To begin with, let me just reiterate a terminological remark I made elsewhere, that might help a bit with conceptual clarity: the certificates don’t really denote an increment of impact. They denote being a “patron” for an impactful action. So they’re really patronage certificates (Or you can choose a similar name). If the buyer is an EA, it is still an impactpurchase, because buyers are simply valuing the certificates based on their impact.
Now let me say something more novel. To decide what the impact certificates should be for, it seems like discreteness is a key desideratum. An organisation is relatively discrete, so it’s easier to say whether a charity did/didn’t do something, than to evaluate smaller objects (like a project) or larger objects, like intervention areas. Instinctively, I’d think that intervention shares are a non-starter. Because it’s so unclear who is allowed to sell them. It would seem to me for an intervention share to be built out of charity shares, similar to how an ETF is built out of stocks, or how a mortgage-backed security is built out of home loans. Out of the other two, I don’t have as strong of an opinion.
If you do “charity shares”, then you’d probably want to sell shares corresponding to activities that are restricted to a particular year, or at least those that have already happened in the past. Otherwise, the charity could just sell shares corresponding to large projected future impacts, and then shut down. Once you sell the charity shares, the buyers would need to be able to split those shares up, and sell only that portion of the patronage corresponding to their preferred projects.
If you do “project shares”, then there’s a bit more overhead for the charity, in selling these separately, but then the buyers can just buy their favourite projects directly. Or if they want to buy patronage for all the charity’s activities, they can buy a full set, or bundle them together.
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 charity shares are probably top on that metric, but I don’t see the differences between the models as particularly great. Intervention shares are almost as discrete as charity shares in that they are simply a few charities pooled together with the option to add more, sort of like the Serum Ecosystem Token. At every point, it’ll be complete transparent who has been voted into the pool and how much tokens their wallets still hold. Projects are a bit more vague in that no one goes out of their way to write binding by-laws for a research project and lock themselves in to some particular mode of operation through expensive marketing – but then again charities can gradually change their complete staff. A project will rather tend to be discontinued when a key person (maybe the only person) stops working on it. But in the end, I think charity shares still win by a small margin.
But charity shares are probably a nonstarter for different reasons: (1) So long as the benefits of fundraising through impact stock issues is avant-garde, speculative, and legally risky, charities will be loath to invest any time into it. That might be avoided by me issuing the token for them and donating them all to them, but I don’t know if that really makes a difference legally. Besides, they need to be auctioned off in some fashion, which will again cost staff time. (2) The legal situation will probably be determined by the location where the charity is registered, so it would be infeasible for a third party to do the legal research on behalf of all the charities. Even if most of them are in the US, the laws there vary a lot between states. (3) Liquidity will be a huge bottleneck so long as the markets are not yet well established. Even the liquidity on the SECO/USD market I mentioned above is rather meh, and that’s listed on big exchanges. This will be more manageable when there are fewer markets. That may also make it easier to get someone like Raydium on board with the project. (4) To be able to short bad charities, there needs to be lending. The smart contract that could manage the remaining intervention shares could, for a long time, see to it that these can be borrowed at high interest rates (e.g., > 500% APY, so that lending still incentivizes hodling). (5) Intervention shares have a nice build-in decentralized mechanism for keeping bad actors out. For charity and project shares, only centralized mechanisms come to mind.
So for better or worse, I don’t think anything other than intervention shares will be feasible at all at first. But if the system catches on, charities and projects will want to jump on the fundraising train, and then the incentives would be right, so that they’d be happy to put some work into issuing and auctioning off their shares. Note that the idea behind project shares is to remove the legal risks from the charity, so the charity would never touch them or do anything with them; that would all be managed by the employee who runs the project and is in the right jurisdiction to issue the shares safely.
Past activities: Only selling impact in past activities would seem odd to me. Of course there are a lot of established companies that have their quarterly earnings calls where they report on various fundamental and how they changed over the past quarter, and then shareholders react to that. But most EA charities are more like startups. If we want to grow the community, then hopefully most EA charities are entirely in the future. That may be analogous to how one can base the valuation of a profitable company on EBITDA but has to come up with othermethods for early-stage startups. AMF might have quarterly net calls, but the valuation of most charity startups will probably also be based on such criteria as the soundness of the strategic plan or path to impact, the team, the network, the marketing, etc. There might of course be Safemoon-type charities in the end, but I don’t see how that could be avoided. All we’ll be able to about it is education, centralized vetting, and using the classic legal system against them. Besides, we at least already sort of know how to do that, to some extend, since we’re currently allocating our illiquid donations according to similar criteria.
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 normal stocks, they do confer an ownership of the company into the indefinite future. Stocks can also have the problem where people make a company and make a bunch of promises about what it will do, sell it, then reneg on those promises—they call it securities fraud, and have a lot of defenses built up against it. If you want to piggyback on that, maybe you would want to only allow sale of past activities “natively”, and then for sale of future impact to be done only by sale of regular stocks in the company itself. That’s my initial instinct, although there may be a lot of other considerations.
I think the process of issuing charity shares could be automated for the charities.
Yes, that’d be awesome!
Creating a wallet is so easy, there is virtually no need to automate anything further.
Creating a bonding curve auction on Serum is something that would be valuable to automate.
Raydium integration, lending, etc. are slightly less essential, but that would also make sense to automate at some point.
But researching the legal environment in the state where the charity is registered and coming up with creative ways around local regulations or going through complicated registration procedures such as the ~ 1.5 year long one with the SEC are not things that I can automate (I think).
So it varies – a lot of things can be automated but what remains is probably still prohibitively complicated. There are also more things that charities can do with their shares to make them more attractive, such as governance mechanisms. Finally, I don’t want to put all the work into automating the system so long as its demand and product-market fit is unproven.
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.
I’m taking two different perspectives in the comment based on the following steps: (1) What is realistic to realize now to get the idea off the ground, and (2) what is realistic to expect to happen in 5–10 years assuming that step 1 has succeeded. Now that we’re at step 1, I think it’s unrealistic to think that almost any charity will be ready to run these risks and invest any time given the unknown value of the fundraising system for them. But once we’re at step 2, the value of the system will be proven (or else we won’t reach step 2), in which case charities will hope to raise tens of millions or more through the system, and it will be worth going to great lengths for them, e.g., founding a for-profit, hiring lawyers, and going through SEC registration processes.
US for profits of course also have to register their securities. They can do a lot more with them, so doing this as a for-profit is probably necessary, but it’s still very costly. Founding a for-profit branch in another country may be an option, but I don’t know enough about that to tell.
although I agree that tax deductability is nice to have
I don’t see a way to get that unfortunately, but then again the money with the least valuable counterfactuals comes from for-profit investors who don’t expect deductibility anyway. The legal risks I’m referring to are not simply that it might not be possible to get tax deductibility. It’s rather that in the worst case the responsible people at the charities may need to pay 8–9 digit settlements to the SEC or go to prison for up to five years for issuing unregistered securities. Especially the second would be a tremendous risk to the whole AI safety ecosystem. Even if the risk of that happening is small because they’re likely to be able to reach a settlement, it may still be too great of a risk for any AI safety charity to touch tokenized impact at all.
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).
Yeah, makes sense.
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?
Ah, you actually intended it exactly like SECO, okay. :-)
My thinking has gone through the following steps: (1) I want to create charity shares. (2) Oops, charity shares are prohibitively difficult to do because of legal risks, effort, and hence very low chance of getting the buy-in from all the US- and UK-based EA charities. (3) So I need to come up with something that is almost as good but is more achievable: Project shares, because individuals are more likely to be outside the US or UK, and intervention shares because I can do them from Switzerland with minimal buy-in (just an okay) from charities.
So once we are in a position where it becomes realistic to expect charities to issue their own shares, we don’t need intervention shares anymore. They may still have their various benefits, like governance and maybe higher liquidity, so they may continue to be developed, but at that point they can become an afterthought. And maybe there’s a way to convert them into a pool of charity shares too.
Re (4), why can’t charity shares be bought/sold?
Ah, my point here was more that an evil charity that is afraid that it’ll get shorted can decide not to offer the (say) 99% of its shares that it still holds for borrowing. The only shares shorts can borrow will then be those that some others have, directly or indirectly, bought from the charity, so relatively few. Conversely, the smart contract that manages the intervention shares could just be developed such that it automatically puts up all the shares it still holds onto a lending platform. It’ll probably take a few years before that proportion is down to 1% and by that point the shares will be distributed across a number of charities of which hopefully very few are evil. ;-)
Re (5), what is the built-in mechanism?
I’m referring to this one:
There could be, e.g., quarterly events where a new organization can receive a fraction (which decreases every time) of the remaining shares. The shareholders would vote on who the new awardee will be, and the issuing organization or a smart contract will donate the shares accordingly.
I’m currently very concerned about prices not reflecting downside risks, and this mechanism is the only one that may be able to keep risky charities out, so it seems very important to me but unfortunately also rather unsatisfactory.
researching the legal environment in the state where the charity is registered and coming up with creative ways around local regulations or going through complicated registration procedures such as the ~ 1.5 year long one with the SEC are not things that I can automate… I’m taking two different perspectives in the comment based on the following steps: (1) What is realistic to realize now to get the idea off the ground, and (2) what is realistic to expect to happen in 5–10 years assuming that step 1 has succeeded… I don’t see a way to get [tax deductability] unfortunately… The legal risks I’m referring to are not simply that it might not be possible to get tax deductibility. It’s rather that in the worst case the responsible people at the charities may need to pay 8–9 digit settlements to the SEC or go to prison for up to five years for issuing unregistered securities.
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?
Ah, my point here was more that an evil charity that is afraid that it’ll get shorted can decide not to offer the (say) 99% of its shares that it still holds for borrowing...
I can envisage a lot of ways to ensure some lending, so this seems like a small advantage.
I’m currently very concerned about prices not reflecting downside risks, and this mechanism is the only one that may be able to keep risky charities out...
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″...
My thinking has gone through the following steps: (1) I want to create charity shares. (2) Oops, charity shares are prohibitively difficult to do because of legal risks, effort, and hence very low chance of getting the buy-in from all the US- and UK-based EA charities. (3) So I need to come up with something that is almost as good but is more achievable: Project shares… and intervention shares...
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!
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 impact purchase, and it worked just fine. They even have a version history that’s a bit like a blockchain. Writing contracts is rather far from my absolute advantages, so maybe it’s also far from my relative advantages…
I can envisage a lot of ways to ensure some lending, so this seems like a small advantage.
Yeah.
It would be better if we could get charities to pay for their negative impact somehow.
No mechanism comes to mind, but that general problem is one I want to think about more.
It’s quite messy to require an external panel to divide up the tokens between orgs.
That’s just for the initial allocation. So long as no one (other than me) has the tokens, no one (other than me) can vote, which is boring. But once I’ve allocated some 50% of them to MIRI, FHI, CLR, AISS, et al., the actual voting can start. I haven’t researched how that is usually done on Solana, but surely there’s some elegant mechanism for it.
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.
If the existing shareholders – MIRI et al. – initially vote to get Evil Org accepted into their ranks, but then it turns out that Evil Org is evil and they regret the decision, then yes, that’s a problem. But if they set a high bar and only vote in orgs that have proven over many years to do high-quality and conscientious work, the risk from that failure mode can be minimized. So for this to become a problem, a new org would first have to impress MIRI et al. a lot, but then completely fall short of their expectations after all.
And if the problem with the disappointing Evil Org gets too bad, someone (me) will deploy an alternative intervention token, and the market will decide which one people like more. There might even be a market of one token against the other.
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!
To begin with, let me just reiterate a terminological remark I made elsewhere, that might help a bit with conceptual clarity: the certificates don’t really denote an increment of impact. They denote being a “patron” for an impactful action. So they’re really patronage certificates (Or you can choose a similar name). If the buyer is an EA, it is still an impact purchase, because buyers are simply valuing the certificates based on their impact.
Now let me say something more novel. To decide what the impact certificates should be for, it seems like discreteness is a key desideratum. An organisation is relatively discrete, so it’s easier to say whether a charity did/didn’t do something, than to evaluate smaller objects (like a project) or larger objects, like intervention areas. Instinctively, I’d think that intervention shares are a non-starter. Because it’s so unclear who is allowed to sell them. It would seem to me for an intervention share to be built out of charity shares, similar to how an ETF is built out of stocks, or how a mortgage-backed security is built out of home loans. Out of the other two, I don’t have as strong of an opinion.
If you do “charity shares”, then you’d probably want to sell shares corresponding to activities that are restricted to a particular year, or at least those that have already happened in the past. Otherwise, the charity could just sell shares corresponding to large projected future impacts, and then shut down. Once you sell the charity shares, the buyers would need to be able to split those shares up, and sell only that portion of the patronage corresponding to their preferred projects.
If you do “project shares”, then there’s a bit more overhead for the charity, in selling these separately, but then the buyers can just buy their favourite projects directly. Or if they want to buy patronage for all the charity’s activities, they can buy a full set, or bundle them together.
So not sure what’s better.
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 charity shares are probably top on that metric, but I don’t see the differences between the models as particularly great. Intervention shares are almost as discrete as charity shares in that they are simply a few charities pooled together with the option to add more, sort of like the Serum Ecosystem Token. At every point, it’ll be complete transparent who has been voted into the pool and how much tokens their wallets still hold. Projects are a bit more vague in that no one goes out of their way to write binding by-laws for a research project and lock themselves in to some particular mode of operation through expensive marketing – but then again charities can gradually change their complete staff. A project will rather tend to be discontinued when a key person (maybe the only person) stops working on it. But in the end, I think charity shares still win by a small margin.
But charity shares are probably a nonstarter for different reasons: (1) So long as the benefits of fundraising through impact stock issues is avant-garde, speculative, and legally risky, charities will be loath to invest any time into it. That might be avoided by me issuing the token for them and donating them all to them, but I don’t know if that really makes a difference legally. Besides, they need to be auctioned off in some fashion, which will again cost staff time. (2) The legal situation will probably be determined by the location where the charity is registered, so it would be infeasible for a third party to do the legal research on behalf of all the charities. Even if most of them are in the US, the laws there vary a lot between states. (3) Liquidity will be a huge bottleneck so long as the markets are not yet well established. Even the liquidity on the SECO/USD market I mentioned above is rather meh, and that’s listed on big exchanges. This will be more manageable when there are fewer markets. That may also make it easier to get someone like Raydium on board with the project. (4) To be able to short bad charities, there needs to be lending. The smart contract that could manage the remaining intervention shares could, for a long time, see to it that these can be borrowed at high interest rates (e.g., > 500% APY, so that lending still incentivizes hodling). (5) Intervention shares have a nice build-in decentralized mechanism for keeping bad actors out. For charity and project shares, only centralized mechanisms come to mind.
So for better or worse, I don’t think anything other than intervention shares will be feasible at all at first. But if the system catches on, charities and projects will want to jump on the fundraising train, and then the incentives would be right, so that they’d be happy to put some work into issuing and auctioning off their shares. Note that the idea behind project shares is to remove the legal risks from the charity, so the charity would never touch them or do anything with them; that would all be managed by the employee who runs the project and is in the right jurisdiction to issue the shares safely.
Past activities: Only selling impact in past activities would seem odd to me. Of course there are a lot of established companies that have their quarterly earnings calls where they report on various fundamental and how they changed over the past quarter, and then shareholders react to that. But most EA charities are more like startups. If we want to grow the community, then hopefully most EA charities are entirely in the future. That may be analogous to how one can base the valuation of a profitable company on EBITDA but has to come up with other methods for early-stage startups. AMF might have quarterly net calls, but the valuation of most charity startups will probably also be based on such criteria as the soundness of the strategic plan or path to impact, the team, the network, the marketing, etc. There might of course be Safemoon-type charities in the end, but I don’t see how that could be avoided. All we’ll be able to about it is education, centralized vetting, and using the classic legal system against them. Besides, we at least already sort of know how to do that, to some extend, since we’re currently allocating our illiquid donations according to similar criteria.
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 normal stocks, they do confer an ownership of the company into the indefinite future. Stocks can also have the problem where people make a company and make a bunch of promises about what it will do, sell it, then reneg on those promises—they call it securities fraud, and have a lot of defenses built up against it. If you want to piggyback on that, maybe you would want to only allow sale of past activities “natively”, and then for sale of future impact to be done only by sale of regular stocks in the company itself. That’s my initial instinct, although there may be a lot of other considerations.
Yes, that’d be awesome!
Creating a wallet is so easy, there is virtually no need to automate anything further.
Creating a bonding curve auction on Serum is something that would be valuable to automate.
Raydium integration, lending, etc. are slightly less essential, but that would also make sense to automate at some point.
But researching the legal environment in the state where the charity is registered and coming up with creative ways around local regulations or going through complicated registration procedures such as the ~ 1.5 year long one with the SEC are not things that I can automate (I think).
So it varies – a lot of things can be automated but what remains is probably still prohibitively complicated. There are also more things that charities can do with their shares to make them more attractive, such as governance mechanisms. Finally, I don’t want to put all the work into automating the system so long as its demand and product-market fit is unproven.
I’m taking two different perspectives in the comment based on the following steps: (1) What is realistic to realize now to get the idea off the ground, and (2) what is realistic to expect to happen in 5–10 years assuming that step 1 has succeeded. Now that we’re at step 1, I think it’s unrealistic to think that almost any charity will be ready to run these risks and invest any time given the unknown value of the fundraising system for them. But once we’re at step 2, the value of the system will be proven (or else we won’t reach step 2), in which case charities will hope to raise tens of millions or more through the system, and it will be worth going to great lengths for them, e.g., founding a for-profit, hiring lawyers, and going through SEC registration processes.
US for profits of course also have to register their securities. They can do a lot more with them, so doing this as a for-profit is probably necessary, but it’s still very costly. Founding a for-profit branch in another country may be an option, but I don’t know enough about that to tell.
I don’t see a way to get that unfortunately, but then again the money with the least valuable counterfactuals comes from for-profit investors who don’t expect deductibility anyway. The legal risks I’m referring to are not simply that it might not be possible to get tax deductibility. It’s rather that in the worst case the responsible people at the charities may need to pay 8–9 digit settlements to the SEC or go to prison for up to five years for issuing unregistered securities. Especially the second would be a tremendous risk to the whole AI safety ecosystem. Even if the risk of that happening is small because they’re likely to be able to reach a settlement, it may still be too great of a risk for any AI safety charity to touch tokenized impact at all.
Yeah, makes sense.
Ah, you actually intended it exactly like SECO, okay. :-)
My thinking has gone through the following steps: (1) I want to create charity shares. (2) Oops, charity shares are prohibitively difficult to do because of legal risks, effort, and hence very low chance of getting the buy-in from all the US- and UK-based EA charities. (3) So I need to come up with something that is almost as good but is more achievable: Project shares, because individuals are more likely to be outside the US or UK, and intervention shares because I can do them from Switzerland with minimal buy-in (just an okay) from charities.
So once we are in a position where it becomes realistic to expect charities to issue their own shares, we don’t need intervention shares anymore. They may still have their various benefits, like governance and maybe higher liquidity, so they may continue to be developed, but at that point they can become an afterthought. And maybe there’s a way to convert them into a pool of charity shares too.
Ah, my point here was more that an evil charity that is afraid that it’ll get shorted can decide not to offer the (say) 99% of its shares that it still holds for borrowing. The only shares shorts can borrow will then be those that some others have, directly or indirectly, bought from the charity, so relatively few. Conversely, the smart contract that manages the intervention shares could just be developed such that it automatically puts up all the shares it still holds onto a lending platform. It’ll probably take a few years before that proportion is down to 1% and by that point the shares will be distributed across a number of charities of which hopefully very few are evil. ;-)
I’m referring to this one:
I’m currently very concerned about prices not reflecting downside risks, and this mechanism is the only one that may be able to keep risky charities out, so it seems very important to me but unfortunately also rather unsatisfactory.
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!
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 impact purchase, and it worked just fine. They even have a version history that’s a bit like a blockchain. Writing contracts is rather far from my absolute advantages, so maybe it’s also far from my relative advantages…
Yeah.
No mechanism comes to mind, but that general problem is one I want to think about more.
That’s just for the initial allocation. So long as no one (other than me) has the tokens, no one (other than me) can vote, which is boring. But once I’ve allocated some 50% of them to MIRI, FHI, CLR, AISS, et al., the actual voting can start. I haven’t researched how that is usually done on Solana, but surely there’s some elegant mechanism for it.
If the existing shareholders – MIRI et al. – initially vote to get Evil Org accepted into their ranks, but then it turns out that Evil Org is evil and they regret the decision, then yes, that’s a problem. But if they set a high bar and only vote in orgs that have proven over many years to do high-quality and conscientious work, the risk from that failure mode can be minimized. So for this to become a problem, a new org would first have to impress MIRI et al. a lot, but then completely fall short of their expectations after all.
And if the problem with the disappointing Evil Org gets too bad, someone (me) will deploy an alternative intervention token, and the market will decide which one people like more. There might even be a market of one token against the other.
Awesome! Thank you for your input! :-D