Author: Brook
Translation: Elaine&Sissi & Leia, TEAO
The chaos and lack of innovation in the crypto world make people question: Are we really making substantial strides toward an ideal future? (Protocol revolution and DigiLaw engineering) The introduction explores the essence of the crypto world, points of development, and the infinite possibilities for future construction from a systematic perspective, providing important insights for understanding the true nature of this new planet.
How to realize the original intention of the crypto world and maintain a safe and ethical development environment? Although the crypto world is gradually moving forward, it is still in its early stages of development, and many orders are still being gradually established. New entrants often find themselves in a 'loss of both people and wealth' situation. When the existing infrastructure cannot adequately support the crypto world in achieving its decentralized original intention, can we collaborate with traditional regulatory agencies and the community to establish a mechanism that can spontaneously monitor and compress the space for wrongdoing, thus constructing the 'immune system' of the crypto world to purify its development environment comprehensively? At the same time, can we also enable ordinary people caught in it to gain a holistic perspective and better understand the overall picture of the crypto world's development?
Technology and Mechanisms: Dual Wheels Driving the Future of the Crypto World
To realize the original intention of the crypto world and break the existing dilemmas, especially to dismantle the root causes of 'wrongdoing,' we must rely on the dual-wheel drive of 'technology' and 'mechanisms.'
'We are no longer early to crypto.' Vitalik once stated that the rapid development of Ethereum and Layer 2 solutions, especially the progress in reducing fees, improving transaction speed, and enhancing security, marks that crypto is moving toward a more mature stage. Indeed, in the decade since the birth of Bitcoin, technology builders focused on coding have made significant contributions to the continuous development of the crypto world. Technology is undoubtedly the core engine for exploring the 'endless future' of the crypto world.
However, 'We are early to crypto being usable.' Why has crypto failed to achieve large-scale adoption? Besides the need for improvement in friendliness and usability, another important reason is that our research and application in 'mechanism design and evolution for the DigiLaw ecosystem' lag far behind the development of crypto technology. Whether the vast territory opened up by technology will bear 'flowers' or yield 'bad fruits' depends on whether there are sufficiently sophisticated mechanisms to effectively guide and regulate. The various chaos in the current crypto world reflects, to some extent, that our mechanism design is still not sophisticated enough, leaving ample opportunities for wrongdoing, which is undoubtedly a significant barrier to the popularization and adoption of crypto.
To quickly move toward the next billion users, we urgently need to enhance the overall morality and safety level of the DigiLaw ecosystem. However, this is no easy task.
DigiLaw ecosystem: A brand new 'species'
'DigiLaw ecosystem' is an unprecedented new 'species' in human history. DigiLaw, as a set of rules that achieve specific goals, enables participants to collaborate or compete within the framework of these rules, thereby building an open and dynamically self-evolving complex system (referred to as the 'DigiLaw ecosystem' in this book). Unlike 'dead' (Mechanistic) complex engineering systems such as chips, planes, and bridges, the DigiLaw ecosystem is closer to 'living' (Adaptive) complex adaptive systems like natural ecosystems, global climate, and immune systems. It not only includes interactions at the micro level but also encompasses emergence from micro to macro.
It should be noted that 'Mechanistic' and 'Adaptive' are not two completely opposing states; they lie at opposite ends of the same spectrum. Overall, the crypto protocol ecosystem leans more toward an 'Adaptive' state, but current mechanism research is insufficient to support the construction and sustainable operation of a 'Completely Adaptive' system.
The design and evolution of such 'living systems' is a brand new world-class challenge. The design of token economics alone involves Nobel-level problems such as reverse games and incentive compatibility, let alone that the solutions to these issues should rise to the level of token design, DigiLaw design, and even the design of the entire DigiLaw ecosystem (as shown in the diagram above). In some respects, its difficulty is no less than advanced chip design, rocket and airplane design, automobile design, and skyscraper design, so we cannot rely solely on the 'Model-Based System Engineering (MBSE)' methods that originated from these 'dead' systems. We need to further upgrade to the 'Agent-Based System Engineering (ABSE)' methods that are suitable for living systems with emergence phenomena, to understand, design, and model simulation of behaviors at various levels of the DigiLaw ecosystem throughout its entire lifecycle.
Moreover, 'living systems' are not only design challenges; their evolution also faces enormous challenges. How to minimize artificial governance? Can a complete self-regulating system be constructed that dynamically adjusts parameters and mechanisms according to changes in the external environment and internal operating conditions? Can we even leverage powerful AI in the future to achieve the self-adaptation of 'living' systems?
DigiLaw Engineer: The Rise of a New Type of Talent
From protocols such as Ethereum, AAVE, and Compound, which have successfully traversed bull and bear cycles, we can easily find that a major commonality among these protocols is that they have invested a significant amount of time and energy in mechanism design and evolution.
Similar to technical security audits, how to determine whether a project is trustworthy? In addition to checking whether it has conducted compliant code security audits at the technical level, we should also pay attention to whether DigiLaw engineers are involved in designing and continuously optimizing the mechanisms and parameters of its ecosystem. If so, this at least proves that the project party values ethics and sustainability enough, respects the property safety of every participant, and carefully designs its mechanisms based on the operational laws of the ecosystem.
(Note: In the field of TokenEngineering, such talents are often referred to as 'token engineers.' This term is indeed distinctive, novel, and clearly directed. I have also been wavering between 'token engineer' and 'DigiLaw engineer.' However, for example, protocols like AAVE and Compound, as highly automated ecosystems, have their economic mechanism parameter operations (such as adjustments of key parameters like collateral rates and liquidation ratios in core lending operations) significantly impacting the security and efficiency of the entire crypto protocol ecosystem. However, these issues are unrelated to their native tokens and are critical leverage points for the robust and efficient upward development of the Compound protocol today. Compared to 'tokens,' 'DigiLaw' is a more comprehensive proposition. I worry that the title 'token engineer' may lead to misunderstandings, making people think that the role of such talents only focuses on 'tokens.' Meanwhile, 'DigiLaw engineer' more accurately reflects the essence of their work—designing and evolving transparent and tamper-proof laws in the digital world. Therefore, I choose the title 'DigiLaw engineer' as the 2.0 version of 'token engineer.')
However, currently, the crypto world does not value DigiLaw engineers enough. Although organizations like TokenEngineeringCommons have been continuously promoting the development of the token engineering field and have achieved significant results, the concepts and methods of 'TokenEngineering' are still not widely popularized and applied. Many project parties, investors, and others are still stuck at the level of 'Tokenomics,' and even know very little about 'TokenEngineering.' This reflects, to some extent, that 'We are still VERY early' in the research on the mechanism design and evolution of the DigiLaw ecosystem, which is not only manifested in the lack of theory and practice but also in the lack of professional talents.
To further break through the bottlenecks of security and efficiency in the crypto world, it is necessary to further explore the potential and value of DigiLaw engineers.
Technology is the pioneer of unknown fields, and mechanisms are the guardians of vast territories. Without the synergistic drive of both, it is difficult to create a balanced, robust, and anti-fragile DigiLaw ecosystem. The ultimate ideal state is that the development of 'technology' and 'mechanisms' can sufficiently support the intrinsic self-security defenses and automated efficiency optimizations of the DigiLaw ecosystem without any human intervention.
However, the iterative development of technology and the cultivation of DigiLaw engineers are not achieved overnight. When the dual wheels cannot fully support the original intention of the crypto world, we still need the collaborative efforts of 'external artificial defenses' to jointly safeguard the morality and safety of the crypto world.
New Defense System: Co-constructing the morality and safety of the encrypted world with technology and mechanisms
The crypto world urgently needs to establish a new defense system against risks. It is highly likely that the crypto world will remain in a 'hybrid' state of 'centralization' and 'decentralization' for some time in the future. The 'hybrid' here has two meanings: first, the 'decentralization' of DigiLaw itself is a gradual process; second, the degree of 'decentralization' in the end-to-end entire process where DigiLaw is located varies. For example, although some DeFi protocols are highly decentralized, they still rely on centralized infrastructure services during implementation, and the apps built on these protocols may also be centralized.
In such hybrid systems, the defense system should also be composable. The ultimate ideal state is - the community collectively completes the 'decentralized' part of self-regulation from the bottom up, while traditional institutions complete the 'centralized' part of regulation from the top down. Currently, the regulation by governments and other traditional institutions is accelerating, which belongs to external artificial defenses. Although this regulation can indeed compress certain spaces for wrongdoing, it may limit the development of 'decentralization.' By leveraging technology and tools, constructing a community-based DigiLaw self-regulation system can internally and bottom-up suppress the emergence of 'evil' and systemic risks. This internal artificial defense mechanism can more flexibly address the 'wrongdoing' challenges faced by the crypto world, while also aligning with the path to achieving the original intention through decentralization.
Conclusion: Synergistic drive of technology, mechanisms, and defense systems
Therefore, to realize the original intention of the crypto world and establish a safe and ethical digital natural environment, it seems that at this stage, at least the dual-wheel synergistic drive of technology and mechanisms is needed, along with a composable new defense system. These three are not necessarily exhaustive, but they are key to breaking through the bottlenecks in the development of the crypto world.
