The joint-stock company has created the world's major wealth, will the encryption network be the next one?

This article wants to discuss the encryption network as a tool. When it acts on modern corporate governance, what is its possible role?

For this problem, in fact, the blockchain industry has launched a lot of imagination and discussion, such as the pass-through economy, such as STO. This article brings together three recent articles on related content and adds a little personal understanding. For the sake of reading experience, the original sections of the main three articles are not separately quoted below. I highly recommend readers to read these articles separately and to extract their own opinions. See the end of the article for related links.

Let’s first look at two recent hot events:

1, 996ICU, reflects the employee's dissatisfaction with the long working hours, is the conflict between employees and enterprises.

2, Mercedes-Benz female car owner rights protection, is the customer's dissatisfaction with the vehicle service, is the conflict between the customer and the company's partner (dealer).

In fact, companies, employees, customers, shareholders, and stakeholders often have highly complex and mutually balanced relationships between them:

  • Fair vs. efficiency
  • Profit first vs. social responsibility
  • The idea of ​​the majority (invest more, contribute more) vs. the idea of ​​a few people (from the individual to see weaker, more discourse)

Most of the time, right and wrong are just questions from different angles, or proportional issues. What we are interested in is: Is there a better organizational framework when laws, public opinion constraints, and business rules are not enough to solve problems? Or a framework for solving problems at a lower cost?

Before starting the discussion, a very real problem we need to recognize is that good products and services are still the most scarce compared to existing problems. This is even if those head companies really have 996,996ICU and more are just complaining, even if a Mercedes-Benz really did not go out, it leaked oil and the service is not good, and it is still a good car.

Therefore, relatively speaking, in the whole ecology, good companies still have the right to speak and decide. What really brings these product services and business models to the market is the organizational body centered on the founder/management. The corporate system is still the greatest common denominator of commercial social development. At the same time, we have seen many tools and methods that try to optimize the company system, including:

  1. Morphological change: commune, cooperative
  2. Through the state machine: legislation
  3. Through Public Opinion: Self Media/Media in the Internet Age

So why do you think encrypted networks look like a better choice?

  • The encrypted network connects all stakeholders, and the Token-centric incentive mechanism is relatively transparent and fluid.
  • Governance-related data exists in the encrypted network, and some governance work is done online.


Past, present and future: from cooperatives to encrypted networks

Human society has never lacked an attempt to better organize forms, and cooperatives are one of them. According to the Swiss International Labour Organization (ILO) labor cooperation expert Emmanuel Kamdem on Swissinfo, the cooperative is defined as:

"As long as people unite to create value based on democracy and distribute wealth correctly, then we can call it a cooperative."

It is not difficult to see that the main difference between cooperatives and companies is that 1) cooperatives are the union of small businesses; 2) cooperatives have certain values. It is not only the economic situation, but also the connection between market logic and social responsibility.

In the modern market economy, there is no doubt that the organizational form of enterprises is mainly a company, but in fact cooperatives still exist in large numbers. In 2012, it was designated by the United Nations as the International Year of Cooperatives. According to ILO data, cooperatives provide 20% more jobs than multinational corporations. In countries like Switzerland, the largest employers in private companies are cooperatives.

A very important feature of cooperatives is that members are usually "employees", "investors (shareholders)" or "consumers".

For example, Arizmendi Pizza is a cooperative and all pizza manufacturers also operate and own the business. REI, a consumer organization of American mountaineering enthusiasts, is also a $2.9 billion consumer cooperative, and consumers can also receive dividends through purchases. Another example is the mutual insurance of the United States. The insured is the shareholder of the company. At the end of the year, the insurance company can participate in the profit distribution of the insurance company with the policy, that is, the insurance has reduced the insurance cost.

Moreover, the goal of cooperatives is not necessarily to maximize profits. Generally speaking, cooperative members are the easiest to succeed when they are consistent in values, because they will gather resources for common interests, achieve economies of scale, and consciously avoid Compete and avoid extracting users.

So what is the problem with the cooperative? Three articles are listed in the original text.

  1. In the early days of the establishment, it was difficult to start a cold start, and it was necessary to find members with common values ​​to invest;
  2. Compared with other competitors, cooperatives often have insufficient funds;
  3. Cooperatives are far more complex than ordinary companies in order to ensure that the diverse values ​​of their members are accurately expressed and maintained while maintaining operational efficiency.

The encrypted network is a bit like the cooperative version 2.0. You can start with investors, buy, and employees, investing time/skills/capital into operations/development, and at the same time being consumers.

Encrypted networks are creating a new form of "cooperative capitalism." With open source code in the information network, shared state, automated “smart contracts” and all-weather international markets, and other tools, encrypted networks enable participants to find each other, share information and collaborate. By programming the promise of continued collaboration in software, encrypted networks can continue to maintain this trust as the scale grows.

Another advantage of encrypted networks is in terms of growth: fair treatment of users' networks may be easier and lower cost development. Early participants can benefit from their contribution to the network, so he will take the initiative to promote the development of the entire network.


Shareholders, stakeholders, customers, who is more important?

When enterprises, especially technology companies, are becoming more and more important in social and economic affairs, a basic question often asked by many people is that the company exists only to maximize the interests of shareholders… Or the board should also carefully consider ESG (environment, society) More ambitious social responsibility issues, such as governance and governance, especially when conflicts between the two require decision making?

Scott Kupor, a partner at a16z, has been involved in technology entrepreneurship and investment in Silicon Valley for many years. His view is that "many well-run great companies finally realize that these two things can be taken into account at the same time: maximizing long-term shareholder interests while giving priority Dealing with issues that are important to a wide range of people, not only at the same time, but also without legislation to empower customers."

American politicians have tried to legislate to solve this problem:

  • Called through the "Accountability Capitalism Act." Senator Warren’s motion pointed out that if a company does not consider the interests of all stakeholders in its business decisions, shareholders have “action reasons” to sue the company. At the same time, Senators Schumer and Saners also made similar proposals in the context of US corporate stock repurchases and dividends, because 93% of corporate profits in the past decade were paid in this way, and they believe that this excess cash can be used to distribute wages. , recruitment and research and development.
  • Even in the 10 years before the recent legislative wave, many states have established a legal framework: using a “B company” architecture as a structurally enforced stakeholder supremacy concept. "B Company" allows companies to more clearly consider the interests of stakeholders, even if these activities do not significantly increase the interests of shareholders.

But Scott Kupor believes that "shareholders" and "stakeholders" are first and foremost a wrong dichotomy. For a good company, these two principles never conflict. Good companies have long recognized that maximizing the long-term interests of shareholders requires first understanding how customers, employees and other stakeholders decide whether to work with the company. This decision is usually based on whether the company respects their priorities. In fact, the deep and sustained participation of stakeholders can often translate into greater corporate profits, thereby driving the long-term interests of shareholders.

My understanding of this is very simple. Business growth is the same as human nature. Short-term happiness (profit-oriented), long-term pain is likely (with cost); short-term pain (doing correct and difficult choices), and long-term more likely to gain (social) reward).

If the company is properly managed and can balance profit goals and objectives through good decision-making and governance, then “stakeholder priority” can strengthen “shareholders' equity priority” and both succumb to the principle of customer priority.

But is it really feasible to consider that these characters' own engines may compete with each other?

The existence of companies is provided to customers through their products and services. No customers – "There is no market -" companies can't survive (at least there will be no subsidies or cash flow). And customers (those who make choices in the capital economy) can vote with their own wallets. dislike? You can leave. This is why the usual brand resistance is more effective than legislation to change things.

Encrypted networks are a new way to build "community public and digital service operations." More specifically, let's imagine a company that is similar to Airbnb, but is built entirely on an encrypted network. If it is built through a blockchain structure, the new organizational entity can reward the token as an operator (or miner). Mechanism to determine the accuracy of transactions for network participants (landlords, reviews, etc.). If the organization becomes a successful business, the value of the token can be increased accordingly.

Because encrypted networks do not rely on the good behavior of a centralized enterprise, they are governed by decentralized network/community users, operators, maintainers, and others. The value they create can be accumulated to any participant in different ways.

The key to this mechanism is:

  • Seeking a unified economy, capital, governance, mission, reputation, or other incentives through tokens;
  • Work and value are measured by proof of effort, proof of equity, risk sharing, superusers, and other game theory and mathematical mechanisms.

In this sense, an encrypted network can be the ultimate tool for democratization that enables more people to gain access to capital, wealth, and governance. Not only can it be used for the company itself, but also for the ownership of the user and the ownership of the data.

For enterprise builders and developers, this mechanism generates additional benefits in addition to users and maintainers. We believe that such an encryption economy can help solve the network bootstrapping problem:

  • It is not necessary to subsidize the landlord to obtain demand early in the market, and early users (including landlords and early adopters) can stay active through participation in the market, so that their participation and business growth are consistent.
  • Similarly, customers can have their own reputation, comments, and other relevant data and activities on the web (as opposed to the current network owning the data for profit).
  • Super users, such as large landlords or frequent customers/loyal customers, will have more say in the strategic direction of the company, through voting based on their level of participation (in contrast to getting the token first or just predictive) The person who snapped up the token).

All of these mechanisms are constructed through open code (as opposed to private decisions by companies).

It can be said that Scott Kupor's point of view is quite concise and clear: 1) When the conflict of interest, customer>stakeholder>shareholder 2) Encrypted network is the ultimate tool for democratization of capital, wealth and governance.


Encrypted network governance as capital

Placeholder's Joel Monegro argues that capital is essentially a power to allocate the economic resources of a social system. Its value is a function of how much of these resources can be directly transferred to the interests of the holder. This understanding reveals the intrinsic value of “cryptonetwork governance as capital” and helps us understand the token of governance as a new type of capital asset.

The encryption economic cycle model drawn by Joel Monegro can help us better understand:

Encrypted economic cycle model

The model describes a three-way market: miners (suppliers), users (demand side), and investors (capital side). Miners choose to join the consensus agreement and coordinate their resources to provide network services in a decentralized manner; consumer service; investors capitalize the network while facilitating transactions.

These groups use the network's own scarce cryptocurrency or tokens to exchange value with each other. These interactions include miners – user relationships, investors – miners relations, investor – user relationships. They describe the abstract flow of value, which can take many forms in addition to direct transactions between the two.

The two pillars of encrypted network trust are its encryption economy and governance model. The cryptographic economic model defines the "rules" of the system (what is the work unit, how the user pays, how the miner gets paid, the token supply model, etc.), and the governance model defines who has the right to change these rules and under what conditions Change these rules.

If capital is the power to allocate economic resources, then the power to change the rules of the encryption network forms its capital. When this power is in the form of tokens, it can be traded, priced and modeled by the market.

Joel pointed out that tokens combine the functions of capital and currency, while capital function is the driving force of long-term value. When capital flows in the crypto-economic model, all parties involved, because of the existence of tokens as capital, will not only focus on short-term value, but also on long-term value. There are of course a large number of speculators/short-term investors in the encrypted network. They create liquidity for the tokens. If the encrypted network has value, there is no need to worry about the lack of sufficient users and long-term investors.

From the model we can also see that investors and users can better balance the company's main body relative to the equity economy, because the company's functions have been decomposed, which may be the composition of miners/developers/foundations, which is very important. The part is no longer part of the company, will this bring more management and communication costs? Perhaps through the adjustment of the free market, some problems will be solved. There is currently no definitive answer.

In this article, I saw that there may be universality in the encryption network. In many cases , it is not suitable to use the blockchain as the underlying layer in the company's business and product form, but the encrypted network is an organizational structure. Its scope of application may far exceed blockchain technology.


to sum up

  1. It can be seen that in the process of capitalism and commercial society development, encrypted networks have very solid needs and clear paths.
  2. One possibility for the future is that the best companies have chosen encryption networks as their governance model, which has a herding effect. But just as the Kindle does not make paper books die, there are still a large number of joint-stock companies, the existence of private companies.
  3. Encrypted networks may have universality.

Going back to the 996 and Mercedes-Benz after-sales events mentioned at the beginning of the article, if the company involved is imagined to be running on an encrypted network, will the problem occur at the beginning? Will the result be better?

First of all, if the developer of 996 belongs to the company, the length of his working time is not easy to adjust directly through the token, but if it is not a company, but an open source developer, you can adjust its work in the market through the workload. time. After all, this is a two-way choice.

If all the dealers, users and shareholders of Mercedes-Benz exist in the chain of Layer 2 of the same after-sales service, can the public service data make the complaints of many dealers out? Can new competitors gain competitive rights by forking user data? Can the proposal method allow more people to vote on how to deal with the accident, rather than just a few high-level decisions of the dealer or the manufacturer?

I think the answer is not necessarily, because the surface is always a minority. If the cost of a single transaction dealing with social hotspots is used to deal with a large number of similar events, the consumption of resources is amazing. But one thing is clear. When there is damage to Mercedes-Benz's goodwill, if the accident is harmful to everyone who owns the Mercedes-Benz token, perhaps more stakeholders will take action that is beneficial to long-term interests/social responsibility. .

5 links

Most of the content of this article consists of the following three documents.

1. Past, Present and Future: From Cooperatives to Encrypted Networks

By Jesse Walden (a16z)



Translation Jessie213

2. Who are more important to shareholders and stakeholders? No: Customers (Customers)

Author: Scott Kupor (a16z)


3. Encrypted network governance becomes capital

Author: Joel Monegro (placeholder)



Translation Wu Hao

Written by: realthinkbit

Source: Orange Book

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