If a man has his eyes bound, you can encourage him as much as you like to stare through the bandage, but he’ll never see anything.
~Franz Kafka, The Castle
The importance of understanding power dynamics in the blockchain space is quite understated. With recent struggles in the Steem community, IOTA community, and even the Ethereum community, it’s becoming abundantly clear that power structures in decentralized (bar IOTA) systems are ill-defined. Power defines how a protocol runs, who can change the rules, and how rules are changed. Sometimes the rules can be implicit via a protocol’s social contract, where these structures are outlined in a particular founding-document. …
Bitcoin is, or Bitcoin is not. But to which side shall we incline?
A bet on Bitcoin will yield the greatest outcome for anyone supporting cryptocurrency. Wagering against Bitcoin is an exercise in futility in the scenario where Bitcoin still succeeds or leads to absolute misery in the case that Bitcoin fails. It is useful to use Blaise Pascal’s argument for the belief in God as a parallel to how Bitcoin should be treated by any observer and participant in this ecosystem. Betting on Bitcoin isn’t betting against other assets such as Ethereum, but instead only adds weight and power to altcoins — as positive sentiment and activity around Bitcoin will only lead to all ships being raised. …
Rose is a rose is a rose is a rose.
~Gertrude Stein, Sacred Emily
I want to preface this by saying I personally appreciate all of the experiments being conducted in the space. This is in no way an attack on the projects that will be mentioned, and this is all just opinion. It’s simply a bit of observation in order to put things into perspective. As always, this space is a semantic wasteland — so let’s jump right in.
De(Decentralized) + Fi(Finance) = DeFi
Great — now that we got that out of the way:
Decentralization is quite simple, as it means taking power or authority from a centralized force and distributing it to localized forces, or even the establishment of a federated model of equal power. In the context of blockchains, this comes in…
— But do you know what a nation means? says John Wyse.
— Yes, says Bloom.
— What is it? says John Wyse.
— A nation? says Bloom. A nation is the same people living in the same place.”
~James Joyce, Ulysses
Typically when speaking of social contracts, we invoke three concepts: a subject seeking refuge, an agreed form of rule, and a medium between those forces. The subject was originally covered at length in Thomas Hobbes’ Leviathan, in which humans (in order to escape a dangerous state of nature), will relinquish power to a form of government for safety.
For example, on a micro scale, let’s use the example of being in a store waiting on line to check out. This could be generalized, as stores typically follow the same social contract: the subject wishing to purchase something, the agreed form of rule being the institution that provides a particular good, and the medium being the line itself. It’s how we implicitly know to form a line although we may not be the first to check out (as humans are typically self-interested). …
Abstraction is a key component to the mass adoption of cryptocurrency. How easy of an experience we give users is typically at the cost of a more centralized experience. A more technical user can abstain from abstraction in the form of harnessing the technology and its associated frictions at a localized level, while your mother will most likely need third-party providers to hold her hand along the way.
At the moment, I’d argue that most, if not all of the systems that have been created to date (whether it be a global monetary system or an NFT DApp) have been purely catered toward a niche group of enthusiasts. This, of course, isn’t a negative thing — because the design thinking then focuses on the introduction of new users to these systems. Abstracting away technical components obviously comes with risk. The more we abstract, the more we centralize, and the more risk end users may have. Ejection from these systems and the breaking of abstraction comes with the risk profile being in one’s own hands while facing all the associated frictions with it. …
On April 14th, an Augur market opened with the question of whether or not Calvin Ayre will get egged in the next three months. The market’s resolution source is noted as “General knowledge,” with the market resolving to “yes” should Calvin Ayre get hit by an egg within this timeframe. Along with this is a media requirement showing the egging, and an important note stating that a video of Calvin Ayre egging himself won’t count.
Last week, NuCypher released their thoughts on a unique token distribution model called the WorkLock. The aim of the model was to find something that limited speculation as much as possible, kept incentives aligned with the network’s health, works out regulatory uncertainty, and avoids deanonymizing participants by having to implement KYC procedures. After considering both airdrops (which aren’t that effective), and LivePeer’s Merkle Mine, they began outlining a more efficient model.
The WorkLock features a means in which participants lock up collateral, in this case, ETH, for tokens. If they decide to use the tokens for their intended purpose, which in the given case is staking nodes, they would receive their escrowed collateral back after working for a certain period of time. …
Fair launches have always been lauded as the holy grail for a cryptocurrency. The problem is, how can a launch be fair when we are currently in a time when assets have absurd valuations before launch, are typically sold, and even the ones that aren’t sold are already treated with speculation?
Parties will continually argue on the philosophy of fairness, but typically come to the same conclusion of fairness encapsulating every possible individual associated with a particular system. On a macro scale, it’s every member of society, on a micro scale, it’s everyone involved with cryptocurrency to some extent. Before Bitcoin, there was no subset of individuals involved with any form of cryptocurrency (as we know them today). …
Earlier this month, Kyle Samani from Multicoin Capital published an article describing how layer 1 and 2 protocols capture value, as well as frameworks to apply to each.
On the first layer, the value capture associated with the asset is linked to securing the base protocol from attacks, namely 51% attacks. Outlined in the framework is the cost of conducting such an attack, which is noted as a “security budget” (SB), which is the network’s current value multiplied by its inflation rate as a means to quantify the reward of securing that network (with transaction fees added). …
Estragon: Perhaps he could dance first and think afterwards, if it isn’t too much to ask him.
Vladimir: (to Pozzo). Would that be possible?
Pozzo: By all means, nothing simpler. It’s the natural order. He laughs briefly.
~Samuel Beckett, Waiting for Gadot
This is the second in a series of articles explaining topics related to governance. For the first in the series that explains both governance generally and the weak points of token governance, click here.
Blockchains have governance. Even instances of ‘ungovernance’ such as that displayed in Bitcoin or Monero are technically forms of governance. However, what having a multiple-blockchain ecosystem provides is a means to test implementations of other governance systems without as much at stake. What also often angers many individuals is the idea of “governance theater,” where governance is used to promote an asset by being a ‘cutting edge’ feature. Meanwhile, most of these new systems will likely end up proving to be inferior due to being overcomplicated. …