Peering Over the Edge: Hedging Bets and the Promise of DAOs

In 1989, a group of hackers was invited to participate in a debate on the then-prominent internet community, The Well, to be published in Harper’s Magazine. The Sausalito, Calif.-based computer bulletin board chat system was a product of the then out-of-print West Coast-based magazine, Whole Earth Catalog (The Well was short for Whole Earth ‘Lectronic Link). The subject of the debate seemed simple: “Is Computer Hacking a Crime?” The discussion, though, quickly turned into a much larger meta-debate about who actually had power over a developing cyberspace.

An older set of hippie hackers alongside the cyberlibertarian activist, cattle ranching, Grateful Dead lyricist, John Perry Barlow, believed that they had carried out the divine duty of liberating computers from institutions. As hackers, they were fulfilling their duty of helping technology actualize its true, ethereal potential: to become “the new American religion” and to “transcend custom and engage in creativity for its own sake.”

The younger, newer hackers in the debate saw it differently; the institutions were already dominating a nascent internet, and using it to reify their hegemonic positions. Cyberspace had already been compromised and they were fighting an uphill battle to reverse it. To them, debating whether or not hacking into systems was criminal was to concede to the corporations’ attempts to redefine morality. The real transgression was the “mountain of data” about an individual that had already been “compiled without his consent.” To prove the point, one of the new-guard hackers, under the nom de guerre Phiber Optik, hacked Barlow’s credit history and posted it in the Harper’s/The Well debate chat. Barlow would later recall that “No one has ever put the spook in me quite as Phiber Optik did at that moment. To a middle-class American, one’s credit rating has become nearly identical to his freedom.”

Evidently though, this didn’t scare Barlow that much. Seven years later at the Davos World Economic Forum in Switzerland, he presented his “Declaration of the Independence of Cyberspace,” a document that targeted not the companies like the one inhaling his credit without his consent, but maybe the only institution with the power to stop them: Governments. “Governments of the Industrial World,” he wrote in the opening lines of his declaration, “you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone.” Barlow didn’t bother to address the corporate masters of the universe who attend Davos every year, whose successors would create their own corporate quasi-governments with which to control the internet.

You know what happens next: The younger generation of hackers doesn’t win. Cyber counterculture gets co-opted into, and eventually overrun by, big business. The mountains of data compiled by credit reporting agencies like the one Phiber Optik hacked get eclipsed by the data-collecting work of even larger companies that come to dominate the internet. Only five companies—Facebook, Amazon, Apple, Netflix and Google—account for 43 percent of all internet traffic and 19 percent of the total market cap of all S&P 500 companies.

Their dominance goes further than metrics, too. In a 2016 intro to an episode of his podcast, writer Bret Easton Ellis observed that “Movies and novels no longer work as a way for us to explore unseen cultures...” In the author’s estimation, people don’t go to the theater to peer at “Richard Gere naked standing in his Westwood apartment” or “letting us be a voyeur to the wealthy world of Beverly Hills that ‘American Gigolo’ takes place in. Instagram has replaced this.” This is probably an overstatement, but is at least partially true. An app run by a ruthless, for-profit company has superseded individual pieces of art as the dominant force of cultural commentary, production, and voyeurism.

Instagram and its internet giant peers have captured such a large swath of the internet that Republicans and Democrats in both chambers of Congress, who are otherwise at each other’s throats, have agreed that they need to be reigned in as a foregone conclusion, and only disagree on the specific means by which it needs to be done.

Of course, the founders, executives, venture capitalists, and angel investors of the internet companies, have amassed unprecedented wealth as people at the bottom and even the middle have had proportionally less than they have in a long time.

Now, tech finds itself at a similar crossroads á la 1989—grasping the potential of a liberatory dream that’s being closed in on by the crushing reality of the actual economic order.

The champions of Web3 think that there’s another way out. In building a new, decentralized future for the internet, they’ll pry the web and the wealth it created back from the small amount of multibillion, and now multitrillion-dollar companies. Many are skeptical. In the earliest days of the internet, we were promised not just the world, but an entirely new world. Instead, we got a handful of apps designed to consume as much of our time as possible in exchange for the extraction of every potential bit of data we could produce. We did get a new world, just not a very good one; the skepticism isn’t misplaced.

Now, tech finds itself at a similar crossroads á la 1989—grasping the potential of a liberatory dream that’s being closed in on by the crushing reality of the actual economic order. By the time the Harper’s debate happened, the internet was already down a path that all but presupposed heavy consolidation among a small group of companies. As the Web3 version of this debate unfolds, critics say it may already be too late. The venture capitalists who architected the corporate surveillance business models of Silicon Valley are coming for Web3: Andreessen Horowitz invested in the $314 million initial coin offering of Solana, an Ethereum smart contract platform alternative; their other crypto investments include key Web3 apps and infrastructure, like the NFT marketplace OpenSea, the decentralized storage protocol Arweave, and the decentralized financial tool Maker; Union Square Ventures, like Andreessen Horowitz, has been investing in the space for years and other firms are trying to make inroads; a quarter of the legendary venture capital firm Sequoia’s new investments in 2021 were in crypto, and Kleiner Perkins has started to try its hand as well.

In the Web2 phase of the internet which these firms played an outsized role in shaping, there are very few business models that don’t involve extraction; even when you pay a subscription fee, your data is usually still being siphoned and monetized by someone. There’s no reason to believe that if they end up shaping the landscape of Web3 they won’t bring those same strategies and market consolidation with them. But the old guard throwing money into Web3 isn’t yet a death sentence damning us to the bipartisanly loathed order of Silicon Valley dominance; it’s an admission that the order of the internet might be changing and Silicon Valley is hedging its bets accordingly. The workers of Silicon Valley understand this as well and are anecdotally leaving en masse.

Even though it’s late, the fate of the next iteration of the internet isn’t sealed—the consciousness is different this time around. Barlow and the first-gen hackers thought that they were cruising towards a technolibertarian utopia. In 2022, a significant portion of the Web3 and crypto community asserts that the world in its current state does not have the coordinates to such a land of milk and honey.

When crypto investor and influencer Jordan Fish, better known by Crypto Cobain or Cobie for short, described why he came to Bitcoin in 2013 in a recent episode of the podcast he co-hosts, it was in reaction to everyone he knew getting financially annihilated. “Nearly every one of my friends struggled with money in some way,” he said. They were affected by 2008 and “mismanaged monetary policy.” He was frustrated with banks which he saw had “lending practices that were unfair,” and “as an outsider, it felt like the people running the show were unaffected from the hardship that regular people felt.”

Artists, who don’t always have avenues to make money, have found communities to be able to fund their work that they would not have otherwise without Web3.

Fish isn’t an outlier. Before his Twitter account got suspended, the anonymous crypto investor and influencer DefiGod1 occasionally tweeted about how the “Middle class is getting wiped out.” Earlier in January, the crypto trader Blknoiz06, tweeted “if you get less than a 7% raise every year you're losing money, what kinda clown world is this lmao.” Versions of this sentiment are common. The trope is that crypto traders flex with sports cars and Rolexes that they buy with their profits. Some do, but there are more and more people talking about using their gains to give money to their financially insecure parents. Artists, who don’t always have avenues to make money, have found communities to be able to fund their work that they would not have otherwise without Web3.

Even if there’s a vague consciousness among elite crypto investors of how bad things are, investing and trading aren’t going to change platform hegemony and how people at the bottom are suffering financially.

In her 2015 book, “Undoing the Demos: Neoliberalism’s Stealth Revolution,” political theorist Wendy Brown inadvertently responded to Barlow’s anti-government declaration when she wrote that “this open hostility to the political in turn curtails the promise of the modern liberal democratic state to secure inclusion, equality, and freedom as dimensions of popular sovereignty.” In refocusing our time towards personal financial betterment, Brown argued, we disengage from politics and deprive ourselves of the ability to systematically handle the problems—problems which Fish, DefiGod1, and Blknoiz06 articulate. Politics are how you change the political and economic order, not by making more profitable trades, or building extractive, nearly solely profit-seeking organizations.

This doesn’t mean Web3 can’t be helpful. Web3 protocols alone can’t build worker co-ops, but Decentralized Autonomous Organizations, or DAOs, do provide a means to make it easier.

The internet is at an inflection point in a time political consciousness about the economy is, too. Populist (or at the very least populist-presenting) politicians have had national momentum since the 2016 U.S. presidential election. Reddit’s pro-labor r/Antiwork community was among its fastest-growing subreddit in 2021. People posted in the subreddit this past December that they came across hacked receipt machines printing anti-work manifestos at their jobs.  DAOs are poised to potentially help anyone who wants to try to turn that energy into altering the current political and economic order.

It’s possible to rethink models of ownership in which organizations are split via DAOs into workers' co-ops, where especially active participants or customers receive some percentage say in governance, or democratically elected or appointed officials in government. The main reason that this doesn’t happen now is because it’s not viable in the current way that the economy is arranged (shareholders and owners do not want to cede control of their businesses to their workers and customers), but some part of the reason is that it would be a nightmare to construct.

In speaking on a recent episode of the podcast “The Blockchain Socialist,” a senior lecturer at the University of Exeter James Muldoon outlined a potential vision for this with a municipally run ride-hail system. A ride-hailing system sanctioned and facilitated by the government could be integrated into the existing public infrastructure system, Muldoon posits. The problems that Uber and Lyft cause—skirting local regulations which have shown to increase congestion and notoriously underpaying their workers from whom they deprive benefits—don’t have to persist.

“Rather than just resisting [new technology] or just saying ‘no’ or having this cynical, skeptical take on social media, I think we need our own inspiring vision of the future of how people’s lives will be better,” Muldoon argues. “How can we harness new technology for socially useful ends? People want to think that their lives will get better. They want technology to be a part of that.”

And in a recent essay, Zora co-founder (note, this publication is owned by Zora) Jacob Horne envisioned a possible digital commons achievable through decentralized Web3, called “Hyperstructures”. He describes them as “crypto protocols that can run for free and forever, without maintenance, interruption or intermediaries.” Horne posits that these hyperstructures would be built with the short-sighted financial considerations currently rife in the crypto space, and become the future digital equivalent of “museums, power grids, canals, dams, and ancient roads.”

Potential solutions aren’t just theoretical, either, though many aren’t yet happening at the kinds of large scales Muldoon and Horne envision. Spotify notoriously pays its artists little and gives them no control or even insight into their opaque algorithms and playlist selection processes. Audius, a crypto-based music service, aims to give artists a higher percentage cut than Spotify, and instead of taking the remaining fees for itself, it distributes them back out to people who keep the platform up by running nodes. Other projects, like Nina, are also trying to build a more ethical music streaming platform. Channel, a decentralized media organization comprising artists Josh Citarella, Holly Herndon, Mat Dryhurst, and the New Models collective, presents a Web3 alternative to crowdfunding sites like Patreon. DisCO is already trying to improve on DAOs by, in their words, creating a “ P2P/Commons, cooperative and Feminist Economic alternative” to them.

Even more explicitly profit-seeking protocols like Aave and Compound, still provide a glimpse at what a more just banking system could look like, even if their platforms have limits as they’re currently constructed: a transparent lending system where profits are distributed back to the community of lenders instead of legions of bank VPs and their general counsels.

Rectifying the wrongs of Web2 requires a vision of the future, taking advantage of what’s being built, and using it to your project’s ends. The “innovative” visions of the future were molded in the sterile, minimalist VC offices of Menlo Park, and they will be again if no one else comes up with anything otherwise.

In the middle of the Harper’s/The Well debate, as some hackers waxed poetic about what the internet could bring, Dr. Robert Jacobson, under the alias “Bluefire”, soberly wrote: “For every hacker in revolt, busting through a security code, ten thousand people are being wired up with automatic call-identification and credit-checking machines. Long live the computer Revolution, which died aborning.”