Gustav Friis, who has been working in the field of crypto and blockchain for the last five years, works as a founder on the investing side, as well as on the impact side. Gustav joins the podcast for a conversation about blockchains, cryptocurrencies, DAOs, online communities, community currencies and so much more.
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The world of crypto and blockchain is exploding. It’s attracting an enormous amount of money, talent resources and, obviously, cowboys, scams, and Ponzi schemes. What should we know in the regeneration and finance space about this fascinating, scary, and very confusing world? What are some of the investment models that bring much potential in the regen ag space?
Trust: Foundation of Blockchains
Invented by Satoshi Nakamoto, blockchains are known as systems in which the currencies, rather than being maintained by just one person or organization, are maintained evenly by all the users (a.k.a “miners”). With many people putting money in this space and hundreds of billions of real money going through blockchains, this space has expanded significantly over the years. In the blockchain, trust is crucial. Miners earn or lose money by following protocols they think they could get incentives from. The blockchain platform that Gustav and his team use is Ethereum.
“If you are behaving well and just running like a normal class service, not all this extra energy-efficient, or inefficient stuff, then you’re going to get a reward. However, if we catch you trying to do some malicious transaction or try to game the network, then you’re going to lose your stake.” – Gustav Friis
The Power of DAOs
While many would have negative connotations of blockchains because of how they consume a lot of energy, Gustav believes that blockchains have so much potential in terms of funding regenerative spaces. Gustav mentions forming organizations called DAOs (decentralized autonomous organizations) where people anywhere in the world could shell out money in a “smart contract” and collaborate in decision-making to reach a certain goal. DAOs are an efficient and legal way to operate and reach a specific goal. In fact, some charities use DAOs to operate.
“There is no accounting person who we have to trust that takes both capitals, finances, etc.—everyone can see that.” – Gustav Friis
Revolutionizing the Decision-making Process
Blockchain DAOs may be maintained by “invisible” individuals, but as their transactions are heavily financial assets, there are still regulations that they need to follow. These include connections, taxes, and invoices, among others. But on the much brighter side, DAOs can revolutionize the way decisions are made. As each member can bring insights, there is democracy, and more thinking minds, which can lead to greater results. There is also an option to “rage quit” if decisions are no longer to one’s favor. Gustav mentions that in this kind of setup, especially when in the regenerative space, in order to avoid losing, there should be transparency in data.
“We can always choose our own governance, what type of voting we want, etc. Then we apply that to just another case and another group of people.” – Gustav Friis
Skin in the Game
For a considerable collaborative funding process, Gustav thinks that significant knowledge of the regenerative agricultural space should at least be a minimum requirement. This is important to build trust. For an investment model, Gustav also mentions Bitcoin’s quadratic funding, a public funding system that allows individuals to allocate money for a certain project for a period of time (e.g. 10 years). In order to utilise this model at scale, the concept of “skin in the game” is important, which means that the more people put money, the more likely that there will be a consensus algorithm that will draw many others to put money in the project.
“I’m actually not making that decision, I’m just trying to let my funding be allocated based on that signal of people who know more about it than me and who put their own money as well. It’s just to avoid any sort of obvious spam issues.” – Gustav Friis
Other Points Discussed
Koen and Gustav also talked about:
- Proof of work and proof of stake in mining;
- Tendermint, Cosmos;
- Blockchain startups;
- Quantitative metrics on looking at blockchains.
To know more about Gustav Friis and his work, download and listen to this episode.
- Near – 3rd generation blockchain
- Quadratic Funding
- Bela Hatvany
- Mustardseed Trust
- Proof of stake vs proof of work
- The Commons Stack
- Defi Pulse
- Staking Rewards
- Ricardo Semler – Semco vision
- Ricardo Semler TED Talk How to run a company with (almost) no rules
- Skin in the game book by Nassim Taleb
- Total Value Locked
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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.