Realizing the original intention of encryption: dual-wheel drive of technology and mechanism and new defense system

Written by: Brook  Translated by: Elaine  Sissi & Leia, TEAO

The chaos and lack of innovation in the crypto world make people wonder: Are we moving towards an ideal future in a substantive way? The preface of "Protocol Revolution and DigiLaw Engineering" explores the essence of the crypto world, the bottlenecks in development, and the infinite possibilities of future construction from a systematic perspective, providing important thinking for understanding the true face 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 the early stages of development and many orders are still being gradually established. Newcomers who rush in rashly often end up with "no money and no money". When the existing infrastructure cannot well support the original intention of the crypto world to achieve decentralization, can we work with traditional regulatory agencies and the community to establish a mechanism that can spontaneously monitor and compress the space for evil, build the "immune system" of the crypto world, and purify the development environment of the crypto world in all directions? At the same time, can we also allow ordinary people who are trapped in it to gain a global perspective and better see the overall picture of the development of the crypto world?

Technology and Mechanism: Dual-Drive Future of the Crypto World

To realize the original intention of the crypto world, break the existing difficulties, and especially disintegrate the root cause of "evil", we must rely on the dual-wheel drive of "technology" and "mechanism".

“We are no longer early to crypto.” Vitalik once said that the rapid development of Ethereum and Layer2 solutions, especially the progress in reducing fees, increasing transaction speed and enhancing security, indicates that crypto is moving towards a more mature stage. Indeed, in the more than ten years since the birth of Bitcoin, technical builders mainly engaged in coding have made great contributions to the continued development of the crypto world. Technology is undoubtedly the core engine for the crypto world to open up an "endless future."

However, "We are early to crypto being usable." Why has crypto been slow to achieve large-scale adoption? In addition to the need to improve friendliness and ease of use, another important reason is that we lag far behind the development of crypto technology in the research and application of "mechanism design and evolution for the DigiLaw ecosystem." Whether the vast territory newly opened up by technology will grow "flowers" or bear "bad fruits" depends on whether there are sufficiently sophisticated mechanisms to effectively guide and regulate. The current chaos in the crypto world reflects to some extent that our mechanism design is still not sophisticated enough, leaving a lot of opportunities for evil, which is undoubtedly a key obstacle to the popularization and adoption of encryption.

To move towards the next billion users as soon as possible, we urgently need to improve the overall ethics and security level of the DigiLaw ecosystem. However, this is not easy.

DigiLaw Ecosystem: A New "Species"

The "DigiLaw Ecosystem" is a new "species" unprecedented in human history. DigiLaw, as a set of rules to achieve specific goals, enables participants to collaborate or game within the framework of these rules, thereby building an open and dynamically self-evolving complex system (this book calls it the "DigiLaw Ecosystem"). Unlike complex engineering systems that are "dead" (mechanical), such as chips, airplanes, and bridges, the DigiLaw ecosystem is closer to complex adaptive systems that are "alive" (adaptive), such as natural ecosystems, global climate, and immune systems. It not only includes interactions at the micro level, but also includes emergence from the micro to the macro level.

It should be noted that "mechanical" and "adaptive" are not two completely opposite states, they are at the two ends of the same spectrum. Overall, the cryptographic protocol ecosystem is more inclined to the "adaptive" state, but the current mechanism research is not enough to support the construction and sustainable operation of a "completely adaptive" system.

The design and evolution of this type of "living system" is a new world-class challenge. The design of the token economy alone involves Nobel Prize-level problems such as reverse gaming and incentive compatibility. Moreover, the solution to such problems should be elevated to the design of tokens, DigiLaw, and even the design of the entire DigiLaw ecosystem (the relationship is shown in the figure above). In some dimensions, its difficulty is no less than that of advanced chip design, rocket and aircraft design, car design, skyscraper design, etc. Therefore, we cannot rely solely on the "Model-Based System Engineering (MBSE)" method born from such "dead" systems. We need to further upgrade to the "Agent-Based System Engineering (ABSE)" method applicable to living systems with emergent phenomena to understand, design, and model and simulate the behaviors at all levels of the DigiLaw ecosystem throughout its life cycle.

In addition, "living systems" are not only difficult in design, but also face huge challenges in their evolution. How to minimize manual governance? Can we build a complete self-regulation system that can dynamically adjust parameters and mechanisms according to changes in the external environment and internal operating conditions? Will it even be possible to use powerful AI to achieve the self-adaptation of "living" systems in the future?

DigiLaw Engineers: The Rise of New Talents

From Ethereum, AAVE, Compound and other protocols that have successfully crossed the bull-bear cycle, it is not difficult to find that a major commonality of these protocols is that they have invested a lot of time and energy in mechanism design and evolution.

As with technical security audits, how to judge whether a project is trustworthy, in addition to seeing whether it has done compliant code security audits at the technical level, we also need to pay attention to whether there are DigiLaw engineers involved in the design and continuous optimization of the mechanism structure and parameter adjustments of its ecosystem. If so, this at least proves that the project owner attaches enough importance to ethics and sustainability, respects the property security of every participant, and carefully designs its mechanism based on the laws of operation of the ecosystem.

(Note: In the field of Token Engineering, such talents are often referred to as "token engineers". This term is indeed distinctive, novel and has a clear direction. I have also been wavering between "token engineers" and "DigiLaw engineers". But for example, as a highly automated ecosystem, protocols such as AAVE and Compound have parameter operation and maintenance of their economic mechanisms (such as the adjustment of key parameters such as pledge rate and liquidation ratio in core lending business) that highly affect the security and performance of the entire cryptographic protocol ecosystem. However, these issues have nothing to do with their native tokens, but are the key leverage points for the steady and efficient upward development of the Compound protocol today. Compared with "tokens", "DigiLaw" is a more comprehensive proposition. I am worried that the term "token engineer" will cause misunderstandings, and people will mistakenly think that the role of such talents is only focused on "tokens". "DigiLaw engineers" more accurately reflect the essence of their work - designing and evolving transparent and immutable laws in the digital world. Therefore, I chose the title "DigiLaw engineer" as the 2.0 replacement for "token engineer". version. ）

However, today, the crypto world pays far less attention to DigiLaw engineers. Although organizations such as TokenEngineeringCommons have been continuously promoting the development of token engineering and have achieved remarkable results. But relatively speaking, the concept and method of "TokenEngineering" has not yet been popularized and applied on a large scale. Many project parties, investors, etc. are still at the "Tokenomics" level, and even know very little about "TokenEngineering". This reflects to a certain extent that "We are still VERY early" in the research on the design and evolution of the DigiLaw ecosystem mechanism, not only in the lack of theory and practice, but also in the lack of professional talents.

If the crypto world wants to further break through the bottlenecks in security and efficiency, it needs to further explore the potential and value of DigiLaw engineers.

Technology is the pioneer of unknown areas, and mechanisms are the guardians of vast territories. Without the synergistic drive of the two, it is difficult for us to create a balanced, robust and anti-fragile DigiLaw ecosystem. The ultimate ideal state is that, without any human intervention, the development of "technology" and "mechanism" is sufficient to support the endogenous self-security defense and automatic efficiency optimization of the DigiLaw ecosystem.

However, the iterative development of technology and the cultivation of DigiLaw engineer talents cannot be achieved overnight. When the two wheels cannot fully support the original intention of the crypto world, we still need the coordinated efforts of "exogenous artificial defense" to jointly guard the morality and security of the crypto world.

New defense system: Building the ethics and security of the crypto world with technology and mechanisms

The crypto world urgently needs to establish a "new defense system" to fight risks. It is very likely that the crypto world will be in a mixed state of "centralization" and "decentralization" for some time in the future. The "mixed" here has two meanings: First, the "decentralization" of DigiLaw itself is a gradual process; second, the degree of "decentralization" of the end-to-end links where DigiLaw is located is also different.For example, although some DeFi protocols themselves are highly decentralized, they still need to rely on centralized infrastructure services in the implementation process, and the apps built on the protocols may also be centralized.

In such a hybrid system, the defense system should also be combinable. The ultimate ideal state is that the community completes the self-governance of the "decentralized" part from the bottom up, and traditional institutions complete the regulation of the "centralized" part from the top down. Currently, the supervision of traditional institutions such as the government is accelerating, which belongs to external artificial defense. Although this kind of supervision can indeed compress some space for evil, it may limit the development of "decentralization". With the help of technology and tools, building a DigiLaw self-regulatory system based on the community can suppress the birth of "evil" and systemic risks from the inside out and from the bottom up. This internal artificial defense mechanism can more flexibly solve the problem of "evil" faced by the crypto world, and it is also consistent with the path of the crypto world to achieve its original intention through decentralized means.

Conclusion: Cooperative drive of technology, mechanism and defense system

Therefore, in order to realize the original intention of the crypto world and establish a safe and ethical digital natural environment, at this stage, at least the dual-wheel coordinated drive of technology and mechanism, plus a new combinable defense system, is needed. These three are not necessarily exhaustive, but they are the key to breaking through the bottleneck of the development of the crypto world.