Sunday Thoughts Newsletter #2

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This week I’ve been thinking quite a lot about the concept of narratives and in particular the ‘debunking’ of Joel Monegro’s Fat Protocols thesis. Given he made his original post two years ago, I’d say Monegro got it 100% spot on:

You could maybe make semantic arguments against a couple of these being a protocol but to all intents and purposes 18 of the top 20 are what we’d consider a protocol. Given these 18 represent around $190bn of the total $215bn market cap, I’m sure he won’t be too upset how the past 24 months have played out. Longer term, I suspect actually the smart contract protocol valuations will slow down and we’ll see money flow towards one dominant store of value (e.g. Bitcoin) and two smart contract platforms. I think we’ll then see the first largest DApps start to enter this top 20, albeit on a more revolving basis (due to the natural ebbs and flows of popularity — think more Farmville and Facebook initially).

I have a post coming out tomorrow looking at the idea of narratives and the web3 stack. It’s an admittedly long post that probably could have been two or three different articles in their own right, but hopefully it’s interesting. I am not buying much of the talk on the different narratives currently swirling around. We all like to think things change and improve in bear markets. It bears a resemblance as to how people would use to blame their sins and lack of godliness when harvests failed. Crypto needed to cool off and it has. We’ll see the same behaviours repeat if a bull market starts up again, there’s just too much money and not enough regulation for me to think otherwise.

The web3 stack is also interesting. This is what I came up with when I tried to map projects to the different elements (it’s a more simpler version than some others out there, but I wanted to try and keep it quite high level). I am more than willing to be corrected, and I think there’s probably a lot of layers which could go into each other (for example, does layer 5 go into layer 3? Do markets and DEXs just go in DApps?). It probably has more in common with the Web3 Foundations and Kyle Samani’s attempts rather than Stephan Tual’s. It really isn’t an area I’m overly strong in but diagrams generate more discussion if nothing else.

Note in particular the lack of investment and products in layer 8, the layer which will actually be most responsible for people interacting with everything running behind it. Do you think people are going to run a node or even use the website for Augur with MetaMask in the long run? Not a chance. They’re going to use the Coinbase Wallet or Status browser. Most likely, browsers like Chrome will follow the lead of Opera and directly integrate a less cumbersome and easier to use version of MetaMask. More investment is bound to flow into this area sooner rather than later.

A few articles I’ve read or revisited this fortnight:

Web 3 by Stephan Tual. It’s an old article but remains relevant.

The Emerging Financial Stack by German Espitia

Why Infura is the Secret Weapon of Ethereum Infrastructure by Consensys

The ETH bearish case by Tetras Capital

Getting Deep Into EVM: How Ethereum Works Backstage by vasa. A huge but informative read which I found really useful.

In case you’re interested, I keep a list of everything I read here, updated every month or so. It goes back to 2013, albeit I am missing 2014 (I foolishly wrote it solely on paper which I subsequently lost) and some paperbacks which I then forget to include. This last fortnight I’ve read:

Another Day of Life by Ryszard Kapuscinski

The account of journalist Ryszard Kapuscinski of the power vacuum left behind in Angola in 1974 following the Portuguese withdrawal. He depicts a confused and scared populace; whilst the Portuguese colonists are shown fleeing back to the motherland or abroad, the poor and locals are left to wonder about who will capture Luanda and the wider country and how violent the ensuing war will turn.

If you are expecting an account of the war then you will be left disappointed, as it is very much about Kapuscinski’s personal experiences and previous wider detail is provided. However, it is a brief but interesting read. Kapuscinksi engenders a feeling of total isolation, written at a time before 24/7 news channels were reporting from all over the world and reporters had the Internet and satellite phones to always remain in touch.

7/10

84K

84K is a grim portrayal of a corporation dominated near future Britain, where ‘The Company’ has taken control of all public services. The rich are able to commit crimes with impunity, as long as they pay the fine, with murder now just another commodity. Into this enter Theo Miller, an unremarkable man who becomes entangled in a conspiracy to uncover and subsequently bring to justice the men (and they are all men) who have brought a country to its knees.

Dystopian fiction is one of my favourite genres and North’s envisagement is one of the best and most plausibly realistic imaginations I can recall. The whole novel is burdened by the oppressive world she creates and, in particular, the first half of the tale sparkles as a result. The second part, which is far more character driven, arguably loses its way slightly as it descends into more typical action plots. Still, I would highly recommend, particularly if you like dystopian visions. 9/10

The Silo Effect by Gillian Tett

Tett’s book ‘Fools Gold’ is one of my favourite accounts dealing with the GFC, looking at how JP Morgan bankers in the early 90s created the CDOs and CDSs that would later lead to such ruinous events.

The Silo Effect unfortunately never matches up to that account. Focusing on eight different organisations and their lack of or attempts to implement organisation structures which escape the dreaded ‘silo effect’, the book sometimes sparkles but mostly under delivers. It is hard to recommend, although there are interesting nuggets interspersed throughout. 5/10

The Standoff by Chuck Hogan

Hogan’s Prince of Thieves (which become the Ben Affleck vehicle The Town) is one of the best action books around. The Standoff, Hogan’s first novel, again doesn’t reach those highs but remains a very readable thriller. It is reminiscent of a less bombastic Jack Reacher, with a washed up FBI agent (with the usual accompanying harrowed past) being called upon to successfully resolve a hostage crisis with a far right fugitive holed up in his mountain cabin. 8/10

Trading Bases by Joe Peta

Joe Peta recounts his transition from trader/sales to the world of baseball betting, detailing how he created a model to exploit favourable betting situations. I can’t put my finger on what it was, but it felt like it was missing something throughout. It felt less a cohesive novel than a series of chapters, accentuated by the lack of a real ending. It was never boring, but equally I would find it hard to effusively recommend and it certainly doesn’t sparkle in the same way something like Moneyball (a natural albeit unfair comparison) does. 7/10

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