Highway to the Banana Zone

I think this cycle (2024 and 20205) could be the last great crypto bull run. A bull run that surprises everyone, with price action more like 2017 than 2020, and a prolonged and absolutely silly banana zone (to borrow Raoul’s term).

I really like this thread from Yano: https://x.com/jasonyanowitz/status/1762878540280946737?s=46

Using his framework, we’re now between stage 2 (excitement) and 3 (euphoria). We’re seeing many signs of euphoria already: break ATHs; $500M VC funds; athletes & artists. Stage 3 will accelerate as soon as bitcoin re-captures its ATH (~$73K) and I believe we’ll fly — almost teleport — directly to stage 4, which in Yano’s words:

This stage could also be described as Insanity. Nothing makes sense anymore…A crypto person buys a sports team…Justin Bieber joins a decentralized social platform.

Another good framing from Qiao:

top signs of the last cycle, eg celebrities endorsing crypto, r too obvious to work again this cycle
think 10x bigger
this cycle itll be something like mega pension funds or sovereign states yolo into btc

Source: https://x.com/QwQiao/status/1795545263727120778

Hard agree. El Salvador is showing impressive returns (financial and reputational) to their BTC adoption strategy. Nation states are investing in BTC mining. Sovereign funds are rumored to be quietly accumulating (Saudi Arabia, Norway, Kuwait).

The game theory is unfurling, and increasingly unavoidable as government debt continues to rise and fiat currencies continue to subsequently weaken.

Look at gold’s current run. Look at G7 long term bond yields.

And finally from Gwarty:

I am horrified to think about what the top signals are going to be this cycle

Source: https://x.com/GwartyGwart/status/1795896460602409076

Some more signs the highway to the banana zone is coming, and is gonna be quite a ride:

  • The US presidential race hasn’t begun in earnest, yet crypto is already a meaningful wedge issue (SAB121, Trump’s endorsement, FIT21, ETH ETF)
  • Fed rate cuts have yet to start (expectations for the first cut in late Q3/Q4)
  • Mainstream has started buying and announcing bags in earnest (Bitcoin ETF 13F filings, Fink and Blackrock heavily leaning in, Chamath on All-In)
  • We haven’t even seen this cycle’s SBF, Do Kwon, Alex Mashinsky… (or have we)

And how will we know we’re in the zone? Some wild signals:

Last cycle darlings get a rescue pump (Doge passes ATH at $0.68 / $100B market cap, on rumors of potential Dogecoin ETF; NFT pumps including yes, even those poor Apes)

Crypto influencers become nominal billionaires (this cycle’s main characters like Ansem… puncher’s chance to Andrew Tate…). Probably a non-crypto influencer launches a billion dollar coin… Iggy may get lucky if she keeps grinding and memeing (just watch the fomo that will result)

Bitcoin briefly top ticks gold’s market cap (a hand wavy $10T which implies a per bitcoin price of ~$500K USD)

Ethereum briefly top ticks Bitcoin’s market cap (if this happens, it would happen AFTER bitcoin top ticks gold, then crashes, then ETH has an epic run)

Punks surpass $1M (~10x today’s prices)

Raoul Pal is anointed Wall Street’s crypto pied piper, briefly obtaining Bill Ackman and Stanley Druckenmiller levels of influence (think Novogratz but 10x bigger, on magazine covers, TV mainstay, all of that)

A nation-state on the level of UAE or Brazil or Switzerland publicly announces multi-B crypto holdings (could be Bitcoin, could be Ethereum, could be a surprise like Ripple hah) and a set of policies to attract crypto natives and encourage local crypto adoption

The AI hype becomes completely subsumed by crypto; “AI-crypto” projects and narratives dominate non-crypto AI; OpenAI / Sama join the party with some superficially promising but substantively meaningless announcement

Massive M&A in crypto space from miners to exchanges to protocols (Robinhood’s $200M purchase of Bitstamp is an appetizer)

One of the FAANG/MAMAA tech giants becomes first to stake brand and reputation into crypto (my bet is on Meta because of 1, their recent support for open source AI, 2 their failed attempt with Libra, and 3 Zuck’s ambition and continued ability to reinvent)

A meaningful number of provincial / local governments start to buy regulated crypto products; US states are heavily indebted so I’d expect players like Texas, or Hawaii, or maybe at municipal / county level to participate

Where do you think I’m wrong? What am I missing? I plan to add more stuff here as we get deeper into the cycle.

Recent startup, tech, AI, crypto learnings: Industrial Revolution freed people from using muscles, AI will free people from using brain

“Learning always wins,” said Jones. “The history of AI reflects the reality that it always works better to have a model learn something for itself rather than have a human hand-engineer it. The deep learning revolution itself was an example of this, as we went from building feature detectors by hand to letting neural networks learn their own features. This is going to be a core philosophy for us at Sakana AI, and we will draw on ideas from nature including evolution to explore this space.”

Catastrophic forgetting: a scary name for when a model forgets some of its base knowledge learned in pre-training during fine-tuning. If you run into this, there are a few ways to mitigate it.

Launch memecoin (no roadmap, just for fun) → Raise Capital → Forming a tribalistic community early on → build apps/infrastructure → continually adding utility to the memecoin without making false promises or providing roadmaps

One developer already created a Slack workspace where he and his friend hang out with a group of bots that have different personalities, interests, and skills.

In reality, Navboost has a specific module entirely focused on click signals.
The summary of that module defines it as “click and impression signals for Craps,” one of the ranking systems. As we see below, bad clicks, good clicks, last longest clicks, unsquashed clicks, and unsquashed last longest clicks are all considered as metrics. According to Google’s “Scoring local search results based on location prominence” patent, “Squashing is a function that prevents one large signal from dominating the others.” In other words, the systems are normalizing the click data to ensure there is no runaway manipulation based on the click signal.

Industrial Revolution largely freed people from using brawn
AI will largely free people from using brain

Unfortunately there are absolutely no solid predictions we can do about this stage. At the end of the day the startup just has to be lucky enough to start close enough and navigate optimally enough to hit its first discovery before company disintegrates from lack of funding or team morale. The process can be as fast as few months or as long as a decade.

Six of the eight web companion products bill themselves as “uncensored,” which means users can have conversations or interactions with them that may be restricted on platforms like ChatGPT. Users largely access these products via mobile web, as opposed to desktop — though almost none of them offer apps. On average, 75 percent of traffic to the uncensored companion tools on our web list comes from mobile.

🍰 Only 4 out of 70+ projects I ever did made money and grew📉 >95% of everything I ever did failed📈 My hit rate is only about ~5%🚀 So…ship more — @levelsio (@levelsio)

Vitalik said L3 good for customization (L2 for scaling); L3 good for specific kinds of scaling

It’s inspiring to know at any moment in time there is an infinite number of true statements for new startups to discover and further expand our collective system. Gödel’s theorem is not really about our limits: it’s about possibilities always waiting to be discovered. The process is certainly hard and alien to us.

No nation has ever become the major power without a clear lead in technology, both civilian and military. From the Roman legions, to the naval powers of Portugal, Spain and Great Britain, to Germany in World War I and the US post-World War II, great power status was achieved by those nations that were able to harness their technological advantage for holistic development of their civilian and military capabilities.

This holds at a higher level of conceptual abstraction: looking near a feature related to the concept of “inner conflict”, we find features related to relationship breakups, conflicting allegiances, logical inconsistencies, as well as the phrase “catch-22”. This shows that the internal organization of concepts in the AI model corresponds, at least somewhat, to our human notions of similarity. This might be the origin of Claude’s excellent ability to make analogies and metaphors.

Language differences mean that Chinese firms really are in the hot seat for developing domestic AI products. OpenAi’s most recent version of ChatGPT, GPT-4o, has real issues in China. MIT Technology Review reported that its Chinese token-training data is polluted by spam and porn websites.

Metaplanet becomes Japan’s top-performing stock this week, hitting a +50% daily gain limit for two consecutive days. The company plans to increase its authorized shares by 300% to acquire more BTC for its reserves.

Community is made of people, culture is made up of shared memes, community can be transient, culture is much more persistent, “community” can be formed with a free airdrop, culture can only be formed with a sustained commitment to creating a common story.

Every memecoin is an exquisitely precise ad, a self-measuring barometer of attention: the price jumps if people talk about the memecoin and drops if they don’t

McLuhan believed transformative new technologies, like the stirrup or printing press, extend a man’s abilities to the point where the current social structure must change to accommodate it. Just as the car created the Interstate Highway System, the suburb, and the oil industry, so the stirrup helped create a specialized weapon system (knights) that required land and pasture to support it and provide for training and material.

Wall Street is not going to stand idly by while Tether makes more money than Goldman Sachs.

Terminator: In three years, Cyberdyne will become the largest supplier of military computer systems. All stealth bombers are upgraded with Cyberdyne computers, becoming fully unmanned. Afterwards, they fly with a perfect operational record. The Skynet funding bill is passed. The system goes online on August 4th, 1997. Human decisions are removed from strategic defense. Skynet begins to learn at a geometric rate. It becomes self-aware 2:14 AM, Eastern time, August 29th. In a panic, they try to pull the plug.

“Hyperscalers”, which are all looking to create a full stack with an AI model powerhouse at the top and hardware that powers it underneath: OpenAI(models)+Microsoft(compute), Anthropic(models)+AWS(compute), Google (both) and Meta (increasingly both via doubling down on own data center buildout).

Stability AI founder recently stepping down in order to start “decentralizing” his company is one of the first public hints at that. He had previously made no secret of his plans to launch a token in public appearances, but only after the successful completion of the company’s IPO – which sort of gives out the real motives behind the anticipated move.

An additional limitation of transformer models is their inability to learn continuously. Today’s transformer models have static parameters. When a model is trained, its weights (the strength of the connections between its neurons) are set; these weights do not update based on new information that the model encounters as it is deployed in the world.

All this equipment and processes consume large amounts of energy. A large fab might demand 100 megawatts of energy, or 10% of the capacity of a large nuclear reactor. Most of this energy is used by the process tools, the HVAC system and other heating/cooling systems. The demands for power and water are severe enough that some fabs have been canceled or relocated when local utilities can’t guarantee supply.

If we considered things in “capital cost per component” terms, and considered transistors as individual components, semiconductor fabs are actually probably among the cheapest manufacturing facilities.

Build for where models will be in 1-2 years, not where they are today. Bake the challenges of inference at scale into your roadmap. And don’t just think in terms of prompting one mega model and getting an answer back. Plan for the iterative systems design, engineering, and monitoring work needed to make your AI product the proverbial “10x better” than existing alternatives.

Ethereum’s ICO returns were 1.5x higher than available on market.Solana’s seed round returns were 10x higher than those available on market. OP’s seed round returns were 30x higher than those available on market.

Across every major ETH NFT project, more than 3/4 of all NFTs haven’t traded once in 2024.
-95% of punks
-93% of world of women
-87% of BAYC
-87% of MFers
are just sitting in wallets through this year’s moves.

We have to start by understanding the really important parts and building that core functionality first, then building additional features around that core. When you’re building consumer products, getting serious leverage in the marketplace (distribution) is the most important first order goal, so you need to accomplish this as quickly as possible and then shift gears to build second generation features.

Every VC fund with a consumer investing team is one foot in, one foot out of consumer. Even when startups hit the desired milestones & metrics, investors are still unclear which to bet on because the past decade of consumer investing hasn’t yielded many big wins, barriers to entry are low, and AI makes the future of human-tech interaction uncertain.

Angel investing, especially with small checks, is only good for two things: 1) getting into contractual friendships with founders you respect 2) building a track record for being a full-time venture capitalist (raising a fund or joining one).

Mustafa Suleyman has argued that the real Turing Test that matters is whether a given AI can go off and earn $100,000 for you on the internet. I would argue the test that’s more relevant — and consequential — is whether an AI can empty your inbox.

From dataset Google doc memo:
“Few know how to train efficient models” meant “Few know how to craft informative datasets.”

all the consumer graphics cards on the Internet could not compete with a mere thousand GPUs in a supercomputer.

Data cleaning, data curation, and data synthesis do not have this problem: dataset creation is a series of (mostly) parallel operations. This makes dataset creation perfectly suited to distributed computation, as one finds on AI blockchains. We can build good datasets together.

Web2 sports betting losing market share to memecoins

Fabs must limit vibrations to several orders of magnitude below the threshold of perception, while simultaneously absorbing 100 times the mechanical energy and 50 times the air flow as a conventional building.

An interesting phenomenon evident blockchain ecosystems is that the networks with the stickiest communities are the ones where a broad base of developers and users had an opportunity to benefit financially from their participation. Think Ethereum and Solana, which have two of the strongest developer communities: the native tokens were publicly available at a much lower price to the current value. In contrast, ecosystems where network tokens launch at a highly efficient market price tend to struggle to retain a passionate community of developers and users, to the long-term detriment of the ecosystem.

Bitcoin surpasses 1 billion confirmed transactions, averaging over 178,000 transactions per day since its launch in 2009.

We are relatively cheaper and don’t bill by the hour. We get more done. We hire and fire firms. CEOs trust _us_.
As a result, in-house lawyers have grown 7.5x times the rate of other kinds of lawyers the last 25 years. The role of “product counsel” boomed, just like the role of product manager in this time.
Today Google employs 828 “product counsel.” That’s more than only the biggest law firms.

Number one predictor of job retention is whether they have a friend at work

We don’t sell saddles essay
-The best — maybe the only? — real, direct measure of “innovation” is change in human behaviour. In fact, it is useful to take this way of thinking as definitional: innovation is the sum of change across the whole system, not a thing which causes a change in how people behave. No small innovation ever caused a large shift in how people spend their time and no large one has ever failed to do so.
-Because the best possible way to find product-market fit is to define your own market.

Transformers’ fundamental innovation, made possible by the attention mechanism, is to make language processing parallelized, meaning that all the words in a given body of text are analyzed at the same time rather than in sequence.

I’ve been making chatbots since the days of AI Dungeon, and have seen the cycle multiple times. A new site appears with low censorship and free content generation. It grows a user base, starts introducing more censorship, raises prices, and before long it becomes unusable and people move on to the next one. Poe has been around for longer that most and I’m only seeing improvements on it. Plus it’s operated by Quora, which I think will give it added sustainability.

Friendtech is uniswap for social tokens

Steve Jobs figured out that “you have to work hard to get your thinking clean to make it simple. – Taleb

I eventually think these open-source LLMs will beat the closed ones, since there are more people training and feeding data to the model for the shared benefit.
Especially because these open source models can be 10 times cheaper than GPT-3 or even 20 times cheaper than GPT-4 when running on Hugging Face or locally even free, just pay electricity and GPU

In a 1985 interview Wozniak posited: “The home computer may be going the way of video games, which are a dying fad” – alluding to the 1983 crash in the video game market. Wozniak continued:
“for most personal tasks, such as balancing a check book, consulting airline schedules, writing a modest number of letters, paper works just as well as a computer, and costs less.”

He seemed well aware of the heretical nature of his statements, telling a reporter: “Nobody at Apple is going to like hearing this, but as a general device for everyone, computers have been oversold”and that “Steve Jobs is going to kill me when he hears that.”

Bonus (Reality Check): What Are The Odds You Get Acquired Within 5 Years for a Good Price? Around 1%-1.5% by Jason Lemkin
Data on 3,067 startups founded in 2018. The takeaway: It’s the second 5 years where the real value starts to compound. Startups are a long game

The subset of parameters is chosen according to which parameters have the largest (approximate) Fisher information, which captures how much changing a given parameter will affect the model’s output. We demonstrate that our approach makes it possible to update a small fraction (as few as 0.5%) of the model’s parameters while still attaining similar performance to training all parameters.

Excerpts from an amazing essay about what makes startups unique (Godel Incompleteness for Startups)

It’s definitely an oldie (2013) but still very much a goodie

Full link: https://skibinsky.com/godel-incompleteness-for-startups/

Excerpts:

As soon as a startup starts operating in the real world, the vast majority of factors will be outside of a startup direct control or even influence, while having absolutely dominating impact on that startup eventual outcome

Any … formal system capable of expressing elementary arithmetic cannot be both consistent and complete. In particular, for any consistent, … formal system that proves certain basic arithmetic truths, there is an arithmetical statement that is true, but not provable in theory

Infinity will always be far too rich, far too dense, far too big to be chained by anything countable – formal systems, software, and finite proofs. Better systems, better software can grab bigger chunks from infinity. Yet by expanding themselves they are no closer to fully capturing the potential variety hidden in continuum infinity. They just moved the boundary between “knowledge” and “unknown” further out.

The most brilliant minds already know pretty well about deficiency of any given formal system. The legendary Charlie Munger stresses the discipline of developing multiple overlapping mental models when developing his own formal system for investment. He understands no single system no matter how complex will give him the full truth

As an important side note, lets consider if time travelers move deeper into the past, to pitch Henry Ford or Nikola Tesla. However in this case the whole syntax of his proposition makes no sense. Computers do not exist, web and internet does not exist, everything he is saying is meaningless on a syntactical level. His statements belong to total unknowns for inventors of past centuries. Yet for Bill Gates, it represents a true yet un-provable statement.

Unfortunately neither old systems nor newly expanded ones like the one Larry helped create has knowledge about building social graphs or maintaining friend connections. There are a few companies out there – Friendster and Myspace, their whole capitalization is less then Google’s sushi budget

Discovery: The product or service the team builds is released to the real world. Real world complexity is continuum infinity, it’s not bound by any formal systems. What market “wisdom”, startup mentors, university professors, and plain old “common sense” knows is irrelevant – that’s formalization of reality, not the reality itself

Unfortunately there are absolutely no solid predictions we can do about this stage. At the end of the day the startup just has to be lucky enough to start close enough and navigate optimally enough to hit its first discovery before company disintegrates from lack of funding or team morale. The process can be as fast as few months or as long as a decade.

The process of formalization can take decades. As long as a startup has growth, especially non-linear growth driven by new products, the formalization is never finished. Yet sooner or later the process of formalization of any big discovery must end. Facebook will add the last unsigned user and will be permanently bound by birth rate. Everybody will own some version of the iPhone. Amazon’s catalog will carry every single item manufactured on the planet. The new expanded system that includes newly discovered true model might be big, yet it’s still a formal system, it’s still finite

Tech companies rarely die unless extremely badly mismanaged, they just move deeper and deeper into legacy part of the stack, as new formal systems keep being added to the outer shell.

Zombie startups represent small Gödel-statements. They are the small dots in the 3-area chart we used above. Gödel’s theorem only proves they exist – it doesn’t prove anything about their size or distribution. There will be Gödel statement for $100 opportunities just like there would be a few for $1B ones.

It’s inspiring to know at any moment in time there is an infinite number of true statements for new startups to discover and further expand our collective system. Gödel’s theorem is not really about our limits: it’s about possibilities always waiting to be discovered. The process is certainly hard and alien to us.

May TV and movies: highlight was definitely Sword of the Stranger movie (also Kaiji, Champloo, Civil War)

Kaiji S1 — rewatched for first time in many years, I forgot the plot moves soooo slowwww but it’s such a great premise and the real bright spot imo is the s2 storyline where he’s in the prison work camp (degenerate gambler but he stands up for losers but he himself is kinda a loser but he’s a real genius at spotting scams but he still makes idiotic life decisions)

Samurai Champloo — also rewatched for first time in years after seeing it recommended on YT; music + style + art are better than I remembered; but story was worse — too many side quests, not enough character growth / change, not enough progress towards a rather mediocre main storyline

Sword of the Stranger (2007 movie) — the best thing I’ve watched in months; amazing that it came out almost 20 years ago; great characters, great relationships, fast moving plot, fun historical elements but it’s kinda sad that so few Japanese anime have any nuanced depiction of Chinese whatsoever (though I suppose the same can be said for Chinese media depiction of Japanese)

Monsters by Gareth Edwards (2010) — creative low-budget flick; District 9 vibes; good editing, tension, cinematography, acting; but wanted monsters and scares and got very little of either

Civil War by Alex Garland (in theater) —- disturbing premise, with powerful cinematic moments; similar cast and vibes to his other work (eg, Devs, Annihilation, Ex Machina), including the emo soundtrack and melodramatic segues

Garouden (Netflix) — Baki-lite, I’d rate it 5/10 at best but honestly I watch any and every pvp fighting anime (including the BEST EVER Hajime no Ippo and Kengan Ashura); subpar on animation, fight technicals, character dev, plot, but at least the protag fights a giant malevolent bear…

Garouden

Health and fitness learnings for May: a 10 minute walk after a meal can reduce glucose response by 30-35%

Stop Eating All Day (and snacking your kids): Most Americans eat 11 times over a 15-hour period – this is stressful for the body; the body needs time for insulin and glucose to come down

The frequency of aerobic bouts seemed to be more important for their association with health outcomes than the overall duration of daily activity. Concordantly, recent research suggests that short bouts of physical activity can have a strong health-promoting effect

“Watching the news is how you stay on top of other people’s agendas. Taking a walk is how you stay on top of yours.” — Johnny Uzan

https://x.com/ChrisMasterjohn/status/1791625562466779494 — Creatine is needed to spread the impact of mitochondrial ATP production throughout the cell, including in the nucleus, where it is needed for DNA duplication, gene expression, and DNA repair.

10m walk after meal can reduce glucose response by 30-35% (source)

As basic as this sounds, full exhalations are seldom practiced. Most of us engage only a small fraction of our total lung capacity with each breath, requiring us to do more and get less. One of the first steps in healthy breathing is to extend these breaths, to move the diaphragm up and down a bit more, and to get air out of us before taking a new one in.

Meditation (mean rating = 5.8), bright lights in the morning (5), cold shower (4.7), and masturbation abstinence (4.1) also got impressive to pretty good ratings.

Side sleeping allow better glymphatic drainage. especially right side

Spermidine has most significant documented lifespan extension
-studied in naked molerats — don’t age because they produce enormous amounts of spermidine
-most naturally found in: beans; lettuce; wheat germ

This argues that ED and CVD are different manifestations of a systemic arterial damage and, due to the smaller diameter of penile arteries, ED occurs earlier than IHD, stroke or peripheral artery disease (PAD) with an equal extent of artery damage

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