The Mirrortable
balajis.com
balajis.com
When a VC sends a wire transfer to a company after signing a set of financing documents, he knows that state, federal, and international courts will enforce the terms of this financing. If the entrepreneur's company becomes successful and is acquired or pays dividends, the VC will be able to use the armed power of the state to get his rightful share if he is denied it. If the entrepreneur takes the cash and flees to Spain the Spanish police will arrest him and return him to the custody of the United States courts.
That's what gives the VC the confidence to wire $100m and without that, it won't happen.
What guarantees that, having done an irrevocable funds transfer, you get something back? Or get back what you expected. Or that the investor is the person expected. This needs something like a two-phase commit - everybody agrees on the terms, and then all parties trigger the transaction locked to those terms. Any conflict and nothing happens.
There's some handwaving about "smart contracts", but those have trouble controlling anything that isn't on the blockchain. Like actually doing something in the real world.
I'm not saying that this is impossible, but it looks like the proposal has some holes in it.
Also, in practice, if you send US$100 million in USDC to someone, which a VC might do, can the recipient actually convert it to dollars and get it into a bank account within a few hours? Or will they stall for a few days?
How is that at all different from a regular bank transfer?
Also this is only true for erroneous transfers, fraud puts you in a completely different situations.
And in any case, erroneous transfers seem like an easy problem to solve. No? Cryptocurrency addresses have already mostly solved typos with checksums.
Similar to how ICOs work. But with different expectations. The founder gets the whole initial supply. And then sells of enough of it every month to make a living. If they are lucky, the project becomes very valuable and they end up with a huge amount of coins left. But they might also use up all the coins and barely get by.
Does some project like this exist? Or do all founders throw the towel if they do not raise huge sums up front?
This is just slowly giving away control of your company in some kind of monthly auction, it sounds initially great but as time goes on very depressing watching your company be owned by someone else and for a lot of people defeats the point of bootstrapping completely.
For example, to handle transfer restrictions and lockups, the founder "can configure the smart contract for the mirrortable through the platform's interface to implement various kinds of restrictions in the on-chain mirrorshares". So, in addition to working with the lawyers to add the restrictions to the legal docs, she also has to then create a smart contract duplicating this. And, if the angel tries to sell shares and the smart contract allows it, she can't rely on this as it maybe a bug, so she still has to dig through the original docs she signed.
How does this help anyone?
Hey, we publish our cap-table at /.well-known/captable.json as defined in YCRFC-21. You can just scrape it and remember to check against your LEI.
The ideas here are good, and the problems might be real for large investors - but this is yet again throwing Ethereum at a solution as a global spreadsheet.
The blockchain gives you the ability to make a shared interface, a shared DB, and a way to audit whenever someone changes the interface or the data.
I could give you a dozen examples of someone just "throwing the internet" at some problem 20 years ago... Spotify just throws the internet at music distribution, etc...
Those companies have turned out to be extremely valuable because they all solve real pain points of actual users and Balaji is a highly knowledgable investor who experiences this actual pain point so I wouldn't downplay this as throwing blockchain at anything and everything...
- Balaji Fan
He's asking investment-companies to implement Ethereum inter-op, with significant investments in key-management,security, and regulatory risk.
These companies could just come up with a standard instead? With significantly lesser investment (you don't have to worry about running a node or managing keys, or running a sync operation - you just publish your data in a "well-defined format"). All it takes is one company to start offering this (say Cava), and the others must follow suit to stay around and remain competitive. Maybe cava or Angel List could host your definitive captable and company.com/captable.json just does a redirect to angel.co/company/captable.json.
A lot of the well-known URIs come from companies (and groups of them) deciding that a common standard might be helpful: https://www.iana.org/assignments/well-known-uris/well-known-....
You'll find the same challenges even in the Ethereum space. Maybe some company wants to use Solana instead - now your captable can be published in multiple blockchains, with perhaps different token implementations (ERC-20 vs 721?).
It's not like you get "standardization-for-free" with ethereum - companies still have to decide on it and get it right.
>How do you know someone didn't tweak some of the logic or change some info in their DB?
You have the same risk with what he's proposing. The keys are with the org, and he explicitly calls out for mistakes being correctable by creating a new captable from scratch (against perhaps even a new address). The data at the end of the day is "mirrored" from what is reality, and as such will always be as trustworthy as you deem the person who's controlling the keys to be. It's just that the keys change from "ethereum wallet key" to "server-TLS-key-for-company.com". I'd argue that the latter is better since the domain name is usually the primary identifier for the company (and not company.eth)[0]
Balaji might be a highly knowledgable investor, but he also has a significant stake in crypto companies so he has a high incentive to push for these use-cases without considering the alternatives.
[0]: Amazon.eth is on sale!
If this is meant to be practical it is some wicked cart-before-horse thinking. To put it bluntly, VCs wouldn’t want to use Monopoly money and chance cards to fund anything unless the USA and EU agreed that stealing Monopoly money was a more serious crime than absconding with a board game.
https://boingboing.net/2021/02/15/silicon-valley-investor-ca...