The Token Disconnect

A token can be used as an authentication mechanic for a piece of software. It can be used as a voting mechanic in a DAO, for example. You might argue that voting is the purpose of stock certificates, but in practice, it's quite impractical to participate in corporate politics. You generally have to attend an annual stockholder's meeting and put you vote forward there, and even then, you only get to vote on the Board of Directors (and this is rarely used in practice).

In DAOs, it's far more similar to open source software development. People create an improvement proposal and pitch the idea in the forums and chat rooms for the project, and try to drum up enough support, and then it will go to a vote, and depending on how the DAO is set up, either you do an initial temperature check vote followed by a final implementation by the core team, or someone actually submits a PR to merge into the DAO source code and users vote on that code directly.

The transparency of the treasury mechanics is also far more superior to anything else in the corporate world. With a DAO, I know at all times, precisely how much is in the treasury, how they've spent their funds in the past, what mechanics and rules guard that treasury, etc. It's all inspectable and visible on-chain. That makes a qualitative difference in the amount of trust you can generate among a group of dispersed strangers from potentially all corners of the earth, and it allows them to proceed in a productive manner in such a way that was not possible except for largely through groups of close-knit people working within a single jurisdiction (for the most part).

Open source does work this way (which has also had a monetization problem), but pair open source ideals with open source money and open source treasury management, and you get something that is powerful in the same way that Linux is powerful for computing. Except it unlocks this type of coordination for things beyond software development. It encompasses everything, from art, entertainment, charity, politics, business, etc. It's a sea change in the ability to coordinate human beings and capital across distances and to incentivize people to participate in a more sustainable way.

But stable coins of course, also solve a problem in and of themselves, because they make dollar-denominated token mechanics possible. If you want to program a smart contract in such a way that the terms and conditions and programmed rules depend on dollars as a base pair, you need stable coins. Programmable money is powerful for all the reasons above (it can be held in a smart contract, governed by a DAO, controlled by a multisig or by DAO votes or by certain boolean conditions being met) and more. It's also borderless, it's as easy to use in Argentina as it is in Kentucky.

And slippage and liquidity are very real problems that do exist in traditional markets, such as stock markets. We've seen the traditional system mechanics breakdown, like what happened with GameStop earlier this year, when trading was halted due to liquidity issues. At any rate, powerful stuff here, it's here to stay, and it will change everything.

This is a sea change akin to the discovery of double-entry bookkeeping or the common stock corporation. You may reside in one jurisdiction your entire life, but the whole point of the internet is to connect humanity. You have no doubt interacted with hundreds or thousands of people in your lifetime online that reside in other states or countries than yourself.

If you want to coordinate with people across jurisdictions to create a venture or a charity or a political movement or a software start up or a video game project or create an artistic franchise, traditionally you need a pre-established relationship to do so. Because one person ultimately has to be in charge of finances if capital is involved. This creates a touchy situation. What happens if your partner in China or Argentina or Zimbabwe wants to custody the funds? You need to not only trust the person to be the treasurer and not run off with the money, but also the local banking laws and rules guarding those bank accounts. This makes coordination across distances difficult and unpredictable and fraught with risk.

Contrast that with placing those funds in a multisig, where you and your 3 teammates (from 3 different countries) all must sign-off on every expenditure from that multisig smart contract. Maybe you're ok with 3 out of 4 signing off on expenditures, that's fully customizable, since it's all code. You can also effortlessly swap between different currency pairs, whether that be Ether, or Bitcoin, or USDC, or Japanese Yen, and reinvest the treasury into yield generating strategies (since there is demand for on-chain loans and there does exist permissionless 24/7 on-chain money markets).

Now, don't lose sight of the big picture, because there's 7-8 billion human beings on this planet, and currently it is nearly impossible to coordinate, raise, and manage capital in a meaningful way for the vast majority of these humans. This is unlocking the capital availability of Silicon Valley for the whole world.

Uncensorable. Permissionless. Democratic. 100% Availability (Ethereum has 100% uptime for 7 years). No $GME rug pulls like what we saw earlier this year. No Great Financial Crisis due to opaque liabilities (everything is traceable, auditable, open source, solvent, collateralized). Non-custodial. Yield generation. Programmable capital management.

It provides superior capital access and coordination mechanisms for not just first world humans, who also see a benefit, but for all of internet-connected humanity. It provides access to a $2.4 trillion and rapidly growing economy.

If you are a business and you need money in crypto and you don't live in a hostile jurisdiction like North Korea, Iran, or the United States, you can raise money on-chain. You can create a token with any emissions schedule, staking mechanics, profit sharing mechanisms, on-chain royalties, or whatever you can imagine as a programmer. And even if you're not a programmer, you can lean on tools that help to do that.

Not true. https://en.wikipedia.org/wiki/Ethereum#The_DAO_event

Just like $GME, we have a handful of well-connected actors overriding the rules that typically govern the system, in response to a valid but unusual outcome that they don't like personally.

   * Money laundering (create a fake NFT and “sell” it to yourself to clean your money).
   * Illegal Activities (no more money trail for your drug trades!)
   * Billionaries Transfering Money outside of the bank system (no more pesky gift taxes!)
   * Pump and Dump Schemes (securities without regulation!)
   * Bribing Politicians (again, no money trail)
   * …