- Hyperscale is a fund that invests in projects furthering the internet economy.
- Our fund has two stages. Stage 0.1 is a centralized fund & stage 1.0 is a decentralized fund.
- Decentralized capital allocation — defining good investors and giving them capital at scale — is a hard problem to solve. Building this meritocratic fund will require experimentation. We’re on an iterative path to reach stage 1.0.
- At our core, we’re a community.
Hyperscale was started just over three weeks ago. After launch, the core team has been focused on building the DAO race: a way for the community to vote on investments. We’ve seen that the DAO race doesn’t uncover great investments. The problem boils down to groupthink. The DAO race is a solvable problem but it’s too much to solve at once. We’re moving past this as great investments are at the core of Hyperscale. There’s a lot to learn and this was harder than I thought.
I also received feedback from the community. The primary concerns were about lack of communication, transparency, and governance. I have plans to change this going forward.
The goal of this post is to set a clear direction for the future of Hyperscale. This will align the community going forward. I want to be as transparent as possible and walk through my reasoning.
The community is at the core of Hyperscale.
Hyperscale is a fund that invests in projects furthering the internet economy. The fund has two primary components: capital allocation and the community. Capital allocators invest in projects that the community assembles behind. These projects form an economy — they collaborate, compete, transact, and support each other.
Ecosystem funds can be hard to start. Their power comes from network effects. We have broken down the process of building this fund into two stages: 0.1 & 1.0. Stage 0.1 is a centralized fund supporting an ecosystem of projects. Stage 1.0 is a decentralized fund supporting a large internet economy.
Right now we’re in the process of building stage 0.1 where a centralized fund will be making investment decisions. Sam Altman is providing seed capital and we’ll open up the DAO once it’s legally compliant. Will provide more details on the initial fund structure over the next few days.
The projects who are chosen by the fund will receive investment, capital, guidance, and an initial community. The goal of this stage is to establish a clear mission and build a community around the ecosystem.
Our past focus, the DAO race, unintentionally encourages groupthink. The distribution of votes is skewed towards the top. Most applications aren’t read because there’s no incentive to vote on the best projects.
The plan is to build an incentive structure where the best investments rise to the top. In our next iteration, voters compare two projects and vote on the most promising one. One’s vote would be weighted more heavily if they have a strong voting track record. If Hyperscale invests in a DAO a portion of the investment would be distributed to voters. The distribution would be proportional to the weight of one’s vote.
There are several unknowns we currently face, and making this work would take weeks to months of iterations. A centralized fund will serve as the MVP. Going forward we’ll experiment with other models. I’m starting simple — focusing on making great investments and building the community is my primary focus.
Short-term Community Contributions
We’ll be making the first few investments early this week. When we kick off the hackathon this Friday we’ll make several more. DAOs will be started & compete. The best builders, ideas, & communities will get funded! Our financial support is available to anyone, from any country.
The best way that the community can help is by supporting the ecosystem. There will be an explosion of DAOs who will need governance, legal, product, and marketing help. These DAOs will have funding to pay contributors. You’ll now be able to work for DAOs in the Hyperscale ecosystem. DAOs will place bounties for the community to complete in the bounty market. These DAOs can also be thought of as a sandbox for Hyperscale the fund. Learnings here will be implemented.
Hyperscale needs a strong and passionate group of people to help it grow and engage the community. If you have experience with marketing or building communities please reach out!
The details around stage 1.0 are unknown. Currently, the largest grey areas are legal and the decentralized investment structure. The discussion here is quite beneficial as it determines the next actionable steps towards stage 1.0.
As we transition to stage 1.0, we’ll start experimenting with the decentralized model: capital allocation will be done by a decentralized market of capital allocators. Any good trader receives a portion of the treasury. We’ll tokenize the treasury, establish governance mechanisms, and distribute ownership. It’s an iterative process — we may not have all the answers, but we’ll figure it out.
- Investment process & initial fund structure
- Experiments that we’ll run for stage 1.0 (specifically capital allocation)
- Long-term vision (AI-run internet economy; everything is measurable so there’s data abundance. What defines a good investment. Why GDP growth is the KPI for this internet economy)
Hyperscale has the potential to reform how economies are built — capital allocation, labor coordination, etc. At the core, we’re a community. Transparency and openness will be key. It’s been harder than I thought but through small wins, we’ll build the vision.