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...
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...
I think the process of issuing charity shares could be automated for the charities.
Yes, that’d be awesome!
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 ...
Awesome, thank you!
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...
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...
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:
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
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 ...
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.
Thanks! Yeah, and charities whose buy-/sell-in would be important. I’ll start tracking my leads more systematically.
This post gives an overview of the general vision.