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@ Angor
2025-05-21 10:52:12Dear readers,
“The direct use of force is such a poor solution to any problem, it is generally employed only by small children and large nations.” — David Friedman
What If we could enforce promises without force?
David Friedman, in his book The Machinery of Freedom, tosses out a pretty wild idea: that people can build systems of cooperation and justice without needing a government at all. These systems rely on voluntary agreements, social reputation, and mutual incentives. In such a world, contracts hold value because honoring a promise brings greater rewards than breaking it.
From Friedman to Bitcoin
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This vision shaped the thinking behind Angor, a funding tool built on Bitcoin. Friedman’s ideas showed that systems of cooperation could work without central authority, and Bitcoin now provides the foundation to build them. It records transactions in a public and tamper-proof way. With features like Taproot, people can set clear rules for funding and accountability. Angor uses these tools to help founders and backers create agreements that are transparent and easy to verify.
The result is a new kind of marketplace where follow-through is visible, and reputation becomes a real asset. Instead of relying on enforcement from above, trust is earned through action and built into the system itself.
What happens after the project succeeds?
One important question kept returning throughout our work: what happens after a project succeeds? The founder raises the funds, delivers the product, and begins earning revenue. What mechanism ensures that revenue is shared as promised? How can investors protect their interests in an environment that relies on voluntary structure rather than external authority?
To explore possible answers, we looked at how libertarian thinkers approach contracts in stateless systems.
How libertarian thinkers approach contracts without the state?
Friedman, along with other libertarian thinkers like Murray Rothbard and Bruce Benson, describes voluntarily created legal systems where people make binding agreements and use private mechanisms to enforce them. These mechanisms include:
• Reputational risk • Collateralized performance • Community arbitration • Decentralized insuranceSuch tools can replace state-backed enforcement when trust is earned and incentives are aligned.
If founders are anonymous:
When a founder chooses to remain pseudonymous, legal enforcement is not available. In this case, the agreement between the founder and investor can rely on cryptographic mechanisms such as performance bonds, revenue proofs, and public reputation systems.
- Performance Bonds
• Founders deposit additional Bitcoin into a separate, time-locked contract. As they meet revenue-sharing milestones, they are allowed to unlock specific portions of this bond.
• If a revenue allocation is missed or a deadline passes without fulfillment, the contract redirects the bond to investors through a Taproot clause i.e. a feature in Bitcoin that lets you set up ‘if-this-then-that’ rules directly into a transaction, but privately. This creates a clear and automatic consequence, reinforcing accountability through financial incentives.
- Revenue Proofs and Oracles
• Most founders, especially those running small businesses like cafes, games, or services, do not earn revenue in Bitcoin. Their income flows through fiat systems, which means automatic on-chain revenue streaming is not an option. The only way to maintain transparency is to prove income after the fact. This starts with exporting a sales report from a platform such as Stripe, Revolut, or a point-of-sale system. The founder hashes the file and posts that hash to the Bitcoin blockchain as a timestamped public reference.
• An oracle plays the role of a neutral verifier. This could be a trusted accountant or an observer chosen by the investor community. Their job is simple: compare the actual report with the hash recorded on-chain. If the data matches, the oracle signs a message that triggers the revenue-share payout using a Discreet Log Contract (DLC).
A DLC is similar to a smart contract, but built for Bitcoin. It allows two parties to agree on a specific outcome, such as how much revenue was made, and only releases funds when that outcome is confirmed by the oracle.
This process does not depend on central enforcement. Instead, it works through mutual agreement and the oracle’s reputation, or any collateral they may have provided in advance.
- Reputation as collateral
• Every revenue-share payout is recorded on the Bitcoin blockchain, making it publicly visible and verifiable. Community-run indexers can scan the chain and track whether a founder consistently delivers payments on time. This performance history is then summarized into what is known as a “contract streak,” which refers to the number of consecutive payouts completed without delay.
• These streaks are published as signed events through protocols like Nostr, allowing anyone to verify a founder’s track record. A strong, uninterrupted streak builds credibility and can improve the chances of raising funds for future projects. In contrast, a broken streak signals risk, which discourages new investment and reduces access to support from the Angor community.
If founders are public:
When a founder uses a real identity, the parties can combine legal agreements with on-chain contracts. These hybrid arrangements allow for tools like enforceable smart contracts, voluntary arbitration, and potentially community-backed insurance.
- Legally binding smart contracts
• This type of agreement formally identifies the founder’s legal entity and clearly links it to specific Taproot addresses used in the project. It outlines the rules for revenue sharing, describes what constitutes a breach, and specifies how disputes should be resolved. Because it is a formal legal document, it can be enforced in any relevant jurisdiction where the founder has a presence or assets.
- Private arbitration
• During the contract setup, both parties can agree to a neutral arbitrator who will step in if a dispute arises. If a revenue payout is delayed or missed, the arbitrator reviews all relevant data, including on-chain records, oracle confirmations, and supporting documentation. Based on this evidence, the arbitrator issues a decision that determines whether funds should be released, held, or redirected. This method provides a clear resolution process without involving courts, while still maintaining a fair and structured outcome.
- Equity sharing and traditional securities
• When founders are publicly identified and operating under a registered entity, they can also offer equity in the company as part of the funding arrangement. This can take the form of direct share issuance, convertible notes, or tokenized equity, depending on jurisdictional frameworks and investor preferences.
While Angor does not facilitate equity transfers directly, the on-chain agreement can reference these arrangements clearly. Investors may receive shares documented in a cap table, with accompanying legal agreements that govern dividend rights, voting power, or exit terms.
This method provides a more conventional form of investor alignment and is often well-understood by experienced backers. It can also be combined with on-chain revenue-sharing mechanisms to create hybrid models that balance transparency with long-term equity value.
Final Thought: Alignment Over Authority
The ideas in The Machinery of Freedom show how people can build cooperative systems without relying on centralized authority. Angor puts those ideas into action by applying them to decentralized crowdfunding. Each campaign becomes a contract. Each payout becomes a public signal of integrity. Reputation is built over time, through visible and verifiable performance.
This approach shifts enforcement from force to alignment. It rewards honesty and transparency while making misuse costly. By designing systems where trust is earned through action and recorded on-chain, we move toward a more resilient model of funding. This model is grounded in consent, shaped by shared incentives, and supported by the open logic of Bitcoin.
Bitcoin itself works this way. Miners follow the rules not because they are told to, but because breaking them wastes energy, time, and opportunity. The cost of cheating is built into the system. Angor adopts the same principle: integrity is not enforced from above, it is embedded in the architecture.
If you are building on Angor or exploring similar ideas, reach out. The tools are evolving, and the community is growing.
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Have you tried Angor yet?
Thank you & Ciao. Guest writer: Paco nostr:npub1v67clmf4jrezn8hsz28434nc0y5fu65e5esws04djnl2kasxl5tskjmjjk