In continuing the tradition of Ethereal Summit, ConsenSys Mesh hosted the inaugural Ethereal Assembly in NYC on June 21st, 2022. Leaders across the web3 ecosystem came together with a deep desire to collaborate and discuss the current state of the industry. Watch the sizzle recap video here.
We asked a simple question, “what can we do together that we couldn’t do apart?” It’s not enough for a company to use blockchain, tokens or smart contracts to be considered a ‘web3 company’. To truly live up to that name means embracing the web3 ethos, which we define as a willingness to build together and share in the value generated by a network. New communities and their leaders are ushering in a more decentralized future - we’re witnessing an inversion of old power dynamics in real time. This is what the inaugural Ethereal Assembly was all about. In this spirit, we took the best of what we learned to share with our wider community.
The Format: 6 rooms. 6 big topics. Max 25 people per room. Open and honest conversations, following Chatham House Rule.
In contrast to traditional panel-based discussions found at most crypto conferences, Ethereal Assembly participants sat in circles and were encouraged to speak with candor, share hot takes, and even make commitments go-forward. When you gather founders, CEOs, investors, product leads, DAO mods, and engineers in a room, there will inevitably be disagreements, competing interests and a diverse set of opinions, but this diversity is key to getting to the right solutions.
We’ve summarized the most important discussion topics across each room below. What should we talk about next? DM us on Twitter with your ideas.
Real talk about Gaming
Conversation in this room began by diving headfirst into questions of tokenomics and incentives. Web3 gaming has a natural boom and bust cycle, which is uncircumventable when a game has a token that has tradeable value but isn’t burnable via gameplay. Leaders in the room believed more projects should prioritize the prevention of early value extraction as a goal. This is often driven by players that immediately dump them into open markets. Having separate tokens for governance and game play was one possible suggested solution to this.
Overall, the conversation highlighted an important move in the gaming industry from “Play to Earn” to “Play and Earn”. This encourages users to play in a scalable and consistent way, instead of incentivizing financial speculation simply for the sake of earning.
There was strong agreement among participants that in order for the best web3 games to be successful, they need to be community-driven and make it easy to build and modify on top of existing code. Games that incentivize further building are the ones that stand the biggest chance of ‘making it’. This could include making assets downloadable and tradable on marketplaces, or having shared standards, schema or identity solutions to avoid user lock up.
Better identity solutions was also an important discussion point (and was a recurring theme throughout Ethereal Assembly). Participants were aligned on the fact that successfully transitioning to true web3 gaming won’t be possible without better identity solutions, thorough exploration of ownership of assets, and transferable reputation. Additionally, leaders in the room believed factoring in anonymous credentialing systems will be transformational to managing roles in trustless, web3 based gaming environments.
How do we address the human as we build web3 communities via DAOs?
“I don’t want the toxicity to start so early at this stage in the tech”, someone said in this room. “Why are we still having all of these parties with loud DJs? We want more connection!”, said another. This was one of the most crowded rooms at Ethereal Assembly, highlighting the urge many feel to build web3 in a more holistic, sustainable way. There was no denying it, burnout is on everyone’s mind. The conversation therefore revolved around how we build in a way that accounts for our humanity by fostering genuine connection, inclusivity and rest.
People working in web3 full time are often overwhelmed by all of their communications channels and the 24/7 news cycle. Some suggestions to counter this included a need to recognize our own limitations as human beings by having more frequent conversations about balance, boundaries and mental health - it was also acknowledged that these conversations tend to be more successful when they are initiated by leaders.
Various DAO members who have wrestled with these imbalances shared tips they’d found helpful:
- Using a stage-by-stage unfolding of communication channels in Discord, so new members onboarding don’t get overwhelmed by immediate access to all the information within.
- Taking time to share the DAO’s values with newcomers - this helps ensure there is alignment across members and will set newcomers up for a successful entry into the DAO.
- Celebrating individuals and their contributions when they decide to leave a DAO. This was done in a prominent DAO when a leader left and the DAO held a public celebration to mark the end of their time as a contributor.
- Creating rhythms and rest in DAOs. Everything in nature has rhythms and patterns, why should a DAO be any different? Setting goals, milestones and defining seasons can be incredibly helpful for this.
Someone in the room made the poignant comment that we sometimes tend to operate as martyrs, working ourselves dry in an attempt to create a better world for future generations, not realizing that what we are actually doing is setting a poor precedent for those who will come after us. Others in the room said they had instituted “no new alpha” times during the week, where they encourage participants to focus on what’s in front of them instead of sharing any new information with one another.
Culture within communities is being formed daily and it’s up to leaders to set these habits, traditions and values in order to grow and maintain the health of each. What’s right for a group of 10 people may not be right for 100 or 1,000 members. It will take many experiments by leaders to find the models that work for them and the willingness to share those lessons with others.
What should the standards be in an open metaverse?
A big idea discussed in this room was that of “anti-user lockup”. For the purpose of the conversation, participants defined user lockup as walled gardens and closed experiences that make it difficult (or nearly impossible) to partake in any adjacent related activities in an alternate metaverse. Anti-user lockup would mean committing to not locking up users and hoarding value within these networks in the metaverse, a controversial idea to propose as abstaining from user lockup is a particularly difficult ask of start-ups who require a certain amount of liquidity to launch and grow their platforms.
Participants discussed what they would take with them from one walled garden to another if they could. Suggestions included a single transferable identity and a single stack of data. Another participant suggested not just focusing on the transferable elements, but taking a step back to consider what our shared values across the metaverse should be. The challenge of building something of major value and efficiently sharing in that value over the network's progressive maturity led the group to conflicting conclusions but highlighted a desire to change the status quo.
Of course, it’s impossible to discuss the metaverse without also talking about identity. But what exactly IS identity in the metaverse? “There’s a trillion dollar opportunity to build out interoperability in the metaverse”, someone said. Several companies have been trying to do this but no one has succeeded. One possible solution offered was to embrace a user's ability to have several separate online identities and tie them to the same person. Framework and standards to do this would be transformational for the industry and have major implications for how game builders might choose to build and grow their game and communities over time.
“Data should be user owned, and each person should have the option to not be the product sold”, someone else said as the conversation turned to maintaining autonomy from tech giants and/or governments. There was a clear sense of mistrust of many web2 tech giants and their poor track record of respecting those who chose to build on top of them over the long term.
However, there was also a major acknowledgement that these tech giants represent major distribution channels for user attention and are nearly impossible to ignore when it comes to the need for growth. In order to justify external investments, many companies are forced to use these networks and end up dependent on them for growth. One way to avoid this pitfall would be to build an alliance of web3 communities from the get-go and share in a federated network effect.
The final major point of the discussion in the room was interoperability. The room agreed that there is ultimately a difference between “infrastructure layer people” (who may not be particularly interested in interoperability) and “application layer people” (who are naturally more interested in interoperability). Building an interoperable metaverse will ultimately depend on the good will of all those invested, which starts with conversations just like this one. Leaders in the room were committed to more integrations, and even after the room adjourned, founders could be seen forming working groups and inviting new companies into existing initiatives.
How to ensure that investors play a valuable role in DAOs?
Recently, there have been a number of high profile instances where VCs who joined DAOs were criticized for not bringing the value they sold their respective DAOs early on. This topic spurred a conversation around what it means for investors to play in the formation and running of DAOs over time.
When it comes to the role that investors can play in DAOs, it was agreed that “participation” is neither a helpful nor concrete metric to use to quantify success. A DAO can have an extremely high participation rate and deploy lots of capital through multiple investments, all the while not making meaningful progress towards its goals. We need to develop better metrics to measure the value add investors bring to DAOs (beyond their capital contributions and beyond participation). Metrics need to be linked to DAOs' broader mission and quantify progress towards its mission.
One of the ways in which institutions can bring value to the table is by providing real structuring and compliance expertise. One of the best ways investors can help DAOs is by providing guidance around their entity, aligning on measurable goals and bringing deeper connections to their networks.
The discussion wrapped up with the group briefly exploring what is the best way to test the assumptions we discussed. The group agreed that the most productive environment for testing ideas and developing best practices is with a small group of committed individuals. One of the best ways investors can help DAOs is by setting up a strong working model for a relatively small group of people (100 max), which can then be used to scale various DAOs over time. Before we can roll out governance structures to massive groups, we need to continue to iterate, optimize and perfect operations on a smaller scale.
How do we onboard the next 100M users by making the intangible tangible?
There is a long journey ahead in onboarding the next 100M users and doing so will require closing the gap between early adopters and the new wave of crypto-curious. Leaders in this room represented many of the most successful web3 companies using physical spaces and tangible objects to illustrate what esoteric web3 technology can do. The tension between seamless user experiences and educating the masses on paradigm shifts is deeply felt by builders in the space, and it’s ultimately unclear who is responsible for educating the masses.
Founders and leaders were particularly excited by ideas around improving user onboarding. It was agreed that demographically tailored educational resources are needed to address specific needs users face while onboarding. Another option discussed was providing physical spaces with on site support, where newcomers could ask about anything from how to set up hot wallets to how to secure their assets in cold wallets. Providing tangible spaces for onboarding would go a long way in overcoming some of the major skepticism felt by many about the industry due to scams and bad actors.
“I’ve gone to Washington Square park to give NFTs to strangers and you wouldn’t believe how long it takes to convince someone this is legit,” someone said. Other leaders shared their experiences onboarding their art communities into web3 in order for them to share in the benefits of the industry. Overall, the room agreed that the communities that could benefit the most from onboarding into web3 need to be prioritized from a user education perspective.
Design decisions around what we use to onboard people also touched on why we want to use a blockchain, smart contracts or tokens in the first place. We don’t want to simply replicate the existing power structures and mirror the same benefits and UX from web2. Although the group believed we need to simplify the decisions around what chain, network, token, marketplace, wallet, etc we use, many in the room felt strongly that this should not come at the cost of losing security and emphasized the need for decentralization.
What does it mean to have a layer two identity?
A large part of the conversation in this room revolved around what type of layer 2 identity we should be advocating for: a self-sovereign identity vs. a model less focused on the user. While self-sovereign identity allows the user to be in control of what data they reveal about themselves and therefore sounds attractive to many whose primary focus is privacy, the model has several shortcomings.
At its core, reputation requires the ability of other people to make claims about third parties. If a bad actor commits a crime, the general population needs to be able to know who that is and enforce certain precautions to keep others safe. Under a strictly self-sovereign model, however, doing so would be nearly impossible. As someone in the room reminded the group, this tension is one described by Vitalik as the tension between sovereignty maximalists and collectivists.
One suggestion was to use NFTs as a form of verifiable identity and then further distill this identity into smaller micro-claims. This would allow individuals to share certain elements of data as/when relevant, while still having their claims be connected via composability.
Many in the room expressed concern with users being unable to control the factors by which they are ‘scored’ in a reputation system. There is an inherent tension and power dynamic present in creating a system that is code-based and will dictate a ‘score’ for users. What are the implicit biases that we would be bringing into this code?
Another participant mentioned that if it’s too easy to “get slashed” in an online reputation system, then it won’t be very likely that people would want to use it in the first place. Ultimately there is only utility to reputation if enough users are interested in using the system in the first place.
While no clear solutions exist to these problems as of yet, a project the room agreed was interesting to observe from the perspective of composable identity is Gitcoin passport. The project enables users to carry credentials with them through various projects throughout the Gitcoin ecosystem and will provide valuable learnings to the decentralized identity community go-forward. Ultimately, progress in this space will come down to building good tooling in hand with onboarding new users.
Interested in joining in future Assembly events or nominating a leader?
We hope to help curate future Assembly events and key discussion rooms in the future. If you’re interested or would like to nominate another leader to join in the next one, please sign up here.