Is contributor group design flawed? - Rotorless | Lido

thank you very much hope you can all hear me um so today I'm going to give away some sauce so you I go to these things all the time and people uh they talk about stuff that's already out there on crypto Twitter I'm going to show you stuff that is nowhere and um just because I'm kind of in that Groove um and so this short presentation and question session is about contributor pool design right so if you are in defi or you're involved in a dow chances are that you have contributors that is people who uh build the thing that other people use very important that's two different groups of people and they may or may not there may or may not be a token involved uh the person who's building the thing may or may not uh have a token right not everybody has a token who's building stuff and so you know this presentation is about how to think about uh doing that myself most people know me as the rotor list as the head of legal at Lio um and you can call me Eric and um that's where I came from all right so it's not legal advice I am a lawyer I'm not your lawyer I don't know your name your problem your issue uh and uh I won't dwell on that so the big caution is many smaller projects they don't have maybe access to legal advice and you know it's expensive they don't know where to find it's really even harder to find a a lawyer that understands defi or has experience in it which are two different things one is information information is largely meaningless without experience which gives you wisdom and uh what they may see is they may say oh that project over there does things this way this is how they arrange their contributors This Is How They arrange their their their their their their flows and the reality is is that you don't know what legal advice they got you don't know what their objective is you don't know and so the chances that it fits one for one you're taking the solution for some other problem and sticking it on you is uh is rather remote okay so if we think about uh the best analogies about contributor design is take something that everybody understands like you go bungee jumping or you rent some jet skis right forget about software development for a second and you think about who can really screw you up right who is that in any organization what's the number one risk anybody any organization what's the number one risk number one people right ask any lawyer 30% of all their time is taken up with people problems people not doing their job right right people doing their job right but doing something they're not supposed to do extra right um uh people people people people I can tell you that 30% of all litigation involves employees of some type contractors in the world like that is the number one thing so your first challenge if you view this as a system of opposition right of a system of opposition that is preventing you from a accomplishing your task the first challenge is group number one is the contributors themselves Right This is complicated a little further by the fact that you probably have decentralized execution on top of it so the first thing is to recognize that the second group is uh so here you have the contributors so somebody built the jet ski in the first place somebody designed it they wrote a paper they did the engineering uh there's nothing wrong there's nothing dangerous with doing research and designing something then somebody else decided to build it and then somebody decided to commercialize it and then that person who decided to commercialize it who may not be may or may not be the same person that designed it um you know took it a step where all of a sudden you can get in a lot of trouble like for example if it doesn't work right um then you have a user so then it was bought by somebody else and then they get into the rental business so you have two different users right you have the buyer and then you have the renter and all these people I call them users now as I'm talking about that you can map this to like a protocol like a defi type protocol you're like oh yeah one group one challenge group is the contributors who can uh give you a bad day and the other group is the users right so the users could have create a problem for you um now the third challenge here in the systems of opposition right so there's three forces acting on you here right we have the the contributors themselves the users and then you might have a national system like rules from the country that you live in or you might have I call a cultural system right just like where people think something's wrong like your neighbors tell on you right even though there's no rule against that uh and so um you have to be aware of that pressure and the last one which is of often looked over is provisioning right so people in a decentralized uh system a decentralized execution they're going to live all over the world there's a Mobility part to that maybe they never move but they still have to be prision somehow right so they need to get that Ubbi key or like you know if you have some type of security set up right you have to be able to do this logistical support somehow and that is even if you're using readymade tools there there's an aspect to that like so if you do everything in Discord if Discord goes down then you know you don't have any logistical support for your Communications right so that's basically how it is so those are the four areas that are the biggest ones and that you need to think about right so this is how to think about contributor design which is where do they work uh what type of arrangement do they have how do they get paid and how do they have the least amount of contact with uh friction points right touch points so here this next slide is about Devolution so I'm going to talk about Devolution for a second Devolution Is Not A New Concept right the whole American Revolution is based on Devolution right first you had a king or a despot or a feudal system and then eventually you end up with some type of constitutional or parliamentary democracy where you have the separation of powers right so you have a judicial branch an executive branch right so it's not a foreign concept they call it Devolution when it starts concentrated and gets distributed uh as opposed to when it just starts distributed the concept is is not unique right so that is decentralized execution of government right where they devolve Authority and there is a check and balance against each other this is the key part um now when you think about hang on let me just see if there's a yeah okay um so when we think about decentralized EX ecution which is what most Dows will be people live all over the world right people live all over in different places they may be uh citizens of one country they may be no Nomads living in another country overstaying their visa waiting to get picked off for not wearing a helmet riding their moped then it being asked to leave and having nowhere to go turns out they're actually tax resident where they used to live and as you can tell I have lots of experience with this and um decentralized execution is also not something new so decentralized execution was sort of first noticed uh with the Advent of air power and air forces in the world when you think about it and it's been around now for you know 70 or 80 years it's adopted into business in global businesses so a very easy way to think about that is if you have an Air Force you have 100 planes well some of them are taking pictures some of them are uh you know uh developing uh delivering paper towel you know some of them are listening some of them are picking people up some of them are making War but they're not all doing the same thing and they're not all calling home asking what should they do right they the the they have a very clear idea of what their goal is get photograph of resolution X of building Y and then the authority the way you execute that is all with the pilot right because of technical competence and Clarity of the message perhaps not surprisingly if you use the example of a global bank it's the exact same thing so if you work at a global bank world headquarters that has 500 subsidiaries and 23 countries and 88,000 people guess what all 500 subsidiaries do not call home every day You' never get any work done right it's a decentralized execution the only relationship they have with those people like who are spread all over the place is that they own uh uh a stream of the profits that's about it and they set the highlevel objective the high level objective is we want to be you know L by everybody or something okay um and when you think about those two examples you can think about how blockchain works and it basically works exactly the same way so I'm going to use a simple one I know there's many um but you have technical execution of decentralized right uh of devolution right so you have Clarity of the message the next block to be built will be block XYZ every single actor understands what the task and goal is Clarity of the message and every single actor has technical competence to fly their own plane right to get that block built so what you have is you have a program programmatic way uh of objective truths right of of of of decentralized execution and um what you end up with is you end up with these sort of silos I call it containers right right is very helpful you will group the technical competence into silos and one of the questions about decentralized execution is well when do I not need a manager when at what point do I not need a manager at what point do I get rid of these unnecessary layers that are only there to manage the information up and the answer is and it's been proven over and over again in the first two examples there's many others which is if you have technical competence the higher a technical competence the less supervision people need and the more you concentrate on transmitting the message and when I say transmit that message think of the block proposal right what block are we working on it's the same but you just apply that to whatever your task is the ux uh whatever your deliverable is okay so most people can agree that the world is a systems of systems right there's uh you know I don't know 190 something countries uh each country has its own system it may not be interoperable right so that would be a political system uh a non-interoperable political system then you have uh Financial systems there are many there's not one right there's Swift swift AC there's uh different one in there's all sorts of different kind of systems there's different types of uh networking there's different type of communication systems so it's a it's a system of systems and when you have a dow what we're trying to do is you have a network group of actors the contributor pool is what I call them right so they're networked though right they have some some way of communicating they're all over the place and you have this system of systems and layered right on top of that you're trying to introduce this network group and um and where each actor is they're going to transect trans like transect the existing system so I.E you live in Serbia right you are transecting the Serbian system the touch point because you have a you're working in this I won't call it a network state but a network group right that's transnational and you are here and this is your home and every day you eat here and you have contact with this system this system is uh very different than a system you know in another country not so far away and [Music] so that is uh some of the the considerations when you do systems framing because you have to figure out what's what part is relevant right so you can't account for every system on Earth it would be crazy right you can't account for every rule you have to pick the things that matter frame your system system and then work your way I have a slide that explains this it's the sauce and then uh you end up with what I call your operational frame and then that will produce on an individual basis you know how to design your contributor sort of flow and structure and uh my favorite uh expression here is isolation is a counterweight to the amount of force others can exert upon you without your consent it's all in there right isolation if you isolate yourself away from a strong opponent or opposition uh they can't do anything unless you voluntarily consent to it well I'm surprised everybody's not asleep yet everybody's smiling and nodding their heads do I make sense I love it here you go there's the sauce see it says sauce right there so so we have a system of systems you need to frame the system right you have to set the conceptual boundaries right to make the inquiry in the first place a lot of people start right here that's when you say I already saw a solution it existed this really big protocol that's really famous uses this system they may not even do the same thing as you right um this is uh situating the estimate or you know defining a solution to a a problem that you have not defined right so this problem definition so you set the conceptual boundaries like what's relevant you know the rules in um North Korea are relevant the rule rules about North Korea are relevant but the rules in North Korea are irrelevant so you need to set your conceptual boundaries and where are the intersections of activity right then you consider the systems of opposition so a group it says groups challenge one right contributors users and any national laws attached to them and so on and then you need to define a unique frame which is your narrative right so you construct your narrative I want to have um a series of containers that isolate risk and now I'll begin to frame it a little bit so if you have uh computer science researchers who are just researching is that risky no just people thinking not against a lot of think um then you have people who build code is that risky uh I'm going to generally say no right so it's harmless I'll use the word harmless okay so researching is a harmless activity building something is a harmless activity what about deploying something commercially that all of a sudden becomes a higher risk activity um and then what about you know operating a widget that allows uh a user to tr you know transact with the thing that you deployed and that you're getting money from that that's probably like a much higher risk right so you map the relationships right what is the relationship between your contributors right what is the flow between them I I wanted to keep the briefing short I found a really good diagram of the relation the mapping the relationships for systems framing for a Municipal Water uh in some town and it's like so busy you know like you you can't even read it and uh but you need to have understand of the the relationships and then you need to map the risk and between all that you can come up with systems that sound reasonable in the end so here you end up with uh a bunch of containers and as you can see where I'm going with that so let's say you had research let's say you had uh uh running a bulletin board like hey here's my proposal what do you guys think people are talking that's probably not very risky either unless you have somebody saying you should really buy the token because it goes up right um and that's what I talk about uh challenge group number one right your own people might say silly things that don't help you um and you end up with these these compartmentalized containers right in some way or fashion and the example that everybody understands is like this I'll call the front- end widget for example right it's very it's a high risk and then when you map when you look at the intersection of activities right you look at the activities of the user the activity of the contributor and the activity of say the national system which might be a Ru making like law compliance and you'll find that I don't know in like 50% of every country in a high number of them they'll say you know operating that widget looks like something special and so you should have you know you might have to comply with some special rules like some burdens you can maintain the whole thing in defi but you might have to comply so you wouldn't want to put everybody the researcher who does harmless things the coders who do harmless things uh the people who turn the key and deploy it uh it's a little more risky but you don't want to put those people in the same bucket as where the high risk is which would be if you're running um infrastructure for example so you're running web 2 infrastructure to support your interface like you have uh um oracles right you have oracles running and it's updating your website and it says the price is this you know you can turn it in at any moment for $1 but that Oracle is being run by some web 2 server somewhere uh and that's you know having some input into the decision- making of the user so so we're starting to dive down into some little details but these are examples of different things that you know you would think about putting in different containers because you would want to have the least amount of people in some cases nobody in a container or you would I'm a big fan of Outsourcing or privatizing right so if you had a super risky activity you just find like a vendor who's willing to do that and keep you it's another it's another way right so you don't have to run all of these things the ne the last thing I'll just talk about is you know how I have these silos here is that they really should be independent this is the technical competence part right if the pilot of this plane the pilot of that plane and the pilot you know the all four Pilots are fully competent and they simply understand what the goal the deliverable or the task is they really don't need a supervisor just think about how much interference that would be in the cockpit while you're trying to make like think about how burdensome and impossible would be to fly your little trip for two hours if somebody was constantly interfering who's not a pilot in your work and so um there should be a high push for technical competence when you're looking at a decentralized system if you look at for example the Air Forces or you look at a a bank or a big thing like that um what you'll find is that they spend a lot of time training people well nobody trains anybody in defi I'm not saying you have to but you know you should think about like the education part right and picking people who are highly technical competent so um oh yeah I found out how Twitter works so you all need to follow me um with my 400 followers um so I open the floor now for some questions I know it's the last Talk of the day what oh there are two more okay thank God all right anybody anybody want to ask me some questions while I'm here fleu in just for you yeah of course yeah I'm to be honest I'm just curious like in the case of like uh turn out a cash right let's say let's say um if it would be like more than like three developers do you think they they would be like a different outcome and R could be more kind of Diversified among the the team yeah so I don't uh this is just an opinion um personal opinion I think it's the activity that you're doing so Turner cash is always going to be an outlier okay not every developer is going to be uh charged with a crime and it's very unfortunate and you know it's not over yet but uh that has to do with uh what you're actually doing and so in that that case I'll just say that the number one risk I've said it from the first day I was in defi is always going to be sanctions uh for any type of economic transaction like you can't control when somebody from North Korea uses your protocol and uh but you know you should be cognizant of that and and ask yourself uh what can I do or what would I do if that happened right like for example just even announce it is better than doing nothing right um so the short answer is I don't think the number of people matter whether you're 170 or whether you're three I think it turns more on the activity that you're facilitating is probably the the the demon word facilitating yeah go ahead and why this um this this punishment don't goes down the infrastructure layer right because like um well ethereum is enabling turnado cash turnado cash is enabling something right so um for me it's like um yeah any malicious person could use like Unis swap too right like why Unis swap also is punish it in the same way so yeah yeah I think that just becomes a issue that is kind of Timeless which is as long as like one or two people catch fire um is where they're going to put all their resources right they going to spend all their resources to track down every last person or are they simply going to you know crucify one or two people and send a message uh that's kind of like a common theme it's not new it goes all the way back to like the feudal days right we just say I don't care who really did it you unfortunately are going to go to the jail right so um when you mentioned um a common mistake that organizations do and try to apply other uh other models uh because it works for someone uh I it's probably an anti- question but do you still have common Frameworks that work in a lot of cases to uh Advocate or to advise yeah this this so uh in most cases so if you asked me if I was going to guess if uh I was only uh structuring one protocol after another Dow after another it would 95% of them so not 99 but 95% of them going to look like that it's just depends how many silos are there and maybe each Silo is not the same thing right so maybe one Silo is a foundation maybe one Silo is an actual company right maybe one Silo is located in Serbia for example because there's um the banks banking's integrated with the exchange like Switzerland uh and maybe another one is located in you know some other place like the Cayman Islands or Panama or something or maybe another one's located in France because that is dictated by this the relationships right where where are your people located right because you still need people and you need people to sort of run these if you're doing something harmless you probably not afraid to be written down as one of the managers of that place right if it's harmless but if you live somewhere that's kind of favorable to crypto chances are that you're you're not going to go and make your life miserable uh like if it works in Serbia we're not going to go set something up in Panama where it comes under scrutiny like hm like Serbia doesn't like Panamanian companies it makes problems for you right so those are the sort of mapping the relationships and the pressures and the risks and the narrative construction right so yeah what would it look like a bunch of containers but all the containers may not be the same right isolation is the counterweight to the amount of force someone can exert upon you without your consent well that's great thank you very much [Applause]