OtoCo and The Revolution
By Brenden C. Maher
LEXINGTON, MASSACHUSETTS, August 12, 2020 — Revolutions are always silent. Revolutions sneak up on you — like all exponential technologies they are at first imperceptible.
I know — I’ve been a part of several of them.
Technology’s butterfly effect
My name is Brenden Maher and I am a MIT Media Lab alumnus ’98. I am here to tell you about “The Revolution”.
In ’93, I was one of the first ~150 people in the world developing virtual reality with the “original” Boston Virtual Reality Group {BCS_VRG}.
Oops, wrong Revolution.
In 1997, I was a grad student at The MIT Media Laboratory. We didn’t know it at the time but we were developing the pieces for that smartphone you’re using.
Think- the precursors of ad hoc Distributed Networking (“Hotspot WiFi”), SMS Messaging, Wearable Video Transmission…. Yes, precursors to the many zoom video meetings you had today during the Covid-19 pandemic. The idea that you could walk around with a computer was a radical one — let alone transmit video!
And then there was the 3D Audio Content Engine I wrote. (think “Game Engine for News”)
Oops, different Revolution again..…
So, I have come to see (Tech) “Revolutions” in the making.
Causing ripples
I believe Otonomos’ OtoCo onchain company assembler IS at the Epicenter of A Revolution.
OtoCo’s Revolution is dematerializing and demonetizing the physical effort and cost to start an entity. OtoCo Reduces the extraordinary pain and effort to start an entity to near zero and near zero cost and time. But, the real revolution will be in reducing the effort in managing an entity.
Revolutions are subtle though. How they transform society is never clear in the early days.
It would be easy to think that OtoCo is a company about company formation and reducing operational friction. This is true.
However, OtoCo’s transformation of society will ultimately be regarded as a part of another kind of revolution — the replacement of the internet as we know it and the transformation of the Architecture of the Machine. Both of which have deep consequences for the future of work and what is computable.
OtoCo’s Revolution is in the context of a revolution of the Internet and The Machine. But to understand these broader revolutions, it is helpful to understand the basis and beginnings of how OtoCo can create a Revolution in entity formation.
The OtoCo Revolution in Context
Revolutions always happen in context. Their origins are imperceptible at first — a confluence of many smaller systemic changes. Revolutions always have an origin — a context of circumstances from which they start.
Here is some of that context:
The Origins in ComputationalLaw
OtoCo is able to achieve orders of magnitude reduction in cost and effort for entity formation and management because it can utilize the efficiencies of ComputationalLaw.
ComputationalLaw, in this context, is the intersection of Law, Entity Formation, AlgorithmicContracts(“SmartContracts”) and the foundational primitives of a re-engineered internet: Web3.
OtoCo’s Revolution is in some ways entwined with the early history of ComputationalLaw and DAO’s (“Decentralized Autonomous Organizations”).
The ideas of ComputationalLaw — that you could make a legal contract “Computable” (whole or in part) go back to 2016 and The MIT Computational Law Ecosystems.
The History and Origins of ComputationalLaw and “Pegging” of a contract, SmartContract, Entity and DAO (“Decentralized Autonomous Organization”) are entangled and complex — spanning many people, events and organizations.
It is too complex of a story to tell completely here. OtoCo’s Revolution, however, builds upon these ideas and first entities to be “Pegged”.
This came after the 2016 hack of The DAO, when it became clear that having a legal jurisdiction behind an AlgorithmicContract of an organization organized on the internet is important for liability purposes. It was also realized that “Pegging” to a jurisdiction is necessary to allow it to contract with other entities.
So a number of us set out to figure out how to “Peg” a virtual organization to a jurisdiction with paper and/or SmartContracts (“Algorithmic Contract”).
This had never been done before in the U.S.
A detailed account of the people and organizations involved in the early history of ComputationalLaw, “Pegging” of contracts, Algorithmic Contracts(“SmartContracts”), entities and DAOs not possible here.
However, I will briefly mention some of the people and invents involved. This is by NO means the full Origin Story.
Some of the people and organizations include:
The “early” (2016) MIT Computational Law Ecosystem: Dazza Greenwood, Jonathan Askin, Bryan Wilson, Oliver Goodenough, Tony Lai (Stanford CodeX) Jonathan Frankle (myself and others); (Global) Legal Hackers (Dazza Greenwood, Jonathan Askin); The MIT Computational Law Report (Dazza Greenwood, Jonathan Askin, Bryan Wilson; many others); The MIT ComputationalLaw IAP’s (Dazza Greenwood); The Brooklyn Law Incubator & Policy (“BLIP”) School (Jonathan Askin); CB+B : Brooklyn Bushwick Event (“The Seminal DAO Pegging Event”) The AALE (Automated and Autonomous Legal Entities Group (Dazza Greenwood, Brenden Maher, Bryan Wilson, Beth McCarthy, Christopher Bosquillon and many others) and the ties to Stanford CodeX (Toni Lai) and The Origins of DAO/Entity “Pegging” also include The Vermont BBLLC: Blockchain Based LLC (Oliver Goodenough); The Berlin Ecosystem(many other); Gnosis (Silke Elrifai); dOrg (Ori Shimony); Etherize (Tristan Roberts); OpenLaw and The LAO as “A Pegged DAO” (Aaron Wright, Ross Campbell, Pri Desai, Brenden Maher {Mentor}); and Han (Otonomos/OtoCo).
Multiple Roots: DAO’s Ecosystems
It should be noted that the above is also not a complete history of “Pegging” DAO’s or entities. That is another story. The actual Origin Story of DAO “Pegging” (and Enity “Pegging”) and the people place and events involved is more complex and nuanced then can be explained here.
But in short, the Origin Story of DAO “Pegging” in addition to the above includes the Seminal Computational Law + Blockchain Event at The Brooklyn Bushwick Generator in March 2019 organized by Dazza Greenwood and Jonathan Askin {of the The Brooklyn Law Incubator & Policy (“BLIP”) School}. The Bushwick event was Seminal in DAO/Entity “Pegging”and spun out many collaborations and ideas.
There are hundreds of DAOs using different DAO SmartContract ecosystems — Moloch, MolochV2, MetaCartel, Aragon to name a few. Together they support thousands of projects and dApps with deep complex integrations into the DeFi (“Decentralized Finance”) Ecosystem.
Thus there are “Multiple Paths and Roots” through which the DAO Ecosystem has evolved. The above is a small glimmer of the path that has taken root from the MIT Computational Law Ecosystem(s) extending out and interwoven across the DAO ecosystem.
In the history of “Pegging” DAOs and entities the role of OpenLaw and The LAO cannot be overstated — in its depth and breadth of influence. Nor can the above capture the complex relationships to the above ComputationalLaw ecosystem and the broader DAO and DeFi ecosystems.
These ideas of “Pegging” have deep implications for OtoCo, its Revolution and the transformation of work and exchange of value.
The Metamorphosis of Risk
Revolutions are always about a transformation of risk. This has a way of effecting everything in the pool.
Web3
There is a new Internet — but up till now it’s been imperceptible to most in the U.S. because one needs to have a set of keys to access it.
These keys were hard to access without sufficient skill. However through an extraordinary set of developments that has suddenly changed. This new Internet is called Web3. Web3 has profound implications for all societies. First and foremost it allows tokens to simultaneously act as an exchange of value; identity and computational access{There are no such things as tokens as they are actually keys of identity}. The new internet uses a set of cryptographic keys as tokens in a wallet as identity for access to services and value exchange. Up until this point it has taken an extraordinary amount of sophistication to utilize this new internet. However the new wallets will allow anyone to sign up with a password then use cryptographic keys internally for transactions. This has profound implications for opening the door to a vast number of people to start to use this new Internet.
DeFi (Decentralized Finance)
Is an ecosystem of apps and platforms in the Web3 that utilize smart contracts and composable protocols to create new forms of financial interactions and assets. Decentralized Finance’s hallmark is that whole new kinds of assets can be created by easily composing other assets and tokens. DeFi often (but not always) involves some form of staking- locking one Token’s use while using another in a different transaction. This simple idea has unlocked vast new ways to manage risk and generate new forms of assets, ecosystems and markets. In short, DeFi allows for an explosion in new kinds of assets with different kinds of risk.
ComputationalLaw
The broader field a ComputationalLaw including but not limited to SmartContracts allows for new cross disciplinary interactions between Business, Law and Technology- (Computability) at new SCALES of interaction. These efficiencies often include binding legal intent with computability and trust keys of identity (known or unknown) into verifiable transactions without the execution of middlemen. The explosion in the ability to write AlgorithmicContracts(“SmartContracts”) easily has led to a vast new way of exchanging value between entities and machines. This allows for entities that exist natively within blockchain ecosystems to have vast new sources of generating revenue.
It should be noted that if HTML was the gasoline of Web2, then SmartContracts and Tokens are the Nuclear bombs of Web3. There are tremendous economies of SCALE here — a complete inversion of our understanding of the Firm. It Is clear whatever is built on top becomes hyper efficient.
CryptoEconomics
The emerging field of CryptoEconomics IS one in which the precise engineering of risk is achieved through system dynamics modeling, mathematics, incentivization, and token Engineering. It is a multidisciplinary field that often uses bonding curves to precisely know how the system will react in certain situations? The Second annual (MIT) CryptoEconomics Conference was held in March. It is clear that this new field will allow Blockchain enabled companies to engineer risk and a much finer SCALE of granularity. This has deep implications for the SCALABILITY of organizations.
DAO (”Decentralized Autonomous Organizations”)
DAO’s are a new form of Organization, an inversion of the idea of the firm. The DAO Ecosystem has matured since 2016 reaping the rewards of DeFi SmartContract and Security and Audit checks. The result is a DAO Ecosystem that IS rapidly evolving. It is clear that DAO’s are a new kind of Organization which allows for a separation of governance and capitalization. They offer new forms of organizing and incentivizing people to collaborate and work together for common goals. More importantly DAO’s offer new forms of pooling capital and deciding on its uses. In some cases that capital can be separated from its governance. They offer new forms of producing and exchanging value and new ways of participating in that exchange. It is clear that entities formed on the blockchain will be the first to participate in these new forms of value exchange.
DAO’s offer the ability to grow an ecosystem by participating in the governance of its structural formation through governance rights associated with governance tokens. They may offer separate economic rights to investors and potentially other incentives to those who participate in the community in other ways.
Fundamentally, these different roles allow participation in an organization that SCALES in a frictionless manner. Moreover the design of the ability to participate and leave at any point is a fundamental change in how people organize around value creation.
They provide whole new ways for entities to participate in value exchange.
Identity
The revolution that is occurring around identity. A wallet is a key (identity) that contains a set of keys (identities). Tokens are actually the exchange of identity- little transactions that sum to a value. This provides a low barrier and near zero cost (in effort ) to participate in the value exchange and identity exchange.
This means you can exchange assets without providing identity because they are identity insofar as trust.
Covid-19
If there is one thing we are certain about- it is not going to be business as usual. Fundamentally, the way we have been transacting value is not sustainable. Covid-19 will force the discovery of new forms of value.
OtoCo’s Revolution (“Orders of Magnitude”)
It is well understood in scientific and computing communities that when you change something by an order of magnitude (shaving off of zero by going from 1 million to 100,000 or $100 to $10 for example) you fundamentally change whole industries and invent new ones.
OtoCo is NOT just about business formation for the purpose of business as we know it — that is just the tip of the iceberg. The idea that you could reduce entity formation friction(s) down to real time AND relatively near zero cost IS such an order of magnitude transformation. The implications of such are staggering.
Risk Management; Transactional Units
Generally, we think entity formation is starting a business — Store fronts and customers, web pages and banks… There is another side to entity formation — which is well understood in Financial Engineering — another use for entity formation. That payment plan for that phone you’re using AND/OR your mutual fund etc — all use LLCs (or the like) as transactional objects to manage risk. Using LLC’s as transactional objects (entities) to manage risk is nothing new. The Financial Engineering community has been using LLCs and SPVs for all sorts of transactional objectives for decades. But this is at the cost of thousands of dollars, millions when you count all the corporate expertise to ramp into these transactions. Then there is the time to form them and execute agreements…
The revolution (and reality) is that the average person will NOT think about entity formation in terms of financial engineering with its jargon and implementations. Where you once needed an army of lawyers and millions of dollars for formation of transactional business entities you will be able to do so for a few dollars.
Generally Speaking, we are entering a world where there will be a large transformation of value — Both the physical and digital- stored as assets in wallets. For many it makes sense that these wallets are held in LLCs to mitigate risk. It used to be that when I put dollars into my wallet they wouldn’t catch fire- But now that things are Computational, digital assets can compute and produce liability… So it is inevitable at near zero cost and friction that these assets will be held in LLCs. OtoCo provides a path toward these efficiencies at the click of a button.
Billions of Asset Transactions.
Again, Orders of Magnitude…..
Revolutions- A transformation of form.
Revolutions invariably result in a transformation of form. Revolutions start as ideas but their implementation manifests in a transformation of form- with different characterizations of risk. When you’re in a revolution it’s not obvious exactly what the new form will become. This is why revolutions are imperceptible- because the revolutionary THING does not take its form until after the revolution….
The United States Constitution came after the revolution. Apple Computer came after the Homebrew ComputerClub. Microsoft (Windows) came after Altair BASIC.
Why would anybody need a personal computer?
Why would anybody need an operating system?
Revolutions result in a transformation of form. That form, initially, is almost impossible for most to perceive- and just barely perceptible to their Founders.
Apple didn’t ask if anybody needed a personal computer- They just built one.
OtoCo is a transformation of form.
Europe gets the Cake and gets to Eat It Too.
For Non-US Residents there is the added gem that those Entities get access to some of the best jurisdictions in the world for Entity formation without the tax consequences as U.S. residence (not legal advice). And to top it off they get access to U.S. Markets if they want.
U.S. Residents get inexpensive entity formation (and organization services), but also access to European markets. So maybe it isn’t so bad.
There is no free lunch?
When Apple decided it wanted to get into music it didn’t have to find its customers — it had its customers.
There is no free lunch unless it IS Free or near Free.
OtoCo has relatively near Zero Operating Costs (ok it is a metaphor, it’s not hardware after all). So near Zero Costs and a built in (future) customer base to build all kinds of ecosystems on top.
So you can’t predict what those ecosystems and services will be.
But at near zero cost maybe it is a free lunch.
For OtoCo. But maybe, just maybe, Those who build and form entities with Otoco will benefit from the Ecosystem too. Maybe it’s Free and you get dessert too.
What is clear is that with the exponential transformations ahead and low costs there is something for everyone. And that’s how it should be.
What is OtoCo?
Revolutions reduce risk and they reduce frictions. Technological revolutions change our interactions.
In a technological revolution, it’s never clear exactly how a company makes money or what will be the benefit to customers.
How does OtoCo derive revenue on entity formation at near zero cost ?
So what is the revolution to OtoCo?
At first glance it is a company formation company. On second glance, it is a business services company. The company for generating and managing agreements and potentially business operations services. That’s two completely different companies.
Again Orders of Magnitude.
…..and they’re just getting off the ground.
Like russian dolls, with all great companies- some of the biggest value will be what is unimaginable now.
Apple was a computer company — but now it’s a music company.
Microsoft made operating systems — now it is a cloud computing company
Transformation of Work
The elephant in the room is that OtoCo is a company that will allow millions to participate in the future of work- in the infrastructure that is being built around Web3, Identity, DeFi, CryptoEconomics and DAO’s. It is building the the infrastructure for the people to connect to the infrastructure of value generation (“work”),
You have to skate to where the puck isn’t!!
OtoCo’s greatest GEM is that it is at the epicenter of not only its own Revolution but the transformation of computing, the internet, finance and work.
The start of revolutions are always misunderstood and miss-interpreted for something else….
It would be easy to dismiss OtoCo as entity formation for the purposes of starting new businesses.
In actuality its market and purpose is far greater.
Profound implications
OtoCo is not the first to “Peg” a contract or entity to a jurisdiction — The LAO, Etherize and other DAO’s such as dOrg all have “Pegged”.
OtoCo IS however, the first to do it with the intent and engineering designed to SCALE “Pegged” entities as a service.
What is clear to me is OtoCo is starting a Revolution — A Revolution with deep social and economic consequences.
Clearly, there’s some great things to come.
For these reasons, OtoCo will go down in history!!
ABOUT THE AUTHOR
My name is Brenden C. Maher
I am a MIT Media Lab Alumnus ’98 M.S.
I am a Computer Scientists; Parallel Entrepreneur.
I am involved in the MIT computation Law Ecosystem(s). I am a Mentor for The LAO {DAO} and involved in the broader DeFi and DAO Ecosystem(s).
I was an early Pioneer in VR as Director and Member of the “Original”: Boston Virtual Reality Group 1992–01-The- 1990s era Pioneers in VR AR and Telepresence (exhibiting 3 Years at SIGGRAPH ’93, 94 97).
One of the first ~150 people in the World creating Virtual Reality In 1993.
The Boston Virtual Reality Group (originally BCS_VRG} used the Cyberface 3 HMD for SIGGRAPH ’93, 94 97. Members of LeepVR were part of the group. The Leep Optics were used in the famous NASA View Ames Project.
http://www.leepvr.com/cyberface3.php
https://groups.google.com/forum/m/#!topic/sci.virtual-worlds/6uUM-w9OAag
FURTHER READING
The LAO (“A Pegged DAO”)
CB+B : The Bushwick Generator
https://clbfest.github.io/2019-NYC/
MIT Computational Law Report
My Thesis at the MIT Media Lab 1995- 1998
The Origins Of 3D Audio for Content: I was one of the first people in the world to generate 3-D Audio Content with a 3-D Audio Content (“News/Game Engine”) I wrote.
https://dspace.mit.edu/handle/1721.1/62628
MIT CryptoEconomicSystems2020
https://cryptoeconomicsystems.pubpub.org/ces20
Other Revolutions
The origins of the Smart Phone
One of the first wearable transmissions video was done by Steve Man in 1996
“Wearable Wireless Webcam, Steve Mann”
https://groups.google.com/forum/m/#!topic/sci.virtual-worlds/6uUM-w9OAag
The Real Origins Of Google Maps
The Prototype for Google Maps was done in 1978 my Michael Niamark part of ArchMAC the predecessor to The Media Lab before 1985….
Aspen Movie Map:
See start or 5:20 seconds
Car Navigation
was invented by James Davis and Chris Schmandt (my advisor for the Speech Interface Group).
MIT thought it was a liability for them to file a patent so they didn’t !!!
They threw a Sun Microsystems computer in the trunk with a DeckTalk (speech synthesis) and a 12 volt battery.
Here is the raw footage driving around Kendall Sq. …. the first car navigation system ever made !!
https://www.youtube.com/watch?v=8C0V6lDKQ0Y&sns=em
NASA VIEW AMES project
https://www.nasa.gov/ames/spinoff/new_continent_of_ideas/
https://m.youtube.com/watch?v=3L0N7CKvOBA
Altair
