Podcast notes – Cosmos App Chain Thesis – Blockworks (Zaki Manian, Jack Zampolin)

Podcast: Blockworks Empire
Guests: Zaki Manian, Jack Zampolin

2015 in crypto – no one cared, maybe a bit of enterprise blockchain stuff
An email list – Google Group – crypto economic research, “Discord for old men” – Vitalik was on it, CEOs of early crypto cos
*Hosted one of most important events in crypto history – Vitalik didn’t take PoS seriously until he saw Jae’s Tendermint presentation, Nakamoto PoS

Ethan Buchman liked it, began to collab with Jae

Cosmos isn’t Ethereum killer, just as old
Jae’s mission was to make PoS be taken seriously

In 2016 – Jae and Ethan wanted to do public chain

Slashing was Vitalik’s idea – Jae helped solve it in a simpler way

Lots of what’s hot now were Cosmos early ideas – liquid staking, PoS

Introduced Atom in 2019
Early 2020 – Jae wasn’t easy to work with (eventually stepped down), Ethan wanted to quit, Zaki tried to keep things together

2019/2020 – once Cosmos went live, Binance adopted Cosmos SDK; didn’t need Tendermint anymore – Jack and Zaki quit, tired of working with Jae

Santi – Tendermint is battle tested consensus mechanism; Binance, Terra used it; Facebook re-wrote it in Rust for Novi / Libra

*Strong culture of testnets in Cosmos – influenced rest of crypto culture

Single smart contracting blockchain is a lot like a super computer – but there’s a max speed to it, can’t put all of the world’s apps on it

*App chain thesis – to meet demands of 8B people, need lots of chains that talk to each other, that’s Cosmos IBC
It’s about full stack optimization

Every app doesn’t need its own validator set – in shared security, Cosmos validators will validate your chain for you – use Cosmos toolkit, put up a proposal, and validators start running the software, earn rewards to do it

Cosmos believes in ship and iterate – get v1 out, get users, build on it
V1 – can support 10-20 chains – full validator set
V2 – will do partial security / partial validator set

Each chain has different incentive model to reward validators and early token holders

Cosmos top of everyone’s minds now – because of last 2-3 years in crypto, builders understand full-stack optimization and what’s needed
Iteration cycles are slower – 6-9 months for each

DYDX migrating over to Cosmos
Initially built on top of StarkX – similar to IBC; doing $1B of daily volume
But running centralized orderbook – tenuous regulatory position, not censorship resistant
Moving to Cosmos now – can integrate token, censorship resistance, Tendermint + IBC

Once app reaches product-market fit – can easily leave Cosmos Hub – don’t want to build barriers to prevent their departure, but hopefully shared security model is worth it to stay

Currently every Cosmos chain runs own validator set – doesn’t have true shared security yet

Every Cosmos Hub proposal gets 60-70K votes – very high participation

Cosmos is going to kill fat protocol thesis – popular meme
As Cosmos grows, app layer will accrue most value
Original whitepaper barely says anything about Atom token – in 12 days they’ll present Atom 2.0 tokenomics
Hate Polkadot parachain mechanism
Olympus Dao, Liquid Lido, flashbots – from these pieces they’ll construct Atom 2.0
Atom 2.0 will benefit from the growing value of the shared security – but there’s no requirement to use Atom token at all

Built a lot of public goods infrastructure

Will share Atom 2.0 at Cosmoverse in 12 days
Will make EIP-1559 look like a joke
Something like parachain auctions but aligning with new tokens appearing in ecosystem – something better than airdrop mechanism

If not working on Cosmos, what would they work on
Jack – individual chain scaling – thought what Solana was doing was cool, DB optimization / consensus optimization
Zaki – privacy, MEV, wants to see ETH rollup layers become peers to Cosmos Hub – feel like doing Cosmos again, wants to build awesome infrastructure

Jack – wants to see non-Cosmos chains using IBC

You don’t have to use Cosmos SDK to build Cosmos chains – examples include Penumbra, Anoma (sp?)

Every step of Tendermint consensus algorithm is programmable (ABC++?)

Unleash app chains to innovate, solve MEV

Jason – “All roads in blockchain lead back to MEV”

Zaki – wants to speak native IBC to Ethereum – instead of Gravity Bridge (related to Sommelier?)

Most misunderstood about Cosmos – like Ethereum, more of a developer collective, fractal relationships
Strange and wonderful characters
Every validator runs its own influencer biz
Funds ask him how to get onboard – it’s quite confusing – no agreed / simple way

Santi: Starbucks partnership with Polygon – Ryan Watt has been very good at bringing enterprises onboard; Like VHS vs Betamax debate – best tech doesn’t necessarily win
Zaki: would kill himself if he had to run the BD deal to bring Starbucks onboard – “existential crisis every day”
Polygon is fork of pre-Cosmos Hub launch of Tendermint

“If Atom 2.0 is not fire, you can bring me on and just yell at me” – Zaki

Never be for or against

Sometimes you read a poem that seems to open a portal into a world of wisdom beyond us mortals. Maybe this is such a poem.

—

至道无难
zhì dào wú nán
the Way is only difficult

唯嫌拣择
wéi xián jiǎn zé
for those who pick and choose

但莫憎爱
dàn mò zēng ài
Do not like, do not dislike

洞然明白
dòng rán míng bái
all will then be clear

毫厘有差
háo lí yǒu chā
Make a hairbreadth difference

天地悬隔
tiān dì xuán gé
and Heaven and Earth are set apart

欲得现前
yù dé xiàn qián
If you want the truth to stand clear before you

莫存顺逆
mò cún shùn nì
never be for or against

违顺相争
wéi shùn xiāng zhēng
The struggle between ‘for’ and ‘against’

是为心病
shì wéi xīn bìng
is the mind’s worst disease

Wences Casares’s must read document about bitcoin

Wences is widely considered the OG of bitcoin adoption and evangelism in Silicon Valley circles. He bought and began making bitcoin’s case in 2011. Here’s his Wikipedia.

He wrote a 15 page PDF that he shared privately with friends and potential investors. Milk Road kindly published it here.

There were a few passages that I felt compelled to share. Highly recommend reading the whole thing to understand why bitcoin matters, and a practical recommendation for how to invest.

—

HIGHLIGHTS

To illustrate the power of these qualities, consider that today the only standard of value and settlement that the United States of America can be certain that The People’s Republic of China (PRC) will not discriminate access to, censor transactions from or dilute the value of is the Bitcoin Blockchain.

The only innovation of the Blockchain is its sovereignty, the only sovereign Blockchain so far is the Bitcoin Blockchain and the fuel that keeps it sovereign is the Bitcoin currency.

If Bitcoin succeeds it may be a global non-political standard of value and settlement. The world already has a global non-political standard of length in the meter, and a global non-political standard of weight in the kilo. Could you imagine a world in which we changed the length of the meter or the weight of the kilo regularly according to political considerations? Yet that is what we are doing with our standard of value.

However, the history of protocols is very different. Once a protocol gets established it almost never changes. For example, we are using IP (Internet Protocol, or just “the Internet” colloquially) for almost all transport of data (until the late 90s cisco routers used to route dozens of protocols, today they only route IP). We are using only one web protocol and only one email protocol. The email protocol, for example, is quite simple and limited.

Lecture notes – George Yeo – Geopolitics and Singapore, US, China

We’re in transition – old world giving birth to new world; will last many years

Trade was de-politicized – made possible by collapse of Soviet Union – but that’s over now
Countries broke off to form sovereign states – Gorbachev was not strong leader, Yeltsin was drunk often
Western tide flowed east ward
When Putin took power, he started to fight back
He knew Russia couldn’t fight on population, but could on weaponry / technology – invested in this

Ukraine war marks limit of flow of the Western tide eastward
Now it’s an inter tidal period
May see situation similar to Korean Peninsula
More or less ceasefire, de facto partition that may last decades

Rise of China
Creates insecurity in Anglo Saxon world
Five Eyes (intelligence cooperative) used to be a very quiet – decided Huawei was great threat – gave joint media presentation – very unusual for an industry that’s always quiet, discreet

Xi Jinping likes to say “changes not seen in 100 years” – keeps repeating it
China’s US ambassador gave speech after retirement – “America’s ill will for China has no bottom line and underlying it is racism”
“Never fight a war you cannot win, never fight a protracted war”
It was a scripted speech – signal from China leadership

China is preparing for war not because it wants it – but to avoid it, you must prepare for it
Plan on basis that you can withstand all attacks – then there’ll be peace

3 domains of warfare that China’s worried about
1) Nuclear warfare – must have deterrent capability; US cannot prevail in South China Sea; several hundred is not enough, dependent on strategic submarines which is why South China Sea is so important; game going on there; China will increase warheads to 1K, have counter strike capability
2) Cyberspace – fight will be from outer space to underground; assume undersea cables can all be tapped; NASA has said China wants to take over the moon, China space industry making rapid progress
3) Every dynasty has had epidemics – China recorded over 300 epidemics; lots of experience to handle; traditional way to handle is lockdowns; during SARS China locked down and stopped it; even have lockdown procedures for harems and inner palace / princes!; Shanghai lockdown was traumatic but can’t be helped – it’s a rehearsal for something worse in the future

These are what XJP means by challenges not seen in 100 years

China thought could have working relationship with US – but now it’s “don’t assume they won’t attack”

China wants more time, they are growing stronger

US has not been this divided since Civil War – which was decided by violence

Greatest uncertainty in world today is US politics – every institution has been weaponized and politicized

Democrats may face defeat in midterms

For China the big issue is Taiwan
Basis of US-China relations starting with Nixon was based on one China
Every US admin thinks Taiwan is a card, but it’s not — it’s the whole basis

Deep state is committed multi year program to fight China – won’t change based on Democrats or Republicans

Singapore very reliant on US for weapons, finances – best bet is ASEAN; can hide behind ASEAN position

As trade minister, most important was ASEAN – stronger it is, the more Singapore has buffer
If Singapore + Indonesia are aligned, can have ASEAN agreement
Impressed by Indo’s G20 leadership now

Globalization has crested, it’s decoupling because strategically necessary
Every country must protect itself

Stormy period ahead

Podcast notes – Peter Thiel on Uncommon Knowledge – “When do we go from wisdom of crowds to madness of crowds?”

Peter Thiel – Stanford + Stanford Law, PayPal cofounder, first Facebook investor

No ticker tape parades in NYC for individuals in 21st century – now it’s for groups like “healthcare professionals”, before it was for individuals like Charles Lindbergh

Prevailing view is heterodox thought no longer allowed, scared of putting individuals on pedestal

Believes in classic libertarian values – but it can be somewhat cowardly way of saying you’re a loser, you wanna be left alone
Acceptable for him to support Ron Paul for president, much more dangerous to support Donald Trump

When do we go from wisdom of crowds to madness of crowds?

If you win 99% of election, you’re in North Korea – you haven’t arrived at absolute truth but you’re in an insane totalitarian place

West has 2 philosophical traditions – Greco Roman and Judeo Christian

Covid – all kinds of things were asserted too dogmatically – and took hairpin turns

Science fights 2 front war against excess skepticism and excess dogmatism
Science thinks of itself as more fighting against dogmatism – “choose your enemies well because you’ll soon be like them” – now “science” can seem like a dogma, post-modern

Case of Jay Bhattacharya – example of sheer insanity – tenured Stanford professor, libertarian and heterodox thinker
He wrote article saying “there’s no high quality studies that prove wearing masks is effective” – triggered people, crazed campus reaction
Nuanced nature made it dangerous – supposed to think in clean bright line ideological terms
If you’re not allowed to say something, he has suspicion that not only should you say it, it’s simply true

Fauci: “When people criticize me, they’re really criticizing science because I represent science”
Science has become quite opposite from the exploration, open-debate that it should be
Real science doesn’t need to be called “science” – real chemistry, physics, etc – but eg “climate science” is like a tell in poker, exaggerating because it’s not quite there
Science with capital S seems like antonym of science lower case S

20 years of telling ourselves lies about Afghanistan – that it’s going wonderful, we’re nation building, form of epistemic closure
Believes Trump had a fundamentally correct view of Afghanistan – Trump said “Afghanistan is a shit country” – not rigorous or nice thing to say, but “when you limit yourselves to saying something that’s very nice, you can’t actually talk about anything at all”

Political correctness as misdirected form of politeness

Saying anything you want to — but remain civil

Fed Reserve
Inflation is common sense and everyone can see it – gas bill, grocery bill
Another case of epistemic closure – Fed seemed like last institution to register that inflation was accelerating
One of our most sacred institutions

MMT – everyone’s gravitated towards it at precise moment it should be questioned and challenged
Economics risks being very politicized – can twist the answers and go in strange direction
Not very precise a science, but when you violate everything, things will eventually go wrong

The hour is late for fiat money – clear signal is Bitcoin / Satoshi Nakamoto
Bitcoin is revolutionary anti-fiat money thing, a late warning like Trump’s warning on Afghanistan

Broken market
Fed buying all the bonds
Inflation showing up in assets, crypto, art, stocks, bonds
If inflation is 6% and rates are 0%, that’s still 6% confiscation of your cash / earnings

Davos – he stopped attending – people are only there as representatives of corporations and governments – it hit him that there are no real individuals in the room
Davos as sense of global government, participate as part of larger structure
Wisdom of crowds – center left politically correct thing
Not a truth seeking place, not maximum surface area of debate
It’s a world with no dissenting views
Doesn’t believe we’re at end of history

China
Ray Dalio says it’s like family with strict parents
He frames China since 2013 as Putin is positive role model (vs when they used to believe Soviet Union was a negative role model)
China works for one individual – Mr. Xi
Doesn’t work for anyone else anymore
Jack Ma as remarkable example
Tech companies have been clobbered
No individuals allowed, no wealthy people allowed
Back to totalitarian playbook
Quite different from China in 70s, 80s
China like much worse version of Japan – for many decades it had great model of copying and catching up, and then hit the wall – China seems like stranger more dysfunctional version of Japan
For most part, China has not overtaken us
2021 – feels like China has gone haywire, more Marxist economy, totalitarian escalation
Friend said “Xi as best thing happening to West”

Why are we in such a collectivist moment (in America)?
Something went wrong, not an idiosyncratic thing, symptomatic of bigger problem
Should have ticker tape parade for Satoshi – so much healthier sign for country – just symbolic but symbols are important

Is renewable possible? Or is it just historic decline
He believes it’s not historicism, inevitable trends – it’s individuals that matter

Advice to new grads:
Can start companies
Shortage of talent in government
Society feels increasingly on auto-pilot — but he would take opposite bet