On Monday 16 November, we welcomed Nick Almond from finance.vote into the Hillrise Capital Telegram chat for an AMA. Nick is the CEO.
We’ve recently seen a surge in interest around DAOs and the notion of community governance. Many new projects now work toward this model – finance.vote is no different.
finance.vote is a consensus layer specifically aimed at DeFi. The platform allows any ERC-20 token to build a ‘Mini-DAO’ around their community, involving them in decision making. Other notable features include a market predictions product and decentralized social trading.
In this post, we have compiled key questions and answers from the event.
Daniel Dal Bello
Hi Nick, thank you for being here. Let’s start with your background and journey into blockchain.
What motivated you to leave academia and lead the charge at finance.vote?
Thanks for having me guys. Sure, it’s be an interesting journey. I started in Physics where I spent about ten years in experimental physics and ended up getting a PhD in that. Soon after I feel in love with education and took a job teaching mathematics as a lecturer. There I started teaching cryptography, which is where I discovered Bitcoin and it’s been down the rabbit hole since then.
For the last 10 years or so I’ve been working my way up the ranks of the university system where I ended up as an associate dean in learning and teaching. Where I spent several years researching governance systems.
Hi Nick, excited for this conversation. Curious to know more about your experience with the London College of Fashion where you write that you have been a part of ‘Governance and Strategical Organisation Development’… that’s a bit wordy, so what did that work entail and does it help you in your direction with finance.vote?
Yeah so I somehow made a journey from physics to fashion and ended up working at LCF. In my previous role I’d developed a kind of decentralized organisational structure, which it struck me was very much like a DAO. People worked in domain specific groups and came up with proposals that were submitted to a Senate level committee.
This inspired our second layer governance system.
It was really DAOs and the ability to coordinate as a group at scale that made me think, okay I need to go and be a part of this. It’s going to change the world. About 4 years ago I realized it was voting technology that was going to make this happen and blockchain is required to make it work in a Sybil-resistant way. I guess you could say I’ve tested a lot of these ideas out and it’s time to see what happens when we take some real governance theory onto the internet.
As for the fashion influence, I kind of fell in love with the art world and we’re going to introduce quite a bit of that into the finance.vote ecosystem. It’s going to be fun!
I guess you could say ‘Governance and Strategic Organisational Development’ is still my role now, just using decentralized blockchain architecture instead of paper and face to face meetings.
For your second layer governance, ‘MiniDAOs’. You mention that these DAOs are able to guide a project and that they redirect real influence and power to community members/token holders.
My question is, in reality how do these DAOs exert any power over a project at all? From my point of view, it’s very similar to online petitions – you can have a million signers and an organization might just bin them all.
Yeah this is a really interesting question. So in some cases the miniDAOs will have direct collaboration with the blockchains themselves. Like our own for example. The proposals that are formed in the FVT miniDAO will graduate to the main DAO the DMF and change the reality of our system.
But we also wanted to see if we can build influence on other chains. So we’re going to launch with a Bitcoin miniDAO too and see if we can go Bitcoin holders to lobby the core developers.
Really governance is all about social signalling, if there’s a really clear signal that users want a certain feature it becomes hard for the core developers to ignore them. Bitcoin is very much a technocracy at the moment and although we can’t enforce changes on that chain, we can generate signals that coalesce opinions from the crypto-space from real users. I’m absolutely expecting the hardcore ‘Bitcoiners’ to hate this, but that’s part of the fun. We call this ‘Blockchain Geopolitics’.
It’s also worth saying that our miniDAO system will be blockchain agnostic, so we’ll be porting our voting tech onto different chains. We’re working on a bitcoin implementation for the Bitcoin one and we’ve got one more spot for the launch miniDAOs. We’re working on a big partnership for that one and hopefully that will be a collaboration too so the signals from our DAO have a real influence on that chain.
After that it will be permissionless and people will be able to auction themselves into miniDAO slots.
Daniel Dal Bello
Nice one, the vision for it actually seems quite interesting. The collaborations with projects directly makes this a lot more powerful.
Yeah we want to do both, direct collaboration and influence formation. Lobbying makes the real world go round, so I expect it to be similar here.
That sounds like quite the challenge! How are you planning to tackle the participation aspect here?
As a side note, you mention ‘us’. Would be great to know a little about the people who you work with.
Yeah, so voter apathy is a problem in the real world and it’s an even bigger problem in the crypto-space. Part of that is because people don’t feel like they have any real power in these systems and that’s actually true, so we’re trying to solve that problem, but it’s a difficult one. The more direct version is that we pay people to vote.
That happens in two ways. If people make accurate predictions they get a share of the FFVT reward pool which is minted every week.
The other is something called “Vote Mining”, which is going to work a bit similar to the Uniswap airdrop, but instead of everyone getting a flat rate they get an airdrop proportional to the amount that they’ve voted.
Daniel Dal Bello
Something I really liked from your website was a comment about all of the new governance tokens emerging alongside DeFi projects – “governance is surface level at best”. I think the points you make in your blog about fixing voter apathy are really relevant.
How are you going to improve on the current environment of governance in blockchain?
Yeah, I think there’s something really interesting in the fact that these tech / smart contract guys without really a background in finance are making this new financial architecture from scratch and it’s totally out of the legacy system. It’s bringing some crazy new ideas and that’s amazing. But the old world and new will probably meet in the middle somewhere at something sensible. We’ll move past the food coins stage and into some real new financial systems.
I think the same is happening in governance we’re just a bit earlier in that development trajectory. I think it’s surface level largely, because we’ve got to token voting, but the distributions mean that the power is all with a handful of people. Many of the governance systems in the space are really just elaborate multi-sigs. The whales still control everything.
So we want to build systems that nuance the governance systems into a new territory, where real decisions are made, but with a legacy that’s all traceable in a transparent way on chain.
I you look at some of the YFI governance proposals, there’s conversations about monetary policy and whether Andre should have Gucci slippers or not. I think it’s time to separate out the fun crypto-chat from the real policy decisions. I think that’s where we come in.
Daniel Dal Bello
For your prediction market ‘game’ component of this project, you are required to mint an ‘identity’ to join a prediction competition and cast votes. This requires obtaining and burning tokens in exchange for the identity. Are those tokens permanently burned?
They are permanently burned, adoption adds a deflationary dynamic to the monetary policy. This is done because it implies an economic cost to setting up an identity.
In return, you get a Decentralized Identity Token (‘DIT’). This gives you voting rights in the system. Identity is a huge piece of voting technology and it’s there to provide Sybil-resistance. If a whale wants to come in and start buying up identities to swing consensus then they’re going to have to pay for it and when they do everyone wins.
Hi Nick. Is it possible in future to vote for instruments such as PAX Gold? It’s nether stable fiat, nor crypto affiliated.
Yeah, so any asset can be in our token lists if the users want them. We’re building a governance proposal system so that any kind of vote market can be curated. If the users wanted something like a “Commodities” vote market then they can request it and if they get the vote we can set it up.
Daniel Dal Bello
Curious to talk more about your vision for decentralization. We have noted that maximal decentralization of your network is one of the core tenets of the design philosophy in your token economy.
Yeah, so I’ve been thinking about this for a long time. There isn’t really a good definition of what we even mean by decentralization yet, which is why I think the regulators are struggling with it.
So Ethereum seems to be “sufficiently decentralized”, but that’s all the signal we’ve had on that front so far. We wanted to start shaping that conversation, so we’ve split the network into three phases that is about the transition of power to the token holders.
The reality is that decentralization is super difficult, it’s a gradual process, but one that should be done in a way that you give as much power as possible to the users at all times. That’s what we’re calling maximal decentralization. There is such a thing as “too decentralized”, if you just throw a forum up and say you’ve exited to the community that’s not fair to the token holders. You have to build the processes by which the token holders can actually run the thing before you do that.
So, we’re going spend two phases of the network launch doing that. We’re going to let the token holders shape the network from day one and build out some key system parameters that can be tuned, like dials on a hi-fi system. That is way more likely to work as a mechanism for decentralization in my book than just expecting people to be able to self-organize without direction from day one.
Otherwise, it’s just pretend decentralization. I heard someone call them “PretendDAOs” the other day which made me laugh. That’s about where we’re at, at the moment. We need to take a far more nuanced approach to governance. Our last phase is called “Starship” and that’s when we think the token holders will be in a position to run everything. We’re gonna hold their hand until we get there.
Distributed vs decentralized vs centralized always is a very interesting discussion to have.
For the price prediction tournaments focused on brackets of assets within the blockchain space. As I see that you are based in the UK, how do laws around gambling affect the platform, are you compliant?
We’re not actually, I live in the UK currently but the .vote foundation which is the curator of the network is based in the Seychelles. This is a very live question though, we’re looking at regulating some function of the network as a gambling if that’s good for the network, but largely this is a DAO and is extra territorial. I’m just part of the launch team, soon there will be thousands of people working on this. I’m just pointing people in the right direction.
We did look at domiciling in the UK but they’ve just taken a very unfriendly position on CFDs and although we’re non custodial and decentralized there’s aspects of our social trading system that could look like derivatives.
We’ll probably end up with a development company that makes open source software here on behalf of the network, in the same vibe as Parity and Web3 works on Polkadot.
Daniel Dal Bello
We noted that one of your early partners is KIRA Network. In September we had another AMA conversation with both Milana and Mateusz! They’re an interesting player in the DeFi game.
From what I understand your work with KIRA Network will power your vision for social trading. What exactly is the detail of your partnership with them?
Yes, so our social trading system will allow people to be in groups like this and mint their own vote market type system that will allow you to pool ETH, reach consensus on a shared portfolio through our voting system and then trade them ‘trustlessly’ with the DEX space.
When we spoke to KIRA Network they immediately said, well if you do that with staking/yield bearing assets, we can make it so your users can get yield on them and trade them at the same time.
Which we thought was very cool. It will also open us up to the entire ‘Interchain’ space, we were just thinking about Ethereum based assets, but with their tech I think we can go fully cross-chain.
Could you talk to us about any other notable partnerships that you have solidified at this early stage?
Yeah so we’ve also built a strong partnership with Commerce Block, who I’ve known in London for a number of years. They’re don’t shout about it much, but they’re a bitcoin infrastructure company that in my view is on the same tier as Blockstream. We’re going to be working with them to build bitcoin based systems for NFT provenance and Bitcoin based voting tech. We’re very committed to cross-chain stuff.
We’re going to be announcing a few more strong partnerships very soon. I won’t mention names just yet. We’ve been talking to a decentralized insurance protocol. They will be using our voting system to give smart contract auditors special voting rights and this could allow the formation of decentralize risk assessment, which could be absolutely massive. We’re also talking to some data aggregators who are very interested in the data we’ll be collecting from our vote markets and some yield ‘optimizers’ who think we can build some asset and portfolio management tools with our voting and reputation system.
We’re very keen to build strong and ‘real’ partnerships down the line.
Our miniDAO system is also a great vector for collaboration and we’ve been working on something massive there, but my lips are sealed on that one.
Daniel Dal Bello
Social trading is not a new concept and it’s proved popular especially in traditional markets with platforms like eToro. What is that going to look like for finance.vote and why are you creating a social trading component here?
It isn’t a new concept, but it will be certainly novel for the decentralized space. And because it’s decentralized it’s going to look very different to the eToro version.
It will work like this:
Let’s say you’ve built up some reputation as a good trader on your decentralized identity. You’ve customized your NFT with some art and you’re know via that identity as a good trader. People keep an eye out for what you’re voting on. Well when we release our social trading system, you’ll be able to stake FVT on that traders identity, piggy-backing onto their votes. You’ll be able to stake on identities up to the close of the voting window and them you can trade those positions in the run up to the market settlement.
Going to pretty interesting.
The other aspects of social trading is a ranking system, which will show all the identities and their performance in a kind of league table. They’ll be able to join certain high rank only vote markets.
Daniel Dal Bello
We know from our experience running community-driven voting competitions that there are a lot of different methods to cast and count votes. You could choose a single vote parameter, or block, limited, cumulative etc.
Can you talk to us about your Semantic Ballot Voting and the $V token? Why did you choose quadratic voting for your system?
Yeah, I’m super interested in all flavors of voting technology and Semantic Ballot voting is one we’ve designed specifically for decentralized curation purposes. It’s basically quadratic voting, but on a ballot of tokens (it can work for other semantic tags too).
Everyone starts with 100 ‘V’, which is the vote power token in our system. You spend it, it gets airdropped back to you every week. We call this Power UBI. If you get a prediction right, say you vote 6 times on $UNI and it’s the top gaining token (it was last week), you get 36 more V added to your Power UBI after. That means voting power aggregates towards the correct.
This is all built and live!
We chose quadratic voting because I think it will change the world. It enforces nuance in decision making. It’s a really disruptive idea. I think it will shift the world from being a binary one, where everyone takes extreme positions, to one where people can find a middle ground a reach consensus on shared meaning. I think our yes/no binary voting system is half the problem in the world at the moment.
The text in this summary has been adapted to correct grammatical errors and for presentation purposes. We thank our guest Nick for joining us for this AMA. For more information on finance.vote, visit http://finance.vote.