The Token Disconnect
stephendiehl.com
The Token Disconnect
1–10 of 45 posts
Re: The Token Disconnect
#2> These days I read a lot of cross-disciplinary commentary on the crypto asset bubble, and what strikes me as particularly strange is the sheer level of disconnect between people’s lived experience of this mania.
Rather than do an investigation or analysis of some of the broader trends and successful applications of crypto, this article proceeds to make sweeping accusations devoid of earnest research.
Here's what I would suggest to the skeptics, to research and understand this space better and why it continues to keep on ticking in spite of the snarky commentary:
Uniswap (xy = k) https://docs.uniswap.org/
the constant product model that Uniswap introduced made automated money markets practical. It's an elegant solution to the problem of creating an on-chain marketplace with a sub-1000 line smart contract. Uniswap has since improved and introduced concentrated liquidity for better capital efficiency. The exchange does multiple billions in volume each day and the best part is: it's immutable.
Curve (https://curve.readthedocs.io/exchange-overview.html)
While Uniswap is optimal for a long tail of asset swaps, Curve allowed for higher capital efficiency among stable base pairs (such as swaps between two stable coins like USDC and USDT). It achieves high capital efficiency for deeper trades with low slippage. It is decentralized and powered by a DAO.
Gnosis Safe (https://gnosis-safe.io/)
Gnosis is one of the most battle tested asset management and multisig smart contract platforms. Each Gnosis Safe is highly configurable, allowing participants to set up any m of n multisig arrangement and even reinvest treasury funds. A multisig can be seen as a light DAO and allows for participants to manage funds in a transparent way across distances and jurisdictions. This helps with coordination and development. The whole world of DAOs is interesting in and of itself, with many different organizational structures being tested and iterated on.
Aave https://aave.com/
Aave is a lending and borrowing platform that allows users to deposit and lend out their assets. The platform is kept solvent by oracles, which watch the price of the collateral backing the loans to liquidate them if they approach a danger zone. Currently holding nearly $30B in assets.
Chainlink (https://chain.link/)
An oracle platform that allows for off-chain data to be integrated with smart contracts in a maximally (but not entirely) decentralized way. This allows for anything from stock prices to weather reports to credit checks to verifiably random numbers to be integrated with smart contracts to influence their execution and state in a maximally autonomous and tamper-proof way.
If you interact with the above protocols, you'll learn more than reading any op-ed thinkpiece. There really is something there there, the decentralized finance movement is burgeoning and it is qualitatively better than what options exist today. It's more powerful, more universal, more programmable, even more antifragile than the systems in place today. It will win in the long run.
There are other movements too, with DAOs and NFTs. DAOs will reinvent all sorts of organizations and will make internet native communities self-funded and self-sustainable.
Re: The Token Disconnect
#3> These days I read a lot of cross-disciplinary commentary on the crypto asset bubble, and what strikes me as particularly strange is the sheer level of disconnect between people’s lived experience of this mania. Rather than do an investigation or analysis of some of the broader trends and successful applications of crypto, this article proceeds to make sweeping accusations devoid of earnest research. Here's what I w…
How many people start their day and think: oh man, I have such a hard problem of "creating an on-chain marketplace with a sub-1000 line smart contract", I wish there were a product to solve this for me?
If you want to show that blockchains are applicable to real world, you don't want to talk about implementation, but about UX. For example, you are a business and need money. Your choices are banks, VCs, and one of those distributed landing / borrowing platforms. For each, how many money can you expect to get? Under what (effective, averaged) interest rate? Whom do you need to conivince? Do you need to provide any documentation? Can you use your existing assets as collateral?
An answer to this question will make a much more convincing argument in the long term usefulness of DeFi.
Re: The Token Disconnect
#4> These days I read a lot of cross-disciplinary commentary on the crypto asset bubble, and what strikes me as particularly strange is the sheer level of disconnect between people’s lived experience of this mania. Rather than do an investigation or analysis of some of the broader trends and successful applications of crypto, this article proceeds to make sweeping accusations devoid of earnest research. Here's what I w…
What would you say is the best example of a concrete, real-world use case for one of those tokens that would refute the article's claim that blockchains are “a solution in search of a problem”?
I ask because a lot of these things (exchanging one USD-pegged token for another, borrowing a token for another token) seem like problems that wouldn't exist to begin with, without blockchains.
Re: The Token Disconnect
#5> These days I read a lot of cross-disciplinary commentary on the crypto asset bubble, and what strikes me as particularly strange is the sheer level of disconnect between people’s lived experience of this mania. Rather than do an investigation or analysis of some of the broader trends and successful applications of crypto, this article proceeds to make sweeping accusations devoid of earnest research. Here's what I w…
All of these are just castles in the sky if you don’t have a connection back to the real world.
You might argue stablecoins are that connection but in that case you have to deal with both the fact that you could then do all these things in the traditional way more efficiently and that the stable coin situation itself is looking dodgy as hell.
Re: The Token Disconnect
#6This is the guy who has been writing the same things about crypto for the past 2 years. He makes a lot of extremely arrogant assumptions then extrapolates from them to weave a narrative that confirms the biases of his readership.
I'm not sure why he's constantly re-iterating his opinions with new blog posts... he hasn't seemed to update his knowledge at all since 2019, and his opinions haven't changed.
He seemingly has no concern for the state of the economy and public institutions, nor any awareness of the cryptocurrency scene beyond the cryptobros.
For anyone trying to understand why so many people are supportive of crypto, first you have to understand why they are against centralization. The whole cryptocurrency "movement" is about solving political and economic problems through technological means, with the main target being centralized power.
For most, centralization isn't such a bad thing and seems to be working quite well. These are generally the people who, for example, don't think Google is doing anything particularly wrong. For others, decentralization is the only path to simultaneously progress society and untether it (lol) from legacy institutions. Blockchain is the technology that can enable that and usher in more fair and resilient community systems. That's the "use case" that Stephen Diehl is incapable of finding.
Re: The Token Disconnect
#7> These days I read a lot of cross-disciplinary commentary on the crypto asset bubble, and what strikes me as particularly strange is the sheer level of disconnect between people’s lived experience of this mania. Rather than do an investigation or analysis of some of the broader trends and successful applications of crypto, this article proceeds to make sweeping accusations devoid of earnest research. Here's what I w…
All of these are just castles in the sky if you don’t have a connection back to the real world. You might argue stablecoins are that connection but in that case you have to deal with both the fact that you could then do all these things in the traditional way more efficiently and that the stable coin situation itself is looking dodgy as hell.
Are all stablecoins looking dodgy? Sure, centralized ones, particularly tether you could argue so.
But what about decentralized stablecoins such as Dai?
Re: The Token Disconnect
#8> These days I read a lot of cross-disciplinary commentary on the crypto asset bubble, and what strikes me as particularly strange is the sheer level of disconnect between people’s lived experience of this mania. Rather than do an investigation or analysis of some of the broader trends and successful applications of crypto, this article proceeds to make sweeping accusations devoid of earnest research. Here's what I w…
What would you say is the best example of a concrete, real-world use case for one of those tokens that would refute the article's claim that blockchains are “a solution in search of a problem”? I ask because a lot of these things (exchanging one USD-pegged token for another, borrowing a token for another token) seem like problems that wouldn't exist to begin with, without blockchains.
Exactly, each of those examples is only interesting or useful to someone who already believes crypto has value. It's totally circular.
Re: The Token Disconnect
#9> These days I read a lot of cross-disciplinary commentary on the crypto asset bubble, and what strikes me as particularly strange is the sheer level of disconnect between people’s lived experience of this mania. Rather than do an investigation or analysis of some of the broader trends and successful applications of crypto, this article proceeds to make sweeping accusations devoid of earnest research. Here's what I w…
What would you say is the best example of a concrete, real-world use case for one of those tokens that would refute the article's claim that blockchains are “a solution in search of a problem”? I ask because a lot of these things (exchanging one USD-pegged token for another, borrowing a token for another token) seem like problems that wouldn't exist to begin with, without blockchains.
Autonomous services (similar to vending machines): See PoolTogether, a service which before blockchain would be considered almost certainly a scam, and would be nearly impossible to audit.
Because it's on Ethereum the contract is publicly auditable, and the rules are simple: insert currency into a pool, and have a chance of winning a %age of total interest earned once a week. No one owns the service. If the site goes down nothing changes. The developers can't just change the rules (backend) on you. They also have a DAO so the users can manage the service themselves.
A similar service is Compound, which recently was found to have a bug that gave away something like $90 million worth of currency to random users. That's the main danger with blockchain services: exploitable bugs.
Besides that, I've been thinking about something like a blockchain based Wikipedia (or Research Gate?), with monetary incentives for research teams to answer questions posed by the community (when they can't get funding by other means) and a codified scientific process for grading the quality of papers, as well as mechanisms to reliably cite related research papers to use as supporting evidence or jumping off points. Think of this: a debunked paper causing a cascade of debunked papers that cited it.
The point of using the blockchain would be to create a decentralized repository of research information with strict rules to maintain integrity of the information submitted (as opposed to relying on a centralized committee that might become corrupt through perverse incentives).
Re: The Token Disconnect
#10This is the guy who has been writing the same things about crypto for the past 2 years. He makes a lot of extremely arrogant assumptions then extrapolates from them to weave a narrative that confirms the biases of his readership. I'm not sure why he's constantly re-iterating his opinions with new blog posts... he hasn't seemed to update his knowledge at all since 2019, and his opinions haven't changed. He seemingly h…
I've only read a few of his posts so far, and this one seems to do a good job explaining why VCs are so interested in it. It seems like you've simplifying his argument into simply "anti-cryptocurrency," when there are many interesting perspectives explain its irrational popularity. I think you could fill a book on it.
On your argument about centralization, do you think that the momentum fueling its popularity is grounded in centralization vs decentralization? Because most of the interest I see boils down to making money via speculation.