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25 Jan, 5 tweets, 2 min read
One of the more thought provoking essays I’ve read on Ethereum in a while.

In short Ethereum wins not by challenging nation states head-on for monetary supremacy like Bitcoin, but by growing its own digital economy until it surpasses that of the dominant sovereign powers.

1/
“History teaches us that there’s only one viable method for a challenger willing to replace the current monetary reserve: it has to grow its own economy till the point it matches, and eventually surpasses, that of the main global power of the moment — currently, the U.S.”
This is a mental model I’ve long agreed with as well.

Bitcoin - a digital challenger to gold

Ethereum - a digital challenger to sovereign jurisdictions

Bitcoin : Digital Gold :: Ethereum : Digital Economy
This is also why I think various measures for on-chain economic activity are the most important metrics to track to understand Ethereum’s progress.

This literally shows how the above thesis is playing out.
It is also why @WilsonWithiam and I titled our ETH 2 report “The Next Evolution of the Cryptoeconomy”

messari.io/road-to-eth2

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Ryan Watkins Profile picture
26 Jan
To me this is the biggest invalidation of the thesis that fee capture today actually matters.

So long as DeFi protocols have 100x+ growth ahead of them:

Growth > Fee Capture.

1/
Along this line of thinking, even if a token does implement some kind of fee capture it’s much better to reinvest those earnings rather than distribute as dividends.

UNI implicitly does this by not extracting fees from LPs (fee switch off).
This industry’s obsession with dividends is a backlash to the useless utility tokens from 2017.

Yes it’s important for tokens to have the potential to accrue value.

But earnings potential is not the same as dividends.
Read 5 tweets
Ryan Watkins Profile picture
25 Jan
Over the past year Helium has been the single most effective way to evangelize crypto to my friends.

The reason?

Financial use cases are hard to grasp and uninteresting to people without financial backgrounds.

1/
Bitcoin is hard to explain because reality is most people don’t even understand the purpose of gold outside it’s use in jewelry and electronics.

In many ways Bitcoin just seems like a pet rock.
DeFi while somewhat easier to explain because people use financial services, is still hard.

The second you start talking about market making, derivatives, synthetic assets, etc. you lose people.

It’s all very abstract.
Read 8 tweets
Ryan Watkins Profile picture
22 Jan
What’s most impressive about fair launched projects like $YFI and $SUSHI is that they were both able to create billion dollar enterprises in just months without a dime of upfront investment.

Blockchains fundamentally collapse the costs of launching and scaling networks to zero.
Decentralized computing infrastructure is powerful.

Blockchains are shared public infrastructure, and if you design the right set of rules and incentives on top of them, users and capital will self-organize to create novel institutions that are global, open, and permanent.
This is why so many people in DeFi are excited by $YFI.

It is the best example of how blockchains collapse the costs of launching networks to zero, and provide the foundation for truly grassroots, internet native, self-organized institutions.
Read 4 tweets
Ryan Watkins Profile picture
15 Jan
Recently I’ve been thinking a lot about how protocols can sustainably fund themselves - especially in the context of fair launches.

My thesis succinctly:

Pragmatism > Dogmatism.

Equity > Entitlement.

Live protocols > Dead Protocols.

Reality > Narrative.

1/
There was a moment over the summer when the community believed it could launch new protocols without venture backing.

This wave of “fair launches” provided the community with a number of DeFi’s most exciting projects.
However recently the community has also learned the challenges of launching without proper funding.

andrecronje.medium.com/building-in-de…
Read 6 tweets
Ryan Watkins Profile picture
12 Jan
Brutally honest post on building in DeFi.

Bull markets tend to attract people who are here to get rich quick and get out rather than people who care about building shit that people can actually use.

link.medium.com/mPIB98XpZcb
I’ve thought about this a lot, mostly when talking to my friends who are completely divorced from everything happening in DeFi and crypto generally.

Sometimes it does just seem like it’s all speculative financial games (Bitcoin can even feel this way as well at times).
“Community” can also sometimes feel like a bunch of passive participants constantly asking “wen moon?”

But seeing teams and other protocol contributors who are committed to building projects that actually matter and will create real value for people always keeps me optimistic.
Read 4 tweets
Ryan Watkins Profile picture
10 Jan
Was MKR a good trade at $500? Yes. Fundamentals were 📈 without any reward.

Does it currently generate a ton of earnings? Yes among the top in DeFi and 📈

But is the competitive outlook for MKR bright? Debatable. Seriously challenged in lending, synthetics, and stablecoins.

1/
We discussed this opportunity back in August.

Back then Dai supply was going parabolic but stability fees were stuck at zero.

All MKR needed to do to turn on the cash machine was get rates up which it did.

messari.io/article/an-opp…
That said if I had to project 2 years out, how confident would I be that Maker won’t be disrupted on all three of the lending, synthetics, and stablecoin fronts?

Maker is resilient and battle tested, but Lindy effect only goes so far if Maker is fundamentally flawed.
Read 5 tweets

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