DAA Manager Insights: Elad Shtilerman
For some crypto supporters, fractals and nature might not be the most exciting buzzwords. But these concepts are more relevant to crypto than it might seem. In this DAA Insight, our DAA manager Elad Shtilerman gives us a fascinating explanation of how the crypto market can be viewed from the perspective of mathematical ecology.
How does someone with a PhD in mathematical ecology end up in the crypto space?
During my PhD I approached several of the fundamental questions of ecology using advanced mathematical modeling and computer simulations. Some of the topics I have studied are the evolution of cooperation, species coexistence under conditions of limited resources, and spatial population dynamics. As it turns out, some of these models have parallels in economics and in the crypto space.
One can for example view the coins on CoinMarketCap as competing species and the total market cap as a type of limiting resource. Using this observation and ecological niche theory may lead one to believe that every blockchain sector will at some point or another be dominated by a small number of projects.
Another parallel can be drawn between patterns of user adoption of (blockchain) technology and epidemiological models, which study rates of infection in populations with network structure. Personally, the promise of blockchain to enable decentralized cooperation, which is abundant in natural ecological systems, really sparked my imagination and made me turn in that direction.
What is your view on Israel’s blockchain development and community?
Israel is simply booming with blockchain at all levels. At the academic level, quite a few of the leading researchers in the field are based in Israel. There are several strong projects in the space that are also based in Israel: Zen Protocol, Bancor, and DAOStack, to name a few of the existing projects. More are being founded on almost a daily basis. There is a lot of discussion going on in local FB groups and crypto Telegram groups, and recently every significant local news outlet has started releasing relatively profound pieces about the technology and its potential (aside from the benign headlines of record-breaking bitcoin prices). It seems everybody around here is either already holding some cryptocurrency or planning to get some in the near future. It seems more and more fiat wants to get into crypto. I should mention that buying cryptocurrencies in Israel is not currently the easiest thing; local exchanges are relatively limited, and access to international exchanges is possible only through crypto, as far as I know.
You have participated in several ICOs. Are there any special rules or criteria you follow when you make investment decisions? Looking forward, what do you think of new ICOs coming into the market? Are they more sophisticated?
I don’t know where to begin. To state the obvious, I look at the team’s background and reputation and at the whitepaper. I try to assess their best case, meaning what would happen if they succeed in building what they want, and then I look at their probability of actually realizing it. I try to examine their economic model: I ask whether the business idea actually needs a token or a blockchain or whether it could be better accomplished using a traditional technology stack. A working product is nice to have. I don’t like it when a lot of words are simply thrown out without a clear, concise description of the project — that raises a red flag. Another thing I would like to see more of is some kind of vesting schedule for the team so that if certain milestones aren’t met in a certain time frame, the team doesn’t get to liquidate the investment. And in the case where the project simply fails, I think some mechanism for protecting investors can be designed, e.g. by returning some of the investment. I think ICOs should be capped and that certain measures, such as enrollment prior to sale, should be taken to ensure a wide distribution. Honorable mention goes to ZRX on that end. Regarding new ICOs, it is hard to say. I admit it is hard to keep track; just a few months ago it would have been feasible to go over one of the ICO tracker websites, but now the lists on them are endless.
A group of well-known musicians, including Mariah Carey, Marilyn Manson, and G-Eazy, has recently begun accepting the privacy-oriented cryptocurrency monero. What are your thoughts on this? Is this a sign of cryptocurrency mass adoption?
This is very interesting. I hadn’t heard about it. Definitely any bridge that connects the “regular” economy with cryptocurrency brings mass adoption closer. I do think, though, that ultimately mass adoption will come when great products built using blockchain technology are deployed in such a way that users won’t even know there is a blockchain somewhere in the back end of the app — in other words, when dapps surpass apps.
Currently, ethereum represents your biggest position and more than 50% of the array. Considering the recent network congestion caused by the popularity of collectible digital kittens, are you worried about its future and scalability solutions?
As I see it, at this moment all blockchains suffer from the scalability problem. There is a huge backlog of BTC transactions, and it seems more and more products are moving away from BTC as a payment layer due to its large fees and backlog. Other blockchains, if they were used as much as ETH is, would surely come across the same issues. Although the CryptoKitties are a rather strange use case, it seems that it is being handled rather well and that it is reaching a very large audience. As can be seen in these charts, ETH now handles more transactions in twenty-four hours than all the other cryptocurrencies combined! In this regard, I believe necessity is the mother of invention and that ETH, with its outstanding community and class-A researchers, is the leading contender toward a scalable blockchain. Also, because part of the nature of cryptocurrencies is open source, it is my opinion that should another project find a generic solution for scalability, ETH could always adopt it. Regarding my ETH position, I ask what gives a blockchain or any software project or app value. Sure, it has to work and be secure, but ultimately, in my mind, it is the network effect — the fact that there is more usage makes it more valuable, makes it more used, and so on and so forth. The sheer fact that there are tens to hundreds of projects being built on top of Ethereum, from CryptoKitties to national voting systems, affirms its tremendous value and potential.
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