For most of human history, leverage was obtained through labor and capital.

Leverage is important because it enables you to produce more output than you can on your own.

However, to acquire leverage through labor and capital, you need influence, authority, and maybe even the threat of violence.

As a result, labor and capital are examples of permissioned leverage. You need somebody else's permission to acquire them.

Yet, with the advent of the internet, new forms of leverage emerged. For example, writing online is a form of leverage. You publish something once and it can be shared throughout the world at zero marginal cost.

Another form of leverage is code. You write the code for an app, deploy it to a server, and now your code is accessible worldwide 24/7.

Writing and code are examples of permissionless leverage. You don't need to convince bankers or an army of people. Instead, starting a newsletter is as simple as creating an email and password. Deploying an app just requires running some commands in your terminal.

Permissionless leverage is important because it democratizes wealth.

In the world of permissioned leverage, wealthy and powerful people skewed older because they had to build up the influence to acquire permissioned leverage (e.g., labor and capital).

However, in a world of permissionless leverage, a kid in their dorm room can create a billion dollar company and a kid with a smartphone can create videos that attract millions of followers.

Despite that, companies today are using their market dominance to turn what used to be permissionless leverage into permissioned leverage.

The wealthiest companies of the past two decades were able to grow rapidly in the early days because they were relatively permissionless.

For example, Facebook gave open access to it's API and encouraged companies like Zynga to build games to engage Facebook users.

YouTube had generous profit-sharing policies with creators to incentivize them to stay on the platform.

Nevertheless, as institutions get wealthier and more powerful, they begin to entrench their market dominance by turning permissionless leverage into permissioned leverage.

Facebook closed access to it's API which put many companies out of business.

YouTube changed their policies which caused some creators to go from making over $200k a month, to just $1k a month.

As internet platforms scale, they go from cooperative to competitive.


Instead, what if stakehohlders in a platform could be guaranteed that the core logic or policies of the platform could not be changed?

Instead of companies monopolizing user data by storing it on their private servers, what if users controlled their own data and decided who could access it?

This could usher in a new era of permissionless leverage.

Let's see how it could work.

Guaranteeing Permissionless Leverage

Today, arguably the two most valuable assets in the world are data and code.

Yet, data and code are permissioned assets. They are stored on private servers and can only be accessed with permission from centralized corporations.

Blockchains enable a world where users control their data and all code is open source by default. This will create a golden age of permissionless leverage

Let's look at what a world of permissionless data would look like

Permissionless Data

Similar to how Dropbox stores your files today, there will be an app on the blockchain that securely stores all your personal data. Your browsing history, your preferences, your social graph, etc.

Regulations like GDPR and the California Consumer Privacy Act are steps in this direction by requiring companies to allow users to export their data.

However, there is no standard format for the data which makes it difficult to import it into to another provider.

Meanwhile, blockchains are moving in the direction of open standards that allow users to easily export and import their data from different apps.

As a result, user control of data will turn from permissioned to permissionless. Instead of a user asking a company for their data, the user will be able to share their data permissionlessly.

Today, big tech companies’ primary advantage is their proprietary data. Over time, it becomes difficult to compete with big tech companies because they create a virtuous cycle where more users lead to more data which leads to a more personalized product which leads to more users and so on.

As the big tech company scales, it’s harder for you to stop using the service because  it’s so much better than alternatives (e.g., Amazon for shopping or Google for search). But competition is healthy. It drives innovation and more value for consumers through lower prices.

In a world where data is controlled by the user, data monopolies will dissolve because the data will be controlled by the user, not the company. Instead of holding their users hostage, companies will need to compete in a free market. If a company uses suspect policies, the user will simply shut down access to their data and take it to another provider.

User data will have the same sophisticated controls that corporations use with their own data. Encryption, rate limiting, and privileged access, will all be at the user's discretion - not the company's.

Now that we’ve seen the implications of a world with permissionless data, let's take a look at a world with permissionless code.

Permissionless Code

In the current world, if you want to build an app using another company's API, you get permission from them and receive API keys.

In the future, apps will live on the blockchain and be run by smart contracts. Smart contracts are open source programs that anybody can look at and reuse. Once deployed to the blockchain, the smart contract can't be changed.* Even by their owner. This guarantees that the logic and policies won't change.

Additionally, smart contracts can be programmed so that anybody in the world can interact with them.

It doesn't get much more permissionless than that.

An emergent property of this type of system is composability. Smart contracts become like legos that can be composed together to create something greater than the sum of its parts.

For example, my company Dharma, integrates with different smart contracts to enable anyone on the internet to earn interest. When a user deposits dollars from a debit card, we call a smart contract that converts the dollars into a stable cryptoasset called Dai. We then call another smart contract to lend this Dai out to people willing to pay interest to borrow it.

As a result, we're able to create a new type of savings product where we didn't need permission from any bank or government. We just needed to read the documentation and source code for other protocols and integrate with them.

In a world of open protocols like blockchains, apps become infinitely composable and don't require permission from a central authority.

Anybody from New York to Kenya with a smartphone will have access to a new type of open economy.


Permissionless leverage empowers individuals. The rise of the internet reduced the need for permissioned assets like labor and capital. Instead, people were able to build wealth on their own through skills like writing and code.

Similarly, blockchains will turn valuable assets like data and code into permissionless leverage. This will dissolve entrenched monopolies and create new operating principles like openness, fairness, and individual sovereignty. Engineers will create entire digital economies which can’t be shut down by anyone.

We’re just getting started.


* I lied. Deployed smart contracts do sometimes have backdoors that people with admin keys can use to change the smart contract. However, since the code is open source, you can see it for yourself and weigh the risks before deciding to interact with it.


May 11, 2020

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