Transcendent values

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Transcendental values are values which are not captured by any formal description.

The study of DAOs requires an understanding of general human groups. What keeps a group stable and coherent? Centralized organizations can rely on an efficient power structure which protects its membership. Open decentralized organizations can only exist if their members share common purpose. This requires a common set of values that are specific enough to direct the group toward a common goal and identify behaviors which threaten that purpose. The Transcendental Values Thesis explains why these values must not be formal, rigorous, and explicit if a DAO is to persist.

Transcendental values are impossible to explain formally. Some examples of transcendental values include Goodness, Beauty, Truth, Wisdom, Freedom, Harmony, and Love. Different DAOs will have different transcendental values and also differ in the importance which they are ascribed. Thus transcendental values can be contrasted with universal values.

Background

The most important attribute for a DAO’s long term stability is its values. Values are what determine a DAO's membership, which are far more effecting in a decentralized group than a centralized group. A centralized group’s members are less independent and more subject to the dictates of leadership, because hierarchies of control. A decentralized group, especially one which is open, meaning no barriers to entry or exit, must embody the values of its membership.

The values of a group are its goals. The goals of a group tell you where it’s going. A decentralized group is necessarily less nimble and more plodding than a centralized group. A centralized group can change course as soon as its leader decides. A decentralized group must convince a majority of its members before any major changes are made. And the majority must be near unanimity, lest the group lose members, which weakens it significantly because of the network effect discussed previously. Therefore by understanding the values of a DAO we have a strong chance to predict its behavior, farther into the future than its centralized corporate analogs.

There is an inherent tension in the idea of a DAO. On one hand, a DAO is necessarily decentralized. A DAO must be decentralized in the ownership or control of the power of the group. This allows it to incorporate diverse perspectives and talent and knowledge, to incorporate information at the edge. On the other hand, to remain coherent—to stay organized—these diverse individuals must be united in a common purpose, a common goal, they must share a common set of values. They must agree on a set of acceptable behaviors and standards. A DAO's protocols must be centralized.

The protocols around which the DAO is centralized must be extremely explicit, rigorous, formal. These rules are encoded in programmed smart contracts. The regulation and execution of the protocols are automated in implacable programs. Code is law.

The reason these protocols must be so crystalized in a primary DAO is that justice for a group of pseudonymous participants from diverse backgrounds requires objectivity. Fairness requires that everyone's actions must be judged equally regardless of their idiosyncratic motivations.

The primary[1] problem with making the protocols perfectly rigorous is the inevitable potential to game the rules. The Folk Theorems of Game Theory suggest that whenever a group makes formal rules for acceptable behavior, an adversary can follow those rules to the letter and profit at the expense of the majority. Therefore the letter of the law, though necessary, is not the ideal protocol to follow. Following the spirit of the law is more important for maintaining long-term cooperation in a primary DAO.

Thus DAO governance cannot merely consist of a static set of programmed rules. There must be an evolutionary structure of governance that allows review of past behaviors, in order to review past behaviors and punish behaviors that harm the DAO. The very existence of the ability to punish those acts, serves to prevent harm to the DAO.

"Harm to the DAO" is a subjective judgement that depends on the values of the DAO. To know whether something is harm requires us to know what is bad, which requires us to know what is good, which requires us to know what we value. Thus a DAO must express their values. However, if they formally express their values, that is equivalent to explicitly setting the rules, which again allows an adversary to game the system.

Therefore, to maintain long-term stability, harmony, and collaboration, a DAO needs to have a common set of informal values, values which are not capably of being made rigorously explicit, values which transcend any formal rules. Transcendental values.

Transcendental values thesis

Game theory argument

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Consequences

This thesis gives a motivation for the necessity of the existence of religions, which are universal throughout human groups. For long term stability and integrity, groups need to share common values which transcend the ability to formally capture in rigorous symbols.

The thesis also explains the failure of any formal religion to be universal and eternal. Religions are formal protocols for behavior. Religions inevitably collapse. Their centralized protocols lead to hierarchies of power which are then gamed, corrupting and destabilizing the group.

Therefore the protocols of a long-term stable religion requires transcendent principles--principles which transcend any formal description. The experience of transcendent values are of a "know-it-when-you-see-it" nature. We cannot define absolute good, but we recognize what is good and bad when we are honest and observant.

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Primitive values

Analyzing the structure of an organization is a matter of identifying its primary components and their relationships. The five primitive notions[2] we use to analyze a DAO are 1. individual versus 2. group, and the a) transmission, b) processing, and c) storage of information. In designing or evaluating a DAO, the most basic categories, the primitive values, then emerge as the following: freedom versus governance, privacy versus transparency, and personal ownership versus the commons. The analytical framework we use here is the most common triad taken from information theory: all information is broken down into information transmission, information processing, and information storage. In analyzing an organization, the primary concern is between the individual and the group. So the information theory triad is split into six concepts:

  1. DAO information transmission
    • individual: information transmission is freedom
    • group: information transmission is governance
  2. DAO information processing
    • individual: information processing is personal privacy
    • group: information processing is bureaucratic transparency
  3. DAO information storage
    • individual: information storage is private holdings, i.e., financial equity ownership of DAO power tokens
    • group information storage is the commons held in social equity[3], in particular the history of DAO contributions, its collection of smart contracts, and its reputation.

It is fundamental that these basic ideas are in polar relationship to each other. There is an inherent tension between group power and individual power. Individual behavior as freedom, privacy, and personal ownership is not a call to maximize those expressions without constraint. For example if an individual maximally expresses their freedom, then group governance is threatened. If an individual does whatever they wish, if they refuse to stifle whatever personal urge arises, it threatens group cohesion. On the other hand if group governance is maximally enacted, if the group crushes every expression of individual freedom, then its members are weakened, which ultimately diminishes the group. Similarly for each of the three pairs.

Individuals’ behaviors must be constrained to belong to a group. But the group’s power of suppression must also be limited. Maximize the group’s expression of governance, transparency, and social equity without constraint is not sustainable without crushing its individual members' power and freedom.

In order to maximize all these values effectively, the three pairs of polar opposites must be well connected, in healthy tension. When individuals voluntarily constrain the expression of their freedom to improve group collaboration, voluntarily share their personal information with the group, and voluntarily give up some property to the commons, then group function is improved. Similarly, inasmuch as the group can limit their overt control over the individual by minimizing governmental action, then their membership becomes individually more powerful. Thereby the group becomes more successful. More plainly, both the individuals and the group should become as powerful as they are able, then restrain themselves in their use of that power. Such contradictions can only be sustained with a culture that remains conscious of those necessities for long term success.

Each DAO’s values can be evaluated by how they perform in these six categories, which can be contrasted with the internal rhetoric and external propaganda the DAO produces. In general, a DAO’s health and outlook can be measured by how it maximizes the expression all of these polar opposite values. In general, contemporary DAO leadership has wisely favored the group designing protections for individual values, inasmuch as they have formalized their constitutional values. However, that has had the effect of lopsidedly ignoring the development of a culture which encourages the individual virtues of contributing to the group selflessly. This necessarily weakens each DAO which purely rewards selfishness, as this can only last as long as founder zeal can sustain their naïve idealism. A focus on group-generated individual reputation can remedy such unhealthy imbalances.

Each of these six categories generate jargon particular to these primitive notions in the literature on DAOs, such as: open network, open source, smart contract, “code is law”, crypto, and pseudonymity.

  • Open network
    • global (transnational legal implications)
    • internet communication
    • freedom of entry and exit for anyone who is willing to follow the established protocols
  • code is law
    • instant algorithmic legal execution through smart contracts, which allow theoretically infinitely complicated business logic thanks to the Turing completeness of the blockchain’s bytecode (modulated by the severe practical limits of actual network speed)
  • pseudonymous
    • the same asymmetric encryption (public-key cryptography and zk-proofs) that allows us to put our banking information online allows us to buy and sell bitcoin without fear of hackers stealing our passwords
  • open source
    • Decentralization requires all protocols to be available to exactly the number of people that defines how decentralized the network is. The number of people who have access to the code that governs the blockchain determines the level of decentralization. If it’s not centralized then everyone in the network has equal access to power, so everyone in the network needs equal access to be able to audit the functioning of the blockchain.
    • Bureaucratic transparency is baked in to a well-functioning blockchain. However, practical measure of decentralization is severely limited in this case, since expertise is limited. There are far fewer members who have a solid conception of the full technical function of the blockchain than those who use it.


Table 1: DAO analysis through 5 primitives

IT Triad
Set Dyad Values
Information Transmission Information Processing Information Storage
Individual freedom privacy meritocracy
Group governance transparency commons


The individual vs group division is an analysis of our subject into two primitives. We can’t define the ideas of single or multiple by appealing to any more basic notions. These primitive notions are essential to understanding the functioning of a DAO at every level. For example, the concepts of centralization and decentralization rely on the primitive analysis into individual and group. Every quality can be analyzed at every level by determining where the subject is on the spectrum between centralization and decentralization, between individual and group, between single and multiple.

For instance, an ideal DAO will be decentralized in the sense that all members have equal potential to gain power in the group. An ideal DAO is an ideal democracy. But every DAO (and democracy) needs to be extremely centralized on another level—protocol centralization. This means every DAO needs to have a single, uniform set of rules (protocols, laws) that the members follow, in order to remain organized.

All qualities will be expressed as more concentrated (individual) or more spread out (group), i.e., as more centralized or more decentralized. Besides protocol decentralization and power decentralization, it is also useful to analyze location, member talent, and transcendental values, for example, to determine how coherently or variegated these qualities are expressed in a DAO.

Unity emerges from multiplicity, and multiplicity emerges from individuals. Unity is the linking of multiple individuals—each individual is a united collection of multiple things at a lower level. Each group is a collection of individuals, but not all collections of individuals is a group. A group is a collection of individuals with a common goal, i.e., shared values. Once they have shared values, then their ways of doing things, i.e., their protocols, converge.

The group often starts with different, even incompatible protocols. Each individual in a group follows their own personally invented protocols The group at that stage is protocol decentralized, i.e., disorganized. With enough time, in a group with shared goals, they will achieve protocol centralization. The group becomes an organization, meaning it becomes organized. In the DAO acronym, the D means power decentralization, which comes first, while the O means protocol centralization. People either compete or collaborate, but to remain a coherent group, eventually a single united group protocol must emerge which all individuals in the group can accept. For this to happen all of the distinct individuals' protocols must change enough to become compatible, allowing them to link, forming a superset of group protocols.

DGF transcendental values

Main page: DGF transcendental values

  • Decentralized organization
    • Individual power and freedom
    • Group harmony
  • Decentralized knowledge
    • Individual privacy
    • Group transparency
  • Open decentralized ownership
    • Equity control of essentials
    • Meritocratic competition for inessentials

SDF transcendental values

Main page: SDF transcendental values

  1. Seek Truth.
  2. Share Knowledge.
  3. Govern Wisely.

See Also

Notes & references

  1. ↑ A secondary problem with making the letter of the law the ultimate dictate of control is that it necessarily ignores the motivations of the actor, which are crucial for determining any fitting reward or punishment. A tertiary problem is that it ignores the background of the individual in the explanation of their motivations.
  2. ↑ A primitive notion is an ultimately basic idea in a system. Primitive notions are used to build up all the other more complex ideas in the system. Primitive notions are the bricks with which we build our mental cathedrals. They are the starting point—the concepts that cannot be defined in terms of more basic concepts. As such, we cannot give a primitive notion a formal definition. Instead, we can only give colloquial descriptions of how we think of them, intuitively. However, once we accept these primitive notions, then all the more complicated constructions can be formally and rigorously specified. For example in computer science, a primitive is the most basic object that can be used in a programming language—often a computer science primitive is a logical object associated with a circuit, such as the IF THEN conditional. The idea of a primitive comes from a primitive notion in mathematics or philosophy which is a concept that is so basic that it cannot be defined in terms of any simpler ideas, but is used to define more complicated ideas. Examples in geometry are the concepts of a point and a line. Examples from set theory relevant to our discussion include the notion of a set itself, the notion of an individual object, and the notions of inclusion and exclusion. Since a primitive notion is not explicitly defined, it is therefore defined implicitly, through practice. The understanding of precisely what a primitive notion means can only become progressively clearer as it is given progressively more contextual background, as the primitive notion is used in more applications. The entire field of study that is built on the primitive notions is automatically recontextualized with each new application of the theory.
  3. ↑ There is an unfortunate terminological ambiguity between economics and sociology. Equity in finance means differentiated individual partial ownership of a company, such as stock holdings. Equity in sociology means the precise opposite. In sociology, equity is the concept of equally sharing power or goods in a group, which are referred to as the commons. Both concepts are fundamentally important when analyzing DAOs.
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