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Tokens and Complex Systems

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This talk describes how tokens/decentralization and complex systems relate. Contents:
-blockchains as trust machines
-blockchains as incentive machines
-evolutionary algorithm design (and agent based simulation) for token design
-benevolent computer viruses (aka smart contracts)
-AI DAOs
-blockchains as life

Presented at Santa Fe Institute, New Mexico, Jan 31, 2018

Video at: https://medium.com/abq-blockchain-community/talking-blockchain-ai-complex-systems-3c5a33676f85

Published in: Internet
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Tokens and Complex Systems

  1. 1. Tokens and Complex Systems Trent McConaghy @trentmc0
  2. 2. Outline • Trust machines • Incentive machines • EA design for token design • Benevolent computer viruses • AI DAOs • Blockchains as life
  3. 3. Blockchains as Trust Machines
  4. 4. Blockchains: Google Sheets, Minus the Google What’s special: - no one owns it - anyone can add to it - no one can delete from it - Writing to a blockchain is like etching in stone. - The sheet stores a list of transactions (txs). - Then we use txs to issue assets, and transfer them
  5. 5. Blockchains are databases with “blue ocean” benefits Decentralized / shared control Immutability / audit trail Assets / exchanges
  6. 6. How: • Decentralized: Byzantine fault tolerant (BFT) consensus • Immutable: chain of blocks = hash linked list of transaction groups • Assets: digital signature on every transaction “Trust machine” because it minimizes trust needed to operate. Alice Mongo DB
  7. 7. Blockchains as Incentive Machines
  8. 8. What’s the amazing thing about blockchains? •Decentralized? •Immutability? •Assets •One more…
  9. 9. Blockchain Superpower: Get people to do stuff By rewarding with tokens
  10. 10. Economic Incentive for Bitcoin Objective: Maximize security of network • Where “security” = compute power • Therefore, super expensive to roll back changes to the transaction log E(Ri) α Hi * T E() = expected value # tokens (BTC) dispensed each block block rewards hash power of actor = contribution to “security”
  11. 11. E(Ri) α Hi * T Bitcoin Token Release Schedule F(H, t) = 1 - (0.5t/10) = % tokens released after t years • Schedule is fixed in advance • 4 years for 50% of tokens released = half-life “the halvening”
  12. 12. Result of Bitcoin maximizing security? Maximizing energy usage! > USA by mid 2019!
  13. 13. Result of Bitcoin maximizing security? Maximizing energy usage! > USA by mid 2019! Like paper-clip generating AI, but with energy…
  14. 14. Economic Incentive for Ocean Objective: Maximize supply of high-quality data (for use by AI) • This means: reward curating data + making it available • Where “curating” = betting on data. Reward taste-making. E(Rij) α log10(Sij) * log10(Dj) * T *Ri Expected reward for user i on dataset j Dj = proofed popularity = # proof-of-service invoked (eg # deliveries of dataset j) Sij = predicted popularity = user’s curation market stake in service j (eg dataset j) # tokens during interval
  15. 15. Complex Systems in Token Design
  16. 16. Design of Tokenized ecosystem ≈ Design of EAs (Evolutionary Algorithms) What Tokenized ecosystem Evolutionary Algorithm Goals Block reward function E.g. “Maximize hash rate” Objective function E.g. “Minimize error” Measurement & test Proof E.g. “Proof of Work” Evaluate fitness E.g. “Simulate circuit” System agents Miners & token holders (humans) In a network Individuals (computer agents) In a population System clock Block reward interval Generation Incentives & Disincentives You can’t control human, Just reward: give tokens And punish: slash stake You can’t control individual, Just reward: reproduce And punish: kill
  17. 17. Agent-based Systems for Token Simulation • Q: How do we design computer chips? • A: Simulator + CAD tools • Q: How are we currently designing tokenized ecosystems? • A: By the seat of our pants! • Which means we might be getting it all wrong! What we (desperately) need: 1. Simulators: agent-based systems 2. CAD tools: for token design
  18. 18. Reason #37 why you might care: there is tons of $$ at stake (and we might be getting it all wrong)
  19. 19. Benevolent Computer Viruses (aka Smart Contracts)
  20. 20. Then you get decentralized processing aka smart contracts. And you can build a world computer having decentralized processing, storage, and communications (e.g. Ethereum vision) What if you used a blockchain (database) to store state of a state machine? State Virtual machine Decentralized applications (Dapps) World computer Blockchain
  21. 21. DAO: a computational process that • runs autonomously, • on decentralized infrastructure, • with resource manipulation. It’s code that can own stuff! (Or, good computer viruses) DAO: Decentralized Autonomous Organization State Virtual machine DAO Dapp World computer Blockchain
  22. 22. AI DAOs
  23. 23. AI entity is a feedback control system. That is, AGI. Its feedback loop would continue on its own, taking inputs, updating its state, and actuating outputs, with the resources to do so continually. AGI on a DAO? State Virtual machine AI DAO Dapp World computer Blockchain
  24. 24. An AI DAO is … • An AI running on decentralized processing substrate <or, equivalently> • A DAO running with AI algorithms Definition of AI DAO
  25. 25. Example: The ArtDAO Algorithm… 1. Run AI art engine to generate new image, using GP or deep 2. Claim attribution in blockchain 3. Create multiple editions 4. Post editions for sale onto a marketplace, using Getty (centralized), or OpenBazaar (decent.) 5. Sell the editions. $ goes to ArtDAO using built-in cryptocurrency like Ether. IP go from ArtDAO using ascribe. 6. Repeat! Create more art, sell it, get wealthier
  26. 26. Example: The ArtDAO Algorithm… 1. Run AI art engine to generate new image, using GP or deep 2. Claim attribution in blockchain, using ascribe 3. Create multiple editions, using ascribe 4. Post editions for sale onto a marketplace, using Getty (centralized), or OpenBazaar (decent.) 5. Sell the editions. $ goes to ArtDAO using built-in cryptocurrency like Ether. IP go from ArtDAO using ascribe. 6. Repeat! Create more art, sell it, get wealthier Over time, if ArtDAO makes more money from sales than from generating new art, then it will accumulate wealth. And, you can’t turn it off.
  27. 27. AI DAO Architectures
  28. 28. AI DAO Arch 1/3: AI at the Center
  29. 29. AI DAO Arch 2/3 : AI at the Edges
  30. 30. AI DAO Arch 3/3 : Swarm Intelligence Many dumb agents with emergent AI complexity
  31. 31. Angles to Making AI DAOs • DAO  AI DAO. Start with DAO, add AI. E.g. Plantoid • AI  AI DAO. Start with AI, add DAO. E.g. numer.ai • SaaS  DAO  AI DAO. Convert SaaS to DAO. Then add AI • Physical service  AI DAO. E.g. Uber self-owning cars
  32. 32. Evolving the ArtDAO Market Art work Code Level to adapt at How to adapt Human-based adapt at the code level. Here, humans put in new smart contract code (and related code in 3rd party services), to improve ArtDAO’s ability to generate art and amass wealth.
  33. 33. Evolving the ArtDAO Market Art work Code Level to adapt at How to adapt Auto adapt at the market level. It creates more of what humans buy, and less of what humans don’t buy.
  34. 34. Evolving the ArtDAO Market Art work Code Level to adapt at How to adapt Auto adapt at the art-work level. Here, a human influences the creation of an artifact. For example, it presents four variants of a work, and a human clicks on a favorite. After 10 or 50 iterations, it will have a piece that the human likes, and purchases.
  35. 35. Evolving the ArtDAO Auto adapt at the code level. Here, the ArtDAO modifies its own code, in hopes of improving. • It creates a copy of itself, changes that copy’s code just a little bit, and gives a tiny bit of resources to that new copy. • If that new copy is bad, it will simply run out of resources and be ignored. • But if that new copy is truly an improvement, the market will reward it, and it will be able to amass resources and split more on its own. • Over time, ArtDAO will spawn more children, and grandchildren, and the ones that do well will continue to spread. We end up with a mini-army of AI DAOs for art. • If buyers are DAOs too, it’s a network of DAOs, leading to swarm intelligence We can extrapolate way further. It gets crazy, quickly. A simple ArtDAO allows us to “idea-inoculate” so we’re ready for the scarier stuff… Market Art work Code Level to adapt at How to adapt
  36. 36. Giving Personhood to an AI DAO With Today’s Laws (!)
  37. 37. Blockchains as Life
  38. 38. Blockchains as Life (Merkle) -Ralph Merkle, “DAOs, Democracy and Governance”, May 2016
  39. 39. Blockchains as Life (Merkle) -Ralph Merkle, “DAOs, Democracy and Governance”, May 2016
  40. 40. Conclusion
  41. 41. Trent McConaghy @trentmc0 We covered: • Blockchains as trust machines, and incentive machines • You can get people to do stuff! • Complex systems for token design. EAs, agents • Smart contracts are benevolent computer viruses • AI DAOs = amazing intersection of AI * blockchain • Blockchains as life The complex systems world has useful theory & tools for blockchain world; and blockchain has many interesting problems! Conclusion

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