# Introduction
Under the prevailing economy, human civilisation has achieved the height of its industrial and technological success. Yet, increasing inequality, environmental degradation and the climate crisis are forcing us to consider whether the paradigm is serving people and the planet. Looking for alternatives, we recognise that a viable economy must begin to respect ecological boundaries and social wellbeing, and shift from prioritising self-interest towards encouraging prosocial relationships. How can we transcend the established paradigm and bring about systemic change in the real world?
With the advent of the internet, and with the latest advances in AI, complexity science, and blockchain technologies, we now have the opportunity to create novel protocol-based social coordination systems. Widespread transition to a new paradigm now involves people opting in to a digital social-economic network when they are ready, instead of necessitating the difficult and slow process of conventional political transformation.
The need for elected human representatives and centralised institutions is replaced with consent-based protocols which define how we conduct our relationships with one another and our environment. These new ‘economic’ protocols can be designed with different rules and explicitly defined objectives embedded into their architecture.
This living gitbook is a collective open-source proposal for one of such protocols, therefore any contribution to its definition and refinement is encouraged and welcome.
# The Objectives
The core economic rules are like the DNA for a large component of our collective social and economic behaviour. A minor, well-crafted change in this DNA would yield immense transformation of the emergent social behaviour and impact of our species - reshaping our social relations, our economic output, and our collective impact on the planet.
This document outlines an holonic, peer-to-peer social coordination protocol. Its core rules are designed to emergently fulfil the following objectives:
* Facilitate prosocial coordination, favouring co-creation and collaboration over competition
* Fulfil psycho-physiological needs, ensuring wellbeing for all humans
* Regenerate the planetary resource ecology, attaining widespread abundance
* Remain viable across locations and through time, respecting the local and global boundary conditions of place and planet
To realise such a design without falling into the trap of reinventing the prevailing macroeconomic system, we must begin from a clean set of fundamental assumptions. To this end we adopt a tabula rasa approach, where we start by revising our assumptions about our relationship with the world.
# The Food Web
Planet earth is a rare haven for life in a vast universe. It is home to the only complex living systems we have yet discovered. Building up from the most basic physical resources, ecosystems have emerged in which species of all kinds consume and nourish one another in a deeply interconnected food web.
In the case of humans, our psycho-physiological needs and our sociality have extended this ecological food web into what we call ‘the economy’ - a system for social coordination around resources to fulfil human needs.
# Needs-driven Economy
Since our needs drive what we consume, the economic food web begins with them. By leveraging blockchain technologies on the internet layer, geo-localised needs could be broadcasted as requests to the entire economic network.
As every economic participant will be able to see what is needed and where, potential providers can leapfrog the information barriers to economic interaction, like the need for market research and advertisement. Consequently, every person is immediately able to contribute towards fulfilling needs, leading to broad inclusion, equal opportunity and economic participation.
# Prosocial Incentives
After collecting humanity's shared needs, incentives can be introduced to motivate economic activity. In social systems, incentives are often used to align people’s attention and behaviour towards certain activities, steering the group behaviour.
The profit motive is the main reward construct in the prevailing economic protocol - the DNA from which our group behaviour emerges. Profit arises directly from the system of market-based pricing - wherein suppliers set their own prices and therefore profits as high as possible. The market then requires competition to bring prices and profits back to an equilibrium. Although profit can be earned by improving value to consumers, over time, profit-maximising strategies tend to serve the self-interest of suppliers - ultimately converging on behaviours which are detrimental to people and the planet.
In the proposed design, the self-interested profit motive is replaced with a well-defined incentive to serve one another’s needs. The aggregated information about geo-localised needs can be used as a parameter to steer a reward function, such that higher rewards will be assigned to those who fulfil the most prevalent needs first. In essence, the community publishing their needs are indirectly setting a needs-based incentive. The community is rewarding suppliers who fulfil their needs, instead of suppliers setting their own prices and profits for themselves.
Following these rewards, producers emergently orient their behaviour towards the fulfilment of the community’s needs. This is similar to the way whereby people currently pursue profit, with the key difference being that the reward now encourages prosocial behaviour.
By replacing profit with a prosocial reward, we remove perverse incentives which reward antisocial individual gain, rebalance the power relationship between people and producers, and realign one’s individual incentive with a measure of common good. This simply could not be achieved with the competitive price system and profit motive of the prevailing economy and monetary system.
# Resource Ecology
When producers organise to satisfy requests, they will need to combine resources and labour to produce the required products or services. Resources are linked together into "recipes" which relate all products to their constituent components, in specified physical units. Every time a recipe is requested, orders for its constituent components (i.e. resources) are requested too.
These recipes are then chained together into a web called the resource ecology - a graph built up from resource recipes where each node represents a unique type of resource. The resource ecology can be likened to a transparent and shared web of supply chains in which every resource is geo-localised. By shifting from a concealed collection of abstract, linear supply chains to a transparent geo-localised resource graph, local providers can easily fill gaps in the resource web and optimize long supply pathways. Consequently, the resource ecology harmonises the efficiencies of globalisation and the resilience of localisation.
# Resource-Based Economy
With the resource ecology available, we are able to replace market-based pricing with resource-based prices, where the value of any resource reflects what it costs to be produced. When a product is requested, its resource-based price is calculated. The values of its component resources are summed together, cascading through recipes until the most basic resources at the extremities of the food web. Here, the value graph is rooted in the most fundamental physical units like energy and human time.
Since the value of every resource is directly equal to the sum of the values of its constituent resources, prices come to reflect the true costs of production. Thus, a fair-trade economy is established, free from profits, economic rents and speculation which seep into market-based prices.
Resource-based pricing enables us to directly relate all of our economic activity to its impact on the resource base. Since resource-based prices are not measured in dollars, but rather physical units, economising on price directly implies economising on resources. Cradle-to-cradle life-cycle costs, from production to end-of-life can also be traced and included in the prices of goods the moment they are created. Moreover, the needs-based incentive gives the resource ecology no incentive to produce surplus to what is needed. Sustainability and a circular economy becomes an emergent consequence of the protocol.
# Regeneration
In the prevailing economic system, the resource base is only considered valuable insofar as it can be exploited to feed consumption. A system which aims for widespread abundance must move beyond sustainable exploitation of resources towards planet-wide regeneration of the ecological resource base. In order to achieve this, the mechanisms for degradation must first be addressed, and then a new mechanism for regeneration introduced.
In a private-property based system or an open-access system, individuals look out for themselves at the expense of the group. When resources are considered scarce, individuals race to exploit their desired share of resources before they miss out, degrading the resource base in the process. This process is called the ‘tragedy of open-access’, commonly mislabeled as the ‘tragedy of the commons’. The commons is in fact an ecologically viable alternative to the ‘market’ for collectively managing and allocating resources, as opposed to open-access where no management system applies.
In order to avoid this scarcity-fueled race to the bottom, we assert the primacy of the commons. The concept of private-property ownership and exchange of exclusion rights on goods gives way to stewardship and allocation rights for managing the shared common pool resources. People do not individually ‘own’ resources but rather, earn rights to allocate them from the commons for a time.
Effective stewardship is rewarded with a regeneration incentive, targeted at regenerating the resource commons. Every resource maintains a reserve, and a corresponding reserve ratio which describes the percentage of resources withheld from its total available resource pool. The regeneration incentive is computed from the reserve ratio and then used to encourage the reserve’s replenishment via natural and augmented processes, starting from the fundamental resources and the carrying capacity of the planetary base. Resources can only be extracted to fulfill needs if the resource base has been regenerated to increase its carrying capacity to a sufficient level.
# Planetary Boundaries
For any system to remain viable in the long-term, it requires a negative feedback mechanism to stay within limits. In an ecologically sound economy, these limits must include local and global planetary boundaries, such as the maximum amount of carbon emissions allowed in the atmosphere before runaway global warming occurs.
As the economy nears a planetary boundary for a particular resource or waste stream, the protocol modulates its reserve ratio. Consequently, the regeneration incentive grows as the resource becomes scarce, increasing its effective price. This incentivises regeneration activities, and disincents the use of the targeted resource or waste stream - in this case, carbon dioxide.
As economic participants, we agree to alter our consumption and regeneration behaviour to remain within limits and to aim for targets defined by the distributed governance of the commons. Via a distributed consensus mechanism, we collectively set targets and boundaries in any relevant economic sector. The system then automatically realigns incentives for the entire group to navigate towards or away from them. Instead of post-mortem analysis after boundaries have already been crossed, crisis can be averted by pre-emptive collective action well before critical limits are reached.
# The Transition
This gitbook describes a protocol-based economic system which could be used as a leverage point for addressing looming ecological and social challenges. Widespread adoption of a novel social coordination protocol which achieves the stated objectives would induce a systemic impact with enormous benefits for social and environmental wellbeing.
The proposed protocol, provides a viable path to recover from the degraded state of human economic activities, by guiding it back towards prosocial coordination, regenerating abundance and the fulfilment of wellbeing, while restoring harmony between people and the planet.
This transition system is familiar enough to the global economy that anyone who agrees with the proposed economic rules can opt in when ready. It enables a piecewise, smooth transition without having to isolate oneself from society.
The protocol serves as a trustworthy infrastructure for connecting people, communities, foundations and sustainability initiatives together in a new economic grid where fair trade, wellbeing, prosociality and regeneration are the basis.
Participants who engage in this new economy can trust in fair indirect reciprocity - that everyone else who participates will be bound by the same set of rules and be rewarded in the same manner for their contributions. Communities everywhere can nucleate alone but then merge when they are ready; and the contributions across communities will be fungible. By coming together around a protocol, a coordinated transition becomes possible with much greater breadth and speed.
#### Realising the Transition
A socio-economic transition is necessary to be able to preserve our planet and the precious life within it, including the human civilisation.
Novel economic protocols, rethought in the interconnected age and built upon the newfound possibilities offered by the world wide web and the emergent technologies, might be one of the catalysing factors for the transition to the next stage in human social coordination. There is much work to be done for the emergent social change to manifest in real communities around the globe. If you are willing to commit resources to co-create and bring this new economic paradigm to life, you are invited to join this endeavour and become an active catalyst of change. All [forms of capitals](http://www.appleseedpermaculture.com/8-forms-of-capital/) to sustain and accelerate this endeavour are welcome.
# Slicing the Pie
A prosocial coordination protocol for the people and the planet
For any proposed system to be holistic, it should contain everything within itself. That's "the pie".
To deal with complexity, humans tend to categorise things, to put them in separate buckets. This is counter intuitive in a complex adaptable systems such as life and societies, where everything is actually heavily interconnected.
As the expression goes, there are many ways of slicing a pie!
Instead of picking one incomplete framework or another, we should be able to propose a selection of "views" to the activities, which are able to slice the pie exactly how we like it.
For instance, we could use the wisdom wheel, dividing everything into its current phase of progress, or to use the moon phase to time coordination.
A widely used framework is the permaculture flower, slicing the pie in 7 petals:
Hodgson, proposes a world model subdivided in 12 categories.
{% file src="/files/-M41Fq1R4kilUpQna2Lp" %}
Transdisciplinary World Model
{% endfile %}
Barbara Marx Hubbard also uses 12 sector in her wheel of co-creation, with added focus on the human and cultural aspects of society.
The key factor is that these frameworks is that each category is to be interpreted as highly correlated to each other. A change in one has repercussions in all others, which need to be observed and taken into consideration in the regenerative design.
The protocol should allow for any frameworks to be considered as "lenses" looking at a complex and interrelated system, where any project or initiative can map into any of the frameworks above and beyond the one listed here.
# Community & Resilence
## Getting Super Powers
Becoming a super hero is a fairly straight forward process:
```
$ give me super-powers
```
{% hint style="info" %}
Super-powers are granted randomly so please submit an issue if you're not happy with yours.
{% endhint %}
Once you're strong enough, save the world:
{% code title="hello.sh" %}
```bash
# Ain't no code for that yet, sorry
echo 'You got to trust me on this, I saved the world'
```
{% endcode %}
# Governance & Institutions
# Economy & Wealth
# Habitat & Infrastructure
# Water Availability
# Ecosystem Services
# Climate Change Intensity
# Energy & Earth Resources
The XS Exchange (XSE) is a digital facilitated marketplace where companies can exchange any XS B2B and turn their waste into additional revenues. The XSE is like a dating site for materials which matches both the supply with the demand, and the demand with the supply, by matching materials with their highest value reuse or recycle opportunity.
Material buyers will use XSE as a reliable supply of XS - which saves them money over purchasing virgin material, while material sellers will find new customers for their secondary materials, saving waste processing fees and turning them directly into additional revenues.
At its core, XSE is a blockchain-enabled application which uses the power of smart contracts to create the necessary transparency, traceability and reliability required in the recycling market. The products and materials are registered and tracked with a unique ID and a list of materials they contain, where the highest value recycle and reuse opportunities are automatically computed at search time by applying a sequence of known recycling processes. The tracing of the ownership and location of the materials is achieved via unfungible material tokens, which can be freely traded on the marketplace or on secondary markets.
The XSE smart contracts handle all operations of exchange, escrow and insurance, but more importantly, they are used to create potential recycling pathways and propose them to the users. Artificial Intelligence will aid in finding the optimal matches according to the search criterias, and to analyze digital literature to find novel recycling processes which would further optimize the exchanges.
We envision the XSE to play a key role into enabling a smooth and rapid transition towards a circular economy, with major economic, social and environmental benefits.
Technology
The functionalities of XSE described in this document are implemented as an interface to an ecosystem of smart contracts. A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties.\
The Ethereum blockchain is currently the most mature platform available for the implementation of smart contracts, and therefore chosen as the platform on which to base XSE.
From the ethereum website:
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.
These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property. This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.
## The XSE Token System
The Excess Material Exchange digitally represents every excess material into the form of material tokens . These could be directly minted by the platform (by registering a material or a product), or mined from registered products (material bundles).
#### Material Tokens
Every raw material introduced into the exchange has its own token class, defined by its ID and resource definition. Declaring the existence of a material into the platform automatically mints tokens. These tokens are not not fungible: once materials enter the platform, they will always be traceable.
The token also contain additional information associated with each material, starting from the quantity and the location, and extendable to contain more specific characteristics such as purity, shape, location, age, last owner etc..
The material tokens can be freely traded within the marketplace, and purchased on secondary markets. By purchasing a token, the buyer is effectively signing a digital contract to own the actual materials that they represent. The transaction is completed at the moment that the physical material is received. At this stage, this also act as the validation of the existence of that material and its history so far. Information regarding the location and ownership of the resources are perpetually written on the ledger. We can use this information track and trace the materials, effectively creating the beginning of a “value web”. This will highlight how the material flow and localise their position for current business and future generations.\
#### Material Bundles
In order to be able to transition to a circular economy, it is necessary to trace materials even if they are bundled together with others into products.
Therefore, in XSE, every product or material is represented as a resource passport, a sort of “material bundle”, where the product is specified as the sum of its components, and its components specified as its respective basic material content. This recursive structure allows all materials and products to be traced at different levels, preserving all the fundamental information necessary to find best value reuse or recycling opportunities. A product manufacturer or recycler can create a product definition, by specifying the product ID and the list of its contents. In the illustrated example, the material passport specifies that a wooden house consists of two parts: a roof and a base, and each of these consists of a special arrangement of sticks with different lengths and properties.\
Material Processing
Declaring all the materials and components within a product does not directly mean that all the materials would directly be available for reuse or recycling.
Material processing contracts are introduced to digitally represent the knowledge of transformation processes available through the platform.
Each processing contract needs to specify the ID of the token of the materials (or bundles) it takes as input (Material Inlet) and the ID of the materials tokens which can be given as output (Material Outlet), together with its quantities.
In the illustrated example, Recycler 1 declares a process to separate the wooden house in two parts: a base and a roof. Additional parameters, such as additional costs, CO2 emissions, water usage, and geolocation also need to be specified at this stage. These will aid the platform to select a recycler instead of another with the same characteristics, but different location, cost, emission etc..
The recycles who optimize the material processing from specific bundles are automatically preferred by the platform as the most efficient recycling pathway, since they are able to extract more value from the original product. The recyclers are incentivized to declare their best recycling rate estimate to be selected as recycling facility, yet to be conservative as they can always reintroduce XS as new material sources.
Suppliers (Material Providers):
Material Providers input materials or material bundles into the platform. It can also represented as material process without an inlet.
They bring their XS to the platform by uploading or selecting a resource passport os outlet. Additional parameters are location, quantity, and expiration day of the availability. If the material is contained within a product, they are also responsible to declare the correct material bundle. To avoid abuse, this process is moderated by a small fee per entry.
Buyers (Material Consumers):
Material Consumers submit searches to purchase materials out of the platform by adding a request for specific materials they need. They also specify location and quantity, expiration date and how much they are willing to pay. This information remains private. They can also subscribe to material channels, where they get notified of the new availability of materials in their interest. This process is free of charge up to the point of a match.\
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Direct Exchanges
Direct exchanges is the basic function of any exchange.
The supply is directly matched with the demand, so that an entity could source material if another entity is willing to provide it as is.
This is the same process which occur in the traditional marketplace. Match the match is often aided on the base on different characteristics (eg: size, state, location, age, location, ...)
In the illustrated example, only one (partial) match is possible. \
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Indirect Exchange\
The XSE adds an additional layer of functionality to the traditional exchanges. In fact, when looking for a match, the marketplace doesn’t only search between the direct matches, but also uses the known processes to generate pseudo demand and pseudo supply.
The platform enumerates all possible combinations, find the most viable ones depending on the search criteria, and then present the highest value opportunities.
Pseudo Supply\
The pseudo supply are the materials that would be available to the platform if all material processing contracts were activated using the supply currently available to the platform. A direct acyclic graph is created and traversed to enumerate the available pseudo supply.
From the buyer’s perspective, the pseudo supply is equivalent to the normal supply, but the costs involved to turn the available supply into the pseudo one is accounted for in the final price.
Pseudo supply is most likely more expensive than a normal direct exchange, but it creates the possibility of sourcing different materials from the platform which would not have been available otherwise. The pseudo supply gives secondary material multiple reuse/recycle opportunity, which can be picked up on the demand side.
Pseudo Demand 
On the other side of the pseudo supply, there is the pseudo demand.
This is the demand created from travelling back the potential recycling outlets into their inlet, starting from the declared demand. It represents a selling opportunity for companies that have the material available but have not listed it into the platform. A material in high pseudo demand would quickly be recycled, thus representing a significant opportunity for gains.
Material Pathways\
The material processes can also be applied for multiple times (eg: processing the processed material), the marketplace will showcase both real and pseudo materials pathways.
The XSE will enumerate the possible recycling pathways, both using real and pseudo resources, and present the found opportunity in an easy-to-read interface. The interface allows a clear overview of the tradeoff choosing a pseudo pathway with respect to another.
While enumerating the pseudo-supply and the pseudo demand, the marketplace automatically adds the parameters required for the material processing pathway, including CO2 emission, water usage, and distance. The results are presented the buyers will have a direct overview of how much material can be sourced from the platform, and what would be the costs and timeline associated with the exchange. \
In general, we do expect the pseudo pathways to be more expensive than the direct exchange. However, as the materials are secondary and might also be entirely sourced from the platform, we expect the total cost to still be significantly lower than directly sourcing the virgin material. In fact, applying the virtual processes will significantly enhance what could be sourced from the marketplace. In the illustrated example, starting from the same demand and supply as in the in the direct exchange example, the XSE is able to match all materials, while only introducing one excess material supply for recycler 3.\
## Payments
When a match is found, the buyer initiates the exchange by depositing the money for the purchase of the material and the processes involved. This means that everyone in the process already has received the money, as long as the complete the task. All this process is handled by a smart contract, which traces the material pathway all the way to the supplier. All parties involved in the transaction will have visibility of its status and of the processors involved.
### Initial Deposit (Insurance)
An initial deposit is required to subscribe a material process on the platform. The deposit acts as an form of insurance of the reliability of the processor, and incentivize the processor to behave accordingly to what he declared. The deposit can be returned by simply deleting the respective material process from the platform.
As an incentive to maximise the insurance of the contract, the contract will not accept deals bigger than their deposit. This is because, in case of default, the deposit will be used as payment for the processes which could not be completed because of the defaulting party. As a bigger deposit might bring bigger deals, the recycler is incentivized to set the deposit to his actual capacity.
### Escrow payment
When a pathway between a material supplier, processes and a material buyer is found, the buyer can initiate a trade request by submitting a downpayment to the escrow smart contract. The escrow payment would generally be equal to the total of the deal, although we do not exclude situations in which only a percentage of the deal goes in the escrow agreement. Whenever the buyer receives the material and submits the confirmation, the escrow (and eventually the full payment) is released and the monetary and material token transfer is submitted to all participants in the selected processing pathway. Once finalized, and the material tokens validated.
### Dispute
In the case of a dispute such as the lack of delivery or quality by one of the parties involved into a deal, the platform is notified and a dispute resolution process is opened directly involving the interested parties. An independent moderator will get in touch with the parties, consider the issue and decide to 1) Refund the escrow to the buyer 2) Complete the trade and allow the payment to the reach supplier 3) arbitrarily split the escrow. Failure to complete a transaction will compensate non-defaulting parties using the deposit. Material processors will not be able to accept new deals or be deleted while handling a dispute.
In case the escrow is refund to the buyer, the unsold materials are automatically reintroduced within the platform. It is up to the provider to modify the parameters which did not allow the trade to complete.
### Exchange fee
A small transaction fee for any completed trade remains within the platform, in a multi-signature wallet controlled by the core team and accessible through a proposal system. The transaction fee will be tunable by the core team (between 0% and 10%), so that the platform will have ways incentivise trades on specific dates (eg: a “circular month”).
Using a publicly accessible chain with a fee embedded directly into the smart contract allows anyone to perform trades even outside of the excess material exchange interface. Third parties will have ways to directly interact with the marketplace at the smart contract level. This will be extremely useful to integrate the information with existing resource management software. The martketplace fees will always paid as part of the smart contracting system.
### Material Flows
All available processes and completed transactions will be used to populate what we call the material flow. This information will allow users of the XSE to have an overview on how the materials flow within the platform.
This information is also highly valuable to understand how the platform is being used, and will give more insight which could be used for better matchmaking.
Furthermore, by matching the real supply and demand with the pseudo supply and demand, gaps will emerges. XSE will monitor these situations and suggest potential recycling opportunities by looking at scientific literatures. These suggestions will be investigated by XSE and the right parties will be contacted fulfill that role.\
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# Business & Trade
# Food & Agriculture
# Cultural Values & Worldviews
# Health & Wellbeing
