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Not going to Berlin blockchain week.
But will be at Edge Esmeralda next week (15-20th).
HMU if you are working on interesting problems.
But will be at Edge Esmeralda next week (15-20th).
HMU if you are working on interesting problems.
Recent improvements in crypto infra are getting incremental: we have steady improvements on latency, throughput, faster zk proofs, etc.
What are some exciting open challenges that, if solved, enable net new apps?
(Privacy is one for sure but curious of others.)
What are some exciting open challenges that, if solved, enable net new apps?
(Privacy is one for sure but curious of others.)
1/ "Zero trust" is a term that is growing fast in popularity, with mindshare growing faster (per Google trends) than "decentralization" and "self custody", two main pillars of crypto.
What is Zero Trust?! 🧵
What is Zero Trust?! 🧵
Why crypto need to refocus on capability, over blind emphasis on decentralization or verifiability.
All technological progress are defined by the capabilities unlocked.
For crypto:
- Censorship-resistant money (and store of value) was the first capability unlock.
- Permissionless asset creation and finance was the second capability unlock.
Notice the theme: censorship resistance and permissionless-ness, which are security features enabled by decentralization, were critical to these first two unlocks--
- Bitcoin would not be what it is if not for its self-custodial property and censorship resistance.
- Ethereum would not have been what it is without ICO and defi summer, which were enabled by permissionless smart contracts.
Over the last few years, crypto got sidetracked and started to value decentralization, security, and verifiability without specific capability unlocks. Examples: decentralization theater (early forms of onchain AI), adding verifiability without specific purpose ("zk-everything").
I believe our the industry is finally exiting this sidetrack.
Example: If an app requires real-time censorship resistance, then decentralize. No need for real-time censorship resistance? Let's use a centralized sequencer but offer self-custodial guarantee via validity proofs.
Refocus on capability; make crypto great again.
(Image credit ChatGPT 4o)
All technological progress are defined by the capabilities unlocked.
For crypto:
- Censorship-resistant money (and store of value) was the first capability unlock.
- Permissionless asset creation and finance was the second capability unlock.
Notice the theme: censorship resistance and permissionless-ness, which are security features enabled by decentralization, were critical to these first two unlocks--
- Bitcoin would not be what it is if not for its self-custodial property and censorship resistance.
- Ethereum would not have been what it is without ICO and defi summer, which were enabled by permissionless smart contracts.
Over the last few years, crypto got sidetracked and started to value decentralization, security, and verifiability without specific capability unlocks. Examples: decentralization theater (early forms of onchain AI), adding verifiability without specific purpose ("zk-everything").
I believe our the industry is finally exiting this sidetrack.
Example: If an app requires real-time censorship resistance, then decentralize. No need for real-time censorship resistance? Let's use a centralized sequencer but offer self-custodial guarantee via validity proofs.
Refocus on capability; make crypto great again.
(Image credit ChatGPT 4o)
Dee Hock on the founding of Visa in his work "Chaordic Organization".
Visa was perhaps the first successful case of a permissionless platform with decentralized governance and ownership.
Many lessons to be learned here half a century later for crypto networks.
Visa was perhaps the first successful case of a permissionless platform with decentralized governance and ownership.
Many lessons to be learned here half a century later for crypto networks.
prediction: the word "dapp" will die
just apps or onchain apps
just apps or onchain apps
A straddle (call & put option or a long & short perp) is like quantum teleportation for money.
Value magically goes from one position to the other as price of the underlying moves.
Don't believe PnL charts of a single account.
Value magically goes from one position to the other as price of the underlying moves.
Don't believe PnL charts of a single account.
Reject privacy maximalism; embrace privacy pragmatism.
1/ The Onchain Privacy Trilemma 🧵👇
Privacy is the last hurdle to mass-adoption of onchain finance. Can we simply add self-sovereign privacy to today's onchain finance and expect everything to work better?
The answer is no. We must make hard decisions on trade-offs between the following three desirable properties:
1. Maximally useful: no transaction limits, supports private payments and anonymous DeFi
2. Self-sovereign privacy: contents of private transactions cannot be revealed without consent from involved individuals
3. Threat resistant: adversaries cannot use it to hack & launder funds
Choose any 2, but never 3
1/ The Onchain Privacy Trilemma 🧵👇
Privacy is the last hurdle to mass-adoption of onchain finance. Can we simply add self-sovereign privacy to today's onchain finance and expect everything to work better?
The answer is no. We must make hard decisions on trade-offs between the following three desirable properties:
1. Maximally useful: no transaction limits, supports private payments and anonymous DeFi
2. Self-sovereign privacy: contents of private transactions cannot be revealed without consent from involved individuals
3. Threat resistant: adversaries cannot use it to hack & launder funds
Choose any 2, but never 3
How many onchain crypto apps have hit PMF & hyper-growth phases? A: a few.
Out of those, how many sustained the demand without hiccups? A: practically none.
Solving blockchain scaling is about empowering apps to reach PMF & hyper growth.
Out of those, how many sustained the demand without hiccups? A: practically none.
Solving blockchain scaling is about empowering apps to reach PMF & hyper growth.
If an L1 enforces censorship after a large hack, then why not go all the way to implement in-protocol mechanisms to enforce social consensus so that any consensus hack can be reverted?
In the end-state a chain is either a neutral base layer or a social consensus engine.
In the end-state a chain is either a neutral base layer or a social consensus engine.
Blob gas price has dropped back to 0 after Pectra.
Uber doesn't charge $0 when there are more drivers than riders. Why would Eth charge $0 for a valuable resource?
What if EIP1559 is actually terrible for non-congested markets as it was designed for congested ones?
Uber doesn't charge $0 when there are more drivers than riders. Why would Eth charge $0 for a valuable resource?
What if EIP1559 is actually terrible for non-congested markets as it was designed for congested ones?
Theory crafting: SoV assets need *stability* of cashflow/REV, rather than the lack of it.
===========
If BTC (or Gold) started to generate cashflow, it won't stop being a SoV asset, at least right away.
But, if this cashflow ever decrease, the valuation would drop in response.
Plus, markets may over-index on cashflow falling: a SoV asset with falling cashflow is less appealing than another SoV whose cashflow is not falling (could be due to it being zero).
Compound that with the fact that SoV relies on network effects, which means that relative marketshare movements could get amplified (a winning SoV can win harder).
===========
In upshot, the downside of cashflow/REV for a SOV asset is that it makes the asset less appealing when cashflow falls.
Therefore, what's really important for SoV assets is the *stability* of cashflow/REV, rather than the lack of it.
(All of this is mostly empty speculation from first principles and not backed by any real data btw. So take it with a grain of salt.)
===========
If BTC (or Gold) started to generate cashflow, it won't stop being a SoV asset, at least right away.
But, if this cashflow ever decrease, the valuation would drop in response.
Plus, markets may over-index on cashflow falling: a SoV asset with falling cashflow is less appealing than another SoV whose cashflow is not falling (could be due to it being zero).
Compound that with the fact that SoV relies on network effects, which means that relative marketshare movements could get amplified (a winning SoV can win harder).
===========
In upshot, the downside of cashflow/REV for a SOV asset is that it makes the asset less appealing when cashflow falls.
Therefore, what's really important for SoV assets is the *stability* of cashflow/REV, rather than the lack of it.
(All of this is mostly empty speculation from first principles and not backed by any real data btw. So take it with a grain of salt.)
Theory crafting: SoV assets require *stability* of their cashflow/REV, rather than the lack of it.
===========
If BTC (or Gold) started to generate cashflow, it won't stop being a SoV asset, at least right away.
But, if this cashflow ever decrease, the valuation would drop in response.
Plus, markets may over-index on cashflow falling: a SoV asset with falling cashflow is less appealing than another SoV whose cashflow is not falling (could be due to it being zero).
Compounds that with the fact that SoV relies on network effects, which means that relative marketshare movements could get amplified (a winning SoV can win harder).
===========
In upshot, the downside of cashflow/REV for a SOV asset is that it makes the asset less appealing when cashflow falls.
Therefore, what's really important for SoV assets is the *stability* of cashflow/REV, rather than the lack of it.
(All of this is mostly empty speculation from first principles and not backed by any real data btw. So take it with a grain of salt.)
===========
If BTC (or Gold) started to generate cashflow, it won't stop being a SoV asset, at least right away.
But, if this cashflow ever decrease, the valuation would drop in response.
Plus, markets may over-index on cashflow falling: a SoV asset with falling cashflow is less appealing than another SoV whose cashflow is not falling (could be due to it being zero).
Compounds that with the fact that SoV relies on network effects, which means that relative marketshare movements could get amplified (a winning SoV can win harder).
===========
In upshot, the downside of cashflow/REV for a SOV asset is that it makes the asset less appealing when cashflow falls.
Therefore, what's really important for SoV assets is the *stability* of cashflow/REV, rather than the lack of it.
(All of this is mostly empty speculation from first principles and not backed by any real data btw. So take it with a grain of salt.)
Theory crafting: SoV assets requires *stability* of their cashflow/REV, rather than the lack of it.
===========
If BTC (or Gold) started to generate cashflow, it won't stop being a SoV asset, at least right away.
But, if this cashflow ever decrease, the valuation would drop in response.
Plus, markets may over-index on cashflow falling: a SoV asset with falling cashflow is less appealing than another SoV whose cashflow is not falling (could be due to it being zero).
Compounds that with the fact that SoV relies on network effects, which means that relative marketshare movements could get amplified (a winning SoV can win harder).
===========
In upshot, the downside of cashflow/REV for a SOV asset is that it makes the asset less appealing when cashflow falls.
Therefore, what's really important for SoV assets is the *stability* of cashflow/REV, rather than the lack of it.
(All of this is mostly empty speculation from first principles and not backed by any real data btw. So take it with a grain of salt.)
===========
If BTC (or Gold) started to generate cashflow, it won't stop being a SoV asset, at least right away.
But, if this cashflow ever decrease, the valuation would drop in response.
Plus, markets may over-index on cashflow falling: a SoV asset with falling cashflow is less appealing than another SoV whose cashflow is not falling (could be due to it being zero).
Compounds that with the fact that SoV relies on network effects, which means that relative marketshare movements could get amplified (a winning SoV can win harder).
===========
In upshot, the downside of cashflow/REV for a SOV asset is that it makes the asset less appealing when cashflow falls.
Therefore, what's really important for SoV assets is the *stability* of cashflow/REV, rather than the lack of it.
(All of this is mostly empty speculation from first principles and not backed by any real data btw. So take it with a grain of salt.)
It's wild that merchants are still paying ~2-3% from each sale to banks & credit card companies. How come crypto has not won yet in C2B payments?
Here're the necessary components:
For consumers: token incentives, payment app, tradfi-grade account statements, on-ramp from banks, stablecoin savings with yield
For businesses: point-of-sale apps on phones/ipads, stablecoin account with yield, off-ramp to banks, (+ token incentives)
Banks & credit card companies bootstrapped this in the 60s/70s, why can't crypto companies do this today?
Here're the necessary components:
For consumers: token incentives, payment app, tradfi-grade account statements, on-ramp from banks, stablecoin savings with yield
For businesses: point-of-sale apps on phones/ipads, stablecoin account with yield, off-ramp to banks, (+ token incentives)
Banks & credit card companies bootstrapped this in the 60s/70s, why can't crypto companies do this today?
True venture-scale outcomes require unlocks of latent markets.
Google unlocked targeted digital ads (w/ search monopoly).
Uber unlocked ride hailing.
Bitcoin unlocked digital store of value.
What latent market are you unlocking?
Google unlocked targeted digital ads (w/ search monopoly).
Uber unlocked ride hailing.
Bitcoin unlocked digital store of value.
What latent market are you unlocking?
You don't need a single composable state machine to have a coherent ecosystem, i.e. send to and receive from any address and interact with any app seamlessly.
It was never about single chain vs. multi chain.
However, seamless interoperability and network effects will win.
It was never about single chain vs. multi chain.
However, seamless interoperability and network effects will win.
Recommend no more news like "latency = xx ms", for the sake of the people, our industry (and your business).
Instead, quantity what type of latency:
- block/slot time
- inclusion or execution confirmation latency
- write-to-availability-of-effect latency
- network latency
- ...
Instead, quantity what type of latency:
- block/slot time
- inclusion or execution confirmation latency
- write-to-availability-of-effect latency
- network latency
- ...
Takeaways from zkSummit13:
1. War of zkVMs is still heating up. More new entrants & upgrades/redesigns will shake up the performance landscape.
2. VC attendance/attention on ZK has bottomed--someone (half jokingly) told me after the summit that I was the only VC in attendance (and they are not wrong).
3. Attention and stakes are moving up the stack: the zeitgeist is that the ZK adoption is no longer bottlenecked on cost or dev overhead, but onboarding more apps.
Some more subjective notes:
- Attention on proving delay (real-time proving for Eth L1) will shift back to proving cost overhead (kappa).
- We need more product-led companies building features with ZK (like Google wallet leveraging ZK for identity)
- We are more likely to see de facto standards in ZK than de jure standards as progress is simply too fast.
1. War of zkVMs is still heating up. More new entrants & upgrades/redesigns will shake up the performance landscape.
2. VC attendance/attention on ZK has bottomed--someone (half jokingly) told me after the summit that I was the only VC in attendance (and they are not wrong).
3. Attention and stakes are moving up the stack: the zeitgeist is that the ZK adoption is no longer bottlenecked on cost or dev overhead, but onboarding more apps.
Some more subjective notes:
- Attention on proving delay (real-time proving for Eth L1) will shift back to proving cost overhead (kappa).
- We need more product-led companies building features with ZK (like Google wallet leveraging ZK for identity)
- We are more likely to see de facto standards in ZK than de jure standards as progress is simply too fast.
Finally getting around to finishing my slides for the zkSummit 13 talk on the Onchain Privacy Trilemma.
Most of the talk will be an objective exposition of the trilemma.
However, I will be proposing to prioritize programmable disclosure over self-sovereign privacy as the best solution to get around the trilemma.
This will probably be controversial, but I hope to move the onchain privacy conversation forward constructively.
Come in person on Monday if you are coming to zkSummit or watch the live stream on Monday May 12th at 1030am ET.
Most of the talk will be an objective exposition of the trilemma.
However, I will be proposing to prioritize programmable disclosure over self-sovereign privacy as the best solution to get around the trilemma.
This will probably be controversial, but I hope to move the onchain privacy conversation forward constructively.
Come in person on Monday if you are coming to zkSummit or watch the live stream on Monday May 12th at 1030am ET.
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