We Are All Trailblazers
As the EOS launch nears, we move deeper into a new economics of common pool resources. Former assumptions around incentives, governance, and communities are actively being challenged - and we couldn’t be more excited. The community is trailblazing this path together, and EOS New York seeks to help the community understand the behavioral economic forces at hand. For these reasons, we are adding an economic advisor to our team.
“I'm a big believer, that ultimately, the blockchain is empowering communities to disrupt the company.” - Brendan Blumer, CEO of Block.One
Enterprises and private citizens alike are sitting on the sidelines to watch blockchain, and specifically EOS, mature to the point that they can feel comfortable participating. There are many questions surrounding the governance models of DAOs and the transaction costs between value providers and extractors. To paraphrase the great sci-fi novel Snow Crash, condensing these unknowns from the vapors of nuance into published research will be key to helping crack the code to mass adoption.
Dr. Liya Palagashvili
Today, EOS New York is pleased to announce that Liya Palagashvili, PhD, will be joining EOS New York as our Economic Advisor to explore these issues further. Liya has done tremendous research in the field of economics and governance, notably observing the relationships between technology startups, government regulations, and innovation. Liya has been published in outlets such as the Wall Street Journal, Forbes, U.S. News and World Report, and has been interviewed with national media. Liya has testified for agencies such as the White House’s Office of Information and Regulatory Affairs. In 2016, Liya was named a Forbes ‘30 Under 30’ in Law & Policy. Liya will be supporting the EOS community with her planned research which will be made publicly available at its conclusion.
Initially Planned Research
Liya’s research seeks to understand how blockchain technology, smart contracts, and decentralized organizations can reduce transaction costs and alter the standard employee-employer relationship. In fact, technology has already reduced the cost of transacting with the market and lowering monitoring cost, and thereby driving the expansion of contracting, as seen in the rise of the gig economy. Smart contracts can further reduce these transaction costs and continue to alter the employee-employer relationships, leading to more decentralized work that mirrors the fundamentals of “contract at-will” employment. This can also have significant implications for labor law because the standard labor regulations surrounding health and retirements benefits to employees can lose relevance as the employee-employer relationship dissipates.
The transaction costs conception has its beginnings in Ronald Coase’s seminal paper on “The Nature of the Firm” (1937). Coase poses a puzzle: Why are some activities directed by market forces and other by firms? He answers his puzzle with the concept of “transaction costs.” Transaction costs means all costs associated with carrying out an exchange--including the costs of originating, negotiating, consummating, monitoring, and enforcing a contract for any given exchange. This makes the use of the market system somewhat costly for ongoing exchanges. Coase explains that it may be less costly for firms to setup and create one contract (an employment contract) when a job has to be done repeatedly. In other words, rather than creating an infinite series of potentially costly contracts on the market, the institution of a firm can create one contract for each “employee,” which would enable an authority (the owner/manager) to direct resources and production.
From this, Coase explains that the higher the cost of transacting across markets, the greater the advantage of organizing within the firm. Or the corollary, as transaction costs decrease, there will be a tendency for greater use of the market system rather than use of the firm. Other economists followed in line with Coase’s research and have formed a entire avenue called “transaction costs economics,” where they identified the specific factors that lead to expansions of the firms—these things include joint production, monitoring costs, managing costs, transaction-specific investments, uncertainty, and a host of others. Liya’s research analyzes how smart contracts can lower those specific costs and thus reduce the value of expanding firms.
In a special edition journal celebrating 50 years of Coase’s “Nature of the Firm,” economist Sherwin Rosen posits that if factors such as monitoring costs, joint production, or transport costs did not exist, then it would be “difficult to imagine why complete decentralization of labor markets would fail to achieve efficient allocations. Most workers would be, in some sense, self-employed.” Thirty years after that publication, we are beginning to see the onset of just that type of decentralized world created by the broader reduction in transactions costs, which Liya believes will continue to fall with blockchain and smart contracts.
Biography
Liya Palagashvili is an advisor to EOS New York, an economist, writer, and a professor of economics at the State University of New York-Purchase and Researcher at New York University School of Law. She is also the founder of Startup Purchase—a program that helps students jump-start their business ideas. Liya earned her PhD in Economics from George Mason University, and while in graduate school she was a Visiting PhD Scholar with the Department of Economics at New York University. Liya’s research covers institutions and governance, regulations on entrepreneurship, and technology and innovation. Currently, Liya is conducting interviews with startup CEOs building a survey and unique dataset in her role as the co-principal investigator on a major grant analyzing the regulatory and legal landscape for startups. Liya’s work has resulted in over a dozen journal articles and book chapters, and a forthcoming book. Additionally, Liya has published in outlets such as the Wall Street Journal, Forbes, U.S. News and World Report, and has been interviewed with national media. Liya has testified for agencies such as the White House’s Office of Information and Regulatory Affairs. In 2016, Liya was named a Forbes ‘30 Under 30’ in Law & Policy.
Please give a warm welcome to Liya!
An important milestone on our roadmap is gaining a better understanding of Blockchain Economics by conducting and publishing research.
In our block rewards priority framework we’ve established “Understanding the EOS Blockchain” as an important matter to allocate resources.
EOS New York is a block producer candidate for the EOS.IO Blockchain
