Real Protocol: Rule-sets for a Self-Organizing Economy
"The power to do good is also the power to do harm; those who control power today may not tomorrow, and thus rules, rather than discretion, offer a more consistent path to liberty and prosperity."
Executive Summary
Real Protocol is a new framework designed to address fiscal and monetary challenges in the global economy through streamlined, rules-based policy.
The 1944 Bretton Woods conference marked a pivotal attempt to construct an international monetary system that could support global trade while maintaining economic stability. While the resulting system enabled unprecedented global development, its eventual breakdown in 1971 ushered in a dollar-based system facing systemic imbalances, banking fragility, and unsustainable fiscal conditions across nations.
Contrary to fears over the end of dollar hegemony, the primary threat to the US and Western economies is structural in nature. By simplifying tax regimes to a wealth tax and a consumption tax, Real Protocol automates fiscal sustainability, price-stability and countercyclical incentives, creating the potential for a consensus-driven, rules-based financial system.
The decentralized protocol combines advanced cryptography with automated tax collection and real-time price aggregation that anchors price-stable currencies. It introduces mechanisms to incentivize more cost-effective government operations and higher-quality growth in the real economy.
Case Study: Fiscal Balance Through Dual Tax Reform
This simulation demonstrates how a simplified dual tax system—combining a 2.5% wealth tax and a 15.47% Value Added Tax (VAT)—could achieve fiscal balance while dramatically simplifying the US tax regime.
Rather than complex tax codes, the system applies uniform rates to two clear bases:
- A 2.5% tax on total wealth ($132 trillion), yielding $3.30 trillion
- A 15.47% VAT on consumption ($19 trillion), yielding $2.94 trillion
This structure automatically adjusts tax rates in response to government spending, ensuring fiscal sustainability. A dynamic wealth tax on financial assets excluding debt obligations could lower interest rates on government debt. It could also target 0% rates, thereby ending the current problematic paradigm of interest-based public finance.
The following diagram illustrates the fiscal balance achieved through Real Protocol’s dual tax system:
Full paper forthcoming.