Tag: redphonecrypto

Recent crypto learnings 5: “making money, having fun, finding community… in that order”

RECENT CRYPTO LEARNINGS AND READS

Tarun Chitra: Most ZK implementations are not about privacy but about succinctness

Berachain has invented – which they call Proof-of-Liquidity (POL).
7/ In a Proof-of-Stake blockchain such as Ethereum, gas fees and block rewards are distributed to stakers of the native token. In POL, however, block rewards (aka inflation) go to liquidity providers, thus providing a strong incentive for users to deploy capital on Berachain

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I’m convinced the three reasons why 99% of people come to crypto are:

1. making money
2. having fun
3. finding community

in that order.

that means, projects that don’t meet those needs, in that order, will struggle to find pmf.


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@redphonecrypto
Pay attn to new crypto projects and concepts that repulse you… it’s an indicator that the object in question holds sacred power
They’re lightning rods for attention, and attention increases distribution/price
Have seen this play out every cycle. From the launch of dogecoin to ICOs to NFTs to memecoins, ordinals and now runes
It’s the grand paradox: the greater your disgust, the greater the potential

On the call Buterin added that it is easy to underestimate how quickly ZK proofs will become commonplace operations for verifying blockchain state not only across Layer-2 rollups but across Layer-1 blockchains like Ethereum as well. “I think it’s very plausible to our belief that even within one or two years, we’ll have the capability of proving the Ethereum L1 in real time. So, I think it’s just important to mentally adapt to the fact that there’s no such thing as a distinction between ZK chains and non ZK chains. We are basically now entering a mode where every serious chain is a ZK chain,” said Buterin.

“Tarpit” Startup Ideas
• Roommate matching app
• VR/AR shopping
• Photo sharing
• X for Y (e.g. Airbnb for Y)
• Recommendations based on friends
• Anything related to travel planning
• “Better design” (e.g. Craiglist / Linkedin, but not shitty)
• Verticalized social networks
• Education accreditation
• Restaurant loyalty programs
• To-do lists
• News curation

Everyone loves launching new features, but in my experience, most growth comes from the less sexy work: incremental and consistent optimization of your core product.

I view L2s as solving an incentive paradox while also scaling the chain and allowing ETH to accrue more value as money. Use as money is the most important value accrual mechanism in crypto, and far more important than whatever fees L2s eat. I really do not care if Arb/OP is printing fees that could’ve been on L1 if they have 2-3M ETH locked up in their bridges. The use of ETH as money/sink of supply greatly offsets the fees lost to L2s, while blobs/NFTs/L1 DeFi keeps the ETH burn chugging along steadily

AI thrives within blockchain systems, fundamentally because the rules of the crypto economy are explicitly defined, and the system allows for permissionlessness. Operating under clear guidelines significantly reduces the risks tied to AI’s inherent stochasticity. For example, AI’s dominance over humans in chess and video games stems from the fact that these environments are closed sandboxes with straightforward rules. Conversely, advancements in autonomous driving have been more gradual. The open-world challenges are more complex, and our tolerance for AI’s unpredictable problem-solving in such scenarios is markedly lower

This is not getting smaller. There’s not gonna be less money in generative AI next year, it’s a very unique set of circumstances, AI + crypto is not going to have less capital in a year or two. – Emad re: AI+crypto

For instance, Bonkbot is a simple Telegram Trading bot that makes it easy to trade memecoins on Solana. Over just 5 months, its revenue has surpassed over $23 million.

Daily SOL transfers on Solana approximately match those of Ethereum in US Dollars. A noticeable peculiarity caused by Solana’s low transaction fees and fast execution is the seemingly high number of “minnow” transfers—those worth less than $1M—when compared with “whale” transfers. Over 80% of the total value transferred on Solana stems from such minnow transfers. On the other hand, Ethereum currently sports a minnow ratio of only 40% as users shy away from sending funds from which fees would take a significant chunk
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The high throughput and large block size of Solana comes at the expense of an immense chain size. Altogether, the Solana blockchain is over 150 TB. As a result, Solana nodes cannot provide full history back to chain genesis, but are pruned after two epochs (approximately 4 days). Deep history is stored in centralized BigTable instances hosted by the Solana Foundation or professional RPC providers.

96% of the TON supply was distributed to miners during July and August 2020;
At least 85.8% of the supply was mined by a few groups of miners connected with each other and affiliated with TON Foundation;
Funds from these miner groups are used by network validators that control 2/3 of the TON blockchain PoS consensus

$10B+ of BTC is bridged on Ethereum via WBTC alone, a clear proxy of demand for smart contract-enabled use cases that can’t be fulfilled on native BTC…yet

When users invest in memecoins, they are implicitly making a statement that they believe that particular token and meme will grow in popularity: attention is the primary driver of value. One X user called memecoins “a way to angel invest in culture.”

Rollups use a collection of compression tricks to reduce the amount of data that a transaction needs to store on-chain: a simple currency transfer decreases from ~100 to ~16 bytes, an ERC20 transfer in an EVM-compatible chain from ~180 to ~23 bytes, and a privacy-preserving ZK-SNARK transaction could be compressed from ~600 to ~80 bytes. About 8x compression in all cases

Jesse Pollak:
Original ETH scaling vision had 64 shards
Optimism is really strong w onchain governance

Logarithmic curves make the token price rise rapidly at first as more tokens are added. But then the price increases slow down as the supply keeps expanding. So, the price spikes in the beginning but levels off over time. This benefits early investors the most since their tokens gain value quickly up front. The potential for fast early profits can attract the first buyers to provide liquidity

Ordinals are arbitrary data inscriptions (in the form of text, images or videos) inscribed onto individual satoshis

Activity on Coinbase Layer 2 network Base continues to gain momentum as more than 2.6M daily transactions have been settled on the network, a new record and an increase of 550% month-over-month. To put this into perspective, this is more daily volume than leading L2 networks Arbitrum (1.6M) and Optimism (680K) have seen combined

Digital art displays are at the point where they should get mass adoption. I’m no longer embarrassed by this technology and I stood proudly in front of a lot of work we exhibited on screens this week.

From Coinbase report on AI+Crypto
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Nvidia’s February 2024 earnings call revealed that approximately 40% of their business is inferencing, and Sataya Nadella made similar remarks in the Microsoft earnings call a month prior in January, noting that “most” of their Azure AI usage was for inferencing
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The often touted blanket remedy that “decentralization fixes [insert problem]” as a foregone conclusion is, in our view, premature for such a rapidly innovating field. It is also preemptively solving for a centralization problem that may not necessarily exist. The reality is that the AI industry already has a lot of decentralization in both technology and business verticals through competition between many different companies and open source projects

There currently exists no regulatory pathways to host sensitive data on decentralized storage platforms like Filecoin and Arweave. In fact, many enterprises are still transitioning from on-premise servers to centralized cloud storage providers. At a technical level, the decentralized nature of these networks is also currently incompatible with certain geolocation and physical data silo requirements for sensitive data storage.

5./Lots of times if you are early to these kinds of coins you can make lots of money.
For example:
– Hobbes who was Ansems cat
- EPIK which was a memecoin from Mando and others.
- SLERF after the dev accidentally burned $10m
Just be early to crazy and funny things

The key intuition uniting all of these examples is that providing instant settlement of borderless bearer value is a unique and unprecedented phenomenon with derivative implications for every industry, and it will inexorably pull businesses that currently have nothing to do with bitcoin into bitcoin’s orbit

Given that only a few hundred million dollars have been deployed into companies focused on bitcoin, whereas well over $25 billion have been channeled to the broader “crypto” ecosystem, it is safe to say virtually every capital allocator around the world is substantially underweight bitcoin infrastructure

11/ In Solana, there is only one instance, or “singleton”, of the token contract.
Any DEX, blockchain explorer, wallet, etc. can check if the token contract is an instance of this specific, expected, safe token contract

“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. Maximum pessimism is the best time to buy, and maximum optimism the best time to sell.” — John Templeton

This brings me to the core idea of degen communism: a political ideology that openly embraces chaos, but tweaks key rules and incentives to create a background pressure where the consequences of chaos are aligned with the common good.

And 0DTE (zero-day to expiration options, or they expire that day on the close) is now over half of all options traded

@trippingvols
If there’s one lesson I’ve learned onchain, it’s to go balls long every semi-legit new token standard

Today, I would argue that we are decidedly on the decelerating, right side of this S-curve. As of two weeks ago, the two largest changes to the Ethereum blockchain – the switch to proof of stake, and the re-architecting to blobs – are behind us. Further changes are still significant (eg. Verkle trees, single-slot finality, in-protocol account abstraction), but they are not drastic to the same extent that proof of stake and sharding are. In 2022, Ethereum was like a plane replacing its engines mid-flight. In 2023, it was replacing its wings. The Verkle tree transition is the main remaining truly significant one (and we already have testnets for that); the others are more like replacing a tail fin

Upon closing of this token merger, a governing council for the Artificial Superintelligence Alliance will form to monitor and guide operations of the newly merged tokenomic network

Memecoins like DEGEN are marketing coins. Like the marketing layer of a decentralized project. So what does this mean
Is there such a thing as a meta meme coin? A base layer meme coin like ETH to ERC-20
Or a meme coin standard like MEME-20? Allow anyone to easily mint their own meme coin?

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Past updates 1, 2, 3, and 4

Collection of recent crypto learnings: “Crypto is the machine’s body. And AI is the brain that enters into it.”

Below are some thoughtful and entertaining crypto-related content

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Redphonecrypto’s 69 Theses for 2023

Great presentation on crypto’s “big picture”, a bit quasi-religious and grandiose but it’s good crypto hopium if you’re into that sorta thing. Source: https://redphone.substack.com/p/69-dreams-and-delusions

Crypto, you see, is a stepping stone on the journey to AGI. It is a prerequisite, a necessary appendage that allows artificial consciousness to “escape the box” and manipulate its environs.

Crypto is the machine’s body.
And AI is the brain that enters into it.

Bull markets are not mere monetary phenomena. They are collective, psychological, soul-bound events powered by our dreams.

Fundamental analysis always skips the most important metric in crypto: attention.
Nothing matters more (see memecoins or NFTs for evidence).

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Variant Fund’s A Tale of Two Cryptos: Speculation vs Decentralization

Our thesis at Variant is that the next generation of internet networks will turn users into owners—specifically asset owners. The internet enabled everyone to become a publisher, and similarly, crypto enables everyone to become an asset owner, and therefore, an investor. You don’t need capital to invest, you can invest your time or work by producing art, running machines, or doing physical work.

The prospect of participating in economic growth is what has drawn in so many entrepreneurs and users—and it’s important because some portion of those users learn from those experiences, to think, and act, like investors. It often starts with things that look like toys (or dogs) but drives towards a serious shift in psychology, where money, effort, or skill are honed to contribute more seriously to the space

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Quinn Thompson – Lekker’s 5 key themes for 2024

Beginning in Q2 and into Q3 ahead of the November election, the Fed and incumbent administration will declare victory in the war against inflation. Ironically, these proclamations reach a fever pitch just as inflation is bottoming around September 2024, approximately 27 months after the June 2022 peak. As a result, stocks and risk assets post record breaking numbers in Q2 and Q3. The narrative will be something along the lines of “no matter who wins the election, red or blue, both candidates will spend egregiously”. The reality is this continued heavy spending combined with lower interest rates will be the spark that reignites another bout of inflation and will ultimately be bad for long duration and risk assets.

Crypto is in a secular bull market, while also making its first steps into a new cyclical bull market. These two together create big outcomes.

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Balaji’s Thoughts on Tokens

The most important takehome is that tokens are not equity, but are more similar to paid API keys. Nevertheless, they may represent a >1000X improvement in the time-to-liquidity and a >100X improvement in the size of the buyer base relative to traditional means for US technology financing — like a Kickstarter on steroids

For example, when you buy an API key from Amazon Web Services for dollars, you can redeem that API key for time on Amazon’s cloud. The purchase of a token like ether is similar, in that you can redeem ETH for compute time on the decentralized Ethereum compute network.

After the early kinks are worked out, the token launch model will provide a technically feasible way for tech companies (and open source projects in general) to spread the wealth and align their userbase behind their success. This is a better-than-free business model, where users make money for being early adopters