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Vellir #21 → Decentralised government (DeGov)

Decentralised government (DeGov) is a new concept about how web3 tools, applications and incentives could help to support effective government and improve democratic institutions and processes.
Vellir #21 → Decentralised government (DeGov)

I've been playing around with Open AI’s Dall.E 2 this week. It’s an AI system that can create images based on text that you input. I thought i’d try it out for this week’s cover image: the three images above were generated by the AI system using the input: “Decentralised government in the style of Kandinsky”. I think they’re pretty cool! It’s definitely worth playing around with…

Every few months a new crypto term emerges. From ICOs to NFTs to DAOs to DeFi to DeSci to ReFi. Check out our 100 slide explainer to understand more about what they all mean!

These memes are an important part of how the crypto ecosystem evolves. As the graphic below shows, time in web3 moves in ‘millions of memes’...

Source: Gitcoin

Memes create momentum and spark creativity, as well as provide a way to categorise different parts of the web3 ecosystem.

One area that we are particularly interested in is how blockchain relates to government, public administration and democracy more broadly. Can the technology improve these important functions of the state and, if so, how? We think they can, through what we’re calling decentralised government (DeGov), our own new category of web3.

Dive in to find out more…

In the time we’ve been running Project Vellir, we’ve been wrestling with a few different ideas around the implications of web3 technology for government and democracies more broadly.

First, trust in democratic institutions has been on the decline for many years and communities have become more polarised and divided. The role of technology and social media has clearly played a part in this process, whether through the digital echo chambers we live in online or as sources of misinformation.

As we wrote in Vellir #1, we think that web3 tools could play a positive role in society, with more citizen engagement and participation, and a greater sense of community and ownership.

The Vellir Project takes inspiration from Þingvellir (the "Assembly Fields") in Iceland, site of the longest running Parliament in the world. In the early 10th century, it was a meeting place for clans to hold discussions and legal sessions, and subsequently became the site of the Icelandic Parliament, now in Reykjavik. The site was chosen because it was accessible for all clans for their annual parliament. And while we still have the same fundamental participation, community decision-making and governance needs to address, there are no longer the same constraints on geography, physical representation and time between consulting citizens. We believe that web3 tools have the potential to be the Þingvellirs of the future – creating new accessible gathering places, and transforming how participatory systems, governance and policy processes, models and institutions work.

Second, and more specifically, web3 applications related to payments, community organisation and voting could all provide new ways of doing public administration. This could mean encoding tax rules so that when salaries are paid, the right amount of tax is automatically ‘streamed’ or paid via the code, minimising frictions and increasing efficiency. It could mean DAOs being created in particular communities, enabling direct voter participation or voting on local issues. Or it could mean using blockchains for payments, reducing the scope for fraud and abuse.

Third, the policy making process in government is very closed and centralised. While politicians might be influenced by public opinion and polling data, the detail of policy making tends not to be open to the public. Where there is public input, it generally occurs via consultation processes, with mixed levels of impact. This policy making process could be far more open and decentralised, with input at each stage facilitated and incentivised using modern technology and web3 incentives like tokens, making it far more transparent and effective than the way that lobbying tends to occur in private. Further, web3 incentives could help to collect and open source government owned data in order for researchers and firms to benefit from it.

Fourth, the government can create the conditions for economic growth and prosperity, but there are limits to what it can force its citizens to do. Initiatives like the Behavioural Insights Team in the UK have been developed to try to ‘nudge’ citizens to do certain things, whether related to paying taxes or taking up vaccines. The incentive structures that are a core part of web3 could be leveraged to nudge people to behave in socially responsible or beneficial ways.

These four interrelated parts – participation and engagement, public administration, open sourcing and incentivising behaviour – come together to form what we are calling decentralised government or DeGov.

DeGov is about how web3 tools, applications and incentives could help to support effective government and improve democratic institutions and processes.

Let’s look at a few examples of what DeGov might look like in practice.

Participation and engagement: My local council could create a DAO. Anyone that lived in the local community of a particular age (i.e. voting age) could join the DAO, which would give them access to an online community space. They would also be given an initial number of tokens, which would have no financial utility (and couldn’t be traded) but provide voting rights within the DAO. The council might commit to give the DAO treasury a certain amount of funding every year, which could be spent under particular conditions. Members of the DAO could propose schemes for the funding to be spent on – whether regeneration projects, parks or community events. Members of the community could gain additional tokens (i.e. voting rights) for carrying out community work and could vote on the projects, perhaps weighted to how many tokens they had accrued in some circumstances, or other voting methods (e.g. quadratic) for other issues. If enough tokens were accrued for positive contributions to the community, it could result in tax breaks for the individual, ideally administered automatically via payment streaming (see above).

Public administration: A dispute over international mineral rights could be managed by a DAO. Here, a DAO governed by code would establish voting rights on the basis of land ownership, defined by on-chain records, retain funds in a central treasury and automatically pay royalties to those entitled each year. If agreed, it could create a self-executing system between states that is trustless, in an environment where trust is hard to find. Critically, the code would be managing the arrangement, rather than responsibility lying with a particular state of institution.

Open sourcing: Providing free and open data sources is an important function of modern governments. But there are limits to the resources that governments can put towards gathering data and ensuring that it is robust enough to publish. Web3 tools could be used to create new datasets, which could subsequently be open sourced. How? Perhaps the government wants to collect and track real time data on biodiversity in different parts of the UK. To do this centrally would be near impossible due to cost, but what if individuals were incentivised to contribute data in a decentralised way? By contributing the data to a public blockchain, people could gain a token, which could have some monetary value or provide a tax break. The data could also be open sourced and used by researchers and others more quickly and easily than via a centrally controlled database. There would no doubt be some issues to work through, not least ensuring that the data was robust enough to be classified a government statistic, but this process could take place separately, with the government cleaning and publishing a final dataset for more official purposes.

Incentivising behaviour: Imagine that there is a desperate need to develop a new vaccine for a rapidly spreading virus… A new mRNA vaccine has been designed, but regulations require clinical trials. During Covid, the Pfizer and BioNTech vaccine took seven months to approve with a trial involving 43,000 participants in the UK. This was incredibly rapid, but such trials don’t always work like this and can take several years to receive approval. How might this work in a DeGov model? Perhaps a new scheme could be developed that would be based around a new $NHS token, issued by the national health service (NHS) in the UK. The NHS app in the UK might know my blood type which is required for a particular trial, and by approving sharing anonymised health data from my smartwatch with the researchers, I would be rewarded with $NHS for taking part. I might also earn $NHS for exercising or undertaking other activity which would benefit my health and reduce strain and cost on the NHS. (See Stepn for an existing move-to-earn model, which is highly speculative, but an interesting model for tracking and rewarding movement nonetheless). Insurance providers may also provide discounts based on the level of my $NHS.

There is one potential roadblock – why would government bodies, departments and institutions want to engage with DeGov as a concept?

In some areas, like improved public administration, there should be a clear incentive. But even here, there can be ingrained inertia about new ways of doing things or experimentation. There is, understandably, a risk averse culture. This is probably sensible – we don’t generally want our governments getting things wrong all the time (or rather, more than they already do).

In other areas, like a more decentralised approach to policy making, there is little incentive to outsource this process and in doing so give up control. And there is also no guarantee this would lead to better outcomes or improved policies. More often than not, smaller teams are more efficient and effective.

But while the technology is moving at a rapid pace, whether related to blockchain technology, AI/ML or biotech, the government and associated institutions tend not to evolve very fast, or at all. Also, arguably, citizens will come to expect different handling from their representatives and executives. If web3 approaches become mainstream elsewhere, governments may have no choice but to adopt elements of it, as they have with digital services. So although this approach to DeGov might not work in all areas, there are a number of use cases that are worth exploring and testing. There is no reason that public administration should be devoid of innovation or improvements, even if they come from unlikely places, including web3.

We look forward to hearing from the community on whether any of these ideas resonate with you and how you think DeGov could be applied in your domains. And if anyone in our community is building in this space, please let us know!

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