The inspiration behind Orb Land, which V God endorsed, is a deep understanding of the Hauberg Tax, shared ownership, and anti-monopoly.

Author: @Web3Mario

Introduction: On May 21, 2024, Vitalik praised a project called orb.land in Warpcast and conducted in-depth research on its underlying design principles. Therefore, I spent some time reading the book “Radical Markets” and gained some insights, which I would like to share with everyone. Of course, I found a comprehensive article introducing the project itself, which is convenient for everyone to read and understand. In summary, this book proposes a politically left-leaning ownership system - the mechanism of shared ownership, combined with the Harberger tax model, aiming to solve the problem of social injustice caused by the monopolization of resources. This is inspiring for addressing the issues currently faced by the Web3 industry, such as the recent popularity of overvalued VC coins.

What Does “Radical Markets” Really Talk About?

First of all, I would like to briefly introduce some basic information about this book. Its full name is “Radical Markets: Uprooting Capitalism and Democracy for a Just Society”. It was co-authored by Glen Weyl and Eric Posner in 2020. Glen Weyl is the Chief Research Officer at Microsoft Research and a Visiting Professor at Yale University, focusing on innovative research in market design and public policy. Eric Posner is a professor at the University of Chicago Law School and a renowned legal scholar, with research areas including contract law, international law, and legal theory.

In general, this book aims to address a series of underlying issues in modern capitalism and democratic systems. Specifically, it mainly involves the following key issues:

1. Wealth and Income Inequality: In modern society, the phenomenon of wealth and income inequality is increasingly serious. The traditional capitalist system often leads to a few people accumulating a large amount of wealth, while the majority of people face economic pressure. The authors believe that this inequality is not only unfair but also leads to social and economic instability.

2. Inefficient Allocation of Resources and Assets: Many resources and assets are not effectively utilized under the existing market system. For example, in the land and real estate market, many assets are left idle due to speculation and hoarding, failing to fully unleash their economic potential. This not only wastes valuable resources but also exacerbates the shortage of housing and land.

3. Defects of the democratic system: The current democratic system has many problems, such as flaws in the voting system, political polarization, and excessive influence of interest groups. These problems make it difficult for the democratic system to truly represent the interests of the people, leading to inefficient and unfair policy-making.

4. Global Immigration Issues: Existing immigration policies are often subject to strict national control, restricting the free movement of labor. This not only affects individuals’ economic opportunities but also hinders the overall development of the global economy. The authors believe that the free movement of immigrants can significantly improve the allocation efficiency of global resources, promote economic growth, and social progress.

5. Issues of Data and Privacy Rights: In the era of big data, personal data has become an important economic resource. However, currently, the control of most data is in the hands of a few large companies, limiting individuals’ rights to use and benefit from their own data. The authors propose granting individuals more data rights to achieve fairer data usage and benefit distribution.

6. Market Monopoly and Insufficient Competition: Many industries suffer from serious market monopoly issues, where large enterprises control the market through mergers and acquisitions, hindering fair competition and innovation. The authors believe that stricter anti-monopoly policies are needed to break up such monopolies and promote fair and healthy market development.

In response to these issues, this book provides solutions to them, which can be summarized into five points.

• Shared Ownership: Veerle and Posner propose an institutional system called “Common Ownership Self-Assessed Tax” (COST). This system reduces monopolistic behavior and promotes the efficient use of resources by placing all assets in a continuous public auction through self-assessment and public pricing. This self-assessed tax system is also known as “Harberger tax”.
• Voting Reform: They propose “Quadratic Voting,” where each citizen has a certain number of voting points to allocate based on the importance of a particular issue. This allows for a more precise reflection of public preference for different topics and avoids the neglect of minority opinions.
• Immigration Policy: The author suggests establishing a “Labor Market Auction” to determine the quantity and conditions of immigration through bidding. This approach aims to more effectively utilize the economic potential of immigrants and promote the optimal allocation of global labor resources.
• Data Rights: The book also discusses the issue of personal data ownership, advocating for individuals to have full ownership and control over their data, ensuring that the use of data truly benefits the creators of the data rather than just large tech companies.
• Antitrust Policy: They emphasize the need for stronger antitrust laws to prevent market monopolies and advocate for the decentralization of economic power of large corporations to promote fair competition and innovation.

The economic model designed by Orb Land for the Web3 personal consulting service scenario can be said to have referred to the first mechanism, which is the so-called shared ownership system combined with self-assessment tax system. This system is hereinafter referred to as the shared ownership system. So, what is the shared ownership system and what is its effect?

The system of shared ownership brings liquidity to assets through mandatory means, avoiding the unfairness caused by monopolies

The system of shared ownership is a social resource allocation system, and its institutional design mainly includes the following three aspects:

1. Self-assessment and open pricing: This system requires every owner of an asset to publicly assess the value of their own assets. This includes all types of properties such as houses, land, commercial assets, etc. The price determined through this self-assessment is not only determined by the owner but also made public for anyone to see.

2. Continuous Auction Mechanism: At any time, anyone can purchase the asset at the self-assessed price set by the owner. This means that owners must be very careful in setting their assessment price, as they may risk losing their property if it is set too low. At the same time, in order to prevent owners from overestimating the value of their assets and avoiding potential transactions, they will be required to pay a certain percentage of tax based on the self-assessed price. This tax can range from 1% to 7% of the asset value, and the specific percentage depends on the specific policy. This tax is also known as the “Huber Tax,” inspired by the concept proposed by economist Arnold Huber in the 1960s.

3. Tax Usage: The collected taxes will be used as public revenue to provide public services and infrastructure, or distributed to communities to support economic development. At the same time, this tax mechanism can replace or supplement traditional property taxes, simplifying the tax system and increasing government fiscal revenue.

The mechanism design mentioned above brings several benefits. Firstly, this mechanism can effectively reduce monopolies and resource waste. Since all assets are continuously auctioned publicly, monopolistic behavior of holding resources will be reduced, and resource allocation will be more efficient. In addition, people will be more motivated to use and develop their assets because the cost of holding unused assets increases. Secondly, it promotes economic liquidity. The publicly assessed asset pricing and continuous auction mechanism will promote market liquidity, allowing assets to change hands more quickly and reducing market rigidity. At the same time, it becomes easier for companies and individuals to obtain resources, promoting innovation and economic activity. Lastly, it increases fairness and social welfare. The tax collected through this system can be used for public projects and welfare, improving the overall quality of life in society. This approach helps reduce extreme wealth and resource inequality.

Potential Impact of Shared Ownership System on the Web3 World

Next, let’s take a look at how Orb Land uses this concept to design a Web3 personal consulting service system. Simply put, some expert users can generate an NFT through Orb Land, and anyone who holds this NFT can consult the issuer for questions. This NFT has a mechanism of shared ownership. First, when a user purchases the NFT, they need to set a publicly available ask price. Anyone can buy the NFT at that price anytime, anywhere. Second, as the holder of the NFT, one needs to bear a high Haberger tax, thus avoiding users from avoiding NFT transactions by setting exorbitant sale prices. All Haberger taxes and royalties from NFT transactions will belong to the issuer, and the NFT holder has the ability to rate the issuer’s answers.

The reason why Orb Land wants to design such a mechanism is to bring a continuous cash flow income to the experts who act as NFT issuers, in order to ensure their motivation to actively contribute value. However, I don’t think this effectively utilizes the core advantages of the mechanism, because in this scenario, NFT represents the right to consult with a specific expert user, which is not a scarce resource. It is difficult to monopolize and profit from it. For example, if you own an NFT issued by Vitalik, you can monopolize his speaking rights, and he will become your exclusive advisor, and others will not be able to receive any advice from him. This is obviously absurd! Therefore, the value of this model in this use case is unsatisfactory, as it only aims to promote the rapid circulation of NFTs through taxation and increase revenue for issuers. As a result, this mechanism is very unfriendly to holders. At the same time, if this mechanism is only used for price discovery of certain assets, you will find that its efficiency is much lower than that of a free market policy, namely pricing based on market supply and demand relationships.

The potential impact of the shared ownership system on the Web3 world is significant. Simply put, this mechanism is applicable where the problems caused by monopolies are most severe. Let me give you an example: the recent hot topic of overvalued VC coins. The reason why overvalued VC coins are a tool for fleecing retail investors is that the token economics design of most Web3 projects leads to the gradual evolution of an oligopoly market as VC tokens are continuously unlocked. At the same time, due to the significant advantage in capital compared to retail investors, VCs have the ability to set prices. Therefore, VCs can manipulate the secondary market trading price through overvaluation to earn monopoly profits. The reason for the low circulation of VC tokens is that there is a limited number of retail investors willing to buy in and cannot handle a large amount of VC tokens being dumped in the short term. To maintain profits, VCs usually choose a strategy of economizing to avoid running short. In this scenario, it would be exciting if Web3 projects could incorporate a shared ownership system to redesign the token economic model! As for specific solutions, I welcome everyone’s discussion.