Every year, tens of trillions of dollars in value evaporate from our economy. Trillions more are foregone.

This happens because an entire class of goods in the economy — public goods — has no way to capture value; no way for producers to get a return on the value provided to others.

Without value capture there is little incentive to produce public goods in the economy. The result is that we are all significantly less prosperous for it, while our economy bleeds trillions of dollars in value each year.

Until recently this was an unsolvable problem in economics; we simply didn't have the tools to build a value capture mechanism.

But with the advent of blockchains (and programmable money) this is now just a question of coming up with the right mechanism design.

So what would a public goods value capture mechanism look like?

The best way to answer this question may be by looking at what works for other goods in the economy — specifically, commercial goods and the common good of network security.

Network security captures value thanks to the structure of blockchains, while commercial goods capture value thanks to the structure of companies.

Without these Coordination Structures, the goods would not capture value. And if they can't capture value, they can't be funded or produced at scale.

But what do these Coordination Structures have in common?

What can we learn from how they work?

And, most importantly, how can we use these insights to develop a Coordination Structure for public goods value capture?

We can derive four properties that blockchains and companies need for value capture.

These properties are: alignment, consensus, funding, and feedback loops.

In businesses, the profit motive aligns investors’ interests around the business. In blockchains, the value of the currency aligns user interests.

Businesses also make executive decisions through management that need broad agreement from investors and workers in the company. In blockchains, the decision to issue funds for network security is made through the consensus mechanism (the agreement of all nodes in the network).

Funding for ongoing business operations and commercial goods comes from a common treasury, or from equity or debt issuance. In blockchains, funding for network security comes from the network’s native currency.

Finally, the feedback loop for each business decision is evaluated based on ROI — the return on investment of the decision. In blockchains, the feedback loop revolves around the price of the coin, reflecting demand for using the network.

If a business or blockchain exhibits all of these properties, it enables value capture and can do so sustainably over time.

In contrast, if any of these properties is missing — if a business doesn't make decisions with broad support from investors and employees, or if investors have misaligned incentives — it's unlikely to be profitable or survive for long.

So what would a Coordination Structure for public goods look like?

First, it needs to align the interests of the members participating in it.

But unlike the profit motive for businesses, here people are participating in an ecosystem — or rather, a Network Economy. What aligns their interests then is the (individual) desire to benefit from participating in the network both financially and materially — a prosperity motive.

Second, it needs to facilitate agreement in the network on how much goods are valued.

Some points to consider here: it's crucial that participants in the network can trust the process.

If participants believe that bad actors can exploit the process, they’re less likely to participate in the network.

Also, the process needs to be scalable — it’s impractical for all participants to vote on every proposal, for example, especially in a large network with thousands of proposals each day.

You’d also want participants to be informed about what they're evaluating.

Finally, the process needs to be Sybil-proof — participants shouldn't be able to manipulate the vote by creating multiple fake accounts.

Now, obviously, there are various ways to achieve these objectives, but here is a good starting point: we can have participants selected at random from reviewer pools. Random selection greatly reduces the risk of collusion between proposers and reviewers.

This selection can be proportionate to the expected value of the proposal. This way the system can use resources efficiently while still having a representative sample of the network for each proposal.

Reviews can also be two-tiered. In the first tier, domain experts review the credibility of claims in the proposal. In the second tier, network-wide reviewers determine the value of the proposal to the network based on expert feedback. This ensures that a representative sample of the network can have an informed evaluation of the proposal.

Then, to prevent Sybil attacks, participants can have a vote on proposals based on their contribution to the network. This contribution can be in the form of non-transferable tokens, so that no one can have a vote greater than their impact in the network — even if it’s distributed across multiple addresses.

There can then be additional layers of security, such as the ability of users to challenge decisions, locking funds, slashing for fraudulent reviews, and so on.

So we can see that it's possible to achieve all the objectives needed for value consensus to form, and for a network to be able to trust the process.

Third, the Coordination Structure needs a funding source. Since we want funding to align with network participants’ interests, the funding needs to be based on currency issuance.

Everyone in the network then has an interest to both maintain the value of the currency and maximize economic growth from public goods.

As public goods contribute to the network's economic growth, demand for the network’s currency would grow also. If growth in demand for the currency matches currency issuance for public goods, the currency can maintain its value.

The network wouldn't want to overvalue public goods, since that devalues the currency. It also wouldn't want to undervalue public goods, since that makes others less likely to produce public goods for the network. The best strategy then is to value public goods fairly, based on their impact on the network.

Which brings us to the fourth (and last) element: feedback loops. A good way to ensure that public goods capture value based on their impact is to reward the goods retroactively — once the impact is realized. This way, the network has more confidence that funds are properly managed.

So now we have a structure that aligns the interests of network participants around the prosperity motive, facilitates agreement in the network on how much goods are valued, funds the goods from currency issuance, and does so sustainably through retroactive funding.

We thus have the blueprint of a Coordination Structure to capture the value of public goods — but we still need to turn this blueprint into reality.

So how can we do it?

Achieving value capture for public goods may have a far greater impact on our economy than achieving AGI in LLMs — trillions of dollars in value are at stake.

For this reason the effort cannot be limited to one person or organization. It needs to be an ecosystem-wide effort, involving all the major public goods projects in the space.

Our next steps should therefore be to put this coalition together, get the top mechanism designers to hammer out the mechanisms for this Coordination Structure, and start prototyping the system.

The faster we realize value capture in public goods, the better for crypto — and for the world. Let’s get to work!