Jake Brukhman Profile picture
Founder @coinfund_io. Engineer. Investor. Researcher of #CryptoeconomicSystems & #DecentralizedNetworks. Curator @edition1art. Prev: Amazon, Highbridge.
☀️💧Leon-Gerard Vandenberg 🇨🇦🇦🇺 Profile picture 1 added to My Authors
1 Jul 20
21 predictions for next little while.

1. Lots of large protocols using token-based bootstrapping mechanisms.

2. Proliferation/innovation in decentralized governance systems.

3. Many networks bridging Ethereum.

4. Single-chain maximalism death throes start.
5. Governance token model leads to fast iteration, many experiments, a large scale disaster.

6. New concept explosion — liquidity mining, recursive incentives, bootstrapping loops, protocol interference, economic gravity, proposal farming, protocol politicians.
7. Time to liquidity for sufficiently decentralized tokens falls to 0.

8. Protocol liquidity wars, protocols exercising network effect capture through clever incentives and coordination.

9. $10B protocol unicorn.
Read 7 tweets
21 Feb 20
1/Honestly, the #cryptoart space can easily step up their game. 🤷‍♂️

I’ve been trying out the shoes of an NFT creator and viscerally feel the pain of blockchain’s users and customers.

cc @SuperRare_co @makersplaceco @KnownOrigin_io @mintbase @opensea @snarkdotart

Thread. . . 👇
2/Only 1 out of the 3 major NFT origination platforms has login without a cryptowallet.

As a result, I lost a sale yesteday because my buyer simply couldn’t make a purchase on the go at #NFTNYC.
3/Buyers need a smooth onboarding experience so we can encourage them to make sales and build a demand side! 💵

At the same time, requiring an email is terrible for cryptonative buyers who want to keep their assets private. 🕵️‍♀️
Read 10 tweets
13 Aug 19
1/I think we will find in retrospect that decentralized lending protocols and their lending rates are of universal importance not just to #DeFi, but to the entire ecosystem.

I wrote a little bit about that here: blog.coinfund.io/crypto-borrowi…

I write about another interesting case...
2/#Layer2 is coming and in these networks we must capitalize state channel hubs in order to create throughput. This creates a substantial hurdle for running hubs & caps commissions.
3/Instead of locking capital, hub operators might leverage lending protocols to borrow it & increase throughput. However, the borrowing rate will inform the commission hubs will charge (and vice versa).
Read 8 tweets
9 Aug 19
I am working on a post about decentralized resource networks (think file storage or computation) competing with the unit economics of large, efficient incumbents (think Amazon).

Wow, when you write this stuff out on paper, things get very interesting.👇
We tend to think of networks as monolithic protocols that compete with a large incumbents like Amazon as a unit.

But of course such networks are also coalitions of small-to-medium providers that have agreed to follow the network’s rules in order to coordinate.
What they coordinate on is competing with incumbents on weak points: closedness, privacy, censorship-resistance, customer experience, and of course pricing.

They also compete with each other, eroding their margins to nearly 0. (More on that later.)
Read 9 tweets
14 May 19
We as an industry need to make explicit a key point about the #governance space:

*In our 500,000 years of being humans we have learned less about coordination systems than we will learn in the next 5-10 years.*

@lrettig @MolochDAO @cburniske @AragonProject @daostack @nc0we 👇
First and foremost, if you are designing *governance systems* and you’re not up to speed on our 200+ years of quantitative research in this area, consider researching this body of work.

Here is a resource to get you started, first tweeted in 2017:

Secondly, by and large, we collectively have at most a few years of experience with on-chain voting systems.

Voting is just one way to coordinate.

Everything is an experiment.

Governance of networks, upgrades, DAOs, nonprofits, public co’s does not & should not look the same.
Read 14 tweets
17 Apr 19
Blockchain holy grails. If you do any of these, you win the level.

- Dex with liquidity (chortle).

- Cross-platform dex where you can, let’s put it this way, trade Ethereum for STEEM.

- Identity accepted across the blockchain space.

- ZK proofs for general computations.
- Tokenization platform for art which opens up the digital art markets.
- DAO that can make progress without value capture. (More discussion needed.)

- Quant model for valuation of any token type, that predicts prices.

- 1000 transactions per second... worth of customer demand, not platform supply.
Read 4 tweets
6 Apr 19
DAOs have low engagement issues.

One approach to address these issues has been quorumless voting. This is a good approach, and does increase the liveness (ability to move forward) of DAOs.

But this in itself is not enough. 👇
The flat DAOs we see today suffer from massive dispersion of responsibility issues, which get exponentially worse with every new marginal member.

DoR is when everyone is paralyzed because they assume that someone else is moving the progress of the DAO forward. But no one is.
The natural mechanism that begins to form in this context is delegation. Delegation allows stakeholders to deputize and elevate certain individuals into positions of responsibility, and the trade off is that those individuals begin to retain more influence in the organization.
Read 3 tweets
1 Apr 19
Hi all, today I am open sourcing some thinking I have been doing around valuing #DecentralizedGovernance. I am releasing a formal spec and Python code to describe the framework and to get community feedback.

github.com/coinfund/gover…

Demo below.👇
The central question I am trying to answer is the following. Given a governance token distribution, how do we quantify the influence that a particular token holder’s stake exerts over the governance process?

To answer this, I define a measure called “decisiveness”.
Intuitively, the decisiveness of a stake relative to a token distribution is the expected % of the time that this stake’s vote (or lack thereof) can overturn the outcome of a proposal.

The properties of decisiveness are based on discrete partitioning & are somewhat surprising.
Read 16 tweets
8 Feb 19
1/Long have #cryptoinvestors posited that blockchain protocols create “backend-less architectures” where the network replaces the traditional backend, and applications are built by businesses on top.

Value capture in this scenario remains a complicated topic. . . 👇
2/In 2016, I wrote about equity vs. token investments in scenarios where private companies develop highly decentralIzed networks.

blog.coinfund.io/blockchain-inv…
3/The main takeaway was that value capture did not seem to happen ideally in equity. Traditional VC investors would have to consider whether owning tokens was a better exposure mechanism to protocols. Subsequently, many VCs adjusted to token investments and SAFTs.
Read 14 tweets
28 Jan 19
1/This week at #Aracon2019, I would like to explore some core themes around #DecentralizedGovernance and #DisputeResolution together with the #crypto community working on related projects. @devinawalsh @coinfund_io @AragonProject @stefanobernardi @CambrialCapital 👇
2/THEME ONE: Are governance tokens valuable?

Token models have "eroded" somewhat these past few years: it's hard to make a token accrue value! But governance is being touted as one of the few activities fundamentally valuable to a network. How does this actually work?
3/There are actually not too many *actionable* models in this space that I can find. But there are some. . .
Read 20 tweets
10 Dec 18
So many terms floating around lately in relation to #DecentralizedNetworks, protocols, staking, and mining. The following Twitter-Wiki is how I understand all of these closely-related, but subtly different concepts. . . 👇
#DecentralizedNetwork - In our #Blockchain context, a P2P network with a protocol that can trustlessly transfer value in the form of #DigitalAssets.
#GeneralizedMining - Extraction of on-protocol compensation from #DecentralizedNetworks through the provision of #SupplySideServices, liquidity, or alpha-generating activities. (cc @coinfund_io, @JoeLallouz)
Read 25 tweets
16 Nov 18
At my generalized mining talk, one audience question was really interesting. It was, essentially, “Why would a business choose to build their app on a decentralized network, when bootstrapping is so much more expensive than a centralized solution?”



👇
It took me a minute to verbalize the answer. I was taken aback because the form of the question diverged extremely from my understanding of decentralized networks.
So the practical answer is: well, it’s early and the cost of decentralized solutions decreases exponentially over time, like with any developing technology. The assertion makes sense today, but won’t tomorrow. Businesses will perhaps adjust to building products on such networks.
Read 7 tweets
25 Oct 18
We define “#GeneralizedMining” as “any supply-side service provided by a third party to a decentralized network in exchange for compensation allocated by the network”.

Chances are the compensation is provided on-protocol & denominated often, but not always, in a native asset.
#GeneralizedMining opportunities span staking, but also curation, liquidity provision, computational resource provision, TCR voting, governance, market making, and beyond. The market of generalized mining opportunities and supply-side providers is a “third-party economy”.
Investors, and their active participation in networks, is relevant to a subset of the third-party economy. As @TusharJain_ writes, and @fredwilson summarizes, that subset deals with opportunities that help to bootstrap networks.

multicoin.capital/2018/10/23/the…
Read 4 tweets
18 Aug 18
The @LivepeerOrg team has planned and executed a tremendous undertaking for their decentralized protocol so far. 🍻 Putting down some thoughts on the realities of Livepeer’s token model as it exists today. . . 👇
- $LPT is more accessible than funding rounds of startups. You can even get a better deal on $LPT than its private investors by mining it, running a transcoder, or getting it free in the airdrop. That’s cool & these opportunities are overlooked by the ICO-obsessed mainstream.
- On that note, while the early sell orders on $LPT hang around $7-10 (on low volume), Merkle miners have obtained $LPT priced as low as $0.66, better than the last round. Other miners have elected to pay as much as $37 per $LPT in recent conditions. 🤔 (etherscan.io/tx/0x7d4a0a709…)
Read 8 tweets
25 Jul 18
(Thread.) Some learnings in blockchain over the years, in no particular order. . .
You can emerge completely new technologies by correctly combining existing technologies. (2009)
Holders of particular valuable assets are financially incentivized to be biased toward the assets they hold and against other assets. From the perspective of other asset holders, those holders may behave irrationally. (2014)
Read 20 tweets
16 Jun 18
(State channel rant.) An explainer on the exciting developments blockchain is heading for with *state channels* and *generalized state channels.*

I’ll try to keep this mostly non-technical but it is a technical topic, alas. . .
First, state channels are a “Layer 2” technology. Layer 1 is the blockchain — txs are relatively slow and expensive and require consensus and fees. Layer 2 is an “off-chain” layer which can be settled or “taken” on-chain; it doesn’t require consensus and can be very fast.
[Aside: there are only two layers we actually understand fairly well right now — Layer 1 and 2. If someone tries to sell you Layer 3 or Layer 0, caveat emptor.]
Read 21 tweets