13/ The idealist would say that people should just ditch their dollars and begin transacting in crypto-native assets today
The purchasing power of the dollar has indeed collapsed -96% in the past 100 years
The dollar is the ultimate shitcoin (infinite supply, central issuer)
14/ But in reality, a more pragmatic transitionary phase is required
People get paid in dollars, price things in dollars, spend in dollars, and pay taxes in dollars
You can’t throw people into the deep-end, you have to walk with them
Stablecoins are the entry point
15/ A large part of this shift towards stablecoin usage will happen on the institutional front
First for internal operations, then for external operations
The ability to transmit dollars between institutions becomes frictionless and orders of magnitude faster and cheaper
16/ They can then being leveraging existing DeFi protocols
- Exchange one stablecoin for another (@CurveFinance)
- Earn yield on the stablecoins (@ConvexFinance)
- Borrow/lend the stablecoins (@AaveAave)
Again, first internally and then externally
17/ It just takes one institution to make the leap and the rest follow as they don’t want to be left behind
This will more than likely require identity protocols, and ideally one that is privacy preserving
At this point, the advantages of smart contracts are evidently clear
18/ Existing paper-based agreements begin to be replaced with deterministic smart contract agreements
With each deployed smart contract, interactions between counterparties become increasingly trust-minimized
Assets get tokenized and value-flow becomes entirely frictionless
19/ Likewise, there will probably be a parallel track focused on retail
This will be driven by greater education around self-custody and by a number of FinTechs focused on simplifying the experience
There will be a @Venmo scale app based entirely on transacting stablecoins
20/ This will evolve to merchants widely adopting stablecoins via Point-of-Sale solutions due to user demand and lower fees
@Visa is likely to lead or quickly join this bandwagon
This is the OG P2P digital cash narrative, but a reality for a large and growing number of people
21/ Users will then demand to be able to do more things with stablecoins, which will lead to the creation of full stack “superapps”
Like @Alipay in China, but self/MPC-custody and providing a simplified + holistic view into the Web3 economy including DeFi, P2E, NFTs, etc
22/ At this point, stabecoins and smart contracts will have become an integral part of the global economy
Just as we couldn’t imagine the world today without Internet
Naturally, Chainlink will play a crucial role in making this a reality both in its initial stages and at scale
23/
- Proof of Reserve for automated on-chain audits of collateral
- Price Feeds for DeFi apps using stablecoins
- CCIP for transferring stablecoins between blockchains
- Enterprise abstraction layer for enabling seamless access
- DECO for privacy-preserving identity credentials
24/ Ultimately, the end-result is a more trust-minimized society where people can exchange value freely
Crypto as a whole isn’t quite mainstream ready, but stablecoins are the most clear use-case that already meets real-world user demand today
25/ The path that I’ve laid in this thread is not necessary the future, but a future that I think has a high probably of occurring
More thoughts on the current state of the crypto ecosystem and what steps are needed going forward are below 👇
When you’re an outsider looking in, our industry looks like a fucking joke
And honestly, kinda hard to blame them
The incentives for crypto devs are simply broken
If you’re not providing xx% yield or a token to speculate on, 99% of your user base just don’t care
If we want the industry as a whole to not just survive, but thrive
We need to begin providing real value to society, not just JPEGs of a monkey or token printer machine
It’s not just about building useful applications, but pruning the speculation focused use cases
Being in crypto just to make some money is distinctly different than being in crypto to create a more trust-minimized society (and then profiting if that succeeds)
Unfortunately much of this comes down to legal blockers, but efforts here are mostly reactionary, not proactive
1/ Oracle networks are not static set and forget objects, but dynamic configurable services
A 🧵 on upgradability and multi-sigs
2/ When you deploy software, you learn over time what works and what needs improving
The first early versions is very unlikely going to be the best and final version
Continuous iterative improvements creates a more secure and reliable system for users over time
3/ When it comes to oracle networks and Chainlink, this is particularly relevant
New software releases (OCR lowering costs 10x), nodes being added to feeds (ETH/USD going from 3 to 31), and fallbacks to backup networks all require a form of upgradability
Ethereum gas fees at the baselayer are unlikely to significantly reduce, even in the long term
And yet the per-user transaction fees will continue to drop over time
Seems contradictory right?
It comes down to data compression and execution outsourcing (aka rollups)
Rather than executing every transaction individually directly on the baselayer
Rollups batch transactions together (redundant data compressed) and outsource execution to off-chain clients
The clients prove their off-chain computations on-chain as needed via succinct proofs
Therefore, the only load on the baselayer itself is storing batches of (compressed) transaction data and executing the occasional proof (cheaper than executing all the transactions individually)
Danksharding increases baselayer data capacity futher