Author: Brook
Compiled by: Elaine & Sissi & Leia, TEAO
The chaos and lack of innovation in the crypto world raise the question: Are we genuinely moving towards an ideal future? (Protocol Revolution and DigiLaw Engineering) This introduction explores the essence of the crypto world, the bottlenecks in its 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 moral development environment? Although the crypto world is gradually moving forward, it is still in its early stages of development, with much order still being established. New entrants often find themselves in a situation of 'losing both their money and their efforts.' When existing infrastructures cannot adequately support the crypto world in realizing its original intention of decentralization, can we collaborate with traditional regulatory agencies and the community at large to establish a set of mechanisms that can spontaneously monitor and compress malicious spaces, constructing the 'immune system' of the crypto world to thoroughly purify the development environment of the crypto world? At the same time, can we allow ordinary people caught in this to gain a global perspective and better understand the overall picture of the crypto world's development?
Technology and Mechanism: Dual Wheels Driving the Future of the Crypto World
To realize the original intention of the crypto world and break the existing deadlock, especially to dismantle the roots of 'evil', we must rely on the dual-wheel drive of 'technology' and 'mechanism'.
'We are no longer early to crypto.' Vitalik once stated that the rapid development of Ethereum and Layer2 solutions, especially advancements in reducing costs, increasing transaction speeds, and enhancing security, marks that crypto is moving towards a more mature stage. Indeed, over the past decade since Bitcoin's birth, technology builders primarily focused on coding have made significant contributions to the sustainable development of the crypto world. Technology is undoubtedly the core engine driving the crypto world toward an 'endless future.'
However, 'We are early to crypto being usable.' Why has crypto yet to achieve widespread adoption? Apart from the need for improvements in friendliness and usability, a significant 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 territories opened up by new technologies will yield 'flowers' or result in 'evil fruits' crucially depends on whether there are sufficiently sophisticated mechanisms to effectively guide and regulate them. The various chaotic phenomena in the crypto world to some extent reflect that our mechanism design is still not sufficiently sophisticated and complete, leaving ample room for wrongdoing, which is undoubtedly a major obstacle to the popularization and adoption of crypto.
To quickly move towards the next billion users, we urgently need to enhance the overall morality and security level of the DigiLaw ecosystem. However, this is no easy task.
DigiLaw Ecosystem: A New 'Species'
'DigiLaw Ecosystem' is an unprecedented new 'species' in human history. DigiLaw, as a set of rules designed to achieve specific goals, enables participants to collaborate or game within the framework of these rules, thereby constructing an open and dynamically self-evolving complex system (referred to in this book as the 'DigiLaw Ecosystem'). Unlike 'dead' (Mechanistic) complex engineering systems such as chips, airplanes, and bridges, the DigiLaw ecosystem is closer to living (Adaptive) complex adaptive systems like natural ecosystems, global climates, and immune systems, encompassing not only micro-level interactions but also emergent phenomena from micro to macro.
It should be noted that 'Mechanistic' and 'Adaptive' are not two completely opposing states; they are at two ends of the same spectrum. Overall, the crypto protocol ecosystem leans more towards an 'Adaptive' state, but current mechanism research is still insufficient to support the construction and sustainable operation of a 'Completely Adaptive' system.
The design and evolution of such 'living systems' present a world-class challenge. The design of token economies alone involves Nobel-level problems like reverse games and incentive compatibility, not to mention that resolving these issues should elevate to the design of tokens, DigiLaw, and even the entire DigiLaw ecosystem (as illustrated above). From certain dimensions, its difficulty is comparable to 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, but need to upgrade further to 'Agent-Based System Engineering (ABSE)' methods suitable for living systems with emergent phenomena, to understand, design, and model the behaviors at various levels throughout the lifecycle of the DigiLaw ecosystem.
Moreover, 'living systems' are not just a design challenge; their evolution also faces significant hurdles. How can we minimize artificial governance? Can we build a complete self-regulating system that can dynamically adjust parameters and mechanisms based on changes in the external environment and internal operating conditions? Can we even rely on powerful AI in the future to achieve the self-adaptability of 'living' systems?
DigiLaw Engineers: The Rise of a New Type of Talent
From successful protocols that have navigated bull and bear cycles such as Ethereum, AAVE, and Compound, we can easily find that a significant commonality among these protocols is the substantial investment of time and effort in mechanism design and evolution.
Similar to technical security audits, how to determine whether a project is trustworthy involves not just examining whether it has conducted compliant code security audits on a technical level, but also focusing on whether DigiLaw engineers are involved in designing and continuously optimizing its ecosystem's mechanism structure and parameter adjustments. If so, it at least proves that the project party values morality and sustainability, respects the property safety of every participant, and meticulously designs its mechanisms based on the operational laws of the ecosystem.
(Note: In the TokenEngineering field, 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 engineers' and 'DigiLaw engineers'. For example, protocols like AAVE and Compound, as highly automated ecosystems, have their economic mechanism parameter operations (such as the adjustment of key parameters like collateralization ratios and liquidation ratios in core lending operations) greatly affecting the security and efficiency of the entire crypto protocol ecosystem. However, these issues are unrelated to their native tokens, yet are key leverage points for Compound's robust and efficient upward development today. Compared to 'tokens', 'DigiLaw' is a more comprehensive proposition. I worry that the term 'token engineer' may lead to misunderstandings, implying that the role of such talents focuses solely on 'tokens'. In contrast, 'DigiLaw engineer' more accurately reflects the nature of their work — designing and evolving transparent and immutable laws in the digital world. Therefore, I choose the title 'DigiLaw engineer' as a 2.0 version of 'token engineer').
However, the current emphasis on DigiLaw engineers in the crypto world is far from sufficient. Although organizations such as TokenEngineeringCommons have been continuously promoting the development of the token engineering field and have achieved significant results, the concept and methods of 'TokenEngineering' are still not widely disseminated and applied. Many project parties, investors, etc., remain at the 'Tokenomics' level, with little knowledge of 'TokenEngineering'. This reflects to some extent that 'We are still VERY early' in the research of mechanism design and evolution for the DigiLaw ecosystem, manifesting not only in the lack of theory and practice but also in the shortage of professional talents.
For the crypto world to further break through the bottlenecks in security and efficiency, it must further explore the potential and value of DigiLaw engineers.
Technology is the pioneer of the unknown, while mechanism is the guardian of vast territories. Without the collaborative 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 'mechanism' is sufficient to support the endogenous self-security defense and automatic efficiency optimization of the DigiLaw ecosystem without any human intervention.
However, the iterative development of technology and the cultivation of DigiLaw engineering talent are not achieved overnight. When the dual wheels cannot fully support the original intention of the crypto world, we still need the collaborative force of 'external artificial defenses' to jointly guard the morality and security of the crypto world.
New Defense System: Building the Morality and Security of the Crypto World with Technology and Mechanism
The crypto world urgently needs to establish a new 'defense system' against risks. It is highly probable that the crypto world will be in a mixed state of 'centralization' and 'decentralization' for some time in the future. The 'hybrid' here has two layers of meaning: first, the 'decentralization' of DigiLaw itself is a gradual process; second, the degree of 'decentralization' across the end-to-end entire process of DigiLaw varies. For example, although some DeFi protocols are highly decentralized, they may still rely on centralized infrastructure services during implementation, and apps built on these protocols may also be centralized.
In such a hybrid system, the defense system should also be composable. The ultimate ideal state is — the community at large 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, regulations by governments and other traditional institutions are accelerating, which belongs to external artificial defense. Although this regulation can indeed compress certain malicious spaces, it may also limit the development of 'decentralization'. By leveraging technology and tools, constructing a community-based DigiLaw self-regulation system can suppress the emergence of 'evil' and systemic risks from within and from the bottom up. This internal artificial defense mechanism can more flexibly address the 'evil' challenges faced by the crypto world, while also aligning with the path of achieving the original intention through decentralized means.
Conclusion: Collaborative Drive of Technology, Mechanism, and Defense Systems
Therefore, to realize the original intention of the crypto world and establish a safe and moral digital natural environment, it seems that at this stage, at least a dual-wheel collaborative drive of technology and mechanism, along with a composable new defense system, is necessary. These three are not necessarily exhaustive, but they are the keys to breaking through the bottlenecks in the development of the crypto world.
