TLDR: We used UMA's Synthetic Token Builder to create an ERC-20 token that tracks the frequency of poop sightings as reported by San Francisco's SF311. The holders of the token "profit" the more shit reported; the "issuer" wins if shit goes down.
Such a system could be used to align the incentives of local government: the city of SF could issue "shit coins" to credibly commit to fixing the homelessness problem (and earn a profit if they succeed); residents of the city of SF could buy shit coins as an "emotional hedge"—they make money if the problem gets worse.
Please note: All credit for this great idea goes to Daniel Que and Tyson Battistella!
*(Rinkeby testnet only... for now)***
The city of San Francisco has a growing homelessness problem. One clearly visible metric of this growing problem is the frequency of human shit found on the streets. Using data pulled from SF311, we calculated the rolling monthly number of shit sightings since 2014. As of November 9, 2019, there were 2927 shit sightings reported in the last 30 days, up from ~1000 monthly sightings in 2014.
Chart shows the 30-day rolling average of "shits" reported to the SF311 database. Shit is going up!
What if you could "invest" in this shit show? We could create a token that tracks the frequency of shits, allowing buyers to speculate on shit going up or down.
But more importantly, such a system could be used to the align incentives of local government. An entity (like a government) that promises to fix the problem could issue shit coins. If the issuer can clean up the problem and bring shits to zero, they would get to keep all the money earned from selling the tokens; if the issuer fails and the problem gets worse, they would have to pay more.
For example, assume the city of San Francisco wants to put their money where they mouth is and fully commit to solving this. The city could issue shit coins and sell them to residents. Say the city issues $10mm shit coins at 3000 shits per month. If the city can reduce the shit rate to 1500 per month, they would make $5mm in "profits"; conversely, if shit doubles (to 6000 per month), the city would owe the shit coiners another $10mm.
The purchasers of these shit coins could be speculators or residents of the city of San Francisco that are looking for an "emotional hedge." Residents could buy these coins knowing that if the problem gets worse and their lives get shittier, they'll at least make some money. And if the problem gets better, they lose money, but at least their city is cleaner!
As much as this sounds like a joke, we think the concept applies in many other similar contexts and is worth exploring. For example, the MTA, the agency in charge of the New York Subway system, could issue coins that track NYC subway delays; airlines could issue coins that track flight delays; etc, etc.
The biggest concern with this approach would be if some asshole bought a bunch of shit coins and then purposefully shat all over SF to drive prices up. It is possible that this shit coin could create an economic incentive for a large bag holder to promote public shitting and actually make the problem worse. (Imagine the headline: "Shit Coin Ruins City").
In theory, both real-world laws and the social embarrassment that comes with shitting in public should protect against this. The problem would also be alleviated if the distribution of the shit coins was very broad and it was difficult to acquire a large stake of coins.
An extreme (and extremely funny) suggestion from Vitalik Buterin to solve the distribution problem: have the city of San Francisco gift non-transferable shit coins to every official resident. This "gift" would go up in value if the city fails to clean the problem up. This is also a form of Universal Basic Income—or Universal Basic Shitcome 😂!