All of RowanBDonovan's Comments + Replies

Cool, thank you for the comment! Sorry about the late reply; I didn’t get a notification. I’m part of a team now, and we have a big post coming out, hopefully in a few days. Then you can check there how your model compares to ours, and maybe we can synthesize the best of both!

Would you be interested in joining our Impact Markets Discord server?

With carbon credits you have governments forcing companies to either stay below pollution limits or buy carbon credits on the market. So to force companies to buy other, maybe generalized moral credits, we’d first ha... (read more)

Thanks! I’m in touch with them now.

VCs often manage to buy stakes in companies privately. Wouldn't it be natural to sidestep that issue by copying what VCs do (and staying off the blockchain)? i.e. step (1) is privately traded patronage certificates, then step (2) is public ones? If so, then one could imagine a scenario where all you need for now is to do some research, and write up a pro forma contract?

Heh, yes. That’s an option. But I don’t suppose having a contract template has been the bottleneck why this hasn’t happened over the past years? I made a Google Doc for this for one impac... (read more)

I think the process of issuing charity shares could be automated for the charities.

Yes, that’d be awesome!

  1. Creating a wallet is so easy, there is virtually no need to automate anything further.
  2. Creating a bonding curve auction on Serum is something that would be valuable to automate.
  3. Raydium integration, lending, etc. are slightly less essential, but that would also make sense to automate at some point.
  4. But researching the legal environment in the state where the charity is registered and coming up with creative ways around local regulations or going t
... (read more)
6
RyanCarey
3y
VCs often manage to buy stakes in companies privately. Wouldn't it be natural to sidestep that issue by copying what VCs do (and staying off the blockchain)? i.e. step (1) is privately traded patronage certificates, then step (2) is public ones? If so, then one could imagine a scenario where all you need for now is to do some research, and write up a pro forma contract? I can envisage a lot of ways to ensure some lending, so this seems like a small advantage. Yes, having the ability to short companies is quite a weak method for punishing companies, because they can just stop selling patronage certs if they go negative. It would be better if we could get charities to pay for their negative impact somehow. An ``absolving'' certificate, of  sorts. Maybe the people who would want to sell these ``absolving'' certificates are similar to the ones who look to buy ``patronage''... Ahhhh, OK! I must say though, it rewards and punishes orgs for the performance of other orgs in their area. You portray this as a positive, but it seems like a big negative to me. It incentivises people to start new incompetent orgs in an intervention area, (or to keep incompetent orgs running) just because there are existing competent orgs. Conversely, it punishes competent orgs for the presence of harmful orgs implementing their same intervention. It's quite messy to require an external panel to divide up the tokens between orgs. Frankly, given the fact that it's a bit inelegant, I would bet that other problems will arise. I can't promise I'll have much more to say in this thread, but in case I don't, let me say that I've found this an illuminating discussion. Thanks!

Nomenclature: I’ll need to think about that at some point… I particularly like the analogy with for-profit shares, so having a name with “shares” in it would be useful. Not if it creates legal problems though. I also like “public good” more than “impact” because it sounds more reputable to me and makes clear that we’re talking about positive impact and not random perturbations or negative impact. “Public good patronage share” is getting a bit wordy though… It seems too early to think about this in earnest though.

Discreteness: That is indeed desirable, and ... (read more)

2
RyanCarey
3y
Agree that discussing terminology is not yet useful in and of itself. Though I'm intending it for the purpose of idea clarification. Re charity Vs intervention shares, my thinking was just that it would be more transparent for intervention shares to be constituted of charity shares, and for such shares to be issued by charities. Based on reading your comment, I'm not sure whether you agree? As for your arguments: I find myself not so convinced by (1-2). I think the process of issuing charity shares could be automated for the charities. If desired, it seems not out of the question that these entities could even run as for-profits - given that you are proposing a revolution of the NGO sector, it seems weird to restrict yourself to the most common current legal setup (although I agree that tax deductability is nice to have). I can see that (3) pushes weakly toward impact certs, but not strongly because ideally you also want to have specific markets, and the benefits of liquidity and specificity trade off against one another (in terms of the information that readers can gain). And even if resale markets are fairly dormant, I don't think it's a disaster - it should still be at least as good as the status quo (donations), and in many ways better (valuation is done retrospectively). Re (4), why can't charity shares be bought/sold? Re (5), what is the built-in mechanism? Re past/future shares, on further thought, even if you only allow patronage certs to be sold for past events on the "bottom layer", there are ways to route around this: you can sell shares in the company itself, or you can sell the rights to any future patronage shares. I'm certain this is a good thing, because it allows people to invest in orgs that will have large future impact, similar to investing in an org that you think will win an x-prize. The real question is just whether you should allow this "natively", i.e. whether you should.be able to sell patronage of future activities. If you think of no

Awesome, thank you!

  1. Public endorsements from trusted experts in relevant domains, such as crypto, econ, impact certificates, EA-style prioritization. Yes, that’d be great! I’m closest to knowledgeable on the last one, and I’m very concerned about Ofer’s concern above. So I want to come up with a promising solution to that before I move forward at all.
  2. A series of blog posts detailing how different actors can use the system. Yes, very good. I’d also explain the reasoning behind various design decisions in these posts. Something that irks me about a lot of
... (read more)

Suppose there's 50% chance that next month a share will be worth $10 (after the project turns out to be beneficial) and 50% chance that the share will be worth $0 (after the project turns out to be extremely harmful). The price of the share today would be ~$5. Why would anyone short these shares if they are currently trade at $5? Doing so will result in losing money in expectation.

Ah, you’re right. Not sure why I was so confused about this before.

I might’ve implicitly been thinking about the case where the bad news about the intervention gradually comes... (read more)

Token lending seems like a really good thing here since it would allow people to short and it would generate passive income for hodlers. Since the tokens will be fairly obscure compared to BTC or USDC, the interest will be high, provided there is any interest in shorting in the first place, right? So the shares of controversial projects like playpumps will yield high interest but will remain cheap while, say, AMF shares will yield low interest but appreciate. I’ll need to think about whether that’s good. And what the interest currency should be.

Perpetual f... (read more)

Yes. I think we have different types of asymmetries in mind here. I can see three types at the moment, but maybe there are more that I’m overlooking? How do you define “net-negative” if not in terms of expected value? Stochastic dominance? Or do you mean that the ex ante expected value of an intervention can be great even though its value is net-negative ex post?

Different asymmetries that come to mind:

  1. Investors should be able to short just as easily as they can long, and their profits from correctly predicting downside should be just as unbounded as the

... (read more)
4
Ofer
3y
Here's a concrete example: Suppose there's 50% chance that next month a certain certificate share will be worth $10, because the project turns out to be beneficial; and there's 50% chance that the share will be worth $0, because the project turns out to be extremely harmful. The price of the share today would be ~$5, even though the EV of the underlying project is negative. The market treats the possibility that "the project turns out to be extremely harmful" as if it was "the project turns out to be neutral". These seem like very important questions. I guess the concern I raised is an argument in favor of using ex ante expected value. (Though I don't know with respect to what exact point in time. The "IPO" of the project?). And then there can indeed be a situation where shares of a project, that is already known to be a failure that caused harm, are traded at a high price (because the project was really a good idea ex ante). I don't see how letting traders bet against a certificate by shorting its shares solves the issue that I raised. Re-using my example above: Suppose there's 50% chance that next month a share will be worth $10 (after the project turns out to be beneficial) and 50% chance that the share will be worth $0 (after the project turns out to be extremely harmful). The price of the share today would be ~$5. Why would anyone short these shares if they are currently trade at $5? Doing so will result in losing money in expectation. Perhaps the mechanism you have in mind here is more like the one suggested by MichaelStJules (see my reply to his comment). That's a great point. This also applies to traders who go long on a share (potentially making them give less weight to the downside risks of the project). I think something like this can potentially be a great solution. Though there may be a risk that such a market will cause other crypto enthusiasts to create competing markets that don't have this mechanism ("our market is truly decentralized, not like

Very interesting!

I'm generally interested in this project. If such a system existed, I'd probably issue certificates for research artifacts (papers, blog posts, software, datasets, etc.) and would advocate for the usage of impact certificates more broadly.

Well, it does. :-) If you haven’t created tokens yet, is it because of the two concerns you listed? I.e. (1) that the creator is not privileged over later buyers of the shares and (2) that the auction mechanism of the exchange always gives you the best price even when you’d like to pay a higher price ... (read more)

2
Ben_Harack
3y
Interesting, thanks for the reply! Let me unpack what I'm thinking of when I say "if such a system existed". Here are some things I'm imagining in such a scenario: Ideally, there is a market already (not just the potential for one, as that link indicates), or there is a clear plan and a number of EAs that I know the names of who have said that they will participate. I'm willing to be an early adopter, but I'm not in a position where I can vet the fundamentals of the project. For example, I'd like to see people who were involved in the prior attempts to do Certificates of Impact endorsing a plan. Similarly, I'd like to see analysis from a different and identifiable person who is an expert with crypto. I'm just conversant in crypto, and I find most of the writing here to be very somewhat inaccessible due to its length and complexity. The above is currently my main set of cruxes, but here are a few expanded thoughts on things I'd like to see: * What is the precise plan (not just a discussion of tradeoffs and technical possibilities).  * Example: A blog post (or several) detailing exactly how the Certificates of Impact system works, how each type of individual can interact with it in all the expected ways, and what its constraints are. After reading such documentation, someone with close to zero crypto knowledge should be able to participate. * Nice to have: A community-vetted website or portal hosted on a reliable domain that simplifies the interactions in the market so all unneeded and removed complexity and terminology is hidden. * Public scrutiny of the system by identifiable crypto people in the community. At my level of knowledge, the only way that I can feasibly be relatively certain that the system would likely be sane is that I've seen it publicly scrutinized by people who are extremely skilled in this sort of thing. I realize that what I'm asking for is costly. From my perspective, these requirements seem to be pretty fundamental for us actually ki

Government bonds, of course! Yes, I should mention those as a precedent. :-)

DAOs with a promising mission: Yeah, but those don’t seem so different from social enterprises or even most companies that provide an important product.

Raphaël Mazet: Interesting, thanks! It’d be great to get input on that question.

Oh wow, yes, thank you! That disconnect between distributions – one symmetrical, the other roughly log-normal – strikes me as very important and dangerous!

This “ex post penalty” that you suggest would be great… I’ll think about things like offering standard (non-inverted) perpetual futures to make it easy to make a lot of money by shorting risky projects; investing through shorting tokenized public bads or world suck; making robustness against downside risks part of the intervention share governance; and whatever else one might do against this problem.

4
Ofer
3y
Re the shorting related ideas: maybe you're thinking about mechanisms that I'm not familiar with, but I don't currently see how these approaches can help here. Certificate shares for a risky, net-negative intervention can have a very high value according to a correct fundamental analysis (due to the chance that the intervention will end up being very beneficial). In such cases traders who would "bet against the certificate" will lose money in expectation.

Thanks! Yeah, and charities whose buy-/sell-in would be important. I’ll start tracking my leads more systematically.