Last week, leaders from government, industry, and civil society convened in Davos, Switzerland to discuss “Cooperation in a Fragmented World” at the annual World Economic Forum (WEF). In some circles, the event is steeped in conspiracy, while others dismiss the assembly as a ski vacation for chest-pumping at the expense of shareholders and taxpayers. Regardless of the motivations, or who’s footing the bill, the event provides an opportunity for Earth’s most important decision makers to network, discuss strategic initiatives, and communicate their intentions to the world.
Top of mind at this year’s conference was the “polycrisis” – today’s mix of macroeconomic weakness, rising costs, technological disruption, widening disparity, and climate change.
Notice that these headwinds are international. While there’s a prevailing rhetoric around decreasing globalization, the WEF congregation called for unity among nation states and corporate giants to tackle the issues together. Crypto is still quite small relative to the overall economy, but it’s not isolated from these headwinds. Should the digital asset ecosystem also pursue a path of collaboration? If so, with whom?
If you polled the crypto community with respect to this idea, you’d find the responses varied and polarizing. For example, Dean Eigenmann, a virtuoso in the art of maximum extractable value (MEV) posted the following tweets:
Dean’s firm, Dialectic, generates returns by reorganizing transactions within blockspace to extract profits, so while his content is focused on distributed systems architecture, the guy is after the same thing as any other investor – returns. However, not unlike many of the world’s billionaires (who attended the WEF), Mr. Eigenmann and his workmates are also committed to distributing their wealth. Perhaps the groups have more common interests than the tweet suggests.
What would gaining mass adoption look like without institutions and compliance? Officials have made it clear that they’ll go the distance to enforce anti-money laundering and terrorist financing laws, so pushing back against the latter seems like it’d be a messy affair. Dean is correct that there’d be disruption, but I’m not sure toppling the current world order and its financial system is in anyone’s best interest.
Sadly, when members of the digital asset community aren’t pushing borderline anarchist narratives, which suggest that adoption can flourish without buy-in from policymakers and the established banking system, many of them are wasting resources infighting about which blockchain or project is “the best”. I’ve long been a fan of the folks at Bankless, but here’s a prime example of deadweight loss:
This tweet is wasteful. It represents a primal tribalism, which diverts resources away from the common goal of growing digital asset adoption. On a standalone basis, such comments take only a few seconds to conjure up, but I suspect the cumulative efforts of “maximalism” across the space are non-trivial. Imagine if that time and brain power were coordinated to encourage a narrative which benefitted the whole industry. After the many high-profile calamities of 2022, the digital asset collective needs cohesive positivity and it should be pushing the good word to lawmakers across the world.
A common discourse from plutocrats at Davos centered on the idea that, in the face of so many global adversities, teamwork should be emphasized over competition. It makes sense that cooperation would enable a smooth and productive path out of a crisis because organizations can battle together on a unified front. However, in times of heightened risk, groups tend to become more insular, focusing on their own well-being first.
Are there benefits to shaking our primitive isolationism in pursuit of a cohesive effort to battle common threats? Researchers at EY published quantitative evidence supporting the notion that taking an ecosystem approach to commerce helps businesses outperform:
Working together improves efficiency, fosters innovation, and makes it easier to enter new markets. In contrast, researchers at the WEF estimate that, if the world’s economies were to split into two distinct groups (which some have hypothesized could be a consequence of the present geopolitical tensions), then global GDP would be reduced by 5%. This compares to the 4.3% output decline experienced during the Great Financial Crisis, so we have a powerful incentive to put our differences aside and collaborate towards a better future.
In an interview with the WEF’s founder, Klaus Schwab, Satya Nadella spoke at length about encryption, trustless credentials, and the metaverse. However, he maintained a noticeable distance from the most common web3 terminology. Meanwhile, Microsoft has internal projects that are building tools for use on public blockchains, like Ethereum. They’re even running an initiative to explain why NFTs are good (60-minute mark of the linked podcast). The bad press generated by the digital asset community’s recent degeneracy was sufficiently shameful that we missed out on an opportunity to have the CEO of one of the world’s leading innovators evangelize the tech and movement.
Microsoft Bing is widely viewed as inferior to Google, but even still it has over a billion active searchers per month. The internet giants are often (and rightly) scrutinized for monopolistic tendencies, but if they rolled out public blockchain projects, then digital asset adoption would skyrocket. This larger audience would mean more potential users of web3-native projects, whose builders could compete on agility and values.
Digital asset proponents, believe that the technology has the potential to promote economic well-being, reduce costs, narrow disparity, and even fight climate change. This aligns perfectly with the global priorities voiced at Davos. If you watch the interviews, you can easily pick up on the fact that the global elite believe in “distributed ledger” technology. However, after the financial collapse and (alleged) frauds of last year, the world’s leaders are keen to distance themselves from “crypto” and the grassroots ecosystem that incubated it.
If the digital asset community cares about improving the world, then wouldn’t it make sense to collaborate with those who possess pharaonic amounts of resources? Sure, these titans have their own agendas, but in many ways, their priorities overlap with crypto’s. There’s a time to compete and a time to band together. To me, it seems like we’re in an environment for the latter. Let’s get to a point where macro conditions are more constructive, regulations set, and the average person feels comfortable on-chain. Then, the web3-natives can come out of the slipstream, activate … collaborate, and compete on values.