Where Web3 & Psychedelics Might Meet

Issue #1: A cross-pollination

Search the internet for psychedelics and web3 and you will be left relatively empty-handed. While sitting under a palm tree together in Spain, we found this surprising. As part of both industries, we’ve witnessed many common themes in their communities, values and a shared vision for helping forge a better future. After all, a mycelial network really is the OG decentralized network.

We’ve spent the last year thinking a lot about web3 and psychedelics, and wanted to begin writing about how they might come together. Our intention is not to write about their characteristics as alternative investment opportunities. There are many great resources out there already. Rather we wanted to explore the philosophical overlap and potential practical applications between the two.

While our enthusiasm for both fields is evidenced by writing this, neither one of us believes that web3 or psychedelics are panaceas. Their adoption and use cases are still in very early days with many problems left to be solved. But we do believe that if nurtured responsibly they each offer deeply valuable resources to a rapidly changing world.

If you’ve landed here, we’ll assume you have some basic interest in web3 or a general sense of the advances in psychedelic medicine over the past year. But maybe not both. If not, we’ve compiled a reading list that covers some of the basics as well as a few resources broken down by theme.

Our intention is to build in public, spark new conversations, learn along the way, and speak to as many people as possible who share our interest.

How on earth did we get here?

The Psychedelic Renaissance

The twenty years between 1950 and 1970 was a heady period of cultural interest and scientific research into psychedelics. Scientists and researchers explored how they could be used in psychotherapy, but also more expansively how they might help us to see the world and ourselves a little more objectively. All of this came to a halt in 1970 with the Nixon administration passing The Controlled Substances Act, making all psychedelic compounds illegal, thus ending all government-sanctioned research on the topic.

Made possible by the research of a few stalwart organizations like The Multidisciplinary Association for Psychedelic Studies (MAPS) and The Beckley Foundation, the 2020s are beginning to look like the decade in which psychedelic medicines could become accepted by doctors to treat a wide range of mental health disorders.

This decade, too, could see millions more people turning to psychedelics to pursue personal growth, overcome challenges and connect more deeply with themselves and their communities.

As early as 2023 it is likely that psychedelic treatments will become legally available in the U.S. for the first time through two pathways: MDMA-assisted therapy for PTSD through prescription regulated by the FDA and psilocybin therapy for anyone in Oregon who can safely benefit from regulation of the Oregon Health Authority.

As the saying goes, we are in the midst of a psychedelic renaissance.

The Dawn of Web3

In 1962, the same year that Timothy Leary was busy at work at the Harvard Psilocybin Project, just down the road in Boston, J.C.R. Licklider penned the first known description of social interactions enabled through computer networks at M.I.T.. This idea, then named ‘Galactic Networks’ envisioned a globally interconnected set of computers through which every one could quickly access data and programs from any site, anywhere. 

Flash forward to January 1st 1983 and the advent of a new communications protocol called Transfer Control Protocol/Internetwork Protocol or TCP/IP. In a nutshell, TCP/IP provides different computer networks with a standard way to communicate with each other. This gave rise to the ‘Web’ as we know it, which has broadly developed in three stages over the following three decades:

• Web1 (~1990-2005): Web 1.0 was the first stage of the World Wide Web where websites were made up entirely of static content and connected by hyperlinks. Think AOL Online, a static news website such as cnn.com from the year 2000, and SMTP, the e-mail delivery protocol used for sending emails. This is usually referred to as ‘read only web’.

• Web2 (~2005-2020ish): Web 2.0 is the version of the web that most of us are familiar with today. It's the internet of communication, social participation and convenience. It’s often referred to as the ‘read + write web’. However it’s the same web that enabled large companies like Google, Apple, Amazon, and Facebook to create data silos that concentrated most major decisions about the direction of the technology in a small set of corporate board rooms.

• Web3 (~2020 - ???): While the term web3 was popularized in 2021, the idea of web3 has been around for a while. Yet the exact definition is still up for debate. What most people seem to agree on is that this is the ‘read + write + own web’, which builds on the existing web with two core themes, decentralization and the ownership of value. In some ways, it combines the decentralized, community-governed ethos of web1 with the advanced functionality of web2. Web3 is the internet owned by the builders and users, orchestrated with tokens. Think dApps (Decentralized Applications), such as Aave or NFTs which are built on peer-to-peer networks such as Ethereum.

One last point on terminology. We’ve chosen to use the term web3 over crypto as the latter has become fairly loaded over the years, and in our experience tends to turn people who are not as familiar with the space away from it. For now, “web3” and “crypto” are fairly synonymous, though we expect that as web3 develops, it will encompass new use cases far beyond those umbrellaed by blockchain and cryptocurrencies today.

Breaking into the mainstream

2021 will be remembered as the year in which both fields became mainstream. In the case of psychedelics this was driven by parallel progress in regulation, clinical research and commercial viability:

• Regulation: Oregon’s Measure 109 and Washington DC’s Initiative 81 set the precedent for legal access to psilocybin assisted-therapy. The Decrim Nature movement is paving the way for 18 other states who have proposed similar initiatives to reduce or eliminate criminal penalties for the possession of psychedelics. If the DEA’s call for increased production of psilocybin isn’t a sign that times are a-changin, we’re not sure what is.

• Clinical Research: In August 2017, the FDA granted Breakthrough Therapy Designation to MDMA for the treatment of PTSD. Five years later, there are now over 160 active clinical trials looking into the efficacy of psychedelic medicine to treat a range of mental health indications. Dozens of research centers have emerged. Some of the most notable are the University California Berkeley, Mass General, and University of California San Francisco, Johns Hopkins University and Imperial College London. But the most notable advancement in clinical research comes in 2023 when MAPS is expected to pass the use of MDMA to treat PTSD through Phase III trials.

• Commercial Viability: Investors are chasing what some are describing as the largest commercial opportunity in life sciences in decades. The market value of medical psychedelics today is $190 million and is expected to exceed $2.4 billion by 2026. There are now 60 publicly traded companies focused on psychedelics, 17 of which went public last year.

2021 was an equally pivotal year for  web3, where it matured from a nascent community to a budding industry. This has been driven primarily by fundamental and speculative investment activity, institutional adoption of cryptocurrency, regulatory progress and the emergence of key use cases and themes like Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), Decentralized Autonomous Organization (DAOs), Play-to-Earn Gaming and the Metaverse.

• Growth & Adoption: The numbers speak for themselves. In 2021, the overall cryptocurrency market cap grew to $3 trillion USD. Total Value Locked (TVL) in DeFi peaked at $111 billion. The NFT market saw a total trading volume of $23 billion, while Blockchain-based metaverses had over $500 million in trading volume and in-game NFT assets saw $4.5 billion in trading volume. 1.26 million unique wallets bought or sold an NFT on OpenSea in 2021, a 47x increase from 2020.

• Regulatory: In October, a futures-based bitcoin ETF made its market debut on the NYSE. Shortly thereafter, President Biden signed the bipartisan infrastructure bill, which included controversial tax reporting provisions that apply to digital assets. This caused significant concern in the cryptocurrency community, and gave rise to DC’s first crypto lobbyist presence. Over the past four months several congressional hearings convened to help educate regulators on cryptocurrency and web3. On an international stage, El Salvador became the first country to adopt Bitcoin as legal tender. The central bank of China is taking a different approach to build their own Central Bank Digital Currency (CBDC), and similar projects are emerging via the Digital Euro initiative in Europe.

• Commercial: Venture Capital deployed $30 billion globally in 2021 into crypto and web3 startups, ~500% more than in 2020. Close to 50 crypto startups raised over $100 million  in 2021, with the industry now counting 65+ crypto unicorns, 40 of which were created in 2021. In the public markets, Coinbase, the largest U.S. cryptocurrency exchange, went live with its direct stock listing on the Nasdaq exchange. Facebook became Meta, Square became Block, and Nike Acquired RTFKT, a leading brand that delivers digital collectibles that merge culture and gaming.

Common Threads

There is a palpable, at times recalcitrant, ethos to both fields. Up until the tail end of the last year the concentric circles of web3 and psychedelics were blurry at best. With only a handful of web3 applications focusing on psychedelic use cases, the overlap between the two is still mostly ideological. However, themes are beginning to emerge.

Bottoms Up, Top Down

Both industries seem to be caught in a tug of war between regulatory oversight and free market standards. While governments are seeking to rein in the monopolistic behavior of Big Tech with top down threats of breakups and ever tightening competitive regulation, web3 tackles the same issue through bottoms up decentralized infrastructure that inherently distributes control and ownership to its builders and users.

At the same time governments are struggling to find appropriate ways to regulate web3. On the one hand tighter regulation of web3 could diminish many of the popular concerns around its legitimacy, create a more robust entrepreneurial ecosystem, and usher in more institutional capital. While, on the other hand, zealous regulation could forfeit the original promise of a sovereign, community governed financial system and push much of the innovation outside of the US and Europe.

We are seeing a similar top down / bottoms up dichotomy in psychedelics, where there are two parallel trajectories both aiming to provide more access to more people. On the federal level, access to psychedelic medicine depends on successful clinical trials for specific mental health disorders. This top down route is referred to as medicalization and is focused solely on the efficacy of psychedelics to treat specific central nervous system disorders such as post traumatic stress and treatment resistant depression.

In parallel to medicalization, there are over 20 states with active petitions to decriminalize or legalize the possession of psychedelics in some way, which could widen the aperture for the relevant use cases of psychedelics beyond treating illness. This represents a non-hierarchical but interconnected system of progress in the field that feels very similar to the bottom up, decentralized development of web3 infrastructure.

FDA approval to prescribe MDMA and psilocybin would be a watershed moment and provide access to millions of people who currently do not have effective treatment for life altering conditions. However, prescription approval for psychedelic medicine also would compound many currently unanswered questions around ownership, intellectual property and indigenous reciprocity.

In order to understand the ethical labyrinth medicalization introduces, it’s important to remember that psychedelic plants have been used and stewarded by indigenous groups long before capitalism was a tiny shimmer of an idea in Western thought. Now as we stand on the brink of broad cultural acceptance of the same medicines, we risk leaving these groups of people out of the equation entirely as billions of dollars flood into research and development.

Here, too, there are benefits to both sides.

FDA approval would be the first step in allowing people to receive insurance reimbursement for treatments that currently are costing anywhere from $300 to $7,000. Federal approval means broader access, sooner. State legislation could provide a more adaptive framework that recognizes that the positive societal impact for psychedelics is not limited solely to treating illness.

Autonomy and Sovereignty

Both psychedelics and web3 tap into an undercurrent of questions concerning what role and responsibility the individual has in larger systems. Web3 asks how data and financial sovereignty can be returned back to the individual, in psychedelics; what responsibilities we have in our own mental wellbeing. 

In web3 this is evidenced by the promise of financial sovereignty and inclusion offered by DeFi. Today, there are over 1.7 billion people without access to essential financial services. Both FinTech and decentralized finance applications represent a natural evolution of financial products that may change the way billions of people interact with their finances, and, for many, these technological developments will offer their first glimpse of a financial world beyond the traditional banking system.

The current DeFi ecosystem already offers a vast variety of financial products that completely remove intermediaries and put users in control of their finances. Now anyone in the world with a mobile phone and internet access, can open a cryptocurrency wallet, buy, sell and hold stablecoins or cryptocurrencies in non-custodial wallets and access permissionless lending and borrowing markets.

Where web3 provides the tools for a more human centered financial system, psychedelics could provide the tools for a more human centered approach to mental health.

One popular view of psychedelic therapy put forward initially by Rick Doblin and MAPS is premised on the idea that each patient has an “innate capacity to heal”. Relating to a transformational experience from psychedelic therapy, Doblin explains, “the medicine unlocks it, the therapist supports it. But it’s really a process that comes from the patient.” Tools are provided, but agency rests in the individual.

These are prime examples of the shared ethos of individual autonomy and iconoclasm towards hierarchical structures that both psychedelics and web3 wade deeply into.

Composable and Transdiagnostic 

Both web3 and psychedelics can use a single idea to solve multiple, different problems. In psychedelics, this is called transdiagnostic, which refers to a single psychedelic medicine’s efficacy in treating more than one diagnosis. In web3, this is called composability, which refers to the ability of protocols and decentralized applications to build on top of or integrate with one another. At the same time components such as tokens and data are interoperable between them.

Composable protocols plug into larger networks to expand upon their use cases. Transdiagnostic medicines open the possibility that a single medicine could prove effective for a range of different conditions.

NFTs can be used to represent ownership of digital art, facilitate royalty payments for tokenised music, or as collateral to take out a DeFi loan against its value. Single technology multiple applications.

This idea is alive in psychedelic research as well. In combination with therapy, the same compounds show promise in treating symptoms across health conditions. Psilocybin is demonstrating effectiveness in treating PTSD, but is also showing promise in treating depression, anxiety and addiction. Single compound, multiple applications. 

Psychedelics, like web3 assets, can be composable.

Open Science, Open Source

Society benefits by incentivizing open information.

Open source software isn’t new. It has been in existence since the dawn of the computer age, and almost all of today's operating systems can be traced back to open source Linux software. 

But unlike traditional open source projects, web3 projects tend to fund themselves with the issuance of tokens, using native, digital currencies to incentivize and reward the participants in their distributed networks. This model addresses the misalignment of monetary incentives open source still suffers from today. Through this mechanism, some of the successful early web3 protocols already built significant treasuries which are often fully owned and controlled by the network participants and token holders. For example, Uniswap holds a treasury of almost $7 billion, while BitDAO, a web3 investment DAO, holds over $2.5 billion in treasury assets.

Open data markets can also expedite clinical research. Let’s say a research institute in Berlin is able to demonstrate that a certain psychedelic compound is effective in treating a certain indication. These scientists then tokenize their research and share their findings through an open source database. Then another research institute in Boston working on a different compound for the same indication finds the Berlin research through the database and is able to build on their findings. Because the original research was tokenized with intrinsic digital value, the team in Berlin are rewarded for their original research. The team in Boston doesn't have to start from scratch.

Imagine academic citations with monetary value.

We’re already seeing this in the automotive industry, where manufacturers increasingly rely on open data to fuel innovation in autonomous driving and vehicle safety. Currently most data infrastructure has limited communication with third-party frameworks, leaving data locked in centralized manufacturer owned silos. As a consequence, automotive manufacturers face a trade-off between opening up access to their data and retaining profits from exclusive control over it. Drive&Stake uses web3 to solve this by empowering all mobility ecosystem participants to benefit from vehicle-generated data. It’s a decentralized, scalable solution for the creation of open mobility data marketplaces that promotes industry-wide data exchange. Drive&Stake is built on Ocean Protocol which provides similar services to many other industries that stand to benefit from open web3 data markets.

The default model in academia is essentially open source. Anyone can cite anyone’s paper for free. Web3 could take this further by shifting funding to a merit based model versus one that rewards incumbents and those seeking large grants. For example, the most viewed paper in JAMA Psychiatry last year, at over 302,000 views, was “Effects of Psilocybin-Assisted Therapy on Major Depressive Disorder”, yet this was presumably not the one most discussed in academic circles. It would be cool to reward this somehow.

Similar to the automotive industry, tokenization, the web3 data economy, and open science will help advance psychedelic research more quickly and more equitably than data silos and patent races. There’s an opportunity to approach psychedelic research and development through open, collaborative models that still reward the origin of new ideas. When it comes to mental and financial health, we benefit more from learning from one another and building from each other’s ideas rather than competing in zero sum games. 

Who owns what

Patents are important. They incentivize innovation and help push science forward. They are also complicated because they attempt to give ownership of ideas. 

One of the more lively debates in psychedelics is whether or not they should be patented at all. Patents are granted for inventions that are deemed to be new or non obvious. However determining whether psychedelic research is at all novel is a unique challenge. Due to the Controlled Substance Act, a large swath of psychedelic research remains in a bit of a black box. Look up publications between 1970 and 1990 and you won’t find much. More importantly, deciding whether any invention that builds upon a practice that has been used by indigenous communities around the world in various ways for centuries is a particularly thorny endeavor.

Psilocybin, mescaline and peyote have all been part of human pharmacopeia for a long time. Yet these are the same compounds making their way through clinical trials owned and operated by mostly private companies who are developing proprietary and synthetic versions of them.

This is not a case to do away with intellectual property. There are many great teams - private and public - developing truly novel medicines and protocols. Rather it’s to raise the question of to whom intellectual property should belong and whether there are new ways of using web3 to distribute intellectual property more fairly and equitably to the many stakeholders who are collectively moving the space forward. 

Web3 offers new models for aligning incentives across a number of different groups and provides a sophisticated mechanism to distribute ownership among them. It provides a way for royalty and fee structures to be coded directly into smart contracts and tokens, so that they can be automatically transferred to originators in a trustless manner. For example, Molecule.to is already using web3 to solve this problem by turning intellectual property and data into liquid assets that can be bought and sold in an open market.  

Imagine a world where the returns from psychedelic IP could be allocated partially to indigenous led plant medicine conservation efforts to sustain traditional healing systems and restore wild sources of plant based psychedelics.

New Paradigms

The adoption of web3 and psychedelic medicine is a response to failing systems. The Bitcoin whitepaper was released against the backdrop of the 2008 financial crisis. The psychedelic renaissance is in direct response to the current mental health crisis, made acute by the covid pandemic.

It’s difficult to affect change to incumbent systems without an alternative that so clearly improves current solutions that we have no choice but to explore its value. This is the principal challenge of both fields. As both topics begin wading into popular discourse and inevitable criticism, can we use the opportunity to responsibly, collectively and pragmatically nurture two ideas, still in their infancy, into invaluable tools towards a better future?

We stand on the shoulders of giants, but there are mountains left to climb. 

Where we go from here

The goal of this article is to explore the overlap in the ethos of psychedelics and web3. Looking ahead, we’d like to begin breaking down practical applications through interviews and specific use cases. By no means exhaustive, below is where we expect to begin. We look forward to learning more about existing projects that are not mentioned here, and welcome all feedback and introductions along the way.

Decentralized Trials and web3 cryptography: In order to better understand the risks and benefits of psychedelics we need more diverse data that exists outside traditional clinical trials. One place we might look to is Real World Data. One way web3 might help is through privacy preserving cryptographic technologies such as Zero Knowledge Proofs.

Psychedelic DAOs: DAOs are a crypto-native way to coordinate a group of individuals in the pursuit of a shared vision. The use of DAOs in the emerging psychedelic field is manifold, and groups like PsyDAO are already beginning to explore potential applications. Can we use DAOs to fund and organize local state ballot initiatives that support decrim efforts? Imagine using Quadratic Funding for research initiatives, clinics, and the production of GMP psychedelic molecules. Discord feels like a great forum for anonymized communities for psychedelic Integration.

Insurance: Psychedelic therapy is super expensive. But outside of prescription pathways there is no way to easily cover costs through insurance. Currently Enthea, a non-profit, is the only organization seeking to solve this problem. Web3 is already opening up new markets for every type of insurance policy you can think of.

Learn to Earn: It’s estimated that we’ll need over 100,000 trained therapists to provide care for the 1 million patients estimated to seek psychedelic assisted therapy by 2031. ‘Learn-to-earn’ is already a growing field within the Web3 industry and community (eg. Coinbase Earn or rabbithole.gg), where people complete learning paths or contribute to decentralized apps to earn tokens. Could we create a similar model that builds communities through peer-to-peer education sessions aligned with different preparation and integration methods?

Web3 Entheogen Supply chains: What would Everledger look like for psychedelic compounds? A successful rollout of MAPS expanded access will depend upon many different factors. One such factor is  infrastructure and supply chain management, which could be built on a blockchain. Similarly, entheogenic materials coming from the Amazon could also be tokenized and tracked through blockchain, providing transparency to origin and ownership to indigenous people.

Tokenized Intellectual Property: As mentioned above, a patent, by its design, is intended to funnel the entire value of a new idea back to the owner of the patent. It has an inherent centralizing effect. By exploring different models for tokenized IP we can develop new ways to distribute ownership and pool knowledge, accountability, resources and capital.

Decentralized Reputation Systems: With a growing number of practitioners and patients exploring psychedelic experiences for the first time, online trust and reputation is critical. Decentralized reputation systems have the promise to restore trust in online marketplaces. Such systems could help consumers discern the validity of content or content creators and give more trust to community-led-research and studies, regardless of the platform they are on. 

That’s it for now. We look forward to sharing the journey.

Will and Phil ✌️