Fungi to Finance: Mycelial Patterns in Governance

Thu Sep 18 2025 · json · rss

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In this episode, Jeff Emmett, author of Exploring MyCofi: Mycelial Design Patterns for Web3 and Beyond, shares insights on how fungi can inspire the redesign of governance and economic systems. As a co-founder of the Common Stack and token engineering researcher at BlockScience, Jeff has developed tools and blueprints for communities to tackle collective action problems. Drawing on natural patterns, he explores how mycelium-inspired frameworks can increase institutional resilience, enable regenerative economies, and foster mutuality.

The conversation touches on the intersections of ecology, distributed technologies, and governance. Jeff discusses how lessons from fungi—such as resource allocation, fractal structures, and adaptogenic resilience—can be applied to human systems. He also examines experiments in decentralized finance, governance models like conviction voting, and the potential for nested economies.

Jeff explores:

How mycelial principles inspire new governance and resource allocation systems
Why diverse, local, and fractalized economies are more resilient
What regenerative finance can learn from ecological cycles

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Themes

Mycelial Design Principles – How fungi’s resource allocation and coherence can inform economic and governance systems.
Fractal and Nested Economies – Building resilient, decentralized economies that scale from local to global.
Alternative Governance Models – Exploring conviction voting, bonding curves, and trust-based signaling.
Mutual Credit and Generosity – Lessons from ecological support networks for economic cooperation.
Adaptogenic Principles – Translating resilience and adaptability from biology into organizational design.
Decentralized Finance and Inclusion – How distributed ledgers and offline transactions can enable bottom-up economies.

Timestamps

00:00 — Institutional neuroplasticity and Mycofi principles
02:06 — Introducing Jeff Emmett and his work
03:07 — Background: from distributed systems to fungi
05:45 — Fungal coherence and resource allocation
07:34 — Six design principles inspired by fungi
09:41 — Beyond money: multidimensional value systems
12:35 — Lessons from fungi for governance in times of abundance and decay
15:21 — Underground networks and mutual credit
17:57 — Governance mechanisms and biomimicry
18:35 — Streaming trust and adaptive governance models
22:12 — Global experiments in governance: Taiwan, Ethereum, and beyond
26:33 — Conviction voting explained
29:54 — Bonding curves as economic membranes
32:35 — Distributed ledger tech and shifts in power
37:29 — Nested economies and ecological parallels
40:19 — Stable currencies without violence-based enforcement
42:09 — Wealth Defense Industry and resource distribution
45:23 — Arbitrage and mushrooms as natural equilibrators
47:01 — Gradients of mutualism and economic incentives
49:53 — Subsidiarity and supersediarity in governance
52:24 — Adaptogenic principles and psilocybinetics
54:59 — Trophic levels and upcycling of energy
56:53 — DeFi and resilient bottom-up economies
59:01 — Offline transactions and financial inclusion
1:00:28 — Designing ideal bottom-up economies
1:03:46 — Validated data, experimentation, and the future of governance
1:04:13 — Closing reflections

Resources

Transcript:

Jeff Emmett (00:00)

If these adaptogenic mushrooms help our brains grow new neural pathways as individuals, maybe if we apply these Mycofi principles in organizations, they can increase institutional neuroplasticity. They can allow for new ways to sense things, new ways to cohere around what's important and new ways to act by creating these sensing governance pathways and these acting funding pathways and allow them to proliferate in new organizational forms.

Lucas Tauil (00:32)

Welcome to Entangled Futures with Lucas Tauil where we explore mutuality in conversations towards a world that works for everyone.

Lucas Tauil (00:50)

This episode is brought to you by the Holochain Foundation. Holochain is creating technology that allows people to team up, share information, and solve their own problems without needing a middleman. Creating carriers that cannot be captured, Holochain enables privacy and holds space for innovation and mutuality. I first came across the project in 2018.

During my journey into participative culture with Unsparil. My good friend Hailey Cooperider pointed me to the green paper and I was blown away by the vision of a local first decentralized internet. I worked for five years on the project and feel very grateful for the support with the show. Enjoy it.

Lucas Tauil (02:06)

Today we welcome Jeff Emmett, the author of Exploring MyCofi, Mycelial Design Patterns for Web3 and Beyond. Observing natural patterns, Jeff has been modeling novel governance and economic patterns. Co-founder of the Common Stack and token engineering researcher at BlockScience, Jeff designed tools and blueprints for communities to solve collective action problems. By targeting governance and incentives alignment, his work supports communities towards economic sustainability.

Welcome, Jeff. It is a pleasure to have you with us.

Jeff Emmett (02:50)

Thanks very much. Happy to be here. Always enjoy our conversations.

Lucas Tauil (02:52)

Nice, nice.

Yeah it's always a pleasure to be with you Jeff. Jeff shall we start with your background? What led you to distributed technologies and the world of fungi?

Jeff Emmett (03:07)

Good question. ⁓ a succinct version of that. I mean, they didn't come at the same time. They kind of, ⁓ myciliated together at some point, ⁓ along my journey. ⁓ I, wasn't necessarily looking at distributed systems necessarily in the beginning. I was, I was wondering why, why the world seemed to be falling apart. ⁓ that, you know, these, we, we seem to be rolling backwards all of these, ⁓ sort of advancements that, that we kept talking about, you know, and we were having narcissists in the White House and economic trade wars and Brexit you know, not that there aren't a lot of reasons for these kind of failures of coordination. It really led me down the rabbit hole of blockchain technologies as sort of the, at least at the time, what I understood to be a way to be, to rethink those coordinative structures as protocols rather than as say corporations or nation states.

And that kept leading me down the rabbit hole. Actually the first blockchain conference that I went to, I stood outside the whole time and learned about Holochain and the agent centric as opposed to data centric ontology really, really sung true to me. I mean, on a parallel track, I had been very interested in mycelium. I was reading, you know, Paul Stamets’ work Merlin Sheldrake and Alona Hapsing, a lot of these sort of researchers, ⁓ Toby Kier's, her work is fascinating, looking at the sort of the market structures of fungi. So I mean, this was kind of a parallel track of interest that at some point, they merged actually, I think it was at a, it was at a collaborative finance conference. ⁓ Cofi is, one of the, you know, defy refi, Cofi is a new, ⁓ meme in the, mean, I wouldn't even call it the web three space in the monetary theory space.

And while we were at the Cofi conference, you know, it was an unconference. So everyone was encouraged to speak if they had topics. ⁓ the topic that we came up with, for my talk was, was Mycofi, was just a play on, on the COFI ⁓ but that really kind of got the sparks, going about how actually there are very, you know, stable long-term resilient patterns of positive, some regeneration in mycelium that have been going since, you know, the dawn of life on this planet.

And maybe we had something to learn from, you know, from these wonderful beings to bring into our own economic fabrics. So yeah, that's kind of where I think those two topics merged, but that was still fairly recently. So I don't know what kept them apart for so long.

Lucas Tauil (05:45)

Jeff, an evolutionary honed capability, both for collective coherence and intelligent resource allocation. Could you share with us how those mechanisms work?

Jeff Emmett (06:02)

I mean, to be honest, I don't know that we know that much. Toby Kears has some really fascinating research. She's got a number of papers looking at the market dynamics of, if one mycelial mat has higher phosphorus and another mycelial mat has lower phosphorus, they will trade at different rates to trees sugars and whatnot.

So you have like walrassian market behaviors. There's also all sorts of like

physical, chemical, even down to I've heard mushrooms or the mycelium, the way that they interact with water molecules because they're continuously exploring, but also, you know, maintaining an internal pressure to in the mycelium, they use almost what is a fourth state of water. It's like a gel-like state that has hydrostatics. They're, really making use of all sorts of different

natural forces that I don't think we even understand that well, because these are happening at such tiny layers. and just that we have massively under sufficient amounts of study going into mycelium and, and how these organisms operate and how we can, what we can learn from them. So I think it's just a rich area of exploration.

Lucas Tauil (07:16)

Jeff, fungi allocate resources and facilitate coherence in genetically diverse collectives. What are the key design principles we can learn from them in designing our resource allocation processes?

Jeff Emmett (07:34)

Yeah, I think there's, there's a number of them. ⁓ the six that we identified in, the book, ⁓ I mean, that these are networked infrastructures, ⁓ which not like our economies aren't today. I just don't think they are very healthy network infrastructures. You have some players that have asymmetrically, you know, more power, ⁓ and a lot of, you know, groups that are underserved in, in current economies. ⁓ the fact that they're fractal in nature, that we can, we could probably have much more resilient.

economic systems through a plurality of diverse local economies that fractalize up into larger groups through their sort of pooling of resources, of funds, of assets, which also creates the ability for emergent coordination. It's not a top-down dictation from, let's say, the central bank to subsidiary banks about what the rate will be, which then impacts the economic behavior.

the economic behavior could, could be much more responsive and dynamic to the actual productive labor in an economy. ⁓ if, if we were to use the same principles as, ⁓ as mycelium, I think also the amount of flow, ⁓ our systems today, actually, I mean, there are, there are organic, parallels to our current economic system and it would be probably a cancer, you know, something that grows and grows and grows, ⁓ can't stop growing, ⁓ until it likely.

kills its host. So it's not saying that we don't have any, you know, organic resemblance in our current system, but I think we just need to choose sort of the more healthy directions and making sure that, you know, it's interesting mushrooms, mushrooms don't get cancer. They evolve too quickly. Their cells outsmart the, the never ending growth cells. So if we can embed that,

property into our own economies, our local economies that fractalize up into larger and larger bio-regional or biomes or regions. I think we potentially address some of the biggest crises that capitalism is currently pushing us towards.

Lucas Tauil (09:41)

Yeah, on that line, Jeff, the present monetary system relies on a single notion of value, money. As Michael Zahrham pointed out in his praise to your book, nutrients can be waste in one context and a resource in another. recognizing this guide us in designing more regenerative resource allocation in our monetary system?

Jeff Emmett (10:10)

Yeah, good question. And I think that's the wonderful thing about ecologies. When we study a forest ecology, we are looking at the flows and resource transferring of many different assets, whether it's nitrogen, oxygen, water, different metals, sugars. So there's always a flow and there are different stakeholders in that ecosystem that bring

resources from one part to another. Mycelium often play a role in that, but so do various insects, birds, animals, even humans, trees. So there's all sorts of different needs within these groups. Waste for some group is food for another. And this is how you get the closed loop in that ecology that you have basically a production cycle, a metabolism of the sort of ecosystem. And I think our

current economies are too unidimensional, which causes everything else to kind of get optimized out. We can learn, we make our balance sheets more sophisticated over time. We now actually account for not just profit, but also risk. And I mean, maybe carbon is kind of coming in, but maybe more broadly like biodiversity credits and even more so, you know, local sustainability, economic sustainability. I think all of these things can be.

valued and priced and put on balance sheets. We just need to be willing to do that. And I think protocolization can greatly help in that. It doesn't have to be one-off, you can be, well, I suppose it's evolutionary.

Lucas Tauil (11:54)

Yeah, iterative, right? Yeah.

Jeff Emmett (11:57)

Mm-hmm.

Lucas Tauil (11:59)

On the line of excess of resources, excess of resources can quickly become toxic and numbing, making people out of touch and dissociative. Given that this day's political power walks hand in hand with financial power, this seems to accelerate the downward spiral we're in. The present money-driven paradigm appears to be approaching an inflection point.

What are the fungi lessons that will help us rethink governance on the upcoming paradigm?

Jeff Emmett (12:35)

Hmm. Yeah, I think, it's interesting to think what, what mushrooms do in the, in the presence of, ⁓ you know, a singular resource or too much of a resource in one area. ⁓ they're often the transporters, they're the ones who break down after a forest fire, for example, mushrooms are some of the first on the scene. They're breaking down all of the charred wood, all of the waste of that, of that event and then transporting it.

through the network to where it might be needed. So they're kind of pulling it or arbitraging. And I think we, mean, maybe arbitrage is too financial a term for it. But I think when we see the death and decay and overturn of a paradigm and in the financial system, as we know it today, I think is in the throes of that. It may still continue for a long time, but now we actually have, you know, since the advent of

cryptocurrencies and mean, e-money even before that is, is there's alternatives. They may be very small today and they may be very niche. wouldn't say they've hit use cases that, you know, many people can be proud of. I'm sure there's lots of money in crypto projects. This isn't necessarily the place that it needs to be. They're probably more Ponzi's and casinos than.

you know, legitimate projects, but I think this also just speaks to the early-ness, the, the nasancy of the technology that we haven't learned to connect it properly, the economic rails to the production rails. And actually Holochain and the, the HoloFuel Reserve account, you know, pricing algorithm was such a fascinating experiment to me to connect the economic power of a token and economy to the productive power of

what it's what it's putting out the the hosting power, the compute, the storage, the bandwidth, anything like that. And I think that pattern can can replicate to many other things. It may be a little bit more difficult or less difficult to measure the outputs of those things. But I think this also gives us a lot of opportunity to experiment like the mushrooms would in alternative theories of value prior to these technologies. This wasn't possible to do.

The only way to deploy a currency, I mean, was to either be a nation state or a gigantic corporation, you know, which are now also the most powerful and influential types of organizations in the world today, probably for that reason. So I think that the proliferation of that affordance to any organization, even down to maybe an individual size, just makes the whole economic exploration environment much more mycelial in nature.

Lucas Tauil (15:21)

Jeff, on that line of thinking, how can the underground economic support network of fungi inspire mutual credit initiatives?

Jeff Emmett (15:33)

Well, I think there's there's so many ways. And not not that a lot of these don't already exist in some form or another. So I don't think oftentimes that the mycelium, I mean, they may have new things to teach us. They may also just validate some of the ideas that we already have. Things like profit pooling or loss pooling. Actually, this is also backed up by a mathematical theory called the ergodicity.

which is gaining some popularity in the past few years, saying that, you lot of our calculations of risk and benefit are not accounting for the fact that our systems are not ergodic. We're kind of making a category error in our business plans and the profitability that we expect from businesses. And actually that is greatly mitigated, that error is greatly mitigated by things like profit pooling among firms.

⁓ so you can, you can get to your ergodic maximum if everyone profit pools, ⁓ at 100%. Of course, this may be difficult to get everyone to agree to do. ⁓ but the, the more that you pool, the more, ⁓ statistically likely it is for everyone to succeed. So I think this is one of those things that we also see in, mycelium. ⁓ but to me, this isn't necessarily, ⁓ something brand new. It's just providing validation that.

yes, we see this work in nature, the mesh network, the mesh support of basically the underground socialism of the forest. A tree can literally be cut down and its root mass underground kept alive for centuries. It'll be fed by the surrounding network. And I mean, it kind of makes sense. If you are a tree buried in the ground next to your friend who's been there with you for a few hundred years, you might just continue feeding him.

So I think we can we can really and this might be difficult to do at a national scale It's very hard to I think relate to a nation scale of people but at our neighborhood scale I think this would be much easier. I think if we had systems of institutionalized generosity Where you can see the people who are not only hurting but are being helped by that generosity I think we can we can change the game of how our economic fabric

encourages coordination over kind of this dog eat dog competition.

Lucas Tauil (17:57)

Yeah, what I find interesting is that in nature, biology regulates the rates of extraction and the rates of contribution over millions of years. In human systems, we are much faster. much more agency, so we can break things. governance is structural for that.

What are the mechanisms of governance that can help us adapt those biomimicry learnings and make use of them on a sustainable form?

Jeff Emmett (18:35)

Absolutely. And I think this is one of the most interesting things of these technologies as well as they are not just tokens representing say dollars or even resources. They could be tokens representing trust where I delegate my trust to you and my tokens flow to you over a rate that that trust increases. For example, you know, and I don't think there's one answer to

You know, what is the right way to do governance governance? Actually, I think there, there, you know, there's the no free lunch theorem. There's some arrows and possibility theorem. we know that there's no perfect way, so we can stop looking for that right off the bat. but I think what mycelium offer is a lot of things that just didn't work under the technical debt of our old voting systems. You know, when you, when you have a voting system or you have to check on a box, ⁓ you know, this person or this person.

you can't give real time input because you know, it would be prohibitively costly and everyone would have to be paying attention to it all the time, which would be terrible. ⁓ but under these systems, we can now stream, ⁓ not just our preference over, let's say policies, but also our preference over who should have what weight over making those policies. You know, if I thought you were an expert on a topic, I could stream my trust to you. My trust increases over time.

And perhaps if you act in a way that betrays that trust and I take those tokens away, well, then my, my trust decays probably faster than, than it grows because that kind of mimics our, our human systems, right? We grow our trust in small bits over time with reliable behavior. And then if you lose that trust, you, you, might lose it all at once or very quickly. So we can, we can now embed those kinds of charge up and discharge dynamics.

into our governance systems. Maybe we have a continuous delegation system where people just actually grow or shrink in the weight that their voice has. And there doesn't have to be any like winner. get the, the power for four years, which just seems like a, really, it's very fraught with danger. know we need consistency to be able to get things done. Certainly. But I think a lot of the assumptions of sort of

representative democracy are really outdated, including things like one person, one vote. I think we could have one person, 100 votes, 1000 votes. You could quadratically cast those. You could delegate them to different people for different authority areas. We could have, you know, bottom up grassroots participation where you can cast your own vote if you have the time, but if you don't, you just delegate it. And that's immediately recallable.

You know, if someone starts enacting policy that you disagree with, then you just point that trust to somewhere else, to someone who is making policy you agree with and their vote, their voice gains in prominence over time. So I think there's all sorts of experiments we could do with signaling, using these tokens, not just as money, which is its own form of signal. Maybe money is the wrong term as currency, but also as governance, as trust.

where we can signal who has authority to speak where. And of course you could overlay, you know, degrees or, you know, all sorts of other, you know, real world authentication systems that we have now. But I think allowing this sort of delegation and trust and waiting, ranking different proposals continuously could open up a whole new world of how we make decisions as groups, which is much more natural.

Lucas Tauil (22:12)

Jeff, on the last 11 years since the sunflower movement in Taiwan, Taiwan has been this exceptional ground for experimenting with new governance models and opinion polling Audrey Ting, their former Digital Affairs Minister and now their Digital Affairs Ambassador, is doing exceptional work on that regard.

What other spaces of experimentation do you see out there where this is happening?

Jeff Emmett (22:44)

Yeah. Yeah. Audrey's been doing some great work and his influences is clear in the Ethereum community as well. His work with Vitalik and Glen while, radical exchange has been doing some very neat, experimentation there. they had a good, ⁓ quadratic voting visualization tool. I think there's, man, there's so many great experiments. The challenge is they're using the tools rather than explaining and understanding the tools. And I think there's, ⁓

We first need to gamify and play with these tools so we know where they work, where they don't, where they break. Because I think iterating the tools and then using the tools simultaneously to like make organizational level decisions creates a lot of challenges. We often have like insufficient tools, which are then, you know, the outputs of which are taken as, you know, immutable blockchain outputs. Meanwhile,

they were just experimental. needed to like validate that they even did what we thought they were going to do before we put it into use to, you know, cement the governance of this ecosystem forever. So I think there's, this was my first foray into the web three space was building these tools and deploying them to see how we could use them. We did deploy a bunch of V1 things, which was great, but I don't think the UX was there for people to really understand tangibly what

they were interacting with. The smart contracts on the backend were doing all sorts of neat things, but the people on the front couldn't really, and I mean, it led to some faux pas where money was spent that it wasn't meant to be because things weren't set up properly. So I think there's still a lot of room for playing with, gamifying these things, visualizing these things, and then putting them to use in very small scale. I'm far less interested in what, DAO tools.

we use, now kind of shrinking down to like even the small working group, know, six people working group. how do you manage the things that you manage? A lot of the tools are actually kind of a fractal shadow of, you know, it's still maybe a bonding curve or conviction voting or, or any of these primitives, ⁓ just assembled in different ways, ⁓ at different, ⁓ scales of group where I think the inputs and the outputs can be much closer, ⁓ correlated.

a few of the other groups that are really innovating in interesting ways in the blockchain space are groups like, you know, the token engineering commons.

this was one of the first, augmented bonding curve deployments with conviction voting, sort of this dynamic governance primitive, ⁓ Giveth also experiments like rapidly. used a quadratic rank choice voting tool that was kind of custom built. ⁓ but I, know, it just gave me a taste of the future that we could build an app that does quadratic rank choice voting, bring your own token. ⁓ and actually I feel like a lot of these things could be turned into, you know, voting.

products or dashboards views on different ways of collective decision making. have a feeling we're on the cusp of some really interesting. One last group I'll point out, because I think they're building a toolkit that's quite interesting, filled with these kinds of components is inverter network. And they're taking a lot of the work that the common stack and the token engineering commons, a lot of these same tools, turning them into sort of a deployable toolkit where you can take different modules and plug it together.

and then launch your own governance system, token system, any number of combinations of these primitives in the toolkit. So yeah, lots of really interesting development going on. And I mean, this is just the tip of the iceberg as well. There's so much going on in different groups below the surface where the mycelium are.

Lucas Tauil (26:33)

Jeff, shall we share with the audience what is the meaning of those things? Shall we start with conviction voting? What is conviction voting?

Jeff Emmett (26:43)

Sure. Yeah. So conviction voting was, was originally, ⁓ put forward by Michael's Zargham as something he called social sensor fusion. so he did his PhD in robotics and multi-agent robotic systems. like drone's swarms that kind of stuff. ⁓ and of course they're, they're doing group consensus all the time, ⁓ through, sensor fusion. So they basically ever all of these sensors have, ⁓ fused together into a, understanding of what needs to go on, who needs to move where.

so taking that the same mathematics from that, but then using humans as social sensors. So in other words, if we are going around our community and we see things that need to be addressed by the collective, we can raise them. We can be a sensor to say, this, this pothole needs to be filled or this person needs to be fed or, know, any number of not that we need to put that to a message board. anyway, ⁓ so conviction voting is, a way that you can, ⁓

votes gain and decay in their weight over time. So in early DAO voting, there were some problems with last minute vote swings with whales in the system. They would come in and deposit, you know, a million votes on yes. One minute before it closed, people thought it was going to be no the whole time. Suddenly it switched to yes. So this was also a response to some of the early I guess, interaction failures of, of DAO voting systems and

Michael Zargham proposed that, you know, votes can actually be cast and then grow over time according to, you know, mathematical formalization so that you don't have this like discrete zero to 10 million votes. You have a smooth curve. And the interesting thing with smooth curves in aggregation, you know, if everyone has a smooth curve of, let's say their, their preferences, you can add all of those together. So you can now have like an aggregate or a cumulative

Maybe consensus is the wrong word, conviction, that a certain thing should happen or not. So that was the idea behind conviction voting is that the weight of your vote grows over time and decays when you pull it away. And you can allocate that across any number of proposals simultaneously. So each user is almost like a tap, pouring their preference into a cup, which each proposal was a cup.

And when your proposal gets enough conviction, then it passes and the funds start to flow. Yeah. So just basically a way of integrating the, the charge up discharge feature, which is actually prevalent everywhere in nature. know, in mammals we eat, we gain mass. If we don't eat, then we lose mass in neurons in cells. This, this works all over the place in nature. So it's.

basically an attempt to bring that into our voting systems because now we can do that. We could never do that before because they weren't on internet rails. was checks on a paper. So yeah, I think it's just one step into a huge space of exploration in alternative governance systems that include dynamic

Lucas Tauil (29:54)

Got you, got you. Jeff, what about bonding curves? What are they? How do they work?

Jeff Emmett (30:02)

yeah, another, another funny term for what is actually a very natural process. ⁓ I think anything that, retains like a, like a swale in permaculture, you know, when you have water running downhill, you want to make the most use of that water. So you dig, you dig swales so that the, water is retained and it's used in a garden and then it keeps flowing down and there's another swale. ⁓ I think basically bonding curves are like asset retention systems. They're kind of like piggy banks.

If you put in a dollar, it generates a token. If you put the token back in, you get the dollar out. So it's just sort of like a membrane between an outside system and an inside system.

whenever there is, something entering from outside, like, like dollars and then inside a token is, is generated. So if we think of this, like a biological analogy, the bonding curve is almost like the membrane of the cell. It, it, it allows some inflow outflow, but it's like, it's not, ⁓ complete, ⁓ permissionless you know, there, there's some,

rules that need to be abided by and that rule is basically like the pricing algorithm and that may be connected to a number of different signals from various systems. So if know if outflow exceeds a certain amount then you know it can be auto limited to certain currencies or certain user types or I think there's all sorts of interesting sort of like economic sense and response mechanisms and bonding curves are in a way this

smart contract, sort of like one-sided market. It exists just when people interact with it. And it always has the ability to respond to that. So I think we're almost talking about like economic life forms. I remember reading one time, the beginning of life was when there was a cell wall, because before that there was no difference between inside and outside. was just a bunch of chemicals. But as soon as there was a cell wall, you had...

something that was different than what was around it. And it could act in, in relation to that environment, but as a unique being. And I think bonding curves might be this sort of same membrane, an economic membrane that separates what's inside that from what's outside that. I'm really interested to think about what that could mean in a future of kind of like economic evolution and yeah.

organizational life forms that are much more responsive to the needs of their members and environments.

Lucas Tauil (32:35)

Jeff, in the past, every time technology opened a path towards new co-ordinative infrastructures, the world has experienced massive shifts in geopolitical structure. The printing press, the telegraph and the internet each transformed how information was distributed, reshaping geopolitical power. How do you see distributed ledger technology reshaping power?

Jeff Emmett (33:05)

the technological advancement from these offered by these technologies is, is quite fascinating.

The internet and the post office are ontologically very similar. They're just message routing systems. You have, you know, a sender, a receiver, you have some middle man that's, that's bringing a letter or a packet from A to B. But the difference of the internet and the post office is obviously fundamental because the speed of the internet, the lightness of sending bits compared to sending letters on horseback.

really changes the nature of, know, look at all the things that we can do that would really be impossible from, you know, hand delivery of letters. So although we're not necessarily like shifting what is happening in say moving from, you know, real world economic networks to distributed ledgers or traditional economic networks to distributed ledgers, the fact that we're doing it on rails of protocols that don't sleep, they don't.

You know, don't need bank tellers. don't, you know, if I, can't send money from my bank on, weekends or holidays, or it takes, you know, extra time, like this, this really makes no sense when you look at, know, the, opportunities afforded these new technological infrastructures. And while they're not, ⁓ they're not rethinking everything. It's just, it's just ledgers. You know, it's not even that, ⁓ you know, just moving from double entry to, triple entry accounting, perhaps, but.

I mean, even the shift from single entry to double entry was a revolution in, know, the allowed the Italian banking industry to flourish, allowed, you know, lot of the systems that we know, today to, to have come into being. So it'll be interesting to consider what the shift from double entry to triple entry accounting brings. ⁓ although it sounds very boring, ⁓ it's a, I think a revolution in, in potential, ⁓ coordination for, humanity.

hope by distributing it to the people at the bottom. I think this is really like lowering the barriers to access for a lot of these things aren't new in our society. The way that we issue tokens, fractional reserve lending, like any of these things, they already exist. I think they just exist at levels that are not reachable by most people, most organizations.

And I think we can do a lot with these technologies to bring them a lot closer to. I don't think a lot of the patterns we use in economics are even necessarily that wrong. I think they're just deployed at the wrong scale. The fact that we try to do it at the nation state scale or the corporate scale, the scale of those corporations that are able to like launch their equities tokens, which are kind of like super money. Some people call them. But I think the,

offer of this technology is, especially if it is in open source as protocols, this is where it can proliferate from the bottom up from as small as it needs to be. And then cluster together, moving up from there. So you could have, you know, a neighborhood currency that's a part of a community currency. That's a part of a regional currency. That's a part of a bio regional currency. That's a part of a global currency. And I'm only saying currency here as in some kind of, ⁓

credit unit of account, whatever, if that is a reputational based currency, it's interesting to think of, maybe can we have money that we don't have to spend to use? Like you think about, you know, love, if your mother loves you, that love isn't decreased when you go over for dinner, you know, or it doesn't, it doesn't get decremented from a ledger. And maybe similarly, we could have currencies that, you know, show that you are

an outstanding member, a contributing member of your community. And that just gets you free lunch or free coffee anywhere in town, or, you know, this, doesn't actually decrement. It can just be a, a signal, a new kind of yeah, currency is just not the right word for it because it may, I guess it flows in different ways. If we think of a Art's currency, we're seeing the currents of these various flows and forms of value.

Lucas Tauil (37:29)

correctly that you were describing nested economies?

Jeff Emmett (37:33)

Yeah, yeah, probably would have been a more succinct way to put it.

Lucas Tauil (37:38)

And what are nested economies? So I think it's a good segue for us to go into this.

Jeff Emmett (37:43)

Hmm.

Certainly, actually it's, let me see if I can recall the term. I just came across it in ecology, inquiline ecologies, I think. Inquiline, we should look that up. But it's an ecology within an ecology. So, I mean, unpleasant things like parasites, for example, they make a living space out of us as in their ecosystem. But this exists all through nature. have animals living within plants.

you know, depositing their feces and feeding the plant, but at the same time getting protection, it's kind of this ecological symbiosis in a lot of cases or parasitism in others.

nested economies are basically the, economic equivalent of these, ⁓ Inqualine, ecologies. have, ⁓ an economy existing within another economy. And I think we, we have this in, several ways already today, but, ⁓ I think it will be very interesting to, consider how, for example, Ethereum as a layer one.

And then all of these protocols and apps built on Ethereum using Ethereum grows the value of the Ethereum ecosystem to much higher. Similarly, you know, the US USD as the world's global reserve currency kind of enforced, kind of militarily enforced, creates massive value in the US economy. So

if we look at it from a more healthy perspective in a permaculture context, we can redistribute the flows to make sure that these things are long term sustainable from the local out, rather than sort of extract and dominate at the highest level and then, you know, dictate things down like interest rates or whatnot. I think there can be a much more emergent sense and response in our economic systems that

We'll look back at how we do things today and just wonder how it ever worked and that it didn't.

Lucas Tauil (39:44)

Yeah, what you just mentioned about the US dollar enforcement happening through army's power. One of the things that occurs to me is if we can come up with a tech that holds its ground by technological efficiency and doesn't depend on army's, what would the consequence of this be? know, what would stable

currencies that do not depend on violence enforcement be. This is fascinating, right?

Jeff Emmett (40:19)

it'll be interesting to see when these currencies, when these tools, these new ledgers and distributed technologies become useful to people such that they're willing to

You know, I'm interested in a day that we can invest in the things that I will need in the future locally for my, for my, as local as I can. ⁓ if I could invest in my healthcare, if I can invest in education, if I could invest in, and I mean, not to say that, you know, these things need to be, Ponzi's or, or, you know, ⁓ money making machines, these, know, generally infrastructure is, ⁓ costly, but important. And I think if we, if we subsidize those things, right.

rather than subsidizing war, fossil fuels, aging industries, protecting the status quo, basically, which is what we see in a lot of the progressive battles that are taking place on traditional political footing, is just that the incumbents have so much power that they'll squeeze everybody else out. So think we need to think of new ways where we don't have to ask the existing incumbents. We can invite them along because we think that

they will want a livable future too. And that that can be a profitable thing that we can bring about a future that we can, that we can actually live and survive in. I think that, yeah, but we, can't wait for the powers that be to, to grant us permission for that. We need to start innovating now. And I think we already have been, there's lots of information and failed experiments or successful experiments that are still ongoing.

that we can learn a lot from and continue iterating towards a world with more alternatives and possibility.

Lucas Tauil (42:09)

Yeah, the co-founder of Zebra's Unite, Dr. Astrid Schoots, recently pointed me to an article of hers called, Tackling the Wealth Defense Industry. The Wealth Defense Industry, it's a major force for inequality, right? Like, we all get shocked that venture

only funds white middle-aged males, right? But then venture capital is just 1 % of available capital. 99 % is in family offices, in foundations, in pension funds. So how can we shift the balance toward better resource distribution? How can we hack this industry? It's in the cloud for us, right? Like, yeah.

Jeff Emmett (43:00)

Yeah. And I think part of this is, you know, that that wealth is is really only a representation of what can be accessed with with it, you know, like we say, you know, the five five richest people in America own as much resources as the bottom 80%, let's say, but, know, they, can't physically have you know, that many apples or that much gold or that much steel, like you can't, you can't physically, you can have pieces of paper that say you have rights to those things. And that, holds as long as the society says that paper is good for that thing. ⁓ but when you go through major societal upheavals, ⁓ often that changes, or at least the number of those pieces of paper you need for that thing changes. ⁓ and I think we're, going to probably see, you know, not to say hyperinflation, you know, the, the, the throws of these kinds of systems meeting their, ⁓ kind of inevitable, you know, progression. ⁓ and we'll start to see alternative systems where, you can actually put, and this has been seen throughout history as well. The, the, VIR and the WIR was a community business currency basically in, in, ⁓ Europe during world war two, extremely successful, ⁓ because it held so much better against inflation because it was actually doing, you know, real world production. was businesses that were basically issuing these credits to each other rather than having to go through the financial system, the banks and using dollars. I think there are so many opportunities that we have with credit clearing. For example, like there's this is what one of the things COFI is bringing is that small businesses could save 30 to 50 % of their cash costs if they just did invoice clearing amongst each other, which I mean, you might need a government to run or maybe a protocol. And I think these kinds of things will be coming up that there will be massive cost savings, cash savings and abilities to move outside of the existing cash system into new forms of value that actually are backed by things that we care about instead of more war and extraction from overseas.

Lucas Tauil (45:23)

Jeff, you mentioned arbitrage earlier. Could you share with us what arbitrage means?

Jeff Emmett (45:30)

Yeah, loosely speaking, in its most traditional form, if you have an asset that's available on two different markets, maybe in two different cities at different prices, arbitrage is the money that can be made by buying it in the place where it's cheaper and selling it in the place where it's more expensive. So you're kind of equal liberating the prices by potentially taking some of that, that arbitrage profit off the table. And this is a way to market incentivize goods to move around from where they're valued to where they're not. The way that I use arbitrage sometimes is kind of funny. don't think it's traditionally used in that way, talking about mushrooms as arbitrageurs, where if they're after a forest fire and there's a ton of one type of resource, they will capitalize on that, bring it to where it is less abundant and trade it for the things that they need. I've had some people disagree that this is arbitrage. It may be considered something a little bit different, but I think there are parallels in sort of that. Like there's a, there's a natural emergent process there that equilibrates between where things are in abundance or where things are in scarcity. And we don't have to measure that in dollars of profit necessarily. I think there are many other ways that we can redistribute those flows and in a higher dimensional economic mesh. We could probably do that in a way that's much more sustainable than just dollars and profit.

Lucas Tauil (47:01)

Jeff, I would like to look into gradients in mutualism. How can we create economic incentives and gradients that encourage mutualism?

Jeff Emmett (47:16)

I think we have to be careful with incentives and where we implement them because every incentive creates kind of an equal and opposite disincentive. You know, if you create an incentive to pay people to clean up trash, well then there's an incentive to dump trash on the ground. So there's trash cleanup. So we have to be careful where we implement these incentives or whether we do and where we do, I think we need to match them to sort of the social gradients that are already there.

So, you know, this comes down to just good system design. know Bernard Letaire talked a lot about different community currencies and he always talks about connecting the thing that you have a lot of that maybe isn't high cost, which is often things like space, you know, or seats in an auditorium. You know, if you're going to put on a play anyway, a few extra people in seats doesn't increase your costs any further. So you actually have kind of an abundance of seats.

And then you need to find out what is the thing that your system is lacking or what do you want to encourage? Maybe that's for people to use more economically or environmentally friendly modes of transit. So then you could say, okay, well, let's connect those two things where we say if citizens ride their bikes instead of taking a car, then they can earn theater tickets at the opera. And then when they go to the opera, they can enjoy, and it doesn't actually cost the...the city anything, if the opera has extra seats and they're willing to offer those for people who are decarbonizing their commute, then this is a great way to connect something that's in abundant supply with something that is needed. And I think in mutualist groups, it's an opportunity for each group to determine what are these resources they have? What are the skills that they have in their community? What are the assets that are non-financial?

that can be utilized people's time, people's skills, people's connections. A lot of these things exist outside of the financial system. And I think we can use a lot of interesting ways of connecting those once we can track them and measure them. I'm not saying that they all need to be tokens necessarily, but that we can have representations of these other systems and connect them in ways that allow them to Yeah, bring about more of this stigma, jic connection that that happens through economics just on a much lower dimensional level.

Lucas Tauil (49:53)

Yeah, on the foundation of the design of governance systems, subsidiarity stands out to me. Subsidiarity is the understanding that decision-making is best held on the edges, close to where the challenges emerge. Jeff, how do you think subsidiarity principles guide us in designing systems that prioritize local problem-solving?

Jeff Emmett (50:22)

Yeah, think subsidiarity is really important, but also one thing that's never called out is supersediarity. And maybe that's because we have too much top-down decision-making in our systems today, but I think we actually need both. Supersediarity in that there are global pools of experts who know certain things may work better than other things. And that may differ depending on whether we're talking about nuclear reactors or governance, online governance systems. But there are pools of talent that have that information and should definitely be referred to regarding that information. However, we need subsidiarity in the contextual application of which of those fields needs to be applied here. So we need local decision-making with global expertise where the context can be fit to the local, but the pool of expertise or the pool of solutions comes from the global. So each community doesn't have to figure it all out by themselves. They can actually choose from a slate of the best options and then choose which one works for them. This kind of comes back to like Cosmo localism. It's like keep the what's heavy local and what's what's light global and ideas are light and the experts who know which ideas are better than which others. This is also something that can be shared easily. When it comes down to deploying those things, you know, we shouldn't allow experts from some place very far away to tell, you know, me and my community, how we, how we need to do things, which is often what happens in, you know, even like development aid projects. there's, there's sort of a, a dictation from, ⁓ the, experts or the elites and speaking broadly here, ⁓ to the people on the ground. so I think a mix of that subsidiarity allowing the local people to decide what works for them and super city airity having a global toolkit of solutions that could actually be deployed.

I think we kind of need both in the right balance.

Lucas Tauil (52:24)

boundaries. no, I like that. Jeff, in your book, you mention adaptogenic principles. What are adaptogenic principles?

Jeff Emmett (52:35)

some mushrooms are called adaptogens because they don't have a targeted effect on, ⁓ say your, physiology, like it might happen if you were taking a Tylenol or an aspirin, it, you know, releases the, the, pressure in your, ⁓ blood vessels and therefore relieves a headache. a lot of these gourmet and medicinal, medicinal mushrooms don't actually have a targeted effect. They just seem to make your immune system better tuned to doing whatever it needs to do, which is, you know, they find it, can affect, you know, fighting cancer. They, recommend it as an adjunct therapy because it basically just kind of tunes, optimizes, adapts your immune system to be able to more handily fight off whatever it needs to.

Lucas Tauil (53:21)

And Jeff, is there a parallel of adaptogenic principles into distributed ledger technologies?

Jeff Emmett (53:29)

I've been playing with this term. I don't know how it lands with you is, ⁓ psilocybinetics. ⁓ so psilocybin being the basically like the adaptogenic, the, the, neuro, ⁓ neurogenesis, you know, regrows your neurons. It teaches your body, ⁓ how to fight off pathogens and so on. ⁓ and cybernetics as the, the science of sort of like organizational design steering ⁓ coop from Kubernetes, the, the, Greek, ⁓ like to steer the ship, the ship of society, the ship of this corporation, the ship of a government, ⁓ any of these could be considered a cybernetics challenge. ⁓ so silo cybernetics is an idea to say, well, if these, adaptogenic mushrooms help our brains grow new neural pathways as individuals, maybe if we apply these Mycofi principles in organizations they can increase institutional neuroplasticity. They can allow for new ways to sense things, new ways to cohere around what's important and new ways to act by creating these sensing governance pathways and these acting funding pathways and allow them to proliferate in new organizational forms. So that's kind of one of the leading edge theories of, of myco-fi is that we can increase institutional neuroplasticity using solo cybernetics.

Lucas Tauil (54:59)

Jeff, another term that appears in the book that I really love is trophic levels. Could you explain what are trophic levels and how do they offer strategies for energy to move uphill?

Jeff Emmett (55:17)

Yeah. I mean, this is a, an interesting, ⁓ area of, know, how do we, the, second law of thermodynamics, you know, fighting, fighting entropy. ⁓ can we, ⁓ and it turns out, I mean, in the long run, no, can't, but in the short run, there are these interesting little like eddies of energy. And I think our, our whole existence is probably one of those. ⁓ but our existence is predicated on several other layers of these, these like energetic eddies. ⁓ and.

mushrooms are kind of a base layer of that because they are the bridge between death and life. know, when things die, they decay. Then they get turned back into useful resources that can, you know, say a plant can grow in that. And that might be the next trophic layer. An animal that eats the plant. That might be another trophic layer. Now we've got us who eats the animal. So we've got sort of this upcycling of energy that is kind of captured from the sun. You know, we've got

We don't live in a closed system. We live in a system that gets abundant energy from the sun. And thus we have this kind of like upcycling of energy through these various layers. So really interesting to consider how actually going back to, like you were saying, nested economies before I feel like these, this is sort of the same nesting of energy flows where if we have, you know, trophic energy levels in an ecosystem, we might have similar positive sum benefits in nested economies with the right kind of checks and balances to keep them in line with each other.

Lucas Tauil (56:53)

Jeff, how can decentralized finance create more resilient and stable economies, especially in bottom-up contexts?

Jeff Emmett (57:03)

Yeah, mean, DeFi on its own is kind of a scary place these days. But I think that the broader design space that it's it's gesturing to has has a lot to offer. You know, going beyond sort of the existing financial system, the way that we create relations between people. It's funny that for for, you know,

you and me to work together, we need to go and get someone else's money to trade between us, or if you wanted to pay me, it's not just something, we've been intermediated. We've always had this, and I mean, it was probably much more intangible. was a gift systems or barter systems even came from person to person, but now we're all intermediated by the present day financial system, which gives it immense amounts of power.

And I think that's how they are able to push the world in this direction, you know, at a, you know, through economic exploitation, through military force backed by that economic exploitation and vice versa. I think if we open up the ability for smaller groups to basically divest from that, to step away from that and start using their own value systems backed by the things that they produce, then we just start to siphon away.

the power of that system piece by piece, pocket by pocket, and allow them to exist in some post capitalist dimension where they're all interconnected in an actually much more powerful economic mesh. Because you can leave this system, but you can join all of the other systems as soon as we have the tools available to mesh them together properly, which is think bonding curves and a lot of these technologies have an important role to play there as well.

Lucas Tauil (58:58)

Yum.

Jeff Emmett (58:58)

HoloFuel

Reserve accounts, for example.

Lucas Tauil (59:01)

Jeff, what about offline transactions in distributed finance? How can they transform financial inclusion?

Jeff Emmett (59:11)

I think we absolutely need offline. We need to be thinking about, you know, redundancy if, if, you know, networks go down or power goes out, or there's, there's all sorts of things that we can't afford to lose. If you can't connect to the internet and you can't use your wallet, this is like, yeah, it's not, it's not a way that these systems are going to become useful in the, the real world. But I think we can, you know, with, especially with things like the agent centric ledger of a Holochain, can have, you know, you and I transacting in the deep woods. ⁓ our devices know our ledger account and we're not connecting, ⁓ until we, we go out and connect to the world again, want to interact with someone else. at which point our ledgers will be updated, ⁓ to the network as soon as you go online. So I think it would be very interesting to consider, ⁓ how, how these tools could be used, you know, without internet connection, without, ⁓grid connectivity even because I don't think we can necessarily rely on that in the future and these tools need to be robust through any kinds of infrastructure failures. yeah, lots of exciting stuff to come I think with how these technologies evolve.

Lucas Tauil (1:00:28)

Jeff, if you could design the ideal bottom-up economy, what features would it have to stabilize systems and create resilience?

Jeff Emmett (1:00:40)

I don't know if I have a good answer for that. The context is so key. This is what I've realized in all of the systems that I've had a hand in, in the design of. The context is so important. I don't think there is a formula for it, but I think there are principles that are better than others. And I think we often have to, you know, there's...

It's very difficult to first order say these kinds of things, but second order, you can abide by principles while staying flexible on how they're achieved. And I think maybe that's the difference between like strategy and tactics. You you can have a strategy or values of something, but then how you actually achieve that strategy or those values changes quite a bit depending on the context.

So I think there are broad principles and I think a lot of these principles are already out there, like Ostrom's principles. mean, Bernard Leterre has ample amounts of community currency patterns to learn from. Michelle Bowens has such a massive literature of the commons and peer-to-peer history that all of these are really important patterns. Donnella Meadows.

and her systems patterns. These are also really important. mean, Art Brock's work, Michael Zargam's work, there's a lot of great patterns and sort of, I think values, but as soon as we can't be too specific on, your voting system has to include this or this. Maybe you don't even have a voting system. Maybe you don't even have an economic value token. It changes so much. And I think this is part of the critique of the Web3 space is,

It often feels like they come in with, you know, here's the token. It's your solution. I mean, your token could do anything. So of course it's the solution, but then it's like, no, there's so much more that goes around that. Even the user experience, the social dynamics, there's it's not about a tool or about a solution. It's about, I think, sense and response around the right problems for the right group at the right time. So any way that we can get closer to that, I think there's there's so many

helpful principles out there. And there's so much data on what has worked and what hasn't in the crypto space so far. We're speed running every economic experiment and governance experiments since probably the dawn of memory. And it's all on chain. We can go and analyze that. That's what we do with some of our research groups and with the bonding curve research group. And we love digging into figuring out what's working and what isn't and where and why.

And then iterating that, you know, we have to understand, add that to our, class of technology that, okay, under these circumstances, this might happen. And now in the future, do we want to design against that or do we want more of that? So I think there's a lot of data out there to learn from and a lot more experiments to try.

Lucas Tauil (1:03:46)

It's a wealth of validated data that is extraordinary, right? And it really excites me how well positioned to play with validated data Holochain is. So as the ecosystem matures, this functionality will likely become more and more meaningful because there is this wealth of validated data we can play with.

Lucas Tauil (1:04:13)

Jeff, thank you so much. It was an honor to have you back and to talk to you. I can't wait for another one.

Jeff Emmett (1:04:24)

Likewise, yeah, great conversation. There's always more to explore. Thanks so much for having me.

Lucas Tauil (1:04:29)

For sure, for sure. Thank you so much.

Have a beautiful day, Jeff.

Jeff Emmett (1:04:35)

Thanks.

Narrator, Clara Chemin (1:04:37)

⁓ Thanks for joining us at Entangled Futures. Subscribe to our channel for more conversations on mutuality. Towards a world that works for all.