Bootstrapping a City

TLDR: We should build Prada Marfa or Storm King v2.

Since joining CityDAO a few days ago, I have been thinking about mechanisms to bootstrap. Bootstrap is commonly used in the context of startup fundraising and describes the process of creating value starting from very little or nothing, specifically value that is financially sustainable, in order to grow.

From my reading of the Discord, most of us agree that we should utilize the Project 1 Land towards a productive end in order to finance its maintenance and enable further experimentation. However, we do not agree on what that productive utilization is. Well, how do we maximize the probability of achieving our long-term goal of building a city on-chain? There’s a first principal to keep in mind when answering this question: small-scale sustainability and large-scalability are mutually exclusive insofar as we choose the wrong productive utilization. Put another way, we can have our cake and eat it too if we design the right system.

The core sociological requirement of a city is a network effect. In other words, how is social value created and then compounded as a function of population density v=f(d)? How can social value be created when d=0? Because of the monopolistic nature of modern real property law [1], what social, legal, and cultural structures and incentives must exist as a pre-condition in order to avoid concentrations of power that will ultimately limit scale? These are the chief questions we must consider.

In thinking about these questions, there is a clear parallel to exploration elsewhere within our Web3 ecosystem, for example by Nouns, a DAO that “attempt[s] to bootstrap identity, community, governance and a treasury that can be used by the community” [2]. To do so, Nouns capitalized on the memetism that has driven the NFT market in the last year and has auctioned randomly-generated avatars. The purchaser of an avatar (“Noun”) gains membership in the DAO (our equivalent of citizenship) and their sale proceeds are deposited into the DAO’s treasury. Members are incentivized to evangelize and grow the DAO in order to maximize the potential of their investment. In November alone, Noun hammer prices have ranged between $250k and $1.1m USD. There is an opportunity for us to learn from Nouns’ successful bootstrap and its shortcomings.

Nouns was able to bootstrap so effectively because creating and selling culture can be extremely low cost relative to its potential ROI. Nouns’ upfront smart contract, web development, and promotion costs have clearly paid off as their treasury now contains $69m USD. At the same time, because each Noun is privately owned and deflationary pressures are few [8], there is a strong incentive to rent-seek, which concentrates capital away from optimal allocation efficiency. However, historical alternatives to private property – despotism, socialism, and other political systems that marginalize individual volition – disincentives individual investment. To grow, we must maximize the allocative efficiency of our land while not cannibalizing its investment efficiency. If correctly designed, this ensuing balance of economic interests can create the positive network effect we need to sustainably scale.

I propose that we place a talisman on our land which pilgrims will seek out due to its intrinsic cultural value in spite of great cost and difficulty. Sustained intrinsic demand in spite of this great cost and difficulty will cause the market to direct supply to make our land more cheaply & easily accessible. This supply will require access to peripheral land and resources, which we lease under a Harberger taxation system to fund the expansion of our land’s cultural value, creating a growth flywheel. We price the Harberger tax to account for the negative externalities created by the supply.

That was dense, so let me break it down:

[A] we place a talisman on our land talisman which pilgrims will seek out due to its intrinsic cultural value in spite of great cost and difficulty

Prada Marfa [3] is the perennial example that comes to mind. It’s located in the desert near the Texas-Mexico border and is a 7 hour drive from Austin. Yet around 40,000 people visit it each year [4]. Right now, the transportation and lodging infrastructure to access our land is scant. Accessing it requires purposeful effort. Think in terms of a Richard Serra sculpture [5][6]; land art has a strong appeal in Western culture [10][11], and you know Kanye would be there every day for his morning coffee.

[B] Sustained intrinsic demand in spite of this great cost and difficulty will cause the market to direct supply to make our land more cheaply & easily accessible

If we do A well, people will want to visit our land. Tourism requires water, power, transportation, lodging, easements, access to food, etc. Let’s encourage the development of these infrastructures because they improve accessibility and create network value that we can capture. At first this probably looks like a luxury destination for the rich. Perfect (hear me out).

[C] This supply will require access to peripheral land and resources, which we lease under a Harberger taxation system to fund the expansion of our land’s cultural value, creating a growth flywheel.

If we do B well, we will have created a cultural destination that’s accessible to a small group of people who are willing to pay to access it and the network infrastructure to scale access down market. Eventually demand will arise for vacation houses, boutique hotels, stores, supermarkets, gas stations, etc. Ideally, we purchase as much of the surrounding land as possible ahead of this. This a) allows us to hedge against externalities which would be detrimental to our value proposition (more on this in D) and b) capture the value that we’ve created. Partial Common Ownership [7] is designed exactly for these aims. It maximizes allocative efficiency and investment efficiency and allows us to capture value while maintaining the incentives for a people to grow a community around our land.

[D] We price the Harberger tax to account for the negative externalities created by the supply.

We now have a small town founded around a commons - our land and its talisman. If we haven’t already considered the tragedy of the commons, the inverse relationship between d and v, our growth will be stunted. We need to ensure that our community flourishes with access to low pollution, clean water and energy, low traffic, cleanliness, etc. It must be a normatively safe place to exist. Otherwise, the quality of our offering will be diminished, stunt demand, and slow our growth flywheel. Harberger taxation should be priced on an individual basis proportional to the marginal cost a member imposes on community. This creates incentives for sustainable behaviors on an individual level which are aligned with their long-term desire for an appreciation in their value of their lease on the secondary market.

This probably sounds fanciful, or radical, or down right impossible, but 2 years ago billions of dollars worth of economic value being coordinated around JPEGs would have sounded the same.


  1. I am not a lawyer, but to the best of my knowledge in the American law system, of which we are subject, maintained ownership of private property is absolute outside of eminent domain.
  2. https://nouns.wtf/
  3. Prada Marfa - Wikipedia
  4. https://texashighways.com/travel-news/prada-marfa-15-years-fashion-west-texas-desert/
  5. Storm King Art Center : Individual : Richard Serra [460]
  6. Richard Serra. To Lift. 1967 | MoMA
  7. Partial Common Ownership - RadicalxChange
  8. I previously worked modeling the art market. Valuations at the top-end weathered the global 2008 economic recession relatively unscathed because owners weren’t forced to liquidate.
  9. Allocative efficiency - Wikipedia
  10. Utah monolith - Wikipedia
  11. Christo and Jeanne-Claude
4 Likes

Agree with this whole-heartedly. Actually happened to write the same things as you in discord. One of the worst things to do, imho, is over-plan and over-develop. Organic growth is much safer and would lead to better results. It is also in line with what I perceive to be the DAO’s mission of doing a more people-oriented planning. What would be unfortunate is to build something that would be exciting to a crypto-friendly minority, waste funds, create an eye sore and piss off locals. That would certainly be a bad start. The “talisman” effort could be a great PR and on-boarding maneuver. Beyond winning money the DAO needs to win minds.

Can anybody list any cons? Pitfalls?

In theory, if this would become the plan, what would the order of events be? Something like this?

Determine a budget.
Reach out to artists and solicit proposals.
Vote on proposals.
Establish legality.
Proceed (this would be full of other logistics I imagine, but I’m just thinking out loud superficially)

3 Likes

100% agree with the importance of the bootstrapping-mindset and building something that is self-sustainable.

It won’t really be “web2.0 bootstrapping” though as by now we have “raised” 1755 ETH.

Gladly, these 7000 “shareholders” who have minted so far or not your average investors .

But still, this project will only come alive, if at any time we manage to keep the “shareholders” happy. That means keeping the community engaged and positive about the direction of this project.

We have now 7000 shareholders (or less if people minted more than 1) and will soon have 10000 shareholders.

Everybody in this pool likes the idea of building a city on the blockchain.

But everybody has different personal opinions of what success looks like short-term and long-term.

The hardest part will be to define a shared view of what success looks short-term and long-term.

Hence aligning the community might be the most important milestone.

The main con’s of bootstrapping are usually the inability to move fast enough to capture market-share (doesn’t affect us though, as we are not playing a zero-sum game like most start ups) or to not having the means to build what needs to be build for breakthrough innovation (also doesn’t affect us as we have more ETH then we need

Love the question and believe the “order of events” shall eventually translate into a roadmap. This way we can create expectations together and assure to execute in the most strategic way.

I see the most important milestones as follows:

1 Constitution

  • What shared vison are we working towards?
  • What shared values and behaviors do we work toward?
  • How do we make decisions?
  • How can we get involved?

2 Key Short-Term and Long-Term Milestones

  • What are the must have’s to achieve in the next 1-2-3 years?
  • How much percentage of the treasury will we use to get there?

I feel these 2 big milestones are crucial. They will probably benefit from extensive debate and brainstorming. Maybe break all of the questions above into smaller work groups and give it some time. Could be a great idea to wait until the mint is don. This way all the minters can set the foundation together (and decide to review all of it every X months/years).

Once 1 and 2 are concludes the biggest questions are out of the way. From here on different teams organized around different subject matters can form and open their own proposals. Everybody is working together towards a shared future vision. Everybody has the right high level understanding to act in the best interest of the community.

2 Likes

Very well put. Actually, I think I made a few assumptions about the DAO that were hasty. The reason being is that I came to it by way of Vitalik’s article. Vitalik has infected me with a certain positivism a few years ago that I cannot shake. A humanity. It is a prism of utopian positivism that I view this DAO through more than, say, a chance to prove money-making viability of such an endeavor. But that is just me.

The point you make @Uncle_Liberi is spot on - the values of the DAO need to be outlined. Constitution sounds about right.

I feel like in DAO context it is ok to ask naive questions (new stuff… right?). So here is mine: How do a few thousand people with varying interest start getting to a consensus on such a thing as constitution? There are lots of things going on and I have trouble seeing patterns.

Love your spirit, ivanp!

How do a few thousand people with varying interest start getting to a consensus on such a thing as constitution?

That’s probably the most important question that we have to answer. Good news is that at this point we are “only” 10 000 token and we already bought into it based on what we all ready on the website. Now we just need to further define it.

It’s currently being discussed in the discord channel “Constitution” under season 0.

1 Like

I like the idea @will but let’s spend a minute diving in.

We build a talisman and 40k ppl / year come. That’s 100 pax / day. If it’s just a land sculpture you spend 60 mins looking at & taking a selfie with, that’s <10 pax / hour. This is just about enough to bootstrap a lemonade stand. It’s a good start, I’m not saying it ironically. But what’s next? I think we need to come up with something that will give people much more a reason to stay, if we are talking about bootstrapping a village / town / city. Would require a much more ambitious roadmap, with several stages of development.

1 Like

Totally agree with you that Constitution shall be the #1 priority milestone for us to be archived. Once we are all clear about our shared vision and core value, there will be much easier to reach agreement on the short and long term plan.

Would require a much more ambitious roadmap, with several stages of development.

Feel the talisman is just the emotional hook to chose this place. It needs to be combined with utility.

Best way for bootstrapping is probably to use tourism.

If we just have 1 talisman that’s a long way to travel to a quick picture.

If we have a nice location for a team-building retreat or company off-site, that has a web3.0 museum or talisman attached to it and 1-2 more perks it can be worth the journey. We just need to make it worthwhile.

Once we have people traveling to this location, we can then develop a community around it to serve the travelers. Maybe start with allowing “off the grid” people or other sub-cultures to use the land. Then we can combine it with learning about sustainable living.

So I put this in partnership ideas, but I think a perfect starting point could be a partnership with Cabin. They are trying to get network effects by connecting many nodes, each of which is a small parcel of land developed so people can travel while also working in the metaverse. We are trying to get network effects on a small piece of land. This helps both of us, they get an additional node, we get something physically there to build off.

The Talisman idea is solid too, and sorry for the lack of creativity, but I don’t think you can just make one. Tourist sites are very emergent, no one really knows which ones will take off. There are millions of things around the world worth seeing, yet so much tourism is just based on a few tourist sites, well a few relative to how many there are. I guess I am just asking what exactly would you build that would draw people?

That said, I agree it is all about network effects and bootstrapping. You can’t build a city at once, you just need to ask “what can I build that will make the land more valuable to someone else to build”. A positive network effect, build it and they will come. Build something that makes other development more likely. That is how you bootstrap. Build something with a positive externality.

<3 this. Oh, and I know the Prada Marfa folks well - I live out in Marfa part time and have a bar a few miles from the piece!

1 Like

Thanks, Jeff – still looking forward to hanging out down there!

I have been a little out of the loop. But before governance and Parcel 0 drop got in the way I wrote out an RFP for artists and started looking for a panel to select artworks. Are we in a better spot now? I would love to continue with this work.

There’s a general consensus it would be cool, but Parcel 1 options preclude it at the moment.

In monetary sense you mean?

That and none of the options are empty land where bootstrapping intrinsic cultural value is necessary. We could buy art to decorate whatever gets purchased, but that’s a separate acquisition strategy.

1 Like