Balaji Profile picture
Dec 26, 2021 7 tweets 5 min read Read on X
How to limit volatility?

In web2, load balancers[1] improve worst case latency at the cost of a little guaranteed latency

In web3, collars[2] improve worst case financial expense at the cost of a little guaranteed expense

[1] cloudflare.com/learning/perfo…
[2] investopedia.com/articles/activ…
If you plot a histogram of latency before and after the introduction of a load balancer, you'll often find that average latency gets a bit worse (as you need to do two hops: load balancer and then server), but worst case latency gets way better.

Often an acceptable tradeoff.
Similarly, if you plot a histogram of expected financial profit before & after buying a collar, you'll find that the average profit gets a bit worse (due to the cost of the collar) but worst case profit gets way better.

Also often an acceptable tradeoff.
investopedia.com/articles/activ…
Bitcoin ushered in the possibility of truly free markets, fully decentralized, high risk & high reward.

Often, however, thesis and antithesis form a synthesis. The success of stablecoins show how valuable volatility reduction can be in some contexts.
stablecoinstats.com
In web2, the financial plumbing[1] that makes things possible is hidden from users. The volatility is hidden, as is the cost in privacy.

In web3, that financial plumbing is made more transparent. The volatility is visible, as is the cost in coins.
[1] adbutler.com/blog/article/w…
Think about ads: how often do you click? And how often do you actually buy? Rarely, right?

That means conversions are rare events. Rarity means high financial variance. Giant web2 companies can buffer this variance, this volatility, so it's not visible.

Oh, but it exists.
This thread prompted in part by @levie's thoughtful comments.

In short, I recognize that we do need tools to control the visible financial volatility of web3's coins.

But I want to note that this is in some ways better than the *invisible* financial volatility of web2's ads.

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Balaji

Balaji Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @balajis

Sep 17
Prime Minister Modi comprehensively defeated the far left in India.

It can be done.
Naxalites drew their inspiration from Maoism and terrorized India for decades. Now these communists have formally surrendered.

britannica.com/topic/Naxalite x.com/thelegatein/st…Image
Fifteen years ago the far left still controlled almost one third of India.

The Modi government fixed the issue by using force against actual terrorists while addressing the underlying discontent with economic development. It worked.
indiatoday.in/amp/india-toda… x.com/iyervval/statu…Image
Read 8 tweets
Sep 8
Both America and China were invested in the illusion that China wasn't already the world's strongest economy.

Psychologically, it suited the incumbent to appear strong. So America downplayed China's numbers.

Strategically, it suited the disruptor to appear weak. So China also sandbagged its own numbers.

But the illusion is becoming harder to maintain.Image
In retrospect, all the China cope over the last decade or so was really just the stealth on the Chinese stealth bomber.

Hide your strength and bide your time was Deng's strategy. Amazingly, denying China's strength somehow also became America's strategy.

For example, all the cope on China's demographics somehow being uniquely bad...when they have 1.4B+ people that crush every international science competition with minimal drug addiction, crime, or fatherlessness...and when their demographic problems have obvious robotic solutions.

Or, for another example, how MAGA sought to mimic China's manufacturing buildout and industrial policy without deeply understanding China's strengths in this area, which is like competing with Google by setting up a website. Vague references to 1945 substituted for understanding the year 2025.

One consequence of the cope is that China knows far more about America's strengths than vice versa. Surprisingly few Americans interested in re-industrialization have ever set foot in Shenzhen. Those who have, like @Molson_Hart, understand what modern China actually is.

Anyway, what @DoggyDog1208 calls the "skull chart" is the same phenomenon @yishan and I commented on months ago. Once China truly enters a vertical, like electric cars or solar, their pace of ascent[1] is so rapid that incumbents often don't even have time to react.

Now apply this at country level. China has flipped America so quickly on so many axes[2], particularly military ones like hypersonics or military-adjacent ones like power, that it can no longer be contained.

A major contributing factor was the dollar illusion. All that money printing made America think it was richer than China. And China was happy to let America persist in the illusion. But an illusion it was. Yet another way in which Keynesianism becomes the epitaph of empire.

[1]: asiatimes.com/2025/07/thucyd…
[2]: x.com/balajis/status…Image
Image
Image
Image
Well, it's not the idea, it's the execution.

China can just sit back and let the world be its Xerox PARC. And then become a speedy second mover on anything that's working.

So you need innovations China genuinely can't copy.
One of them is Bitcoin.
Read 7 tweets
Sep 1
The dollar is losing reserve currency status. It’s down to 42% of global reserves, and gold is rapidly rising. Image
Digital gold is becoming the reserve currency of the individual.

Gold is returning as the reserve currency of the state.

Original post below.
Recall the Fed admitted that a “small number” of countries were switching to gold.

But that small number actually included Russia, India, and China: the RIC of BRICS.
Read 6 tweets
Aug 18
On many graphs of the physical world, China is in first place by a wide margin.

But if you look more closely, India is a distant but real runner up. Image
Image
The same pattern holds in nuclear.
China is #1 in reactors under construction.
But India is in second place. Image
Electricity generation is similar.

China’s recent increase is unparalleled in history. But India is increasing quickly, and will flip the EU soon. Image
Read 7 tweets
Aug 6
There are now two kinds of AI retards.

The first kind of retard uses AI everywhere, even where it shouldn’t be used.

The second kind of retard sees AI everywhere, even where it isn’t used.
Usually, it’s obvious what threads are and aren’t AI-written.

But some people can’t tell the difference between normal writing and AI writing. And because they can’t tell the difference, they’ll either overuse AI…or accuse others of using AI!

What we actually may need are built-in statistical AI detectors for every public text field. Paste in a URL into an archive.is-like interface and get back the probability that any div on the page is AI-generated.

In general my view is that AI text shouldn’t be used raw. It’s like a search engine result, it’s lorem ipsum. Useful for research but not final results. AI code is different, but even that requires review. AI visuals are different still, and you can sometimes use them directly.

We’re still developing these conventions, as the tech itself is of course a moving target. But it is interesting that even technologists (who see the huge time-savings that AI gives for, say, data analysis or vibe coding) are annoyed by AI slop. Imagine how much the people who don’t see the positive parts of AI may hate AI.

TLDR: slop is the new spam, and we’ll need new tools and conventions to defeat it.
I agree email spammers will keep adapting.

But I don’t know if a typical poster will keep morphing their content in such a way.
Read 5 tweets
Jul 25
JP Morgan is updating their p(doom), but for the dollar. Image
Just the fact that JPMC is now admitting this is a big step.

"De-dollarization has increasingly become a substantive topic of discussion among investors, corporates and market participants more broadly."

As the US deglobalizes, the globe dedollarizes.
jpmorgan.com/insights/globa…Image
Yes, but no manufacturing economy can be realistically stood up in time to replace the sheer consumption that money-printing enables.

Example: to make $1T, you can (a) print or (b) sell $1000 phones to 1B people. Obviously, the former is far easier.
Image
Read 4 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(