tl;dr:

• Money was unconsciously designed to be exploitative and the current system fails to address the global problems we face
• Web3 can be the global foundational technology to solve global coordination problems like climate change
• Current #Refi projects mostly miss the mark by being naive about the complexity

FIAT money has deterministically evolved to support the extractive economy that destroys the basis of our existence. When agriculture started and the societal caloric surplus allowed for division of labor, money was inevitable. So were the emergence of interest rates, the concentration of wealth and the exploitation of local and global public goods. The fight over resources led to an arms race and everybody had to join or was feedstock for those who did. This locked people in the zero-sum games of our nation state era. Since these nation states and their leaders follow their own short-term interests they are incapable of solving global challenges. It is the tragedy of the commons.

Web1, the early internet, built the infrastructure for tech savvy people to communicate on a global scale. Web2 enabled everyone to broadcast ideas with a click on a screen but locked people in extractive systems led by businesses that optimize for short term profit and do not act in their users’ best interest. To liberate ourselves, to coordinate and collaborate globally we were missing the glue that allows communities to become powerful enough to enact meaningful change. That glue is global, decentralized and programmable money.

Web3 and tokenomics allow us for the first time to consciously design pluralistic incentive and governance structures for global communities to align their interests and reflect their values. It allows global communication to evolve into coordination and collaboration. It allows us to assign value to our global environment and other public goods that are currently not priced into products and services. It allows for the financialization of these public goods and to leverage financial products.

Climate change and its underlying issues are first and foremost a coordination problem. On the one hand, nobody wants to live on a Dune-like planet and nobody intends to kill species at an unprecedented rate. On the other hand, everybody is doing it since our current economy and our incentive systems and currencies are based on the exploitation and destruction of our existence.

Problems are inevitable, because our knowledge will always be infinitely far from complete. Problems are soluble, and each particular evil is a problem that can be solved. David Deutsch

In the spirit of David Deutsch’s “the beginning of infinity” it is important to understand that we face this problem precisely because we have made such tremendous progress. It is inevitable that as a global economy we run into global-sized problems. Doomsayers often blame technology and advocate for de-growth. But de-growth is not an option. Instead, we have to leverage progress and technology.

To solve this coordination problem we need to create a global system that accounts for the biggest public good we share - our planet's resources and environment. In such a system everybody who is acting in his best self-interest is also acting in our best common interest. But how can you better align these interests?

By reducing market inefficiencies:

• by making the damages and benefits to our public goods transparent
• by designing money and digital assets that are aligned with our values and are in everybody’s best interest
• by punishing and rewarding corporate and state actors
• by making sure that people profit financially from making eco-conscious choices
• by showing the opportunities and economic growth that is possible
• by leveraging technology instead of focusing on sacrificing and de-growth measures

I am convinced that web3 can be used as the foundational technology to solve these problems. I am in the camp of people who think that web3 has the potential to transform our society more than the internet did over the last two decades.

Up to now decentralized finance (Defi) solutions have proven useful and shown that double digit interest rates are possible in times where institutions charge you for your deposit. And permissionless crypto currencies offer the only solution for people unwillingly dragged into financial sanctions.

Last year marked the beginning of a new movement in crypto called #Refi, short for regenerative finance. Whereas previous green crypto projects focused mainly on green (bitcoin) mining and new blockchains with low energy consumption, the Refi movement is looking at how web3 can accelerate the transition to a regenerative economy. I plan to dig deeper into specific projects over the next months. To start, I want to acknowledge that the space is in its infancy and still a niche. My first impression as a climate tech investor was that most climate related projects underestimate the complexity and their solutionism is not serving the environment and sometimes even have the potential to increase the damage. Most projects in web3 generally suffer from skeuomorphism instead of leveraging the full potential by starting with first principles. But web3 is currently attracting the most talented people worldwide with its promise of being the technological frontier and the possibility to shape the future more than most other fields, So, I am convinced this space will mature quickly and produce tangible solutions.

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Disclaimer:

I’m like Jon Snow. I don’t know nothing. So I appreciate your thoughts and feedback. Please reach out and let me know where I am wrong and what I am missing so I can improve my understanding.