How can we discover what defi is good for?

Originally a post at Cryptoeconomics.

The blockchain world is currently obsessed with defi. In the past few months, billions in digital value have been staked, swapped and farmed in radical experiments using liquidity pools, automatic market makers and decentralised exchanges.

Defi is easily belittled as a collection of scam-riddled projects powered by magic internet money. Perhaps. But more optimistically defi is a spectacle of entrepreneurial discovery.

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The Political Economy of Australian Regulatory Reform

Published in the Australian Journal of Public Administration (together with Chris Berg, Aaron M Lane and Patrick A McLaughlin).

Abstract: The problem of regulatory accumulation has increasingly been recognised as a policy problem in its own right. Governments have then devised and implemented regulatory reform policies that directly seek to ameliorate the burdens of regulatory accumulation (e.g. red tape reduction targets). In this paper we examine regulatory reform approaches in Australia through the lens of policy innovation. Our contributions are twofold. We first examine the evolutionary discovery process of regulatory reform policies in Australia (at the federal, intergovernmental, and state levels). This demonstrates a process of policy innovation in regulatory mechanisms and measurements. We then analyse a new measurement of regulatory burden based on text analytics, RegData: Australia. RegData: Australia uses textual analysis to count ‘restrictiveness clauses’ in regulation – such as ‘must’, ‘cannot’ and ‘shall’ – thereby developing a new database (RDAU1.0). We place this ‘restrictiveness clauses’ measurement within the context of regulatory policy innovation, and examine the potential for further innovation in regulatory reform mechanisms.

The Cryptoeconomics of Cities, Data and Space

Published in Cosmos + Taxis (together with Chris Berg, Mikayla Novak, Kiersten Jowett and Jason Potts).

Abstract: We explore the connection between new decentralised data infrastructure and the spatial organisation of cities. Recent advances in digital technologies for data generation, storage and coordination (e.g. blockchain-based supply chains and proof-of-location services) enables more granulated, decentralised and tradeable data about city life. We propose that this new digital infrastructure for information in cities shifts the organisation and planning of city life downwards and opens new opportunities for entrepreneurial discovery. Compared to centralised governance of smart cities, crypto-cities can be understood as more emergent orderings. This paper introduces this research agenda on the boundaries of spatial economics, the economics of cities, information economics, institutional economics and technological change.

From Athens to the Blockchain: Oracles for Digital Democracy

Forthcoming paper in Frontiers in Blockchain (together with Marta Poblet, Oleksii Konashevych, Aaron M. Lane and Carlos A. Diaz Valdivia)

Abstract: Oracles were trusted sources of knowledge for public deliberation in classical Athens. Very much like expert and technical knowledge, divine advice was embedded in the deliberation and decision-making process of the democratic Assembly. While the idea of religious divination is completely out of place in our contemporary democracies, oracles made a technological comeback with modern computer science and cryptography and, more recently, the emergence of the blockchain as a “trust machine”. This paper reviews the role of oracles in Athenian democracy and, stemming from the renewed use of the term in computer sciences and cryptography, analyses the case of oracles in the nascent blockchain ecosystem. The paper also proposes a sociotechnical approach to the use of distributed oracles as informational devices to assist deliberative processes in digital democracy settings, and considers the limits that such an approach may face.

What we think we know about defi

Originally a post at Cryptoeconomics with the RMIT Blockchain Innovation Hub team.

The financial sector exists solely to smooth economic activity and trade. It is the network of organisations, markets, rules, and services that move capital around the global economy so it can be deployed to the most profitable use.

It has evolved as modern capitalism has evolved, spreading with the development of property rights and open markets. It has grown as firms and trade networks became globalised, and supercharged as the global economy became digitised.

Decentralised finance (defi) is trying to do all that. But just since 2019, and entirely on the internet.

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When Entrepreneurs Meet: The Collective Governance of New Ideas

A book published with World Scientific.

When Entrepreneurs Meet: The Collective Governance of New Ideas challenges our understanding of how entrepreneurs crystallize opportunities surrounding new technologies. While innovation is the fundamental driver of growth and prosperity, how the earliest stages of entrepreneurship are governed remains elusive. This book creates a new, institutional approach to understanding entrepreneurship before emphasizing how entrepreneurs create governance structures to coordinate new knowledge resources.

Rather than the conventional view that entrepreneurship happens inside firms, this unique transaction-cost economics analysis of entrepreneurship suggests it might begin earlier in hybrid, polycentric self-governance structures, including the innovation commons. Allen explores and analyses various examples of these structures, including hackerspaces and the institutions coalescing around the development of the blockchain economy, along with the dynamics of how those institutions might collapse into firms. This new understanding of the entrepreneurial governance problem is also connected to contemporary questions about the purpose, scope, and application of innovation policy.

Book Contents

  1. Governing Entrepreneurial Discovery
  2. The Early Stage Entrepreneurial Problem
  3. Beyond Entrepreneurial Firms and Markets
  4. The Private Governance of Hackerspaces
  5. Developing the Blockchain Cryptoeconomy
  6. Rethinking Innovation Policy
  7. Conclusion

 

The New Technologies of Freedom

Book published with the American Institute for Economic Research (with Chris Berg and Sinclair Davidson).

We are on the cusp of a dramatic wave of technological change – from blockchain to automated smart contracts, artificial intelligence and machine learning to advances in cryptography and digitisation, from Internet of Things to advanced communications technologies.

These are the new technologies of freedom. These tools present a historical unprecedented opportunity to recapture individual freedoms in the digital age – to expand individual rights, to protect property, to defend our privacy and personal data, to exercise our freedom of speech, and to develop new voluntary communities.

This book presents a call to arms. The liberty movement has spent too much time begging the state for its liberties back. We can now use new technologies to build the free institutions that are needed for human flourishing without state permission

The New Technologies of Freedom is part of a joint project between the RMIT Blockchain Innovation Hub, an academic research centre based at RMIT University in Melbourne Australia, and the Mannkal Economic Education Foundation. Mannkal’s mission is developing future free market leaders. Mannkal promotes free enterprise, limited government and individual initiative for the benefit of all Australians.

Book Contents

  1. Introduction
  2. Cryptocurrencies and the State
  3. Blockchains and Smart Contracts
  4. Artificial Intelligence and Adversarial Liberty
  5. Freedom of Speech in the Digital Age
  6. The Future of Privacy
  7. Special Jurisdictions and Cryptodemocracies
  8. Technology for Better Institutions in Poor Countries
  9. Conclusion

 

Deregtech: Using Technology to Deregulate the Economy

Originally a post at Cryptoeconomics with Chris Berg and Aaron M Lane.

The Australian Prime Minister Scott Morrison wants to make deregulation and cutting red tape the centrepiece of the COVID-19 economic recovery.

This focus is not just welcome, but essential. Entrepreneurs need room to experiment with new business models without being held back by unnecessary rules — as we argue in our recent book Unfreeze: How to Create a High Growth Economy After the Pandemic.

But at the same time, developed world governments have spent at least three decades trying to cut burdensome red tape — with little obvious to show for it. The regulatory state just keeps expanding.

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Solving blockchain smart contract disputes

Originally published at Machine Lawyering with Aaron M Lane and Marta Poblet.

Blockchain-enabled smart contracts can change how we exchange value over the internet. We now have the technology to code agreements into blockchain protocols, enabling those agreements to self-execute when particular conditions are met. This execution happens without relying on centralized intermediaries—such as banks or governments—but rather through decentralized blockchain networks.

Today, entrepreneurs are experimenting with smart contracts on blockchains, aiming to disrupt an enormous array of industries including property registries, prediction markets, voting and supply chains. These frontier contracting technologies are now widely considered to shift the way that we arrange our economic, social and political activities.

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How to Unfreeze the Post-Pandemic Economy

Originally published at the Foundation for Economic Education (FEE) with Aaron M. Lane.

Right now, economies around the world are frozen in an attempt to deal with the COVID-19 pandemic. Governments have pulled every policy lever to keep it that way, for the time being, to limit the spread of the virus. Many people think that the economy will be unfrozen just like we would turn a machine off and on again. But unfortunately economies don’t work like that—unfreezing won’t be nearly as easy as many assume.

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