Jon Wu Profile picture
10 Jun, 32 tweets, 8 min read
BTC Miami confirmed an idea I've been mulling for a while:

Social status is moving on-chain.

As we transition to a more-digital world, bridging status & identity between blockchain and meat-space will transform the way we build credibility, legitimacy, and personality.
Let's take a detour for a second to discuss the essentiality of status.

@eugenewei says "We're all status-seeking monkeys."

It's the most impactful organizing principle I've encountered in the last 10 years, and it comes up over and over again.

The unending desire to level up status explains a lot of society's "wtf" phenomena:

- Billionaires divorcing their partners at immense financial cost
- Rise of AMC, GME, scamcoins
- The convergence of culture and VC
- This tweetstorm
Status is in fact physiological. The Body Keeps the Score describes how trauma and status manifest in our bodies:

"Manipulating a monkey into a lower position in the dominance hierarchy made his serotonin drop, while enhancing serotonin elevated the rank of former subordinates."
Serotonin regulates feelings of security, and conversely, fear. In other words, feelings of status and belonging are fundamental to our well-being.

Status is fearlessness. Fearlessness is status.
Because the pursuit of status is so fundamental, it's also a massive economic machine.

We spend more on luxury goods *every year* than the current $ETH marketcap: $350B+.

(Ironically, the amount spent on counterfeit goods is even higher: $500B).

And that's only physical goods!
With that foundation, let's turn to The Great BTC Miami Experiment:

Take a bunch of people whose net worths have 100x'd the last few years and put them in one place--what do you get?

Well, kind of what you'd expect:
- Mansions
- Yachts
- Strip clubs
- Fetty Wap
- Rampant COVID
Quaint, old-world status symbols.

You know what they say about the three F's? If it flies, floats, or fucks, rent it?

In Miami, new money rented old status.


Simply put: we haven't yet figured out crypto-native identity.
Everyone was hungry to collectively shed the status quo and build a new status hierarchy rather than climb the existing one.

So how do we encode and communicate status in a crypto-native way?

Well, @arjunblj is onto something with this tweet:
The implication is: meat-you shouldn't matter. Meat-you *doesn't* matter.

Only the internet version of you matters.

It's the magic the internet age, or better yet the crypto-age:

The transcendence of ideas over identity.
When your peers are anime waifus, pixelated portraits, and cartoon animals, you have no choice but to engage with their ideas and actions, rather than who they are.

Who someone is becomes equivalent to what they have done or said.

Status becomes unimpeachable.
One evening in Miami I saw someone wearing Unisocks. The crowd whispered:

"Big flex"
"Giga flex"
"Monster flex"

Simultaneously, the @gmoneyNFT <> @saveartspace collaboration is a way to create real-world awareness of digital status objects.
But if Clay Christiansen were listening to this from business strategy heaven, he'd ask:

"What's the actual job to be done by $SOCKS or $SAK3?"

(Hint: it isn't just mirroring real world goods on the blockchain or displaying NFT's in real life.)
No, the job to be done is communicating unimpeachable status.

But what makes status unimpeachable and how can it be communicated with a genuine and unfakeable token?
That token would have to be something you couldn't possibly have if you didn't have the requisite status.

In logic form:

has_status==false --> has_token==false

Contrapositively, if you do hold the token, you must have real, genuine status.

has_token==true --> has_status==true
Let's plug in a couple naive status tests to see how they fare:
- "You can't drive a Ferrari unless you're rich."
- "You can't attend Harvard unless you're smart."

These simple examples show how hilariously unreliable our existing status tests really are.
Anyone can fake it. Y'know, act like they got it. It's the concept of being hood rich.

As Big Tymers sang, "Got a quarter tank of my new E class."

Faking it is the domain of liars, LARPers, posers and pretenders.
And anyone who's been in business or tech long enough has seen it: the credibility snowball.

Someone (or something) earns a seed of approval from authority, which subsequent parties assume to be genuine and high-signal, which causes them to grant approval...etc.
Because the old world is reliant on low-fidelity tests, it shouldn't be surprising that we ended up with Elizabeth Holmes, Fyre Festival, and Wework.

Credibility is comically easy to exploit without verifiable proof.
But now that everything is provable on-chain, we have only ourselves to blame for allowing credibility snowballs to form.

There's no need to tolerate claims of legitimacy without proof.

Now, if you say you have the biggest genitals you better be willing to pull your pants down.
Unfortunately, our old notions of identity are incompatible with a crypto-native version of the world.

We're allergic to KYC, yet find ourselves in an untenable place where identity is still central to our goals.

(Think: personal credit as a gateway to uncollateralized lending)
So how do you prove to someone you are who you are ("do you even know who I am??") without actually revealing who you are?

Zero knowledge proofs.
I'll treat ZK's in more depth later, but at its core, they allow someone to prove they know a secret without having to reveal the secret itself.

- I'm Satoshi (without showing you the private keys)
- I know where Jimmy Hoffa was buried (without telling you the location)
It's the practical application of what we discussed earlier. ZK's (among other tests) are the gateways to unimpeachable status.

It's the holy grail: communicating status and identity definitively while protecting absolute privacy and discretion.
In this world, the clearinghouse for actions and behavior exists on-chain, and you and only you have custody of your identity(s).

Yes, identities, because one of the most frustrating parts of contemporary life is the monolithic nature of identity.

We're forced to be one person.
Yet w contain multitudes.

Our global, digitally native world allows us to play different parts in different contexts, but while there's more opportunity than ever for jesters and shapeshifters, the risks are also greater than ever.
To bring the idea home:

Zero-knowledge identity is our society's salvation from identity cancellation.

You only have one "you," but you play many characters on the internet, each of which compounds the existential threat to the singular "you."
Simultaneously, provable identity (pseudonymity) protects us from true anonymity, which is both dehumanizing and chaotic.

Anonymity leads to a world with no rewards or punishments.

On the other hand, pseudonymity preserves @cdixon's game theoretic guarantee.
So to sum up:

1) Status and identity are fundamental to our health, not to mention critical to the economy:

- Luxury goods: $350B / yr
- Identity fraud: $50B / yr
- League of Legends costumes: $2B /yr
2) Status and identity in the real world are broken, and both are easily faked.

Status convergence reinforces existing power structures, while also inhibiting our ability to display our multivariate identities.
3) Crypto takes pseudonymity as a prior, protecting:

- The primacy of ideas
- The equality of all under the internet
- The authenticity of claims to legitimacy

Public blockchains allow us to prove status and identity in ways that are more enduring, authentic, and productive.
This was a bit longer-form than usual, but if you enjoyed it I'd appreciate a retweet of the first post!

I'll post a poll soon to gauge appetite for more long-form.

And ofc, the GOAT post from @eugenewei:…


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More from @jonwu_

27 May
You've probably heard about Ethereum Layer 2 solutions and how they promise to scale the Ethereum network and reduce gas fees.

It's a little confusing.

That's why I'm here to explain ETH L2 to you like a mechanic from Brooklyn:

🧑‍🔧 eyyyy it's Tony, Paulie, and Lou
Eyyyyy Jonny how yuse doin? How's ya mudda?

So listen, I been hearin about dis ETH L2 bull-shit.

I know you got all dem smart words, but juss shut da fuck up for a minute and hear me out:

I tink ETH is like da BQE.

Da fuckin Brooklyn Queens Expressway.
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So dere's a proposal to build a coupla new fast lanes.

(Yeah okay "err, durr, it's more technical den dat" shut da fuck up)
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Interest rate derivatives are a $460 trillion notional value market and 98% of corporate bonds are fixed-rate.

Yet the yields in Defi are almost entirely floating-rate. How we gon France the future lyk dis??

@pendle_fi: tokenized yield derivatives. Leggooooo
So what is Pendle? It's a yield tokenization platform with two products:

1) A yield disaggregator:

Takes any interest-bearing token (@compoundfinance c-tokens & @AaveAave a-tokens to start) and splits it into 2 synths:

a) base token (OT)
b) time-bound yield component (XYT)
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When you pool assets for an Automated Market Maker (AMM), you actually *become* a market maker.

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👩‍🌾Yet Another Guide to Yield Farming
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As a garum seller, how would you find a buyer? this is giving me nerd chills
The absolute simplest way would be for you to stand there and yell:

(Denari = Roman bucks).

This is called open outcry trading.

As recently as 10 years ago, trading pits at the CME functioned on this "open outcry" model: look at this shitshow
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Do you yield farm / LP?

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It's more like putting on a short-term trade than buying fixed-income.

🧑‍🌾 Yet Another Guide to Yield Farming
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All of which are volatile, complex, and misleadingly advertised.
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"Make 25%+ yield risk-free by trading Bitcoin futures!"

Is this free money??

In this thread:
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Contrast this to a spot trade, which happens right now ("on the spot").

Simple example: "I promise to buy 100 barrels of oil from you in December 2021 @ $50/bbl."
Why is there value to taking or promising delivery of oil later? Why would the price change between now/then?

It's all about locking in price certainty in the face of:

- FX risk
- Weather/seasonality
- Unforeseen supply/demand spikes
- Storage ("carry") costs
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Decentralized finance has forced me back to basics.

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With that in mind, here's Risk, Volatility, & Insurance--The Story of Tsunami Isle.

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The bigger the tsunami, the further inland it travels.

The closer a home is to the beach, the more likely even the smallest tsunami will destroy it.
Our village pools funds to rebuild homes affected by tsunami strikes.

Beachfront properties pay the most into the fund, because they have the highest likelihood of destruction (and therefore payout).

For whatever reason, we call these payments "insurance premiums."
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