Thread by @Bhau_jagmd

ELI5 Perpetual Tranche $SPOT

Highlights, Preamble, and 🧵:

7: Systems
15: Rotate
30: Yield & Incentives
40: Our Yield in web2
47: Bicycle for the Brain
52: k% Ego Inflation & a dog named SPOT
68: k% Game
80: k% Bridge

When I began writing some days ago, I had no idea this

would turn out like this. Nor do I intend to write a thread this long again

But after several ELI5 requests, justice had to be done

The work took me on a journey to a future in which I could finally have a dog of my own...

and then it all clicked

Dogs r our best friends

This thread weaves together my research over the past decade

So I hope you will read it

But if you are unable to, or don’t want to - yet you value this and would like to support it - plz scroll towards the end of the thread 🙏

Bandwidth is v precious, as you might come to see

The ELI5 has also made this clear: there is no free lunch. In order to understand something, we have to invest Time or Attention,

AND,

Time and Attention -

Attention is Yield on Time

Today's systems tax not only our Money, which is on the path to destruction, but also our

scarcest assets:

Individual + Collective Time & Attention. Systems r configured to harvest our Collective Yield. We are paying

'22 was quite a year

If you're still here building, lets keep it going

When we burn we r forced to learn

We learned how things 𝗱𝗼𝗻'𝘁 work

SPOT shows us how to not let our world fall apart

Less Ego, more Love

Amazing convos have led to this @AmpleforthOrg @ButtonDeFi @NimbleNavis @MedDAO_xyz @banklessDAO @gitcoin @amplcast @DoinGudHQ & others (u know who u are)

Looking forward to an exciting '23 with you all ❤️

7

ELI5 -

$SPOT Perpetual Tranche & $AMPL-SPOT System

Let’s break it down

Approach everything as a system that has inputs & outputs,

And

Some 𝙩𝙝𝙞𝙣𝙜 that it’s doing internally - a "Computation" - with the inputs, that lead the system to generate the output

For example - a Diamond

System is constantly processing inputs, and computing them into outputs

Inputs = disorganizing forces of Entropy in the universe

Outputs = Diamond

“Computation” = Internal fixation of a robustly configured Carbon atom lattice structure

Likewise, the Benzene ring is stabilizing itself by delocalizing the Pi electrons. Naturally, this results in different properties

Every system is inputting Entropy,

and stabilizing itself ("Computation"),

to output some phenomenon which is observable by us

From here, we can map this framework onto more complex systems, which also have their own Agency ~ capacity to ACT in a self-directed way

The Cybernetic System can Act internally with other sub-systems, and externally with the world

Sensory feedback directs Agency

When Input = Entropy;

Computation = Stabilization; and

Output = Observable Phenomenon,

then the framework can be further mapped on to Systems & their Processes

But in terms of

Time ⌚️🕰️ ⌛️

B/c Entropy is the "Arrow of Time." It moves in only one direction: Forward

In my medical profession of Psychiatry, the Bio-Psycho-Social formulation of a disordered state is modeled in terms of its disease process

There are Precipitating, Perpetuating, and Protective factors

Start, continue, slow down

#majordepression is such a disease process

A person may have unfortunately fallen into depression due to certain precipitating factors, such as an accident, a job loss, or some other unfavorable outcome

Hopefully, there r Protective factors in place...like economic security, health insurance, community, friends, family

Thru Action or Inaction, consciously or sub-consciously, deliberately or inadvertently, conscientiously or unwittingly,

willingly or unwillingly

a person is taking part in - exercising Agency ~ Acting - to perpetuate their own process

The 𝙛𝙖𝙘𝙩𝙤𝙧𝙨 are perpetuating, but

the Game of Life does not allow Spectatorship

15

We are 𝙥𝙡𝙖𝙮𝙞𝙣𝙜 whether we want to or not, and thereby we are taking part in inviting all of our outcomes into our lives

Let's rotate 90 degrees counter-clockwise and make a few tweaks to appreciate this better

Psyche is governed by the Id, Ego, and Super-Ego - according to the founders of Psychiatry

These are 𝗣𝘀𝘆𝗰𝗵𝗼𝗹𝗼𝗴𝗶𝗰𝗮𝗹 factors - they can be Precipitating, Perpetuating, & Protective; respectively

By orienting us to our Desires, the Ego perpetuates our processes

Ego literally 𝙙𝙧𝙞𝙫𝙚𝙨 us to Action by integrating Impulses & Instincts (Id) with Judgment & Wisdom (Super-Ego); ideally the integration would be balanced

Above all, the Ego must maintain Integrity

It leads us to justify our Actions & our existence - Stability

Now the overlap with AMPL-SPOT system begins to present itself

But we're not there yet

Let's bookmark the concept of a "Trinity" for systems & processes

Creation = Initiation; Preservation = Perpetuation; Destruction = Inhibition

We'll revisit this later

Under the not-so-ideal spell of Depression then, the Ego can trap itself in an Action-Perception Loop of Learned Helplessness

The insight here is:

Though a person might believe they're doing their best, the outcome may be an inadvertent perpetuation of their predicament

Why?

20

What might be the Incentives?

Wat is the "yield" from directing & driving our processes?

The Ego must finance its operations. There's no free lunch. Nothing is Risk-free

Policies of Action r paired with Consequences of Outcomes, & accounted for with - settled in - Dopamine

You've likely seen me mention Active Inference and Free Energy Principle ad nauseam by now, so here it is again

Minimization of Expected Free Energy - Uncertainty about expected values from expected outcomes - can be approximated with a "yield" of Dopamine for the Nervous System

We can observe this unfold in our Neuro-circuitry

Arrows do not represent theoretical processes, but rather the flow of Information = Neurotransmitters

Drive Vector ≈ Meso-Limbic (VTA --> NAcc) & Meso-Cortical (VTA --> PFC) pathways in brain

Dopamine deposit in NAcc = Reward

Specifically,

"Pay" Attention = Dopamine Depletion

Reward = Dopamine Repletion

The difference = "Yield"

Usually, there is a healthy balance which perpetuates the system forward in intended directions

But depression is a bit like Traumatic Brain Injury (TBI). Evolutionarily,

the pro-survival strategy after neurological or psychological injury is to minimize Risk & Uncertainty by minimizing engagement with the environment

No Risk ~ "wager" of Dopamine depletion --> No Reward

No Yield; No Harm; Learned Helplessness

The opposite is also unhealthy

Risk taking behavior driven by pursuits of Dopamine are seen in Mania

Nowadays, artificial introductions of Dopamine (e.g., Adderall) can fuel Delusions and Addictions. We've witnessed an indelibly clear example of this in crypto

But you see - nobody is spared

Disorder or not

26

web2 apps hijack our neuro-circuitry

After we've been rewarded with Dopamine deposits in our NAcc, what does the system do next?

Rewards were scarce for our ancestors, so Prefrontal Cortex directs our Attention back to the "rewarding" stimulus

Doom Scrolling perpetuates

And its a slippery slope snowballing from here, b/c internally this information is routed also through what r known as:

Cortical-Striatal-Thalamic Loops

Striatum is where motor programs, habits, & behaviors are integrated

Thalamus is "Gateway to the Cortex" for information

In the Age of Information, it is very easy to validate and select for self-serving biases

Echo chambers are everywhere, b/c info is so abundant that it can be solicited to justify any proposed narrative

So loops within & without mirror each other, as Dopamine "yield" is chased

The inevitable question arises: Who is in charge?

Who is driving the bicycle? Who is shifting gears and moving pedals?

And this is how so many people have lost themselves

Unbeknownst to majority of people, Psychic - relating to the Psyche - "center of gravity" is displaced

Agency is lost. People meander aimlessly through Life

"Getting what you want out of Life is a sign of Intelligence, but so is knowing what to want" - Naval

I might be paraphrasing

But it can also be said that people are set up to suffer this fate

The balance is delicate

"The gigantic catastrophes that threaten us today are not elemental happenings of a physical or biological order, but psychic events." - warned Carl Jung

Looks like he was on to something

The West exhibits excessive Ego-consciousness, as evidenced by extreme individualism

and an unrelenting drive to impose one's version of the Truth as some kind of righteous victory over the narratives of others

"Woke"

70% of the US Economy is consumption!

Not every Illusion of reality needs to be shattered all at once, but this one does - lest this Illusion

go on to become a Delusion

How do we think we all got here following COVID-19?

MSM has hijacked our Action-Perception Loops. What has proven to be more dangerous - the idea of COVID, or the biological virus?

Persistent reminders about the Uncertainties around COVID have

served only to activate our Sympathetic Nervous System:

fight/flight state - hostility, irritability
Up-regulated HPA axis & Inflammation
obsessive & compulsive "safety" - self-fulfilling prophecies "this booster will help me"
Anxiety cascades into drug use

Seems v grim

35

Don't worry

The solution is simple

Restore Agency --> Re-orient Bicycle --> Feed forward in prosperous new direction

How?

Transcranial Magnetic Stimulation

TMS is the bicycle for the brain - it helps people get back on the bike, & can redirect it towards health & wealth

Our Prefrontal Cortex can be roughly approximated with the Super-Ego or the "Controller" in the Cybernetic System

When left dorso-lateral prefrontal cortex (dlPFC) is stimulated with high frequency (hf) TMS, neurons r "energized" with electricity

TMS helps the brain shift gears

Metaphorically, and Objectively

When dlPFC is activated, another region called the Anterior Cingulate Cortex (ACC) is suppressed

ACC and its connections - the Salience Network - is down-regulated, while dlPFC and its connections - the Central Executive Network - is up-regulated

Salience Network orients the system towards what it is configured to designate as relevant or salient stimuli, and away from others

So when Central Executive Network is activated with hf TMS, Attention is redirected towards appropriate stimuli to reconfigure reward circuitry

such that the pursuit of NAcc Dopamine "yield" stops governing the system - like an addiction,

and

the Biker gains Agency over Action-Perception Loops, Super-Ego functions improve, while TMS promotes PFC control over behavioral neuro-circuitry

TMS is the Bicycle for the Brain

In #majordepression, the Nervous System is in a Recession

Dopamine Yield is down

Much like how the k% Inflation target of centrally planned economies requires QE - liquidity injection - to prevent downward spirals & Recessions,

the k% policy of Ego Inflation falls short in Depression

It requires a stimulus

TMS is the liquidity

dlPFC electricity is integrated to promote dopamine release along the meso-limbic & meso-cortical pathways, fortifying the Ego to break out of Learned Helplessness patterns

Pills are not the solution

By now we should become acquainted with this idea of Neurotransmitters as Money, b/c then the following becomes clear:

SSRIs r Serotonin Quantitative Easing (printing) for the Nervous System

Short term Gains; Long term Pains

bhau.substack.com/p/moneyness-of…

Why is this all so important?

B/c Health Insurance & Pharma r to Medicine, what Banks r to Finance

The systems exist primarily to take - to extract value - for self oriented enrichment, at the expense of all other participants

Middlemen perpetuate our collective problems

Thankfully, TMS mechanism of Action can be applied to all conditions by pairing with appropriate Cognitive Interventions to ensure correct mechanisms are engaged

In web3, we can democratize TMS for everyone

Thru innovations in Money, we become the perpetuators - not 3rd parties

At last, we can shift our Attention back to SPOT

SPOT is a dog, and dogs like to run & play

Compared to us, SPOT doesn't chase Dopamine yield for himself. He plays fetch & likes to go on car rides where he can cruise & chill

He delegates control to us; it's a diff steady state

46

As a result, SPOT is Trust-worthy

Dogs are hooman's best friend. They will put us 1st before themselves

no Ego, all Love

And he sure loves his treats

Right now, he's picky. He only wants these bones to chew on, which - I've noticed a pattern - he'll stop after 28 days

They're high quality bones too

SPOT is pickier than you'd think. He finds a way to sort out the best 20% of these treats thru the bag - and then he'll chew only on those! 🦴

I thought it was bizarre as well, but others agree - in awe

He's a pup, so we'll spoil him for now

Also...there's a trick

He forgets about the remaining 80% of these bones after 28 days. So when he's fed a "new" bag of bones, he'll jovially sort thru the 20% again and hand me the remaining 80%

and I'll happily oblige 😈😅🐶

For now, SPOT has a weekly cadence of new bones

There's another trick

Others have reported that SPOT can begin to ROLLOVER after 28 days

They've also told me that the 20% bone treats he discards after 28 days, can be fed right back to him - but only if they are rotated out for fresh 20% fav bones he loves

Turns out, it

is a matter of perspective

When SPOT rolls over, he sees the world upside down. So what seemed old before, now appears new

Really, it's true - but, he'll only take the best 20% of that batch too

Again, we happily ROTATE 😇

But why do we really do this? There r Incentives 🐶

b/c ROLLOVER is a signal of Trust

When dogs are on their back, they signal vulnerability & Limbic Resonance

And what else do dogs love? Belly rubs!

Dogs don't have an Ego to self-inflate the way we do, so belly rubs r the closest thing to SPOT's k% Dopamine Issuance

Belly Rubs are a Positive-Sum Outcome

They promote the emergence of positive mood states by triggering release of Neurotransmitters like Dopamine & Serotonin in the mechanistically corresponding neuro-circuitry

Rarely does anyone ever walk away thinking "my day is ruined now"

So that's the SPOT owners' incentive for doing ROLLOVER

We get some k% too, but we have to be careful not to indirectly begin gratifying ourselves with this - I've been fore-warned by the community

Do we want others to miss out on all the fun with SPOT?

I don't think so 🐶

The more SPOT runs & plays on different playgrounds, less he needs to be gratified "artificially" - tho belly rubs r great!

We also want SPOT to get affections from everyone else he interacts with

So the more SPOT socializes naturally, the better he can grow into a good boy 🐶

In other circles, dog owners have figured out a way to trade their freshly sorted 80% bags with others for their 28-day seasoned 80% bags...

Giving them the ability to feed him new 20% bones and also rotate them in during ROLLOVER on command!

Well, if we SPOT owners were to do

something like this, then sure it would be wonderful to see SPOT run very fast and far

But that means we have to be able to YANK the leash - REDEEM

Thankfully, he's safe if he ever does get away from us

And that's b/c nobody can take those bone treats away before 28 days 🐶

One last secret that not many are privy to

When SPOT is in a NET Positive Dopamine Yielding state, he is generally feeling good and so is everyone around him

B/c of this, something "tickles" SPOT once a day,

& after this happens, the 80% bones he set apart go up in quantity!

58

K% should derive from diversity of socialization - not self-gratification

Everyone should belly rub SPOT

𝗧𝗵𝗶𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝘀 𝗩𝗮𝗹𝘂𝗲 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗲𝗻𝘁𝗶𝗿𝗲 𝘄𝗼𝗿𝗹𝗱

To understand how, let's contrast with our present situation

K(2)% Inflation target should

be managed thru judicious use of monetary & fiscal tools; QE/QT & interest rates

Instead, we have QE - debasement of currency - which has been so reckless, that it has evolved into Inflation

Tax Revenue is supposed to feed in to this k% to prevent such economic disasters

Instead, side pots have emerged to gamify value extraction from the very process of reporting taxes

Is it any wonder that US national debt is at $31 Trillion

Debt to GDP Ratio is above 100%

So if this were a CDP, it would be liquidated already...Got it

usdebtclock.org

And why is Individual Income Tax Revenue six times greater than Corporate Tax Revenue?

Same reason

Where has this tax evaded - lobbied - money gone?

Into capital assets & investments

So the "free market" is oriented towards quarterly reports & PE ratios in favor of priorities

Like our Health!

Unbelievable Greed 🤬

Pharmaceutical lobbying interests prioritized COVID vaccine Revenue over our safety

Similar interests prevent everyone - including my patients - from receiving TMS

B/c Pharma 🤝 Health Insurance thru opaque centralized ledgers

Extend

this to other sectors, and you see the picture

This is the main reason FTX went down btw, not b/c it was "crypto" - the ledgers were opaque & clearly SEC didn't care enough to audit + protect consumers

Doesn't it just make more sense to use distributed ledgers for such things?

Yes - this is Bitcoin

Annual k% policy of n BTC per block

Difference is, everyone gets a chance to win block reward while the system is rules-based & transparent

"Tax" is collected as transaction fees

Fixed Supply and other features lead BTC to be valued by the free market

On Ethereum,

Annual k% policy of n ETH per block

In addition to peer-to-peer transactions, Ethereum has Smart Contracts & decentralized applications

Whereas BTC is valued b/c its blockchain is resistant to change, ETH is valued for the opposite

Ethereum upgrades continuously

This has led ETH k% policy to become deflationary - "ultrasound" with EIP-1559

"Tax" revenue is also greater

Ethereum network participants can win block rewards with software based staking thru Smart Contracts

For BTC, hardware is a requirement

And now we have AMPL; it has

no block rewards, b/c there is no blockchain

AMPL-SPOT r Oracle Independent, so they can go to any chain

AMPL-SPOT participants can win k% rewards thru the Action of ROLLOVER - non-randomly

Systems work optimally when components r dynamically balanced

Like Id, Ego, Super-Ego

Or if we want to zoom out more, the notion of "God" can be appreciated

In Hinduism, the Holy Trinity is known as the Trimurti

Brahma is the Creator, Vishnu is the Preserver, and Shiva is the Destroyer

Core fundaments of the Universe are integrated thru distributed consensus

It's all connected

SPOT can only grow with Love

Everyone must cooperate legitimately, by holding collective interests above their own if possible - but certainly not in favor of their own

We all have to contain our Greed & Drive for instant gratification

Examine closely, and

you'll find that AMPL-SPOT motivates potential for such behavior from its Users, and market participants at large who understand these dynamics (e.g., Arbers)

SPOT runs far & AMPL expands so long as we coordinate the functions of the system's respective Action-Perception Loops

This has never been easier than it is today with Smart Contracts

The Z-Tranches mature after 28 days, by which point they have likely accrued Value - giving the user more AMPL upon redemption

1.2x more AMPL than the user would've had by holding raw AMPL

So there isn't even

much of an incentive to dump them or "exit" position via the wAMPL - Z-Tranche LP

The next best thing to do with the raw AMPL is either MINT or ROLLOVER

In this way, feedforward positive loops can be cascaded

while recursive potential in either direction gets locked by Time

WE move the gears of this perpetually rotating conveyor belt of Senior A-Tranche collateral sets

These assets do not - 𝗰𝗮𝗻𝗻𝗼𝘁 - lose Value, for at least 10 days

So long as all 3 functions are balanced, SPOT can continue to run & play

The opposite of Ego is Love

And what does he give us in return? Inflation Resistance & Minimized Price Uncertainty - better than "stablecoin"

So long as he gets his bones & Rotations perpetuate

How can ROLLOVER continue perpetually?

Incentives

These drive AMPL expansion & SPOT's growth

Solve for k%

75

At scale with arbing, mint/burn fees could sustain bulk of the reward incentives for motivating fresh Tranche Rotations into the system

The DAO could also vote to divert its revenue streams towards ROLLOVER incentives

Or perhaps even the daily Rebase

So long as this k% is

Decentralized

Build the K% Bridge, and

𝗧𝗵𝗶𝘀 𝗰𝗿𝗲𝗮𝘁𝗲𝘀 𝗩𝗮𝗹𝘂𝗲 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗲𝗻𝘁𝗶𝗿𝗲 𝘄𝗼𝗿𝗹𝗱

With AMPL-SPOT, we have an n-person non-cooperative Game wherein the optimal outcome for everyone -

which unlocks Value Surplus

- is one that perpetuates ROLLOVER!

This is game theory math speak for "up and to the right"

In the Bargaining Problem, John Nash justifies with mathematical proofs, how non-zero sum outcomes can be unlocked between two individuals

So quite literally, the optimal solutions lie in the first quadrant - up n right

These solutions account for utility, anticipations, & rational expectations

From this emerged the Nash Equilibrium, which is the set of solutions unlocking Value Surplus in n-person non-cooperative Games

How do ppl cooperate without external authority (law)?

If there's no law,

then how can they unlock positive-sum outcomes and Value Surplus?

Nash went very deep into the math. So deep that he took these solutions to the very limits of infinity

Hence, "Asymptotically" Ideal Money

From the outside, it appeared as if he were ill

He also emerged with

the realization that much of the arbitration work of external authorities will be done by software in the future (now)

This enabled him to think far into the future when such ("Robot Attorneys") work would be done by software after tech has scaled computationally

Because he saw

Nature clearly

Cooperation without external authority

What might such a world look like for humanity?

If conditions of Information Symmetry, Scaling Variance, Pareto Efficiency, and the Independence of Irrelevant Alternatives were satisfied, we might have such a society - he

concluded

It's why he worked on Ideal Money - b/c Information is the ultimate Medium of Exchange

Much of this wisdom is incorporated into non-zero games including Bitcoin, Ethereum, and Ampleforth

Importantly, these games cannot grow in a vaccuum

A "Grand Coalition" must

form to unlock Value Surplus

Like the Nation state that harvests yield - taxes - for its k% by attracting individuals to perform labor for capital within its confines, web3 Network states are poised to deliver a superior value proposition for all inhabitants

Simply because the

entire "supply chain" of processes - the "independent arbitration" - that drives this k% has now been effectively delegated to computer code,

for the benefit of everyone!

These are DAOs

Before the telegraph, what was the primary method of telegraphing information?

Messengers

Before blockchain, what was the primary method of telegraphing value (Money)?

Middlemen

Before Smart Contracts, what was the primary method of managing credentials (NFTs)?

Institutions

Before SPOT, what was the primary method of issuing Inflation-Resistant P2P Cash?

________

On that note, let's wrap this up

Vitalik recently wrote about his outlook for 2023. I concur with his views

Money is the most important use case that had not been solved for...until now

vitalik.ca/general/2022/1…

If Money is the Wheel then web3 is the Bicycle, and we r the Agents who govern the decisions that determine its Value

He concludes with Hybrid Applications

Apps that r not entirely on-chain, but take advantage of both blockchains & other systems to improve their Trust Models

I can't think of a better system to hybridize web3 with, than the Nervous System

It resembles a Smart Contracting Brain as I've outlined here: mirror.xyz/bhau.eth/SuoUH…

The pieces r in place now for the bridge to be built, which will onboard the next wave of participants

This is the k% Bridge

I drafted such an initiative a while ago, but I did not feel comfortable enough to campaign for it

And I'm glad I didn't, because we all were burned and lessons were learned

But now, we have to

The alternative is untenable

Because healthcare has been

hijacked by Greed

E.g., Health Insurance companies have hired doctors for "peer to peer reviews" to actively antagonize the process of healthcare -

like dogs in a cage

and Admins to extract even more Value

all for what? A buck?

They gate our Credentials

Therapeutic Alliance

between patient and physician is eroded at every step

I have experienced this as a physician, a patient advocate, and as a patient

We have many epidemics: Sleep, Obesity, Loneliness, and others we aren't even aware of

So now that Money has been designed to Resist Inflation and

Store Value,

or at least it can be clearly verified to not lose Value by cross-verification with perpetual tranche rotating collateral set,

Hybrid Applications can be designed similarly to promote Value accrual in tokens representing Positive-Sum behaviors

Like Sleeping & TMS

On this 3rd of January that marks the 14th anniversary of Bitcoin's Genesis Block,

let's begin 2023 in the direction that will continue to fulfill the promises of our collective dreams

I'm fully committed to rebuilding healthcare & our planet - it's 50 & 60s during winter!

We are in this

There's no going back now

Plus - SPOT would love to have more friends to play with

As we've come to see - No Risk, no Reward

Ready?

Play

mirror.xyz/bhau.eth/wTbXe…