What if we could test out various economic mechanisms by disbursing funding in favelas in Brazil?
We intend to change the definition of public goods from a government initiative paid through taxes to instead be community led:
But how do we know what economic mechanism is the most effective and which are the best for a particular circumstance?
I discussed this question with the renowned economist Robin Hanson after the Startup Society and Crypto Cities Summit I co-organized in the special economic zone of Prospera in Honduras.
The process
Dr. Hanson proposed the following process:
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We crowdsource ideas on what methodologies/funding mechanisms to use until we have 12
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We run a prediction market for which will be the most effective and eliminate all except perhaps the top 3
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We choose an initiative to fund with the various mechanisms
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We have an independent third party write a research paper on which mechanism was the most effective at producing the best results in terms of speed, cost-efficiency, and quality of projects produced.
Repeat this process but with variations on the winning mechanism
Repeat this process but funding different types of projects
Funding Mechanisms
Funding methodologies and variations therein we brainstormed include:
Traditional contract (RFP)
Human chooses who wins a contract
AI chooses who wins a contract
Quadratic funding (such as Gitcoin)
Traditional QF
Pairwise matching
Cluster matching
Prizes/bounties
Prize guaranteed to the best competitor at a predetermined deadline
First come first serve prize (whoever fulfills the requirements first takes the whole thing)
Prize with proportional voting on winners or a refund
Retro PGF
Venture capital
Freelance platform (such as Upwork)
Auction
We could consider focusing on projects on physical infrastructure (construction) or on digital infrastructure (software).
The connections
Funding:
This reminded me of a conversation I had with a friend in Rio who works in prediction markets who wanted to distribute $100,000 - $1M into a favela in Brazil as an experiment to see community managed funds used on public infrastructure
Project:
Another friend created Sikana, an educational video platform with tens of millions of views based in Rio.
Perhaps the project could be something like producing an instructional video in Portuguese on how to cheaply and sustainably construct bathrooms.
I would love to walk through the location with a friend from Brazil and ask residents their thoughts no the whole initiative and crowdsource ideas from the locals on the best projects, and perhaps for QF and prizes they add their ideas for people to vonate towards.
Community and timing:
A group called Blockful was also considering running a Zuzalu style pop up village in Q1 of 2025 in Florianopolis in Brazil, and I know IpeCity network state group was also considering doing a pop up village, and Dweb Brazil has great experience running community gatherings. Perhaps I can connect all three groups and see if they wish to join forces.
Research:
A friend of mine co-founder of Gitcoin and advisor to Metagov researchers group mentioned how there really should be a research paper for the effectiveness of quadratic funding so we have already discussed putting out a prize for this.
And of course Dr. Hanson and the economics professors of George Mason University have an amazing network of researchers.
Media:
Kai of Adrianople helped organize one of the largest beach clean ups in history in Brazil and so has an amazing media/marketing network
Location:
Then Hugo of Tools for the Commons discussed how he knows people who work in Rosinha, the largest favela in Brazil which is located just outside of Rio.
Rocinha has 100,000-300,000 people packed within 1 km^2. For reference, the most densely populated city on earth Manila has only 46,000 people per km^2 (and downtown NYC has 27,000).
The police do not enter there, the infrastructure is all built through the decentralized efforts of residents, and it is generally disconnected from the public services in the rest of the country.
This is despite being a 30 minute walk from a fashion mall, a country club golf course, and a Sheraton hotel.
In Memoriam
When I was in Rio as an 18 year old backpacker, my savings from juggling shows became a fortune in the country. I ate Acai in Copacabana beach to my heart’s content, went hanggliding with a German friend, and raved in a discoteca out in a favela. People warned us we might get stabbed or robbed or drugged there, but that we had to visit because people in that area were the best dancers who knew how to have a good time.
Then the next day, I walked through downtown and found the most extreme financial inequality I had ever witnessed. I had seen waves of tent encampments and shared meals under crowded bridges in the USA which is where I had seen the most inequality before this. The homeless in the USA are mostly immigrants saving up to send more funds to their kids back home, elderly who pushed away or were abandoned by their families, and drug addicts and the mentally ill. In Rio as I walked amongst the shining skyscrapers of the financial district, I saw families.
I remember standing at one intersection and watching as waves of men in suits holding a phone to their ear with one hand and a laptop bag in the other rushed the marble floors lined with cardboard. On one patch of cardboard, a young mother and father were playing with their toddlers.
I knew right then that I would relentlessly pursue every opportunity that I had the good fortune to come across. Now I run a tech company that provides an economic mechanism that I believe can empower people to support their families and one another and that this can scale up to neighborhoods, nations, and civilizations. Not only that, I have a network of friends who also are working for the same goals with their platforms.
Let’s test it and see if we can really make a difference.
I would like to dedicate this idea in memory of my friend Antonio, who’s gentle smile and raucous laughter made my first time in Brazil a wonderful experience.
In conclusion, I think I have some messages to send to see if there are people who wish to work together and help lead this initiative. I cannot put this together myself but if others are excited for it then it could happen.
