Say No to Rugs: The Ethical Foundations of Token Engineering

The future is an exciting and frightening place. Recent advances in Artificial Intelligence and genetic modification make seemingly wild scenarios seem plausible: Terminators and mutant beings that lord over genetic normies, along with poorly-defined objectives inadvertently leading to the human race being sacrificed in pursuit of paperclips. Recently, several governments have issued sweeping statements to set limits around the development of Artificial Intelligence — but these statements occur in the context of decades of ongoing discussion and debate among practitioners and stakeholders in these fields. Both the AI and biotech/genetics disciplines have established themselves as mature, professional fields that take risks to human safety seriously.

Web3 is another modern technology that offers the specter of disruptive change, with deep and complex socio-technical implications affecting individuals, institutions, and states alike. The desire to bring safety to this field is probably best exemplified by the idea of Token Engineering (TE). Since the first essays discussing the term were published in 2018, the TE movement has attracted many people interested in adapting engineering principles to the world of cryptoeconomic systems. Online communities, including TokenEngineering Academy and Token Engineering Commons, are working to establish and promote the foundational principles of this emerging discipline. However, in spite of these efforts to establish Token Engineering, the overall web3 space is still filled with poorly designed or outright fraudulent token designs that rob people of their money, and the industry of its credibility.

We believe that for Token Engineering to become a full-fledged professional discipline, the establishment of professional norms and ethics is essential. Whether traditional engineers are building bridges, electronic circuits, or software, they are united by a strong sense of professionalism, anchored in ethical principles. The idea of engineering ethics goes back more than 2000 years to Cicero’s Creed. Nowadays, each professional society of engineers has a clear Code of Ethics that its members are expected to uphold. To earn its place as an engineering discipline, Token Engineering will need to clearly delineate the professional norms that its practitioners are expected to follow. While there has been discussion of these issues in the past, we believe that there is more concrete work to do, connecting abstract principles to specific scenarios — and that now is an opportune time to deeply engage with the community on these crucial questions.

Our goal in this article is to initiate a serious and productive discussion with the goal of clarifying the ethical codes of the Token Engineering profession. Towards this end, we identify some of the challenging issues inherent in formulating such a code, including the ways in which Token Engineering is fundamentally different from other engineering disciplines.

Here are specific questions and issues that we believe need to be addressed for ethics and professional norms for Token Engineering.

On financial responsibility and transparency:

• Fire Starter: To what extent are Token Engineers responsible for the long-term viability of the projects they design? What should be the standards for honesty, transparency and disclosure by experts engaged in token engineering and design?

• The elephant in the room is that token engineers, if they are receiving or vesting large amounts of tokens for a project, may have personal incentives to maximize the short-term “value” of the tokens with less care for the long-term sustainability of the project. We see little historical precedent for engineers facing this tight coupling of financial considerations and system design questions. An engineer designing a bridge or space shuttle does not have a direct financial stake in the success of the project, with little ability to profit financially from short-sighted designs. Additionally, traditional engineers do not typically need to consider the long-term economic impacts of their design decisions; the bridge engineer does not set the toll.

On Standards of Competence

• Fire starter: How is competence in the Token Engineering domain determined and represented?

• Many engineering disciplines have centralized bodies such as universities or governments that oversee credentials, qualifications and professional practices. Of course, web3 is designed to be decentralized, which eschews the concept of central authorities. Yet, “decentralized” does not imply an absence of standards. Quite the opposite: decentralization does not work without a strong foundation of standards to ensure interoperability. We believe that to prevent regulatory capture, loosely coupled and merit-based oversight bodies would be valuable to foster decentralized professional standards. TokenEngineering Academy and the Token Engineering Commons are already engaged in this work.

On Conflicts Between Traditional Engineering Ethics and Foundational web3 ethos

• Fire starter: To what degree are cypherpunk ideals underpinning cryptocurrency at odds with traditional engineering views of ethics?

• Many professional engineering disciplines presume the de facto norm of always operating within the laws of a practitioner’s geographic jurisdiction. How do these traditional views square with the cypherpunk ethos that characterized the first thirty years of cryptocurrency development, which advocated for pirate utopias and openly challenged legal restrictions? History shows again and again that legality and ethics are not synonymous. Yet, practically speaking, web3 can’t fully operate outside the bounds of existing jurisdictions (looking at you for a new jurisdiction, network states…). Privacy is perhaps the most glaring example of this conflict: is a service like Tornado Cash, whose normal operation may run afoul of laws, something to avoid designing to begin with? More generally, is it possible to reconcile the voluntaryist ethics in cryptocurrency’s foundations with the idea of legitimacy of government, and a belief that the public must be protected?

On creating a roundtable where different disciplines come together

• Fire starter: Who should be involved in answering these questions?

• In most technology enterprises operating at global scales that build and operate complex systems, there are many people who have seats at the table: software engineering, research and development, lawyers, designers, ethicists and management. Web3 is still establishing the standards and practices whereby different disciplines can collaborate. There is no forcing mechanism (e.g., a hierarchical org structure) that incentivizes collaboration, and at times a wish for disintermediation We believe that establishment of norms are the first step not only in bringing different knowledge and perspectives into the fold, but also to foster the inclusion and collaboration needed from all corners of the society we want to impact.

We ask these questions because we believe they are both important and difficult. Yet, we have avoided giving definitive answers — we believe this is the work of a wider community. We would like to invite members of the Token Engineering community and web3 at large to a series of discussions tackling these issues. The first will be on the overall challenge of ethics in the discipline.

Please join us for an X Spaces at 11 AM ET on Friday, November 18. We look forward to hearing your thoughts and furthering this discussion.