Tag: blockworks

Podcast notes – Nick Johnson, ENS lead dev – Bell Curve podcast

Guest: Nick Johnson, ENS lead dev
Kiwi; Lived in New Zealand, Ireland, the UK

Goal never was to launch DAO, goal was maximally achievable decentralization — at that time there was only “The DAO” and not a lot of examples or playbook

Launched purely as governance mechanism – what to do with funds raised from registration fees?

Started with generous ETH Foundation grant

ENS is public good, non profit, goal is to leave as much value behind for users as possible

Believes protocols should all be public goods – things like ETH, L2, infrastructure
“If you want people to innovate on your platform then your platform should be open”
Makes exception for apps eg, DeFi, DEXes

Grew up with internet in 90s – open governance at the time, thing that everyone can improve on, left big impression on him

In 90s AOL didn’t succeed because it was walled garden, too much friction, extracting value that wasn’t re-invested in ecosystem

Attitude in web3 that working in nonprofit / charity gets paid badly and need sacrifice — totally reasonable to pay market rate

ENS token
-best tool we had available, but have shortcomings – eg, tendency to plutocracy
-intentionally launched as governance token, not a profit-accruing token
-wrote ENS Constitution explicitly states that revenue will not return to token holders – instead used to re-invest in ecosystem

ENS didn’t launch as a DAO – felt DAO ecosystem, tooling, examples weren’t there
What changed – use of OpenZeppelin contracts; human control of ENS had been reduced

Can be frustrating to run DAO – differing visions

Lots of parallels to corporate governance, but built more like a co-op than a for-profit
Delegation is still necessary – you don’t want token holders voting on every single decision

What if VCs buy a lot of tokens?
“Probably our biggest risk”
Defenses are social (lots of tokens given to long-term contributors, core team) and financial (would need to spend too much relative to value of $ in treasury)
“Constitution as friction mechanism”

ENS Labs is centralized, get budget and is “hired” by DAO
Hope to see other development orgs funded to help ENS (besides ENS Labs)

Quadratic voting is elegant but only works if you can solve Sybil problem (prove it’s a real human, not bots)
Imagine a good ID system, can still offer $50 to stranger on street to use their ID

Voting escrow tokens (lock tokens to get more weight or just participate in voting) – provides way to show long-term commitment to organization

Tough to design token economic / voting systems that can’t be gamed

Cares about financial privacy
KYC doesn’t reduce money laundering but does reduce financial privacy
Tornado Cash is great example – the devs actually built in compliance mechanisms – but OFAC / Dutch prosecutors ignored that and still charged them with money laundering

Optimism is public benefit corp – very encouraging
More skeptical of StarkNet (raised a lot of VC)

Just share the code, even if its messy – so many benefits from open source

Need more DAO tooling for day to day governance, a unified platform
Helpful to have OpenZeppelin’s version of the governor contractor – based on Compound’s – ENS DAO was one of first to use it

Will see more professional DAO delegates

What excites him
–see DAO move to long-term vision, setup an endowment to last 50-100 years
-integrating with DNS
-offchain names – names w/o reg fees
-happy to see Ethereum hasn’t fallen into trap that Bitcoin did which resists any change
–

DAO provided meaningful outlet for community to contribute eg, small grants program
“Giving them permission to be involved”

Often low participation is because people have selected themselves out of it – you don’t have to be prominent to make a contribution

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

Podcast notes – Neil Howe, author of The Fourth Turning – Blockworks

Host: Mike Ippolito
Guest: Neil Howe, author of The Fourth Turning, works at Hedgeye

Generational theory wasn’t popular after WW2
Rebounded in 1960s-70s – generational gap caused by Baby Boomers, who had very different values from the war generation
Boomers wanted to take over and challenge their parents
Boomers aren’t builders, but they’re very expressive

Co-wrote Fourth Turning w/ Bill Strauss
Both authors had written already about generational issues
Fourth Turning wanted to look at series of generational changes in American history
Didn’t expect cycles – it was an epiphany as they researched
Certain kinds of generations always follow others
Interdisciplinary approach, sociocultural cycles

“Gen X” wasn’t coined until 1992 – Material Girl, hip hop culture, didn’t like Boomers’ hypocrisy, jaundiced and cynical views

Major civic revolutions / upheavals once every ~80 years (average lifespan, called a “saeculum”)
Each generation is ~22 years, 4 of them = ~80-90 years
Every turning tends to end in a crisis
1770s American Revolution > 1860s Civil War > 1940s WW2 > 2020s

Mike:
“Want to rebel against our parents”
Ray Dalio’s long-term debt cycle (every 80 years, great deleveraging in financial markets)

Fourth Turning has lots of linkages with cycles in other fields – economics, culture
Re-aligning political elections occur in sync with these cycles

“It doesn’t look good at the moment”

Every time you have a crisis, every one who had a living memory of the last crisis is already gone – eg, WW2 forgot Civil War, today we forget WW2 and Great Depression

Every turning is a generation – ~20 years
Each turning is when you’re moving from childhood > young adulthood > mid life > elder
The whole social mood changes as each generation shifts

Fourth Turning is final phase, the “crisis phase”
A civic / reconstruction phase
Associated with scarcity, the Depression, the great wars, the revolutions
Periods of great disorder
Institutions have become sclerotic / dysfunctional
Need rejuvenation / forest fires to clear out the brush
Allow new resources and new institutions to flourish
Periods of tremendous social growth

“We always make our biggest changes during times of crisis” – after WW2 we established Social Security, Bretton Woods + IMF + World Bank
Same after Civil War – national currency system, transcontinental railroad, etc

Lots of tribalization today – red vs blue zones, extreme political opinions
More people think a civil war is likely
Fascism vs socialism
Participation in politics has skyrocketed – voter turnout, “Trump solved that problem”
Rapid deterioration of growth prospects for young Americans
Book “Big Sort” shows how Americans are geographically dividing by culture and politics

Now likelihood of a great power confrontation caused by Russia invasion of Ukraine

Our current Fourth Turning started in 2008 with Great Financial Crisis
This phase will extend to 2030
Very low GDP growth, inflated markets with QE and low rates, driven by Central Bank policies and MMT
Long-term inflation expectations are exploding
Powell wants to be Volcker now, must fight inflation

America has enormous deficits today – no more stimmy, higher interest rates, Ukraine conflict, China struggling – bleak picture
Fed can’t really intervene now to protect markets
After mid-term, likely both Houses will be Republican
Both parties don’t really have consensus leadership

Mike: “something eventually has to give” – but then there will be genuine improvement
Realized other great powers aren’t democracies – China, Russia

On youth:
They invented the word “millennial” – high school class of 2000 was initial cohort
Did book “Millennial Rising” – they’re special, risk averse, attached to parents, less crime, collective teamwork / organizing

Greatest distrust with democracy is among younger people – believe it empowers older / richer people – thus the move to collectivism

Podcast notes – Blockchain debate with Blockworks, Avichal (Electric), and Haseeb (Dragonfly)

Blockworks Host Jason (J)
Avichal (A) – Electric
Haseeb (H) – Dragonfly

Crypto narratives today
Haseeb – narrative exhaustion; resurgence of Defi 2.0 (Wonderland); game fi has slowed (Axie price falling); overuse of metaverse; L1 wars have stabilized; interoperability is exciting but not many tokens yet
Avichal – far enough in bull market that everyone’s exhausted, like early 2018; is it a top signal; so much activity in every subsector

H: Lots of activity in private / early stage, but not much movement in public / blue chip tokens
So much web3 chatter, but most of the top coins aren’t really web3
It’s not like 2018 (lots of bullshit got funded, floor fell out of market, market lost confidence)
We’re in a waiting game, what’s the next big thing?
Lots of exciting tech is coming in 1-2 years, like big studio games, zero knowledge

A: As a startup, the promise carries you for a few years, and then the real work begins
Wonderland type drama happens all the time in normal startups – but now it’s public and liquid and transparent much earlier

J: In web2, founder has all the equity, but it’s almost flipped in web3, where founders can’t really sell, but the early employees can and are more anon / have more freedom

A: For best founders, money doesn’t change them but shows who they really are – they just dial up their game. It’s an interesting character test. Like Vitalik, it’s mission driven

J: Money is amplification of character

H: Blockchains as cities thesis
Will ETH win everything?
If blockchains are networks, then one will be completely dominant
But blockchains are physically constrained by decentralization and blocksize
Best analogy is land
ETH is old, congested, improvement is slow, but all the money and status is there (NYC)
Scaling: Rollups (skyscrapers); Alt L1 (build another city)
Cities become differentiated – NYC vs LA vs Chicago
This model predicts a few things:
1. Power law distribution of cities / blockchains
2. Rollups are important but not complete solutions
3. Bridges are important as crypto grows (moving between cities)

A: Worked at Google / Facebook
Think about it as countries not cities (bigger cultural differences, more protectionism), but generally agree w/ Haseeb
TikTok can be huge, but so can Snapchat, LinkedIn, Twitter, etc
Free trade matters, maybe need a NATO
pmarca idea – world is moving to city-state model, away from nation-state; internet is fractured, people aggregating into tribal units that are more like Greek city-states
Are there 10 or 100 L1s?

H: markets generally are neutral; there are some axes (like cost, or privacy) where it does matter
Blockchains try to be a neutral substrate

A: Value capture is tied to L1, so maybe things evolve like Flow (gaming focused, more vertical solutions)
Will fragmentation happen at app layer, or L1 layer?

H: Ethereum doesn’t have a single culture now, NFT v Defi v web3
Balkanization will happen within L1s
Solana culture feels different – high performance, build the fastest thing, everyone makes money
But the same balkanization could happen too

J: Identity could get tied up in L1s, but your identity isn’t tied to AWS v Azure v other cloud services
Identity can shift quickly based on token performance

A: If you missed one chain’s pump, you’re motivated to find a new one, but once your net worth is tied to a chain, you’re more incentivized to identify with and stay there
If I can own a piece of the network, do I HAVE to become an evangelist?
Parallels with religion – there’s an “r factor” where the faster you grow, the more likely you can win

J: If you wanna make it in Hollywood, you go to LA, if you want money you go to NYC
AMMs / lending / blue chip apps will be utilities on each L1

A: Tribes have financial incentive to improve L1, so will build apps on top of them
Nationalism is a good comparison – each nation competes with each other, and wants to support their local economies and companies

H: rarely invests in L1s now, hard to differentiate
In 2017-18, crypto was 95% religion, not many real use cases
Now you have real use cases decided by technical differences of scalability and cost and speed
Becoming less about religion, more about needs

A: At 2B crypto users, we may need a lot more L1s, maybe just a period of consolidation now. It’s 5-7 blue chip L1s today, but could it become 50-70?
Also apps choose chains based on # of users too – not just optimizing tech

H: Maybe invest in Atom / Cosmos Hub to get exposure to the long tail of L1s

J: We’re agreeing on a multichain future, and need bridges to connect the chains
Bridges are harder to build than we expected

A: Anti-bridges, if 99% of users aren’t in crypto yet, you don’t want inter-op, you wanna build your own network effects
Bridges give liquidity + some users, but none of that is really sticky
Better off acquiring new users
FB doesn’t want to get MySpace users, but get new users / new demos (like college students)
Solana wasn’t EVM compatible, wasn’t trying to get ETH users, attracting different type of users / money

H: Very pro-bridge
Solana got all its users and liquidity from FTX – which was de facto a bridge
Considers Binance / FTX bridges too – way to move assets across chains
Users don’t care if bridges are centralized or decentralized
Every social network imports email graphs – that was top of funnel – which is equivalent to Ethereum in crypto today. It’s the starting point, there was an existing graph
New users are unlikely to start with Near, most likely to show up on Coinbase and Metamask

A: Point of entry into crypto is FTX / Binance / Coinbase
Bridge technical challenges will get solved
Back to nations analogy, you want capital controls / protect your native users and companies from foreign competitors
More bullish centralized bridges (like Opensea, FTX, etc, bridges broadly defined) over decentralized bridges

H: Avalanche took off because they had a good bridge
Blockchains are economies, and amount of capital really matters
Cross chain messaging is important but central bridges won’t allow that (want to control the info flow) – thus decentralized bridges are useful for that (in addition to moving capital)

J: Sometimes crypto has reverse network effects – more users = more cost and blockchains can slow down

A: R-factor and evangelism create more / less network effects
EVM is javascript of crypto
Tooling and developer network fx
Spectrum of network fx – some are strong (eg, evangelism, being anti-other chains), others are weak – wonder how this will correlate with market structure and outcomes