In parallel, companies are becoming increasingly important and reaching exponential scales. They are becoming the New Institutions. Citizens don’t elect them, yet consumers make purchasing decisions that grant them power. Companies are the vanguards of progress and society at large relies on them.

We have an imperative to propel companies into the 21st century by granting them the tools to operate at a velocity of the internet.

Corporations

Stemming from the Latin 'corpus,' corporations are the embodiment of economic dynamism. Our modern understanding of them is underpinned by centuries of evolutionary transformation.

Tracing back to the Roman Empire, we see cities themselves as corporate entities, delegating civic responsibilities such as road construction and tax collection to the publicani — the embryonic form of private companies. This era laid the foundations of corporate governance as we know it today.

Fast forward to the discovery of the New World, private companies took on the development of novel trade routes. The funding of these risky explorations led the Dutch to create the first stock market, which made them the world's dominant power from 1550 to 1650.

In the UK, the introduction of the steam engine led to the necessity of financing expensive factories. To accommodate the risky nature of industrial companies, Britain established the joint-stock company with limited liability. This legal advancement propelled Britain to the forefront of the Industrial Revolution, heralding its Golden Age.

As ambitions soared, corporations evolved, necessitating more capital, sophisticated coordination of labor, and a mandate to operate from the state. This adaptation gave birth to the modern firm, characterized by its legal personhood, equity financing, and the protective cloak of limited liability.

The codification of capitalistic principles into the legal fabric has led to exponential human progress since the start of the Industrial Revolution. These laws enabled risk-taking entrepreneurs to take on ambitious ideas and corporations to flourish and be managed effectively.

Alignment

Our current capitalism is flawed, yet it possesses tools for aligning incentives within its arsenal. From vesting schedules and cofounder agreements to super voting shares and director liability, these mechanisms aim to solve the principle-agent problem and safeguard the company against the pitfalls of selfish, self-serving and self-profiting decisions.

Web3 is an alignment tool – it offers novel ways to design incentive mechanisms. Tokens serve to proactively and retroactively fund public good. They are also used to reward early adopters and contributors. Web3’s programmability brings additional efficiency in incentive design and opens doors to unprecedented experimentation.

Nonprofits, while noble in intent, face a conundrum. Their reliance on intrinsic motivations like righteousness and generosity limits their scalability and direct impact. Incentives are not aligned for nonprofits solve the world’s most pressing problems. In contrast, for-profit entities are the correct cartridge. Armed with the right tools, companies stand poised to carry world-changing endeavours.

LLCs are archaic

Running a business today is mired in bureaucratic quagmires — from tax compliance to payroll management. These tasks, though non-core, are critical; neglect them, and the threat of bankruptcy looms large. As businesses scale, these administrative burdens only magnify, distracting entrepreneurs from their true mission, killing companies and preventing great companies from being started.

The velocity of modern commerce has outpaced these archaic systems. Information exchanges and transactions that used to take days now they occur in seconds, thanks to the internet. Yet, company operations remain sluggish, invoices have to be settled in 90 days and taxes are paid 6 months after the end of the year. The legacy is both regulatory and technological.

Regulatory and Technological Overhaul — introducing the INC

LLCs, a relic of a time when commerce was local and correspondence moved at the speed of postage, now hobble under the weight of outdated administrative processes. Attempts by governments to digitise have fallen short of matching the brisk pace of modern trade.

Banking, too, lags behind. Transfers take up to 3 days to settle, prohibitive costs plague international transactions and banks still close on weekends. The settlement of share purchases, mired in outdated processes, struggles to keep up with the rapid trading of the modern stock market.

It’s time to update the firm to a stateful internet (web3). It’s time to make digital economics and internet commerce the default. To do so, an internet native cartridge for economic agents is needed.

Internet Native Companies are for profit entities that are created, operated and governed onchain.

Praxis will kickstart a New Industrial Revolution

Legacy systems are breaking at the seams.

The source of economic growth is moving from labour and capital to technology. AI will further accelerate everything. Praxis recently announced Acceleration Zones: “A new type of Special Economic Zone that accelerate technological progress in service of national priorities. Acceleration Zones do this by attracting technologists and developing an institutional structure that guides technological development and the reinvestment of proceeds”

In Praxis all companies will be INCs.

Praxis emerges as a system-level solution to global challenges, treating founders and builders as first-class citizens. Praxis recognises the importance of nurturing technological progress as the surest path to abundance.

Within Praxis, the administrative shackles that bind traditional corporations will be cast off. Founders will navigate a world where starting a company is virtually free, administrative burdens are minimal, and compliance is ingrained in the very fabric of smart contracts. Taxes and tax credits will stream seamlessly to and from companies, allowing entrepreneurs to focus solely on their mission to change the world.

Ethereum will serve as the universal operating system, uniting companies under a shared global state. The barriers to commerce will crumble, replaced by a system where trust is obsolete and verification reigns supreme.

From the reformation of institutions and the technology revolutions, we envision a future of human prosperity and abundance.

Become an Acceleration Corp

If you are a founder or an executive wanting to move your company to Praxis and become an INC, apply here.

This disheartening truth can in part be explained by bad regulation.

To grow up, crypto needs regulatory clarity

Indeed, launching a coin with no economic value accrual is legal yet redistributing cashflows to token holders may land you in jail. We need better, not less regulation.

We are witnessing early signs of evolution. The crypto lobby for the 2024 US presidential elections stands as the largest super PAC. Coinbase is spearheading the drive for regulatory clarity in the US. Europe is proactively implementing EU-wide regulation with MICA.

This work is crucial, but much more is required to develop a homogenous regulatory framework.

AMCs - solving the cold start problem

Nan Ransohoff wrote about Advanced Market Commitments (AMCs) in Work in Progress. AMCs are a guarantee of future demand to encourage suppliers to develop products that should exist but don't yet.

AMCs are an effective solution to the cold start problem, incentivising suppliers to build the product by eliminating market risk from the equation. Indeed, companies commit to purchasing the product if it can be built.

AMCs have been instrumental in developing an affordable cure for pneumococcal vaccines and Covid vaccines during Operation Warp Speed. In 2022, Stripe launched Frontier, an AMC with a $1B commitment to accelerate carbon removal.

Web3 AMC, the path to regulatory clarity

By committing to relocate operations in a specific jurisdiction and pay taxes there, the web3 AMC participants will compel governments to propose a regulatory framework that safeguards retail while fostering innovation.

Upon recognizing the demand for regulatory clarity, governments will swiftly introduce new laws to capitalise on the fiscal revenue, job creation and wealth generated by the relocation of these web3 companies. The AMC’s role is to unlock the existing inertia and get a government to be the first mover. Amazon’s HQ 2 beauty contest serves as an examplar of what governments are ready to sacrifice to attract talent, capital and jobs.

Below is a brief outline of my crypto policy proposal. It’s stems from many conversations with friends as well as the work done by the CCI.

Proposed Regulatory Framework

1. Regulatory designation:

   1. Cryptocurrencies will be recognized as a utility or commodity, decidedly not a security.

2. Taxation

   1. Capital gains tax will only be levied on off-ramping, exempting crypto-to-crypto transactions (taking a page from France's playbook).

3. Consumer protection

   1. Establish an Accredited Investor test based on knowledge, ensuring investors understand what they are buying when they purchase tokens outside of the top 10 cryptocurrencies.

      1. on a CEX, the test will be passed at onboarding or anytime thereafter.

      2. on a DEX, wallets will mint a soulbound NFT that attests to their status. They will also be able to port it from a wallet to another using zk attestations.

   2. Implementation of travel rules for on and offramping above $10k p.a.

4. Token issuance, listing and vesting:

   1. Insiders and whales holding >1% of token supply are mandated to disclose their purchase or sale. Insiders (team and investor) must have the same vesting schedule as retail and a lockup phase that is 1 year longer than retail’s lockup.

   2. Rigorous, transparent and auditable analysis required pre-listing of a token on a CEX. Market participants should have real time access to information such as TVL, main holders, team, revenue etc. (Dune Dashboard on streroids)

   3. Same requirements for transparency for a token listed on a DEX as on CEX (Dune Dashboard) with the exception of having to provide an analysis as to why the token was listen

5. Privacy as a human right and protection of Opensource code:

   1. We uphold the right to privacy, provided none of the transacting wallets are contaminated (flagged on an AML list). This could be done by a client side proof of non-membership on a ledger of contaminated addresses.

   2. The opensource code is safeguarded, implementing chainanalysis-like AML software on frontends.

6. DAO laws

   1. Possibility to incorporate onchain (company registry)

   2. DAO workers are assured limited liability after being KYC’d

7. Disclosures, KYC and AML

   1. Distinct disclosures and KYC/AML procedures for self-custodial wallets and custodians.

   2. A guarantee that self-custody is safeguard.

   3. Custodians must obtain a license to operate (CEX and other types of custodians)

8. Stablecoins

   1. Fiat-backed stablecoins are a payment technology, they are recognized as cash for legal and accounting purposes

   2. Stablecoin issuers that rely on algorithmic balancing or on lending should obtain a license.

The current regulatory scrutiny on crypto is not unwarranted but its misplaced. AMCs can be used to coalesce collective bargaining power to obtain the regulatory concessions needed for crypto to reach its full potential.