# Bogdan Arsene - Fungibility is All You Need for Governance

- Channel: [ETHCluj Meetup](https://streameth.org/ethcluj-meetup)
- Date: 2025-12-09
- Duration: 24:54
- Watch: https://streameth.org/watch/yt-w4U_XJsPS6k
- YouTube: https://www.youtube.com/watch?v=w4U_XJsPS6k

## Description

Bogdan Arsene makes the case that "crypto coins" are DAOs, that distribution mechanisms alone can outperform established beaurocratic processes and that permissionless allocation is sufficient to settle questions related to organizational configuration and orientation.

If decentralized governance and fair value co-creation is to ever become a mainstram reality, we have to make a delibearate effort to ground our frameworks as close to what matters. And, what matters most in any organization, and is as such by far the most contentious item, is resource allocation. Who gives how much to whom for what is the bare metal of intra-organizational politics, everything else adds cost and makes engagement too expensive for a general audience.

## Transcript

Thank you for choosing to be here tired. Uh thank you for being tired together with me. Uh what I'm going to do, I'm going to talk about tokens and how value flows are enough for governance and for defining organization departments and their future direction. Um and it's going to be a little bit abstract. It's going to I'm going to try to make you think some weird things. Then in the final I'm going to show you some slides of some screenshots of how the application actually works and I hope you have more questions about that. Uh I'm going to start by like last time I did a presentation inclusion I did like my master's degree and I I did the thing where I analyzed like parliamentary transcripts and that's what I'm going to talk a little bit about today. The two main fundamental things are words and counting. uh but I'm not going to talk about counting words but like the these are like the two fundamental thinking patterns and I'm going to put them in opposition. I'm going to argue that counting is superior to words because most of our governance is word based and I want to make it like funding and like counting and comparing things and distribution flows. So some of the weird things like imagine all the people in the sense that u imagine imagine you're a coin and you feel all the transactions that are happening with you. You buy a covery dog, it feels in in one way. You buy two covery dogs, it's the same feeling but like more intense. Issuance feels in a certain way, right? You kind of feel that uh the coin is alive is a living organism and people interact with you anarchically, right? They don't need permission to interact with you so on so forth. So the first is it is money the first blockchain or it just happened for the first blockchain to be money which is a stupid question because Vitalic tried to invent money but he also in the process invented blockchain and that's what happens when you try to to uh disintermediate human coordination and interactions. Uh, a critic about coins. I'm going to say that coins are Dows. That's like the main argument that I'm going to make. And one of the critic of coins is one, they're all like to use an industry term, they're coins. But most of the coins in history are shitcoins. Uh, these are like all coins from like south of Turkey. They're still coins, but they're they're fossilized and they have a historical value, so on so forth, but they're still kind of useless. And in terms of coins being dowsed like all these nation state are so if you live in a country and you have your life saving wings into a coin like you're part of that organization what happens with the coin affects you directly and you can also affect like the state of the coin and so on. So like in this sense like coins are organizations butchers, brewers, bakers, Adam Smith are sequencers. Coins are decentralized autonomous organizations. This like happens permissionlessly even though it's a central issue like the all the things like happen permissionlessly and anarchically and without yeah asynchronously and so on so forth. the status quo proposal based governance. Uh this is a quote from someone that is a big uh actually it's when I started work on this like one of the things that motivated me were talking about proposals and they say that everybody hates proposals and the issue with proposals is that there's cumoric functional their laws. So what happened is that uh we were asked to create governance for the blockchain and the only thing we could imagine is to transpose the existing governance paradigm onto the blockchains. So we could only imagine laws like pieces of text that we put in the center and we all vote on and this is not native to to to to the blockchain uh leads to aperture decentralization and parliamentalism. That's why uh certain Dows like incentivized governance participation which creates some weird weird incentives issues recentralization right you end up with the DAO delegates which are also kind of like representatives in a parliament uh parliamentarism okay collapses to corporate bureaucracy if you look on any like DAO forum you will see that uh you get all kinds of it it becomes highly highly bureaucratic it becomes there's budgets there's KPIs. I for one think that we can do much better and governance is the endgame as Paulo said. Um uh I'm not here for a uh change advisory board, right? I'm not here to participate to recreate all those like shapes and uh paper based paper rooted paper grounded shapes and processes. Paper devices can't on chain. They're not native to the chain. They're not native to a decentralized permissionless medium. uh and we should maybe try to attempt to move beyond that to move to to to ground our design and governance imaginations beyond uh patterns that are rooted to settle on paper while main can jump that's a stereotype it's also a movie paper devices can't chain parliamentarism can uh and this is a lot of context to process if you go on any like DA governance forum you cannot get very fast an idea of what's happening there Right? There's all these texts that are kind of laws that are voted. They're very long. They're you could in theory use AI to summarize everything for it. But even that is somewhat problematic because there's all already like a top layer of interpretation and that's also somewhat problematic, but I'm not going to go into that. Okay. So, how I think Dow should look, they should look, this is the one cell. This is a unicellular organism and it does things. It's alive. things should look more alive in the same way that I don't know like for example the Ethereum blockchain is in theory alive. So organizations should look we should be like a small thing inside this thing and we all signal our wanted direction and fund towards that direction and the organization is alive and moves continuously without the need for sequencing uh the the the governance the settlement because voting on proposals is actually kind of a a sequencing mechanism for settling like the the next direction. It should be an arc again. should move continuously have uh reinforcement loops. Organizations are memories that move forward. That's like my definition of being ceued. Uh because you need in order to have an organization, you need to have a membrane to determine who is in the organization, who is not in the organization. That's like the most basic component that move forward. What forward is is what is governance is for how you determine what that forward is. That's the output of governance. uh forward determinations can be permissionless and instant. So again back to the coin like when you spend a coin or whatever you do like the coin itself doesn't really have a mission a forward in theory but that's just because we we don't ascribe like values our passions or wants our needs into it. But the coin does this thing does the sequencing does changes state has state transition functions so on so forth. So more anarchctic uh will is a systematizing order for instant permissionless disincentivized governance. Uh it puts value flows into an order that is anyone can participate and has free entry and exit. Um it's decentivi disincentivized. Someone has to pay in an organization for change. If you want to change something you better pay for it. Uh and that's there's many reasons why that's so but incentivizing governance participation creates weird incentives and um someone has to pay for change. If you want it pay for it permissionless this incentive governs the main funding mechanism is governed by funding. You pay for change. You you find like specific nodes, goals, the direction in which you want to push the body of the organization or working. When needed, you can create a node in the in the structure. And if your work is valuable for the organization, you get redistributive flows towards the work that you're doing. It's legible and intuitive. When you have only token quantities, it's very easy to summarize the state of the organization. You can just watch a chart and see like you see that when you sell an organism like move towards it forward. You can also see how the organization moves in real time by people signaling their preferences and allocating resources gives coins organizational compet competencies. Uh this all is token nested in the sense that one each token is a DAO. uh but under that token you get uh nested nodes of value and specialization and so on so forth. Uh it distributes funible of arbitrary value signal for config communal configuration accommodates plurality enhances eligibility for of the commons and empowers individuals credibly and continuously commit to political and economic outcomes. Um, so you can create a node in a specific context. I don't know marketing, you do a marketing campaign, you create a node. If you if nobody knows you in that organization, you won't get any flows. But if you have a good idea, someone might give you like I don't know one run. But in time as you work, you update like what you're doing, you link documents, you link proof of work. uh they can u change their allocation increase it or decrease it in real time depending of how they interpret your work as contributed to to the organization. Uh who gives how much for what to whom is of value and of interest to any part of the organization. Resource distribution being like the most contentious thing in an organization. If the company that you work for suddenly decides to use next year's budget to buy Docoin, right, it's an issue for you. I mean, uh, so how the organization distributes the resources, how it allocates resources is of concern to everyone that is part of that organization. So on fungibility can encode, enforce and articulate power relations without precedent, clarity and efficiency. Uh, even simple coins in theory, there's 18 zeros there. you can put some stuff and like only coin transfers could could emerge to have a complex coordination. Vitalic like to like our lord and savior um said this like two weeks ago which was quite interesting. Burn down the legitimacy of existing paradigms reopened over overton window. Um multi-level structures are good. Uh and that's kind of how this works. So if you go to the app, these are like all the coins that you have in your wallet. You click on one of the coins and I'll show you what you see. You see the state of the entire coin, what the coin is doing, all the nodes, uh what they are doing, uh how it distributes value, uh how it in theory the coin, the coin acts and you can create a node at the root level anyone can create a node. But these nodes are nested and in order to create a node within a node you need to be me a member in it and this has like membership conditions that are enforced uh on chain. Everything is on chain. uh characteristics membership and inflation rate. An inflation rate is is an economic protective mechanism. What the node spends is the inflation. So you could mint into a note you can then burn but you'll always remove less value than you deposit because the inflation is what pays for the for the change. What is redistributed by that note to its sub nodes to its activities of interest. So here we have like activities, activity logs to see what happened in the specific node movements. This is like traditional launching governance to execute other external contracts. Signals is where if you are a member of a node, you have value in the node and uh power. Uh you signal how to redistribute value to subnodes of that node in which you are a member. So you redistribute percentages of uh of inflation. you put like 0.9 96% one whatever what's your preference you submit it and uh the the nodes uh when you submit that transaction the rate the share of inflation that they get is recalculated and they can then withdraw uh control there's membrane ID uh the membrane is organizations are memories that move forward the membranes are one the identity like the name the characteristics of the node but also the conditions to be a member Remember this can also be changed. And here there's a you need a majority of uh shares to to change this. Um this is not a very good example but it it should do. So one point that I want to make here. So I just search for a coin. I save the coin and this is like what the coin does. These are all like the value flows. uh it could be better but um just to drive drive the point home of how the the economic interactions work uh these these are nested. So if I burn this these shares, these shares get um have a have a deposit of um are backed by this and this also has shares and when I burn the shares of this uh are backed by this and so on. So at each step you you get diluted and this is so to prevent like weird economic attacks. Um yes. So there's a function it's called burn path and min path that does all these recursive and ultimately in road you withdraw and deposit like the the arc 20 the actual ERC20. Um, okay. This is one of my favorite uh quotes. Uh, this is DevO, the founder of Visa. Very underrated thinker. Uh, without question, the most abundant, less less least expensive, most underutilized and constantly abused resource in the world today is human ingenuity. The source of that abuse is mechanistic industrial age hierarchical domination concepts of organization and the management practices they spawn. Okay. Um I hope you have questions. [applause] Awesome. Thank you so much for that bogdan. Um, again, if anybody has questions, feel free to put your hand up or go through the QR code. Um, so maybe a question for me to start things off. Which areas of the industry are in most need of change in line with what you're describing here, would you say? I think on chain coordination possibilities are very limited uh through reproducing the existing governance structures and putting the the things in nature like the cells in your body do not create small pieces of text and they send it to the brain and the brain asks every other cell in your body to to accept or reject that signal. Right? they they work uh together locally um and they speak to all other at at all times. So um I think there's the the point of blockchain and the biggest potential is def definitely governance and I think we can do much better to govern all the things because it's very much so needed uh in terms of who could benefit all those but particularly all coin holders because coins are Dows >> coins or Dows I love that it's a great tagline um and oh there's a question on the board are there any government is there any any government out there that's tried this or something similar from proof of stake in 99? >> Uh if by governmentment you mean nation state uh I would say no but I could also make a case that I don't know whatever they do budgeting or whatever kind of fits that but I'm not going to force it that that way. uh in terms of ex experiments that are similar. There are some things that have happened over time that for example coordinate coordinate uh it's a project but it was mainly offchain where people like assigned points every month or something like that and like they redistributed their allocated budget for that period. But um and there's also hat protocol that uses for example membranes kind of but nothing that is a systematizing order in this sense that is grounded into a token. >> Um would you say there are any other ecosystems apart from Ethereum where you're seeing alignment with these kind of values? >> Uh probably not. uh this the current app is on base and it's on base because there's some complex logic that might be very expensive for mainet but uh no I think the Ethereum has the only cipher punk decentralization uh values of decentral mediation so on so forth uh it's hard to yes I it will be a weaker base for something like this the foundation will be a lot more shaky So, I I don't think so. Um, yeah. >> Okay, fair enough. Any other questions from the crowd, guys, before we close up? Oh, over there. Coming over to you, sir. Getting back on your on on that question. Uh I think the question would be would the state that is based only on money survive? Yes. Okay. So it's not really based only on money, right? The nodes have labels. They have like links to dogs and so on and that information is also governed over uh you need a majority of like tokens to but your question is somewhere fair. This is hyper financializing governance in a way but it's not betting it's you have to pay to govern. So the only way to participate in this there's little point to participate in it for speculatory reasons because in order to have any effect and any impact on it and on others is to actually pay. So yeah I I'm not I don't have that concern. I think uh all work needs to be paid for example and the problem is is that there's externalities for example we I think we talked once about volunteering if you remember um yeah it's probably it's better for smaller communities government is of a very big deal uh but if you have just you and your neighbor want to change something in your small community >> I think there should be coins for absolut Absolutely anything anything that's a local coordination that's common that's you want to do something with other people you should create a coin that's a power that we have today and it's a power that's not much understood and is very powerful so you should create a coin and then you can use this to redistribute and organize anarchically with your neighbors you don't have to write chat messages you can just do things and start doing things and if they're of value you'll get paid and the people that want to have that to happen will redistribute like flows to it and you'll get like an a direct image like that is intuitive and fast. You just see the chart and see how that initiative overall represented by the coin like evolves over time. And I think that's very valuable. >> It's like [snorts] anarchy with a so with some kind of structure. >> Yeah, it's it's structure. It's Yeah, it's to quote someone anarchy is order. >> You sure you want to ask a question? >> No, no, we had an argument earlier like um I wasn't sure if you were trying to tell us about this tool to use in your local community or if you're doing for a talk that is more philosophical because on a philosical standpoint that looks like a pritocracy to me. uh which is perfectly fine if you do a small project but then if we talk about governance at a higher degree this is not fine >> but uh this is fully permissionless and you can always have the option it's I think it's pluralist actually because you can always have the option to create a node that competes with the node that you want to to that you're kicked out of or um I think this the entire structure is permissionless so it's not I I don't see the the protocol ratic nature of it. >> Anyone with a lot of money can come and say I'll just fund so much more on this project. The other one will never happen which is perfectly fine in a small structure or in a business. You know, you give money to directors and each director spend the money however they want. I wasn't sure if you're going for a tool if you're going for a philosophical governance uh topic and a philosophical governance topic is the rich oppressing the poor. >> But there's there's no oppression there. There's it's a free entry and free exit. You can create your own coin. You can create your own node. You can create a node where the rich guy cannot participate. >> It's a it's a tool. >> Yeah. But ultimately like if you want to change something, right, someone has to pay for it and uh you cannot posture here. The only thing to affect change is to pay for it, right? So it's a lot more sincere and more clear. >> Depends how you want to come up to a consensus, right? That's one way of getting a consensus. But yeah, if you if you base it on the fact that everyone has money and is this a product you want to fund? Yes, perfectly fine premise as a method of governance where some resources are shared and pulled together which is the state the case of a government. it becomes more of an issue or saying people who have more resource at the beginning you know they may oppress the welfare of other people you know they may so which is not what you're doing right that this is a tool so just question was what kind of usage you were thinking of which is perfectly fine for a small project where you look funding externally >> yeah I still don't think I buy the oppression part I am very against oppression you know like um I I'm not the on on yeah >> well I'm going to build a road uh where you houses right now. I don't want your house to exist and I have so much more money than you. Then I'm going to fund this project. So you move out and I build my road. >> You don't have enough money. So my project is going to go through. >> I mean your project goes to organic kid anyway. I cannot stop you from your project going away going. But like you're you're starting from the assumption that that coin like um rules over that land, right? >> Yeah. >> When I see a world where there's thousands of coins where you use like coins as Tik Tok for example. >> Yeah. So the original question I was trying to figure out is you could see a model where you if you want to be more fair if you're trying to decide between five or six different projects and maybe that's a little different from what you're trying to do is you allocate some coins to people and then you say not everyone's going to vote let's say 10 coins on each project and you're going to end up with differentiated options which is this one has the highest uh votes so this one can go first etc. But it's not votes. It's direct funding, right? And it's it's actually calculated per second and it's continuous. And if you don't like it, you can leave or like but like that's a bad argument. I know how that's a bad argument. But in the world that I see, I think you're making an assumption that there's already an asymmetry of power that's very big from the start. >> Is it not? >> Otherwise, it's meritocratic. And >> look at Bitcoin. This is asymmetric. So that's a problem to to take into consideration. And how do you correct for this asymmetry or is designed for this asymmetry and that's perfectly fine? >> Yeah, I don't I I'm not sure I get the problem. Sorry. >> Okay. Sounds like we're going to have to have a a debate on that one at another conference. Um, any other questions or philosophical musings from the crowd, guys? Doesn't look like it. Okay, guys. Thank you very much to Bogdam. Cheers. >> [applause]