Rainbow-Colored Money: The Story Behind My 64 ETH Gift
How gifting is the yin to crypto-capitalism's yang
|Aug 21, 2020||7|
At a time when the term degenerate finance gains steam amid a mad rush for profit, with traders yield farming various vegetables and food items, I have been presented with a unique opportunity to highlight the opposite side of the community: crypto gifting. Or as you’ll read now, the yin to crypto-capitalism’s yang.
It’s well-known that crypto relies on profit-driven incentives; it’s at the very heart of how these blockchain machines work. But consensus relies just as much on sharing information, as quickly and freely, and as much as possible. The piece below argues that “it's always been just as much about public goods as about markets, and just as the basis of markets is freely transacting, public goods are about freely sharing.”
Before we get to the piece, I have to share the background on this story: A few weeks ago, an anonymous account on Twitter sent me a direct message saying they had read The Infinite Machine and really enjoyed it for its balanced account on the history of Ethereum. They hadn’t been able to purchase it, so wanted to make a contribution to thank me for my work. I told them not to worry about it, and that just leaving a review and telling others about the book is enough.
But they wouldn't take no for an answer.:
“In the old days (before ‘blockchain’), it was common for people to post our ‘contribution addresses’ publicly. Terrible privacy practice, but great for community spirit. And it's how things got to where they are today. So in that spirit, please do accept this request! It would mean a lot to me.”
So I sent my Ethereum address and went to bed. The next morning, I couldn’t believe what I was seeing and checked multiple times until I finally understood: I had an additional 64 ETH in my account.
Of course, the number has a very clear meaning: 64 is 2 times 32, the number of ETH required to run an ETH2 validator node. My generous contributor said to consider their gift of ETH as an invitation to “join the machine community that powers our open economy,” and to encourage The Defiant subscribers to run or stake nodes too.
“Nothing would make me happier than if my contribution helped lead to a The Defiant community staking group - passionate contributors bonding at the lower levels of defi too. And in a way - to play with your words a little - it would be helping ensure that your content platform has the open foundation it deserves :)”
I have pledged to take 32 ETH to run an ETH2 node, and to use the rest as a war chest that will help me continue building out my vision for this content platform.
This anonymous contributor was also generous enough to share their thoughts on crypto gifting, which I found to be so deep and beautiful, that I convinced him/her they should be published. After some pushback, they agreed that it would be better for the whole community to read.
Hope it helps put all the craziness of the past few weeks in perspective. This is also why we’re building.
🙌 Together with Zapper, the ultimate hub for managing DeFi assets & liabilities.
Ethereum’s Gifting Culture: The Story of Rainbow Money
So one part that I felt was perhaps a little bit missing from the book (and this is not meant as criticism at all, because it's historically something that's been very subtle and unspoken)... was that much of what has been built, has been built on the spontaneous yet deeply meaningful coordination that comes from gifting - and that this continues to be the case.
It's a deep topic, and for many people it's been so normal that it's probably unconscious... so I didn't expect more than a small bit to be written about it, if the topic came up at all. And I thought you captured an aspect of this story quite well, in the part about the massive amounts of work done before the token sale (and which got touched on again later, with mentions of the YOLO Twitter grant, and the related “beauty in subtraction” EF philosophy).
Yet there is also so much more to that story, and how it grew immensely over time, that is core to the Ethereum phenomenon - and which is becoming increasingly visible and important today, as Ethereum becomes less about impoverished scrappy hackers building public goods and more about re-defining and popularizing public goods themselves (and about enlisting the broader population to deliver those goods together).
It really has always been about creating and sharing public goods - that was the whole point since the very beginning, all the way back past the bitcoin faucet to Satoshi and the metzdowd list (not to mention, from a natural or substantivist view of economics, to the beginning of civilization, before there were markets).
People often talk about how crypto works because of the under-layer of economic self-interest (“capitalism for machines”) that produces a sustainable ledger. And the human element of that story is that a deflationary store of value grows adoption.
But this popular tech explanation usually leaves out one key element of the design: Nakamoto consensus incentivizes *sharing information* - as much and as quickly as possible, as freely as possible. Similarly, the social element beyond inflationary and deflationary dynamics, that is mostly left unsaid, is this: sustainable value comes from the willingness to share it - to meaningfully gift what is of value. That is, gifting is a deep and unalienable part of what, on the surface, is depicted as primarily a culture of trade. In truth, it's always been just as much about public goods as about markets, and just as the basis of markets is freely transacting, public goods are about freely sharing.
Crypto-gifting is the yin to crypto-capitalism's yang - intrinsic, the part of the iceberg that's underwater. **
Some concrete examples - just a few among so many others - that trace this gifting theme within Ethereum's history:
The ETH token sale was about raising money and a flag, to build a thing (a shared machine, a community). From a certain perspective, everything since then has been about using the thing to give the money that was raised away, while waving the flag.
In 2015, the Foundation had a paid work schedule for client and core development, and an understated grants program that did gifting for everything else.
In 2016, after the first big wave of adoption (and price increases), the DAO project emerged as an attempt to community-fund the ecosystem, wrapping itself as an attractive decentralized investment vehicle - but peek under the hood and the proposals were basically all grants.
In 2017, multiple ICO treasuries emerged - meaning the EF was no longer the sole custodian of community money - and those who understood their newfound role and responsibilities attempted to answer the question of how to allocate those purses correctly, in a way that fulfilled both their specific fundraising mandates as well as the general mandate of legitimacy in serving the Ethereum community as a whole.
In 2018, the formulation of quadratic payments presented a structure that could make fulfilling these kinds of dual mandates easier - and, more generally, opened up discussion of decentralized financial coordination between institutions and individuals. Meanwhile, the Foundation had finally caught up on a backlog of paperwork and other issues enough, to start firing on all cylinders to promote independent development at all levels - freely gifting to individuals, other non-profits, and even corporations, alike.
In 2019, the question “how do we sustainably fund continuing Ethereum network development?” became a question of public interest, whereas previously it had mostly only been talked about within EF (not because it was a secret topic, but because few others were aware it was an issue). At around the same time, Gitcoin flourished, as the first working example of a formal (semi-)decentralized grants program - and so coordinated grant-giving to fund public goods became itself a publicly-recognized public good. And other DAOs (Moloch, etc) formed, also largely around this theme, and were well received.
Now, in 2020, participating in maintaining public goods looks increasingly important to an unprecedentedly large number of people - partly because ETH2 is almost ready, so participating will be easier... and partly because the world has been in one massive governance failure crisis after another this year, with no end in sight.
These governance crises have highlighted that public participation in *serving public goods* may really be necessary, even if it's not overwhelmingly profitable. And this civic value may be especially important in the community in the next 1-2 years ahead, when Ethereum starts organically playing a role as a credibly neutral/permissionless settlement layer for international trade and CBDC settlement.
We'd been orienting for this since before the ICO days - public choice theory made it clear this role was a strongly possible and likely positive outcome - but at this point it is all but certain to happen very soon. Will we be ready, will the infrastructure be stable enough to be a good, and be credibly inclusive enough to be truly public?
It's really only been these last two years that people like V and others are starting to outwardly articulate - though it has long been a guiding intuition - how gifting culture is itself a public good, and should be a key consideration in designing and running public infrastructure, no less so than market economic activity. And that this will be worth talking about directly, and leveraging as common knowledge, more and more in the years to come.
As much as crypto is capitalism for machines, the gifting economy that infuses it is an economy of voluntary and appreciative relationships. These are the real stories of rainbow-colored money.
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About the founder: I’m Camila Russo, author of The Infinite Machine, the first book on the history of Ethereum. I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.