wait, no, that’s a terrible idea. We could get spammed. Are we going hard fork? Okay, we’re going to hard fork. Okay, like what does this mean? Is it immutable? Who knows like is this an existential crisis? 10% of all the Eth was was at stake there so I didn’t really want that to happen. And so I spent a lot of time trying to make sure that that wouldn’t happen for for Moloch, that the simplicity of the design is heavily informed by the DAO so Moloch is only 400 lines of code. It doesn’t do anything except for what we’ve talked about, it just you know allows you to pull money vote and leave that’s it and it was designed to allow you to leave. The excellent posts on A Call for a Temporary Moratorium on The DAO by Emin Gün Sirer who is a noted professor at Cornell along with I think Vlad and Dino so they wrote this post actually before the DAO hack just about all the game theoretical problems with the DAO and so even if it hadn’t gotten hacked it would have been broken in all sorts of ways. One of the attack vectors was called the stocking attack. So if you want to leave the DAO you actually had to create a child DAO, the problem was anyone else in the DAO could join your child DAO. And so if you want to try and leave that child DAO, you have to make another child DAO and they could follow you forever. And that’s exactly what happened when people try to leave. So there are essentially two recommendations that they made at the bottom of that post and the first one was instant withdrawals and the second one was post vote grace periods. And I just took that as sort of my design outline and then that’s how we got to Moloch. The combination of the two is very powerful. If you have instant withdrawals without the post vote grace period you can leave but you can only ever leave before you know how a vote is going to go but if you if you make it so that there’s a grace period between when the vote on a proposal is final and when the execution of that vote, essentially the printing of the shares and the diluting of all members, then you give all the members who don’t like how that you know vote went a chance to leave before it is it is executed and we have to add like, you know, small amount of nuance around that because you know, just trying to get this sort of rage quit functionality in came with its own little edge cases. So one of those edge cases was well, what if I vote yes on something and then I leave and then everybody else is now on the hook for paying for that thing that I wanted, right? And so actually the only circumstance where you cannot leave is if you have voted yes on something that has yet to be processed. It is either in the voting or grace period, so you have to be a little bit careful on not voting, you know on something that you might want to leave after on because of some other proposal. And the other thing is that if I vote Yes on a proposal that is for example requesting 1% of the guild’s money, then let’s say 99% of the other members leave and let’s say it’s even not related to that specific proposal but another proposal which just happened to be before it right? Well now I’m on the hook for a hundred times more money than I thought I was trying to be giving to this because if there’s like a hundred shares its requesting one new share, 99% of the other people leave. I’m the only share now I’m about to dilute myself 50% because I’m going to create one share from one share and I’m going to pay a lot more money than I thought I was going to. It’s unbounded risk, right? And so we had to introduce a little mechanism just for that so that if more than two thirds of the people leave between when a proposal gets voted on and when it is processed at the end of the grace period it just automatically fails and then you know, you could try it again if you want it.
Friederike: Okay, I see so basically say I have submitted a proposal and it was passed for a payout for a grant for building Eth 2.0 unit whatever so I’m issued shares and how do I actually retrieve the money? So I effectively have to rage quit in order to actually get the Ether back out right, for the shares that I’ve been issued for nothing for doing this work.
Ameen: Yes. That’s correct. You would have to rage quit the shares. So you have the option, you can either keep the voting power if you don’t immediately need the money or if you want the money or you don’t want to hold it in Ether then you have to exit. So long as you keep at least one share, which is when we started out with just one share one Eth, so you keep at least one share you will be, you know, allowed to stay in the discord channel, you’ll be considered a member. You’ll be allowed to submit future proposals for either other members or more grants for yourself or others.
Friederike: And do you have any kind of mechanism that this payout is contingent on so basically typically if I apply for a grant there’s some kind of payment schedule or there’s some sort of milestone that I need to reach before payout. Is this the case for the Moloch DAO?
Ameen: No, the idea is because the system’s fast we would just probably split it up on like a month-to-month basis and then just do separate proposals every month. You can do a sort of ad hoc, like if it’s a larger proposal you want to have somebody manage it we could find somebody who’s trusted within the DAO to act as a manager give disbursements every month. And like if they decide you know that we don’t want to continue this just give the rest of the money back to the DAO. We haven’t done this yet, so far we haven’t given out, there’s only about a little over a million dollars in the DAO right now, so haven’t given out. I think the largest one was like $20,000 for a Mixer UI on top of the Argan Hopper smart contracts. And so these have all been in the range of like one in 2 months, right and I think the reputational risk for anybody involved is also quite high, if you want to go and you know fail the Moloch DAO you’re failing quite a lot of the most important people in space so do so at your own risk.
Friederike: Okay, I have that in mind. Can I delegate my vote for someone else in the DAO?
Ameen: So you can’t delegate your vote to another member in the sense that like, I can’t pool votes. That would have been really helpful feature from a UX perspective if we allowed that, we built a mini permission system so that you can essentially have two addresses you have the address that controls your ability to leave with the money, the rage quit function and then another address which acts as your delegate key, but two members cannot give another member like to act as their delegates also, you have to have separate delegate keys. And this was annoying because when like for example the EF wanted to join it would have been really easy if they could just join with a thousand Ether and then say okay this address has a hundred shares this addresses a hundred shares this addresses hundred shares but instead they had to join 10 times from ten separate accounts, which each controlled a hundred shares and then delegate those addresses to the address of the member within the EF that wanted to vote.
Sebastien: So those were 10 different proposals to have the EF join the DAO.
Ameen: Yeah our lack of foresight there cause an EF ops guy to spend an afternoon making 31 transactions which you know not the end of the world but if it would have been better to be able to avoid it. There’s a lot of things now that are really obvious that could be improved about the DAO. And I think it’s I think it’s great that we’ve been able to identify those because we sort of you know, we tried to do our best but ultimately our focus was shipping it. This is a side project of you know, a couple of us that had other full-time jobs, Arjun wrote the white paper, me and the Connects team we did a lot of solidity extender is helping design the game theory, had we spent too much time on this and try to figure everything out up front like it might not have shipped for another several months. Writing Solidity is easy, shipping Solidity is not easy. And so you end up designing the entire process just to optimize for how easy will this be to understand and get audited and how confident am I that you know, the tests are are thorough and every single thing that you add on especially if it interacts with any other thing increases that complexity and makes it much harder to ship something and the fact that we’re having this conversation at all to me means that you know, I’ve already won in terms of signing a thing that worked well enough that it got attention and and can now be iterated on.
Sebastien: Do you foresee then a rage quit at any point soon like everybody rage quits and then there’s like a new one that comes out and with all these added features.
Ameen: There’s no upgrade mechanism, right? So people kept asking me like, how do we upgrade? I’m like, here’s how we upgrade. We all leave and then we make another contract and I’ll join that right and I do I think that maybe in six months to a year we’ll do it. It’s not pressing because nobody has abused the system yet. For example, you have to spend 10 Ether as a deposit when you want to submit a proposal and you get that back in two weeks period after the voting grace period is done but if you really want it to spend the DAO it would cost you, there’s five new proposals per day. So the maximum throughput is 35 proposals per week. So you’d have to put down 10 per each so you’d have to put down 700 ether to occupy the entire proposal throughput during the voting and grace period 35 and 35 so 70 and then times 10 for deposit so 700 Ether, it’s not that expensive if you really think about it and what would happen is somebody does this some membered effects, right? And then it becomes a more pressing issue to figure out how do we design a better anti-spam mechanism and the one that came to mind that wasn’t obvious at the time was well you can non linearly increase the cost of the proposal deposit cost just on the person who is submitting. So for example, if I’m the only one spamming then my proposal deposit cost should go up with every other proposal that I’ve already submitted. So it starts at 10 then it goes to 11 12 13 14, right and then it becomes a lot more expensive for me and only me to submit proposals but everybody else is fine, these kinds of mechanisms would have been harder to explain at the beginning at the outset have to go and it’s a hey, well, this is what we think and they’re like, why would you do it that way? And there’s a whole other conversation which makes getting people in the door, you know, a little less socially scalable. But you know, if somebody spams it then it’s really easy conversation have which is like hey, look this happened. Here’s how we’re going to fix it moving on, also having the ability to forcibly remove members, not take their money, but just kick them out would also be nice, if you know we feel that a member is compromised and spamming all the time and we would prefer to instead of moving to a new contract just kick them out.
Sebastien: Yeah, those are all really great points.
Friederike: Yeah, totally agree that it’s preferable to ship early and often and if necessary iterate over what you’re offering, maybe that’s targeted of the funding and the influence of the DAO. So how many people are currently members or how many entities are members of the DAO.
Ameen: I’m looking at the website. It says 65. It’s a little hard to tell who’s who so ten of those are ConsenSys people, ten of those are Ethereum Foundation people, one of those is Vitalik with a thousand Eth, one of those is Joe, the original 22 co-founders that they’re largely individuals SpankChain joined with, five people each with a hundred Ether as well. So probably yeah around 60 members total.
Friederike: So Vitalik, the Ethereum Foundation, ConsenSys and Joe can vote for a thousand shares each, right? So they put in the Thousand Ether.
Ameen: ConsenSys and the EF votes are split between ten people so there’s ten people who each have a hundred shares.
Friederike: That is like two-thirds of the total pool, right?
Friederike: Do you think there’s a problem with this voting power distribution?
Ameen: So the great thing about how this works is that if it was ever perceived as a problem everyone else could leave. So even if they’re sitting there, you know, the way the game theory of of the DAO works out is you don’t want to vote in ways that incentivize other people to quit because then you’re just back to funding things by yourself. So, you know, Joe and Vitalik to date have not voted at all. Some people within ConsenSys and the EF have voted. So so let’s say I felt like being, excluding the votes that SpankChain has, I have personally a hundred votes and then I see this Ethereum 2.0 lodestar proposal here has 500 yes votes right now, right so I could go and swing that whole thing inside that you know what this Eth 2.0 team does not deserve a grant from Moloch. Now, do I want to do that? And so if I did that I might you know piss off those 510 shareholders worth of capital and maybe they are no longer interested in participating and and that would be sort of self-destructive. Right? And so maybe I don’t want to do that at all. On the other hand there is another series of votes for another guy.
Sebastien: Also, they would also lose their funds if you were to vote no on this, right?
Ameen: Well they wouldn’t lose any funds. It’s just that the team that was trying to get the grant wouldn’t get the grant.
Sebastien: There’s no penalty for proposals that don’t get passed?
Ameen: No, there’s no penalty. You get the deposit back at the end of the two weeks you get the 10 Ether back. So that’s if you the cost of spamming the thing is 700 Eth that you lock up for two weeks essentially and so there’s another series of votes on YangDAO right which is much smaller. It’s ten times less money than what the Loadstar Eth 2 team is asking for to 3500 instead of like 30,000 and it’s something that I think is really important. But so far many people have voted against. So like the votes are split here. There’s four different proposals. So we did it in four parts. And so one is like it’s funny because some of them are passing one is like 625 to 600 and other ones 425 to 600 and other ones 525 to 500 but I could also make all of these pass and so maybe what I’ll do is I’ll make all those pass and then I just won’t interrupt the other and that’s a sort of compromise right? It’s not even a compromise I had to talk to anybody about it’s a sort of compromise based on like the implicit game theory of the situation, which is that the other members don’t want me to leave so they might not vote, if we all have our own little like pet project that we want to get funded through this it could happen through a series of compromises now, I think that YangDAO is critically important and having a grant from Moloch would signal boost and you know, add some legitimacy to the project. I think it’s an entire category of new use case where we are collectively funding marketing operations for a US presidential candidate. I think that could attract a lot of attention. I think it could Inspire other clones for other US presidential candidates and I think like that’s the kind of level that we as a community want to be operating. It’s sort of not enough to always be looking inside and and trying to think about, you know, research and tools and scalability if nobody is using it and so I think the point is to bring Ethereum to these other communities and if we’re failing to do that then we’re definitely not getting anywhere.
Friederike: Let’s talk about the YangDAO in a second because this is actually truly fascinating but is it fair to summarize you entire stace as saying the Moloch DAO works because we have an offchain reputation system within the Ethereum community and people know who I am and I know who the other people are and I know that our interests in getting Ethereum 2.0 off the ground I lined.
Ameen: Yeah, that’s pretty accurate. You know, it is a permission system after all, you have to know who the other people are in order to get in. There have been some people who have, I’ve actually proposed that they join and there’s there’s a couple people who I don’t even know who they are and I propose them anyway, and the reason is they were able to prove to me that they have a Genesis wallet and I was like, you know, what fine that’s good enough.
Friederike: So basically the system in and of itself is not something that’s game theoretically locked in. So basically you actually have to rely on outside things. So for instance, I mean what some other DAO projects have tried to do is to build this failsafe system. So for instance what what what can in principle happen with the Moloch DAO is you can actually turn a vote at the very last block, right? So basically you could actually submit your 600 votes at the very last block of the voting period and you could still turn it and then no one else would actually have the chance to actually turn it back because no one would have known that, so basically, I mean what some projects actually actually have is instances quiet ending period where if the vote flips then you know the voting period gets extended by a certain amount of hours or days and in itself it’s not a system that works in a vacuum.
Ameen: Yeah. I think that the vote flipping the quiet period or you know, whatever that is, is a good feature. I would have preferred it to be in this as well. I think that, so I talked to Martin Koppelmann about DAOStack a couple times, how they designed it and we basically came to the conclusion that they kind of wish they had a grace period and I kind of wish I had the vote flipping thing because right now people are incentivized in Moloch to vote at the very end, right? There’s there’s like a day left on these proposals. Maybe, you know, I’m just going to wait until the last couple hours and then I’ll start voting because then that gives less of a time for everybody else to organize around it. Like if I flip the vote and then it would keep going for a little bit longer and give other people a heads up. At the same time the fact that there’s this grace period means that I can’t bully anybody into staying and paying first anything that they don’t want which is also really helpful, even if you know the vote flips because if you didn’t have that grace period you would have to decide whether or not to leave based on, like you could leave because you think a vote is going to pass and then it could get flipped on the last block. And so that’s sort of also kind of annoying. Now the point is like I’m not I’m not going to be as game theoretically exploitative as I can be because that would potentially backfire in incentivizing the other members to quit and `if I do that then I’m back to funding everything just from SpankChain itself, which is where I started so I don’t want to do that.
Friederike: That makes sense and I think it’s a great approach in that it actually did. I mean, I think this can’t be stressed enough. This is actually a project that did get traction and that attracted a lot of important community members to contribute their own money and with a common goal of furthering the cause of Ethereum 2.0.
Sebastien: Looking at the proposal. So there’s 85 proposals in total and about 65 members I think so, I guess a lot of those proposals are proposals to add new members and then of the rest quite a few of the ones that are pending at the moment or in the voting period are for this YangDAO. We’ll talk about YangDAO in a second. But can you talk about aside from the YangDAO proposals how many of the proposals are actually about advancing Eth 2.0 and I guess my question is has anything come out of this that’s actually usable in that is being used towards building Eth 2.0.
Ameen: Yeah. So there’s the first one was the state of Eth 2.0 report. Then we were funding Matt Slipper’s part-time contributing. He did the first draft of the networking spec. We brought Antoine Toulme who is now the CTO White Block on to build a 2.0 test runner that many of the clients were using and can integrate into their workflows. And we just published the p2p report and now we’re sort of in the RFP process for doing a validator client that can plug into any underlying node and show performance, earnings and stuff like that for a Eth 2.0 validator client that is trying to calculate their earnings as they go. I would guess like around 60 or 70% of the grants actually have gone to Eth 2.0 stuff. This is skewed slightly by the $20,000 recent grant for Block X to build a web UI for the mixer because there’s a mobile app that had a mixer integrated and so we were like, well, we can increase the unanimity set and bring this to more users if we build a web UI as well that interfaces with the same contracts. So the mandate is evolving, and we always knew it would in the sense that like we knew that you get a bunch of these people together and we’re going to have ideas of other central things that we might want to fund above and beyond just you know, Eth 2.0 and some of those things have also not gotten funded, you know, some of those proposals have failed, there was a Eth 2.0 Block Explorer, I think it was Block Squid and that was rejected and some of the membership proposals failed. I tried to reach out and personally recruit somebody from the Ethereum community I’d ever met because I liked his blog posts his name was Peter Pan and the other members felt that he shouldn’t be let in. His mistake was that he didn’t have very much money. And at the time the members were trying to limit people who would join with less than a hundred shares because they thought it would increase the coordination overhead which you know seemed like a valid concern at the time but then they rejected him and well, that’s how the MetaCartel DAO was actually born. So I called him up and I said hey, let’s make another DAO, you know screw it. Let’s do it again. And he’s like two steps ahead of you. I’ve actually already gotten all the MetaCartel people like we’re all excited about building a UX focused DAO for building tools for the application layer because the MetaCartel started with meta transactions, which is a way to use re layers for a transaction, so you don’t have to pay for the gas. You can even abstract the you know, unit of account that you pay for your gas. You can pay for it with Eth and dai and and so forth and you just like sign a transaction and uses the smart contract wallet and that’s all great. And then it’s evolving into funding both other tools of that kind and to make that development easier and some dapps themselves, and now the MetaCartel I think has a couple hundred Ether, maybe like between a hundred and two hundred thousand dollars and it’s like 750 or something. So they are trying to decide what their first grants should be. And so this shows a way that this can scale and it’s using the exact same contracts, we call it a fork of Moloch. It’s really just a redeploy and yeah, it has a different set of members who are pooling their funds and advancing the cause that they are passionate about and so one of the proposals for YangDAO is actually I’ve had Peter Pan is a surprisingly good DAO coordinator to help p.m. a lot of the YangDAO stuff and I thought that maybe Moloch could reward him for that. And so now we’d have like DAO’s spawning other DAO’s.
Sebastien: So let’s spend a little bit of time on this YangDAO idea. So, what is the YangDAO and why is it becoming a proposal within Moloch? Why wouldn’t they just spin it off as their own thing and yeah as a fork of the Moloch?
Ameen: Well, I mean, it’s also the same contracts so MetaCartel, Moloch, YangDAO, there’s even you know, earlier stages there’s a Lobby DAO, but we’ll come back to that. So it could have you know, I could have funded out of pocket, it wouldn’t have been as interesting. I think I think it’s, you know, people are watching Moloch now it has some attention. It’s it’s not quite you know, the EF but when Moloch gives a grant it is a signal within the community. Also, I’m sort of using Moloch to just accumulate talented people that I want to work with and that I want to be able to have access to if we have stuff that needs to get done and so the people who are proposed to be getting money for YangDAO are one of the designers who made a site which is you know, for the yangdao.org site so if you want to join the YangDAO you can pre-register.
Friederike: We actually have to give some background at this point. So for anyone who is not based in the US, Andrew Yang is one of the Democratic presidential candidates for the next election. His main talking point is the unconditional basic income as far as I know. He’s been gaining a lot of traction and I think one more thing we should say about US campaign financing is that there are very strict laws about this, right? So basically you can only contribute a certain amount towards any given candidate and you also have to be a resident or a national of the US, I’m not quite sure maybe you can talk about this Ameen.
Ameen: If the contributions are going to the candidate, but if the contributions are going to marketing around the candidate that the candidate is explicitly not coordinating with then you have I think a little bit more leeway. I didn’t actually expect the Moloch DAO code to be used in this way. I was just talking to somebody who’s close to the campaign and they’re like, yeah we’re raising money how does that work? I was like, you know, they explained and I was like, well, you know, we built this interesting grants system that you might be interested in using it and it turns out that it maps really well on to that use case because normally when you donate money to politicians campaign or like a super PAC, right, you just give them the money and then you hope that they do spend it well and this case you actually get the option to not only vote on it, but also leave with your money if you don’t like how they’re spending it so has some advantages in that regard. Yeah. So one of the other things that we’re building is James Young who was a VP engineering at SpankChain for a while but has moved on, he’s been building me a bridge wallet. And so it’s like a really nice bridge between web 2 and web 3 where you can sort of counterfactually instantiate this, you know, basically without having to send any transactions until you have money in this contract and the contract gets deployed its kind of how the Gnosis safe works, you get this wallet and this wallet can have any number of your keys plug into it. So it’s not like an M-of-N multisig but it’s also much safer. If you already have one or two wallets to just plug your existing wallets into a contract and authorize them as spenders of the money or as people who can execute transactions through that then, you know needing to make a new wallet. And so the YangDAO launches in about a week and it’ll be the first app that uses that and so we’re paying for the developers there and the designers there and for the coordinators who are sort of managing.
Friederike: And this is very well something that could hit the mainstream media if it becomes successful, right? So I mean people will talk about this so is your ambition in promoting this to a large part a PR exercise or is it still truly the idealism that fuels it.
Ameen: PR for idealism is never bad right? Like if your ideals and they get more attention. That’s a benefit. I mean it’s because we have maybe for the first time a presidential Democratic candidate that is crypto friendly, right? And so if we can help support them with our crypto then maybe we’ll you know change the narrative. Trump has already started tweeting about Bitcoin. I expect crypto to be at least if not, you know, a topic during this nomination process and I think that being able to have our voice in this process would be really important and if that blows up then great people will look at Ethereum and say hey like this can actually be used for stuff that maybe isn’t even around finance, right? This is just purely a social coordination mechanism and if that, you know brings more activity on to the Ethereum network then I think that’s a win.
Friederike: I think that would be super interesting to see and I’m personally rooting for the YangDAO.
Sebastien: Yeah. It’s a very interesting like design and I think your approach to building it has been, I see this kind of like a lean product approach where you know, you just build the features that you need and then you know, if you need to implement new features and everybody just exit and there’s like a new DAO and I think that’s a really good way to try to bootstrap this thing and like the whole way that you bootstrapped this thing is very interesting.
Ameen: It’s a new type of development practice. It’s called meme driven development, MDD, if the meme is good enough we’ll do it. That’s the point right.
Sebastien: So moving now to the future of the ecosystem and so your views on these and we’ve talked about this a little bit but I’m curious to get your thoughts on you know, where you see the future of Ethereum going and if you could you share your thoughts on you know, the foundation more generally.
Ameen: Yeah, I think Ethereum is going to do well, I mean, I think Eth 2.0 will ship, there’s a lot of talented people working on it’s a hard problem, but I think they’ve solved a lot of the research problems and moved on to engineering. I think it’s going to be a heroic effort that’s required because we have to like build all the tools again to adapt to this new sharded future. I think the community will will get there. It’s like one of those things where you know, you’re anxious about it but the same time you’re you’re pretty sure it’s like you’re going to win, you know. In terms of EF I’m really impressed. They’ve stepped up a lot, increased their transparency, they shipped the new website, you know, people have opinions about it. I kind of like it to be honest, but they have committed to spending, you know, thirty million dollars over the next year as an organisation they seem more willing to let go of people if needed which I think is healthy. So we had a case of that and also by participating in stuff like Moloch, they are decentralizing themselves, right? So they are planning to be obsolete at some point, right? They don’t want to go obsolete too soon because the ecosystem needs their support, but they also don’t want to go obsolete too late where they stick around for, you know longer than they’re needed. And so they’re playing a delicate balance game and they’re also trying to support other, you know, decision makers and and community members who can potentially compliment them in coordinating resource allocation, which I think is pretty cool.
Sebastien: So one question that I often ask people who are deep in the Ethereum ecosystem is with regards to the roadmap and how long it’s expected to take to deploy Ethereum 2.0. So firstly how long do you think this will take like one you think that Ethereum 2.0 will ship, if you have any indication there any ideas and and secondly, do you think that introduction of other blockchain systems that have a lot of the features that are in Ethereum 2.0 is wanting to have like, you know things like Cosmos and Polkadot, which is coming soon. Do you think that the fact that these chains are ready or near ready can harm the Ethereum ecosystem and take away some of the talent and mindshare and just like generally like the projects that they’re looking to build on blockchain systems.
Ameen: Yeah, I think they’ll develop communities. I don’t think competition is necessarily a bad thing. I think it you know inspires you to push yourself to new heights. Going back to your to roadmap question for a sec though Q1 2020 is like the planned, you know beacon chain release date so phase zero of sharding which is just the backbone, the data layer should be made available by the end of 2020. So maybe Q4 or Q1 the next year and then I think the interoperability between shards and adding smart contracting to the shards will come, you know, something like a year after that. It could be faster depending on how well teams transition between implementing a spec and like the sort of other engineering challenges that go into building a client, additional coordination on the engineering side I think would probably be welcome because most of the coordination that’s going on is happening at the research level like here is the spec, build the spec, did you build this spec? Yes. Okay. Good. Okay. What about all the rest of the work that goes into building a client? The teams are sort of on their own to manage that part and and I think that maybe there’s there’s room to do better there. Cosmos and Polkadot are you know they are not in and of themselves smart contract platforms, right, but I can connect them to other chains base chains and so they’re actually glorified layer twos in my mind, because they don’t really exist without layer ones. So will they get traction, you know probably will it, you know people might launch experiments on them in the meantime but ultimately I have a choice when you know, I’m building something for my users and it’s like, you know, I can plug into this one ecosystem where I have all these other developers that built out a bunch of stuff that I’m even realize I needed yet or you know, I can be a pioneer but that’s going to be like Ethereum five years ago. Now not a whole lot of the tooling is built. They haven’t really figured out what what it’s supposed to be used for stuff like that. And so I expect maybe it’ll drain some of the value from Ethereum in the short term over the next two years while there’s uncertainty around the Ethereum roadmap execution, but I think at the end of that when it’s when there’s no longer uncertainty about the Ethereum roadmap execution all of that value and more is going to come back to Ethereum and it will continue to dominate, that’s my bet, I could be wrong. There’s a lot of people who have you know, and I’m sort of incentivized to play this way. But like I’m also you know, there’s a thing where like you’re holding is reflect your beliefs and then your beliefs reflect your holding in a sort of cyclical way. Right? So, I’m sure that’s at play here too. And there’s lots of Cosmos and Polkadot bag holders with which would tell me otherwise and they’d say but you need governance like, how are you going to get anything done if you don’t have a governance structure? It’s like, well, you know what I don’t actually really like that governance structure can make protocol updates or determine if for example in Polkadot like who gets the leaseof pair chain because I also run a adult oriented company and historically, you know adult companies have had issues with banking with they are on the other side of ConsenSys if you will, like that means that if I’m operating a pair chain or on a pair chant then I always have to wonder will the dot holders decide that you know, they no longer want my community on their chain, which they could do because you know that they’re about to bring in some banking partners theyre really excited about it and then they decide you know, do we really need these this, you know, the sex worker community and every single time that question has been asked in that way the answer is no. So Ethereum gives me a lot of benefits because for people to remove something like SpankChain you literally have to get everybody to update their full nodes at the same time and do it via hard fork and people I think really underestimate the power of that kind of decentralization because the reason I’m building on Ethereum not like the Twitter API is so that I can’t get shut down, if you can shut me down via some kind of coin vote I’m not as interested in building on your chain, you know, and I think that the most value in the world is held in central banking reserves. And so when they decide what they want to build on they will want to build on something neutral and so I don’t see, you know platforms that have capturable governance being useful for them to build for example settlement layers between central banks on which is sort of the ultimate goal, you know case for any sort of crypto sediment layer to begin with.
Friederike: Perfect. Thank you Ameen, I think those were fantastic closing words. Thank you so much for being on the show. We’re excited to see what the future of Moloch DAO brings
Ameen: Great. Thanks for having me I had fun.
Sebastien: So where can people learn more about Moloch and perhaps even how do people make a proposal to become a member.
Ameen: Yeah, so to make a proposal to join, you can’t. You have to find somebody you can DM. I mean so on Twitter, moloch.com. We’re about to set up a forum for Moloch DAO so that you can you can post a sort of like, hey, I’d like to join here’s me post there. And then YangDAO is yangdao.org, you can pre-register for the launch. There’s also a MetaCartel DAO, check it out if you’re into daps and UX and you know, as always there is spankchain.com and SpankLive which are you know, adult-friendly platforms.