ICOs are disrupting late stage venture capital. Shawn Cheng was working at the Vayner/RSE VC, but now he’s working with Ethereum co-founder Joe Lubin’s Consensys where he’s helping to manage a portfolio of over 40 blockchain companies. Cheng talks about how the coopitition ecosystem dynamics of blockchain companies is completely opposite to how VC thinks about value creation. Supporting a unicorn companies can make or break a VC investment, and the entire VC-industry has been aimed towards hitting these home runs.
Value creation for a blockchain company is more about the cultivation and nurturing of an entire ecosystem that can’t always be reduced down to a single number. This is part of why Lubin is reinvesting his money made off of being a co-founder of Ethereum into so many of these blockchain projects that are trying to develop these different ecosystems.
I talk to Cheng about how the trends of blockchain decentralization are leading to open source software, open protocols, open networks, being permissionless, censorship resistance, and how immutable, malleable, accessible data is leading to a free market of innovation in the blockchain ecosystem.
Whereas “Web 2” focused on enterprise companies that added value, but consolidated power and influence, the “Web 3” is more focused on the individual being able to contribute and add value and participate.
There are many idealistic and optimistic potentials for the future of the blockchain, but there are also many open questions and challenges around scaling, creating viable long-term infrastrucutre management, and whether or not all of this will change the fundamental dynamics of the consolidation of wealth and power.
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Music: Fatality
Rough Transcript
[00:00:05.412] Kent Bye: The Voices of VR Podcast. Hello, my name is Kent Bye and welcome to the Voices of VR podcast. So one of the things that I heard over and over at the Decentralized Web Summit was that the cryptocurrencies represent this new mechanism by which these startups can raise investment capital through the mechanism of the ERC-20. That's the fungible token standard of Ethereum that allows these people to invest into these tokens and they can have an influx of money. And then from that point, they have to then provide some sort of value to the larger community. Decentraland is probably the most high-profile project that has done an ICO with raising about $26 million to be able to then build out their entire open source protocols for a decentralized metaverse. And at the Decentralized Web Summit, I had a chance to talk to Sean Cheng, who is now working for ConsenSys. When I first met Sean, he was working for a venture capital firm out of New York City, looking at a lot of these different emerging technologies. Shawn is decided to go work with consensus which was founded by one of the co-founders of aetherium who made a bunch of money off of aetherium and then Has since invested into at this point up to like 44 different projects and so they're trying to build out this entire ecosystem So the thing that I got from Shawn is that there's an entire ecosystem that is still evolving and growing and they're still trying to figure out a lot of these fundamental questions around scalability and whatnot, but There is this coopetition that's happening with the defining of protocols, and a lot of people refer to this shift from the Web 2 to Web 3. So Web 2 was a lot of these enterprise companies that were centralized, that were adding value at that corporate scale, and that Web 3 is much more focused on individuals trying to contribute and add value and participate at the kind of decentralized level. So I talked to Sean about how cryptocurrencies are changing the larger investment ecosystem, him coming from a traditional VC and now working in the space of helping to fund and manage all these other companies, and to see the larger different dynamics of, you know, whether or not some of these cryptocurrencies are going to change some of the underlying market dynamics of our society. So that's what we're covering on today's episode of the Wasteless VR podcast. So this interview with Sean happened on Thursday, August 2nd, 2018 at the Decentralized Web Summit in San Francisco, California. So with that, let's go ahead and dive right in.
[00:02:32.255] Shawn Cheng: So, my name is Sean Chang. I'm the head of partnerships and programs for ConsenSys, and I help to run the Labs Group. And the Labs Group is effectively responsible for managing the health of our portfolio of companies, which we have about 44 of now. And we run our EIR program and help founders that are exploring and figuring out whether or not they want to use Ethereum to help build their next company. Yeah, and we support these companies for all the things that they need in order to kind of take their proof of concepts or their white papers into something that's actually tangible and a reality.
[00:03:05.181] Kent Bye: So we're here at the Decentralized Web Summit, and I see a lot of optimism for what is possible with these kind of new models of cryptocurrencies. And I also have heard some people have some skepticism about the sort of complexity of cryptocurrencies and whether or not they're actually going to be viable for solving any sort of real-world problems. the user interface, and the whole sort of like, it seems like early days of what's possible theoretically, but sort of actually solving user problems that are out there. So from your perspective, what is happening in Ethereum and why do you feel it is a compelling phenomenon that you have been working with it and been involved in the community?
[00:03:42.552] Shawn Cheng: Yeah, I chose to join ConsenSys as a company largely because of the founder Joe Lubin. So Joe is one of the co-founders of Ethereum and he essentially took it upon himself to start to invest in creators and founders and developers even before there was a lot of certainty. And so I think a lot of the skepticism that is felt not only in the community but outside the community is valid. So many of the things that are out of the control of a founder are things that are stopping a lot of people from wanting to dive in. So, number one is scalability. There's a ton of different solutions that people are working on. Second layer solutions, plasma, sharding, there's a lot of interesting approaches to how they think they're going to be able to increase the network capacity, and even changing the consensus mechanisms themselves, moving from proof of work to proof of stake. And so, as we're kind of seeing this drama unfold right before our eyes, Joe and ConsenSys has been so bullish on it that we've tried to approach building a company that's taking an ecosystem approach. And that's a little bit different from any other kind of tech sector, right? Most tech sectors or companies within spaces are trying to be a platform, or they're trying to be an app, or they're trying to be a marketplace. For Ethereum, many of the benefits that traditional Web2 companies have don't exist yet. So, I think our company is saying, well, in order for this ecosystem and this biome to actually come to life, we have to be thinking in a systems way. If we're responsible for providing the water, the soil, the sunlight, the very gravity itself that actually holds a lot of these things in place, we actually have to be addressing multiple issues along that path. And so, consensus is less interested in just waiting for the world to catch up and for regulation and usability and all these other things that prevent from Ethereum reaching mass adoption. It basically is saying the best way to predict the future is to invent it, right? And so for us, it was building developer tools that we may not necessarily immediately profit from, But if they're removing thousands of barriers for many other entrepreneurs and developers out there and founders, we think it's a good investment because indirectly, we'll be able to build more products and services that allow for more people to do more testing.
[00:06:07.592] Kent Bye: Yeah, and being here at the Decentralized Web Summit, there's a lot of people talking about the impacts on what drives human behavior, whether that's from the cultural norms, whether that's the laws and regulations, whether that's the technology that we have in terms of our communication systems, and whether that's the markets and the economies. And so it seems like that There's a number of variables in terms of once you get down to human behavior and cultural values and individual choice that it's a little bit impossible to really model what's going to happen. And so there's all these experiments that are happening. But yet, you were just telling me about how you see that cryptocurrencies and Ethereum specifically are allowing you to embed your values into the economic process. So what does that look like?
[00:06:48.722] Shawn Cheng: I think one of the most beautiful aspects of consensus is that we welcome debate. And in this community, there are people that are Bitcoin maximalists, Ethereum maximalists, people that believe in multiple different outcomes, maybe cross-chain solutions. And so given that blockchain allows for a greater degree of agency for the individual, And for the individual to start thinking about, well, what do I care about? What are my values? And how can I graph these things into the very code itself? I think we're now starting to ask those questions where if smart contracts can start to automate a lot of the things that I already care about, What does it look like for every action that I take, for every dollar that I spend, to reinforce the very world and system around me? And so, one example of that that I love thinking about is MetaMask, one of our projects. What does it look like for MetaMask and maybe Viant, our supply chain play, to be able to say, okay, are all the products and materials that are going into creating this particular electronic device, this food, the packaging, Are they aligned with my values, that equal pay for men and women? Or are they using only fair trade materials? Are they actually making sure and holding up their, actually paying off on the values that they say they are in terms of fighting child labor? Whatever it may be, what if your wallet actually knew these things about you and that you weren't willing to compromise on price? Just because it's the cheapest on Amazon doesn't necessarily make it the best product, right? And right now, many of these things are obfuscated, right? You can't see, you don't know. But as blockchains allow for there to be a greater degree of transparency and agency for not only individuals, but for companies themselves, I'm really, really excited for people to really know where their dollars are going and know exactly the type of world that they're reinforcing and making. Because I truly believe that we vote every day. We vote with our time. We vote with our resources. And blockchains themselves, I think people like to talk about some of these, a lot of the esoteric terms and concepts, but I think the most exciting parts are when blockchain projects are talking about real world use cases that affect people on a day-to-day and that they can see themselves and how this product will actually change their life.
[00:09:16.100] Kent Bye: Yeah and talking to some of the developers here just getting the sense that in some ways having the transparency of the blockchain allows you to have a lot more empirical data as to what's actually happening when it comes to exchanging a value between people and to be able to perhaps model or get a deeper insight or understanding with that. And so there seems like there's lots of potentials in terms of what this could mean and do but I'm curious to hear from ConsenSys' perspective what some of the specific projects are in terms of where you see the applications or problems that are trying to be solved through these various companies that have been invested in.
[00:09:49.717] Shawn Cheng: Absolutely. So one I would say that might be applicable to you is the combating of fake news. And something that they're calling, can we help transform media and create something that actually leads to sustainable journalism? I'd like that. Yeah, right? A lot of people would. And a lot of people, I think, would benefit from finding a tokenized model for the ways by which creators and curators and consumers actually participate in that ecosystem. So, Civil, which is one of our projects, is about to do their token sale in two weeks. And they're partnering with news organizations from New York Times to Vice in launching these newsrooms to be able to say, Can we find a more equitable way for a token to be able to ensure that the facts are there, that people that care about journalistic integrity, that people care about projects and stories that actually are hitting news topics that actually are additive or generative to their lives and actually align with what they care about? Can we ensure that writers and videographers and even podcast interviewers are getting paid an appropriate amount so that it's not being lost to the ad dollars of Fang, right? Should Facebook and Google and a lot of these other companies that are mining our data be the ones that only benefit from the content that's created out there? We would say no. We would say Because all of these stakeholders are involved in making media and making journalism a part of how societies progress and learn and move forward, we think tokenizing that space can be extremely beneficial to pretty much everybody except for maybe the incumbents.
[00:11:31.078] Kent Bye: Great, so what are some of the other things that get you really excited about Ethereum?
[00:11:35.018] Shawn Cheng: Yeah, I am really, really excited about how founders themselves and individuals can take a greater agency in their daily lives and how some of the use cases are not just measured by unicorn outcomes. So, as a former VC in my last life, I think the venture capital system by which you make money and you raise from limited partners and you as a general partner are trying to optimize for unicorn returns and the chutes and ladders game that you're playing, there's a very set way by which you're supposed to follow. You're supposed to sell X amount of your company, you have 16 to 18 months, You're supposed to hit these KPIs and OKRs, and you're supposed to be optimizing for the maximum amount of value, right? But that value, should it just be dollars? What about impact to life? What about reach? What about actually changing the lives of a huge portion of humanity that doesn't have access to any of these pieces? Should it just be coastal elites and a new oligarchy that allows for people to be able to say, I am contributing to the world? Some of the practical use cases that I'm interested in, ConsenSys has a whole consulting arm called Solutions. One interesting project is their work with the World Food Program. And they're currently working today with Syrian refugees. So there's 300,000 Syrian refugees six miles off the coast of Jordan. And right now they're using a private permission blockchain and facial recognition or biometrics to be able to say, If you are a family that's been displaced and you need access to credits to be able to pay for your groceries, how do we ensure that those dollars and those credits are going into the right hands? And so 100,000 of those 300,000 families are actually using a private permission chain. It's not theory, it's literally happening today. 2.6 billion people in the world don't have any form of identification, which is the first thing you need to own property, to get a job, or to be able to lift yourself up out of poverty. self-sovereign identity and identity systems by which people can register on using you port our project or one of the other competitors like these are wonderful ways by which we can start to think about Helping the bottom fourth of humanity. And so those are some of the other things that I feel like are moving things forward I think partnering with existing systems and Even though some of them may be inefficient, like the UN, for example, I think 25% of donations that go to the UN actually just disappear. And maybe not all that's bad. Maybe in the field, that's how things get done, from the truck driver to the person that makes that introduction. Maybe that's how the system works. But is there a way that can actually make it more transparent that it's actually hashed on a blockchain that we can keep track of it so that we ensure that no one is getting taken advantage of along that path or along that chain? So, in addition to cool and interesting Web2 use cases and systems that come out of the Valley or New York, I'm also extremely interested in how blockchains themselves can actually affect the lives of so many people that don't have access to a $1,000 iPhone in their pocket, right? Is it enough to just be building things that are making rich people even more rich? Or can we actually use decentralized technologies to actually make a more equitable world and a world by which all parties can benefit from?
[00:15:02.192] Kent Bye: Yeah, it's fascinating that you're coming from a venture capital background and working now in the blockchain and well as in Ethereum because you have this, I guess, dynamic that I've heard a lot of people talk about, which is either doing an ICO or some sort of way of doing initial coin offering that that is in some ways replacing the role of venture capital. So in some ways you're going from being a venture capitalist to working in technology that is disrupting venture capital. And so what are you seeing in terms of the pragmatic applications for how that is playing out and whether or not there's a bit of, I guess, a leap of faith by which people who are investing in these ICOs have to do their due diligence or they have to do what is essentially the role of a VC to make sure that this is not just some sort of Ponzi scheme or people just sort of saying that they're going to deliver something but have no capacity to actually deliver it. So there's a bit of like that burden being offloaded into people who are, you know, taking the leap into investing. But I'm just curious to hear your thoughts into how this is kind of playing out and sort of the disruption of VC with these technologies.
[00:16:00.018] Shawn Cheng: A lot of VCs right now are struggling to think about this because a lot of the power dynamics and the way by which companies are built, the very foundational elements and pressure points that typically would be taken for a startup are completely removed, right? For blockchain-based projects, especially for ICOs, if ERC-20 tokens are the killer app of Ethereum, and being able to raise outside capital without constraints or having to necessarily think about stuffy VCs and ivory towers, saying that they know everything, I think there's got to be a balance. Both the Web3 blockchain space as well as the Web2 traditional tech VC landscape, I think, will need to kind of meet in the middle. And what I mean by that is that I think traditional VCs, they, in certain ways, are going to have to think about how they gain more exposure to projects that don't just think about ruthless optimization, monopolization, and actually crushing your competition. Open protocols by nature are about collaboration. It's about value creation and the pie growing. It's not fatalistic or zero-sum. And the most successful projects in the Web3 space, investing in them oftentimes will come at a cost that I don't think most VCs are willing to pay or willing to spend time to wrap their heads around. It's not like other thematics within most VC spaces. I like to say that if you're not spending 100% of your time on blockchain, you're already behind. And if you are spending 100% of your time in blockchain, you're acutely aware of the exact places that you're already behind. Like, oh, I should probably learn more about state channels and stablecoins. And maybe think about what are some of the solutions that can affect marketplaces. There are people that are experimenting with decentralizing the sourcing of deals themselves, actually using a tokenized model to actually diligence deals. Maybe you're getting fractional ownership or some sort of carry. A lot of people are thinking about both assets and securities and how people can actually participate in that sort of economy. And so right now, a lot of the regulations, we're also thinking about how it affects how people are thinking about future value creation. So one of the things that I think is interesting in VC land and blockchain land is that most companies are aligned in the long term for venture-backed companies, right? You have a vesting period, you know exactly when your cliffs are, but with tokens, sometimes you're getting immediate liquidity. But in more and more term sheets, we're now seeing deals where people are saying, well, actually, we either are signing up and saying, you know what, if we do an ICO, we'll actually self-proclaim and self-regulate and say, we will hold on to these tokens for a year or two years. And so there are all these little things that both these worlds are kind of converging together that in certain instances I think VC will have to adapt and blockchain companies will also take some of the best aspects of how they embrace certain aspects of self-regulation and actually aligning long-term interests with their kind of short-term tactics. And so every model that is definitely being tested right now But I am very, very excited for both those worlds to kind of meet more and more in the middle and for even VCs to be reimagining how they continue to provide value for founders that produce companies in this space.
[00:19:36.525] Kent Bye: One of the open questions that I have in terms of cryptocurrencies in relation to the larger market dynamics is whether or not the dynamic of the rich get richer and the poor get poorer, of the power dynamics of those entities that have a lot of power and influence early, have sort of an exponential amount of opportunity to have more and more value. And so the cryptocurrencies, I guess, hold this promise that they're able to potentially redistribute the wealth in different ways. But maybe if it's applied to the same values and assumptions of existing market dynamics, is it going to actually escape the existing market economies, especially when you have outside fundings that are kind of infusing money into these ICOs. It seems like that's an interface that has a potential to kind of have maybe rent-seeking behavior that is going to not be creating any additional value, but just being able to just kind of amplify the money that they already have. And so, I'm curious to hear from your perspective, someone who's been in the VC and sort of understand the markets, whether or not there are new fundamental market dynamics that are going to be evolving from these cryptocurrencies.
[00:20:40.941] Shawn Cheng: I think asking the question of why you're building what you're building and why you're investing in what you're investing in is more important in blockchain than ever. I think a lot of folks, especially from the Ethereum side of the blockchain ecosystem, are asking, if I am just using decentralized technologies to create more centralized wealth, is that enough? And for people in the space that are trying to find a way by which you fuse equity ownership or tokens themselves and the utility which you provide and not separate them, I do think that there is a higher potential for wealth creation to be spread across more people. Now, I think it might be ignorant for me to say that existing networks and systems and relationships and people that have access to mining pools and even just the knowledge to be able to know how to download Geth and actually understand some of these pieces, that there are some societal pieces that will reinforce those, I think, existing structures. But many people that are issuing tokens and working on this space are thinking about ways how to increase values around decentralization, open source software, open networks, being permissionless, censorship resistance. These attributes I think provide a world and an opportunity for the most marginalized people in the world to participate. So I love seeing countries like Venezuela where many citizens have basically not wanted to use any of their their country's currency anymore and switch completely to Bitcoin because it's less volatile than the inflation and inflation that they see for their own local currency and their government is taking advantage of them. And I think that's great. I think when you start to see movement like that at a global scale, that there's an opportunity for people in Africa, for example, that use M-Pesa, right? Where you couldn't open up a bank account before or you didn't have ready access to an ATM. How do you ensure that no one steals what you've made for that day? And can you use M-Pesa credits to be able to transfer and pay and to feel secure that no one can steal it at the end of the day? I love the work that Firefox and Opera and many of these other browsers are working on in terms of providing more web tools and web apps and applications that allow for a greater degree of participation and use of products that allow for greater degrees of individual agency and to participate in their economies. And so I think other mechanisms that people are working like burnable tokens or tokens that kind of like metronome, like people are thinking about, well, can we ensure that for a specific time period of a token's life that the maximum amount of people are using it and spending it and that utility is at its core? I think those are other interesting mechanisms. So it's not just about crypto whales buying a crap ton of a token and then flipping it once they pump and dump. I think there are, with any new technology, you're going to see a lot of people that try to take advantage of it, don't have any moral qualms with thinking about whether or not they're harming or hurting people. But there are also, I think, a lot of people, especially in the Ethereum ecosystem, that are trying to actually build not just market cap or enterprise value, but they're really trying to think about new users and how some of these new users that have never touched technology can participate in these new economies. And that it moves from price speculation to something that which affects their day-to-day life.
[00:24:26.034] Kent Bye: So for you, what are some of the biggest either open problems that you're trying to solve or open questions that you're trying to answer?
[00:24:33.576] Shawn Cheng: Some of the biggest questions that we're trying to solve, I would say we've got consensus also is creating consortiums. So we have about half a dozen of them and we're also joining some. So examples of these might be the Enterprise Ethereum Alliance, which about 600 unique organizations, many publicly traded ones are trying to participate and agree upon what are the protocols and the rules by which we should use Ethereum. Or blockchain for social impact. It's basically every entity that wants to think about how tokens could actually affect impact-driven causes and organizations. Or the Brooklyn Project, which is actually working with financial regulatory firms around the world, legal minds to figure out what are the frameworks and heuristics that you use to actually decide if a token is a security, or if it's a utility. And then we participate in ones. We just recently joined Mobi, which is the automotive consortium talking about how to tokenize telematic information and how that telematic information gets used and how can other people actually use it for maybe insurance claims. I think those are some of the biggest problems. The paradox of coopetition is one of the biggest problems that The only way that can be solved is human groups getting together and finding a democratic way that may not necessarily be the fastest, may not necessarily be the most efficient, but we hope the highest degree of ownership and allowing for individuals and entities to feel like they had a say in how a system in a way that these decisions were made that they had a part that they played in it. Yeah, I feel like that's definitely one of the biggest opportunities and problems that we're trying to solve through collaboration, which is very different from that of a Web2 company, which is about defensibility, zero-sum, and knock your competition out, win at all costs, right?
[00:26:23.533] Kent Bye: What is it about the cryptocurrencies and the blockchain that is promoting more collaboration rather than competition? What is it at the infrastructure layer that is really making that switch, incentivizing cooperation rather than zero-sum game competition?
[00:26:38.143] Shawn Cheng: I think people realize that at this stage in this ecosystem, for protocols at least, the reality for most founders that are playing at that level or that in the space is that they're launching a non-profit through a foundation that manages a protocol, a for-profit which accompanies being built on top of that protocol, and then working with all your competitors to actually adopt the protocol so that it can get to some semblance of network effect. You're doing all three or four of those things at the same time, and without getting to some semblance of critical mass of people that subscribe and say, yes, this is the protocol that we all agree upon works and is the best way to build this particular product or service, it's a non-starter. And so for Web3 principles and the way that which people are thinking about the flow of information, If Web 2 was centered around how organizations create enterprise value, and Web 3 is about the individual creating value and being able to participate, you can't necessarily play the same tribal games that you had to in Web 2. In Web 3, without actually getting more people involved, it's already dead in the water. There is no dap. When you don't have standards, one of my favorite examples right now, it's kind of like deciding the size of, for a soccer game, like deciding the parameters of the pitch, or how many balls are on the field, or how many players are on the field, and how many minutes are in the game. And if you don't agree upon those things at a protocol layer, players on the field can't even get on there. Like companies can't get on there and say, okay, now we know what the rules are and we know what will be judged by. And so now we can actually compete in a free market. And so given how immature the space is, we're at the stage where many, many different protocols, fat protocols, which is the thing that the space loves to talk about until we have those things, it's not necessarily going to reach mass adoption.
[00:28:41.970] Kent Bye: So you were also telling me a little bit about some of the virtual reality companies that you see are at this intersection between potentially using something like an Ethereum ERC20 token to be able to do various different things within the context of a virtual reality company. So since I do the Voices of VR and so very interested in this cross-section between virtual reality as well as in the blockchain and cryptocurrencies, what is it that you've seen is happening out there in the space of this intersection?
[00:29:08.426] Shawn Cheng: I mean, it's fascinating. The way that I kind of see it is that I see blockchain and AI being kind of the hammer and the sickle of being able to produce and create so many amazing new things. So if blockchain represents almost an infinitesimal amount of data and information that is immutable and malleable and permissionless and accessible, then all varieties of AI, from robotics to NLP to everything in the middle of deep learning and ML, are ways by which it can be repurposed, reshaped into formats that are generative and start to offer new ways that people can engage with it. And I kind of see VR AR as one of the most beautiful, I guess, palettes that this paint can kind of be drawn on. that you can start to put those pixels and bits and bytes into a new way of how they're restructured and how people actually create and consume these pieces. And so, some specific projects that I really am excited about, Tony and Matt who run Little Star, right? That team had built the largest network of premium-based content. Talking to folks like CBS and Disney, they're about to raise a token called Aura. And a lot of their core infrastructure was built by team members that were part of BitTorrent, and the desktop plan for Spotify, and peer-to-peer networks, and being able to transfer that information easily. When transferring the largest files on the internet, especially for VR experiences, what happens when you tokenize that? If you were to be able to allow for tokens to be used in a way by which publishers can ensure that they are the ones that get the credit for being able to say Deadpool 2 or whatever movie is out, and also curators and consumers of that content are using that token to stake against pirates and people that are saying, oh, I'm republishing. I have to stake tokens to be able to publish this piece of content. What happens when the network gets rewarded for taking those things down? And what happens when all of the actors and all of the directors and producers and makeup artists that participated in creating that movie automatically get paid through smart contracts. We start to collapse many, many of these functions where that ecosystem is filled with a lot of bureaucracy, just like many other sectors. But when you start to tokenize layer by layer, we start to see a world where more and more people can feel secure about getting paid for the work that they're doing and that they're producing. And I think that really, really excites me, especially at the intersection of VR and blockchain.
[00:31:53.072] Kent Bye: Great. And finally, what do you think is kind of the ultimate potential of the blockchain and decentralized cryptocurrencies and what they might be able to enable?
[00:32:04.056] Shawn Cheng: The ultimate... Wow. I think one of the greatest impacts of blockchain could actually be a world by which everyone has an opportunity to participate in the economy, a global economy. An economy that isn't necessarily based upon where you were born, since you had no choice in that. A world by which, like we were talking about before, 2.6 billion people without identity can actually get a job, have accreditations, own property, have rights. I'm excited about how blockchain can make the world more human again. It feels odd to say that, but I feel like technology has dehumanized us, made us into addictive machines that are just staring at glowing screens and waiting for the next dopamine hit. And I hope that through smart contracts and automation and cryptocurrencies and tokens themselves that people will think less and less about just the media, social media and content and some of these good things that can be very bad for us. My hope is that blockchain can actually help us become more human again. And that's kind of a weird thing to say out loud. I don't know if I've ever said that out loud. I feel like I've heard a lot of people talk about that in various ways of grafting humanity back into code and our values into the code itself. I really hope that happens, especially for people that aren't lucky enough to grow up in the Bay Area or in New York or even in America, right? That don't have a choice or don't necessarily have the economic conditions to be able to even take a chance and to move from a mentality of scarcity to a mentality of abundance where they can actually have a moment to think about how to participate in a global economy like we were talking about. But I hope that that can happen. I think we're a long ways away and it'll be a long road. But I think that's why a lot of people have been attracted to projects like Ethereum and are really willing to go into the space, even though it's still fraught with a lot of question marks. a lot of uncertainty but many people are driven I think beyond just the ability to make a lot more wealth.
[00:34:46.391] Kent Bye: Is there anything else that's left unsaid that you'd like to say?
[00:34:49.436] Shawn Cheng: Yeah, if anyone that's out there and is interested in thinking about these problems or joining a ConsenSys company or building something that creates a more equitable, open and sustainable world, please reach out to ConsenSys. Check out ConsenSys.net and please reach out to ConsenSys Labs. I think we're always excited to be talking to people that are building interesting projects that can be generative. And we want to be as helpful as we can to anyone that's willing to be committing time on their nights and weekends outside of their real jobs to build this ecosystem. And there's no one that's going to do it for us. And so many incumbents are disincentivized from seeing it succeed, that it has to be for the people by the people. And so if any of this resonates with you, yeah, please reach out. Awesome. Great.
[00:35:47.797] Kent Bye: Thank you so much for joining me today on the podcast. So thank you.
[00:35:49.919] Shawn Cheng: Thanks a lot Kent.
[00:35:51.980] Kent Bye: So that was Sean Chang He's the head of partnerships and programs at consensus So I've a number of different takeaways about this interview Is that first of all got this sense that you know in order to really succeed in these blockchain communities you have to be willing to either give value away and to really Cooperate with your competitors. So there's this coopetition where you're collaborating with all of your competitors to come up with a standard set of protocols And those are kind of like the rules of playing soccer so you decide what those rules are those protocols the ways in which these companies are going to be able to Communicate with each other through the blockchain. So there's a mutable data that's being written to the blockchain that Sean describes as being permissionless and It's information that's immutable, it's malleable, it's accessible, and that all these companies can go in and repurpose and reshape into different formats that are generative and adding value in different ways. And that it's kind of like a free market in that way. And that overall, these Web3 companies, because they're focused on collaborating and building value, then the ways in which you are measuring that I think are different than how VCs traditionally turn everything into a number. That the blockchain ecosystems are looking about how do you distribute value into an entire community in different ways? It seems like there's probably still trying to figure out ways to actually kind of quantify this but one of the things that happened at the decentralized web summit is that it's actually talking to an ecologist because the ecologist was looking at the similar metaphors to a studying nature from looking at these open source communities that are developing within the blockchain community and Finding ways to show value improve value to show that you know You've actually cultivated a viable ecosystem that has a lot of different people that are participating in your project and that if you're able to prove that you have this viability in the sense of an ecosystem then you're able to then get more investment and So the thing that was interesting about Ethereum was that there's this wide range of different people that are working with financial institutions to looking at social change, looking at how these technologies can be embedded into communities where they don't have a lot of access to other technologies and to see If there's 2.6 billion people on the earth that don't have an identity, and if you can't own anything if you don't have an identity, then it's a bit of a non-starter for people to really start to participate in this global economy. And so there's this kind of grand idealistic vision to be able to empower these individuals to start to participate in these economies in ways that, you know, previously they weren't able to do before. So things like self-identity and being able to have some sort of standardized way of identifying yourself to be able to actually participate in some of these larger economic systems. And Sean was also specifically pointing to Littlestar, which is distributing a lot of virtual reality content. if there's a way to tokenize the process of delivering different files out there, then there can be ways of validating whether or not something has been verified as an official distribution channel. And that there could be some ways of tokenizing and distributing the process of copyright enforcement. So rather than coming up with something like YouTube has created with this content ID, which has invested $60 million in order to create this process that is a little bit aggressive when it comes to takedown notices. And what Cory Doctorow told me was that pretty much nobody who is using the content ID, either as a content creator or the people who are creating content, there's a lot of false positives and it tends to be a little bit more aggressive of restricting free speech. and that this system by LittleStars is trying to think of ways of using the blockchain to both do the distribution of files but also the verification of those files and to potentially come up with different incentivized ways for people to report copyright violations so that the citizens could be able to participate in this process of trying to make sure that the original content owners are able to be adequately compensated for the work that they've been able to do. and just in the process of embedding your values within these smart contracts and so to have things do automatically there's this concept of like out of sight out of mind which is that if you can't see something that is happening then how do you know like you know where your dollars are actually going to go just as a simple example if you're going and buying stuff at the grocery store if someone is Doing some really unethical practices, but it's the cheapest price We don't necessarily have a lot of transparency as to how each of these different aspects of food were produced and so if there's these different Entities that are able to give these different verified claims on these different products that would allow you to you know Maybe put on a filter on and only show yourself the things that are going to be produced in some sort of ethical fashion and I think being able to have that ability to have a Tracking of stuff as it you know is coming from the source and to where you get it You're able to do things like that like embed smart contracts to be able to say hey I only want to buy fair trade coffee or companies that are having specific diversity initiatives or whatever it ends up being that there could be both a way that These companies could put in these practices and other independent entities that are somehow verifying that they're doing that you already see that today with the little stamps of approval, but This is just going to be able to take it to the next level and to be able to automate that even further. So there seems to be a lot of excitement about what the potential of all this is. And I think that if you look at the fundamental regulators of a society, whether it's the technology and the algorithms or the market dynamics or the culture or the laws that are governing everything, that all these things are playing together. It seems as though that these blockchain technologies are providing a technologically mediated ways for people to embed their values into their process of how they're doing business, which is going to drive perhaps new market behaviors and more economies and being able to potentially change these fundamental dynamics. And if there is this sense of trying to invest into communities in different ways, then it has the potential to change some of these dynamics where all the wealth is consolidated into a few hands, and that is being able to be redistributed out to these various different communities, and really trying to find new ways to make sure that you're actually delivering value to these communities. And that level of oracle of ensuring that, I think, is one of the big open questions as to seeing that the potential of these blockchains have that is actually carrying through on that. So I expect to see that there is going to be a continuing evolution of these blockchain technologies and that we're going to see a convergence of these blockchain technologies within the context of these virtual reality experiences, especially because of self-sovereign identity and be able to track assets and just virtual currencies. Because when you're in a virtual world, you need kind of a global currency. And the blockchain is the closest thing that we have to be able to provide ways for people to exchange value with each other. And so when we think about the vision of the metaverse that's depicted in Ready Player One, we don't want it to be owned by just one corporation and one company. We want it to be decentralized so that we can have the freedom to be able to fully participate and not be bought and sold and advertised in a way that every single one of our moves are being tracked. And that's a big open question as to whether or not this vision of a decentralized metaverse and a decentralized web is even possible. But I think that virtual reality provides a direct immersive experience of the benefits of what it means to be able to actually own your identity And yeah, I think it just, it provides all sorts of ways of providing these immersive embodied experiences with these virtualized exchanges. And I think that because of that, there's just a lot of compelling use cases for virtual reality in the blockchain in the future. So, that's all that I have for today, and I just wanted to thank you for listening to the Voices of VR podcast, and if you enjoy the podcast, then please do spread the word, tell your friends, and consider becoming a donor to the Patreon. This is a listener-supported podcast, and I do rely upon your donations in order to continue to bring you this coverage. So, you can donate today at patreon.com slash voicesofvr. Thanks for listening.
