Bankless - DAVID READS: Crypto is Here to Set You Free

Episode Date: March 1, 2022

Free markets are an incredible force. They allow humans to come together and produce a global price on something. But today's 'free markets' aren't really free. Access to markets is gatekept, and the ability for something of value to become instantiated into an asset is permissioned. Read along with David’s most recent thought piece on why 'Crypto is Here to Set Us Free.' Read the Article: https://newsletter.banklesshq.com/p/crypto-is-here-to-set-us-free?utm_source=url  ------ 📣 NOTIONAL FINANCE | DeFi's Leading Fixed Rate Yield https://bankless.cc/Notional  ------ 🚀 SUBSCRIBE TO NEWSLETTER:          https://newsletter.banklesshq.com/   🎙️ SUBSCRIBE TO PODCAST:                 http://podcast.banklesshq.com/   ------ BANKLESS SPONSOR TOOLS:  👀 POLYGON | LAYER  2 DEFI https://bankless.cc/Polygon   ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across   🦊 METAMASK | THE CRYPTO WALLET https://bankless.cc/metamask   💳 LEDGER | THE CRYPTO LIFE CARD https://bankless.cc/Ledger   🧙‍♂️ ALCHEMIX | SELF REPAYING LOANS https://bankless.cc/Alchemix   🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants   ------ Topics Covered: 0:00 Intro 1:25 Crypto is here to set us free 2:27 Expressive Markets 9:54 Societal Change 14:19 Private Keys & Value Flow 19:04 Extract to Enable 22:57 Aligning Systems 26:03 Changing Societies 30:49 Building a Better Future ------ Resources: The Crypto Renaissance: https://shows.banklesshq.com/p/-the-crypto-renaissance-josh-rosenthal  Governance & Capital: https://shows.banklesshq.com/p/-governance-and-capital-joel-monegro  Cobie Clip: https://twitter.com/BanklessHQ/status/1480999234526613504?s=20&t=XCMeIZiOb3toUyRPgo_7Gg  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Hey, Bankless Nation. Today we are going to read the article that I'm putting out on the Bankless Newsletter. I also gave this as a talk at East Denver, but I was kind of just like using this article as notes to inspire the talk and then use the pictures that are in the, in the article as as what was being displayed on the slides. But today we're going to actually read the article for those that don't want to read it themselves and prefer audio content. And then maybe I'll talk and pause and ramble about some other stuff that's not in there. But before we do, I got a shout out the sponsors that make the show up possible. Polygon is the fastest, coolest layer two that you've ever used across protocol. You can use a cross protocol to get to Polygon and then also

to other layer twos. While you're doing that, you're probably going to be approving tokens in your metamask. So use Metamask. And then if you're doing things right and you're truly bankless holding your private keys, you'll actually be using your ledger to connect to Metamask to use across, to get to Polygon. And maybe one day, Alchemics will deploy. on Polygon. I think maybe they already are, actually. But you know, what definitely is is also uniswap. So you can use all these products together. And that's why the bankless advertisers are so goddamn dope, because we get to talk about them all at the same time. Thank you sponsors for sponsoring bankless. Let's go ahead and read, Crypto is here to set you free. And shout out to the guys over at

the Design Guild out of the Bankless Dow who helped me put this awesome graphic together. I really like that. Okay. Crypto is here to set us free. Free markets are an incredible force. They allow humans to come together and produce a global price on something. This is how much we value that, says society via the market. But today's free markets aren't really free. Access to markets is gay-kept, and the ability for something of value to be instantiated into an asset is permissioned. Traditional financial institutions worked in the analog world,

but the technology that supports traditional markets has lagged behind what society is ready for. people these days associate markets with strictly just finance, which is a shame because they are so much more than that. With just a few new primitives, smart contracts, tokens, private keys, we can unlock our innate human desire to express what we see valuable upon the world. By aligning personal freedoms with free markets, we can unite culture and economics in a new age of expressivity and efficiency. And cool things will happen as a result. All right. So here's what captured markets look like. On this graph right here, we have the gray scale GBT charts. I can't zoom in, sorry.

Does something seem missing? Does it appear on a whole? What's with all the gaps in the chart? Like, look at all these gaps. Like, it's all this blank space. I mean, you get the gist, but like, it's so ugly. But here's the BTC chart on Coinbase where Bitcoin trades 24-7, 365. And there are no gaps.

It looks like it's a good-looking chart. like there's data there, like it's holistic. It's fully expressed. Bitcoin is fully expressed by Coinbase because Coinbase trades 24-7-365. The differences between these two charts reflects the different systems upon which this asset is expressed. The Grayscale GBTC Trust trades on the traditional stock market, which is only online 253 days out of the year. And since these markets are only open for six and a half hours a day, the value of GBT is only expressed for 19% of the year. For 81% of the time, the market doesn't have a

price for BTC. It's just not being expressed by the legacy platforms. Bitcoin and all of these properties can't be expressed 81% of the time. It's silenced. Bitcoin system is designed for 100% uptime, enabling the truest expression of the nature of the assets. Yet the expression of this value is throttled by the medium upon which it trades. So this, this, this, this feature of the traditional stock market has left the door open for innovators to build new exchanges that enable a higher fidelity relationship between the markets and their participants. Early crypto exchanges like Coinbase, unbridled by regulations, spun up 24-7-365 crypto marketplaces, enabling Bitcoin to more fully express its unique properties upon its users.

Defi is doing the same. DeFi didn't invent finance, but for the majority of humans, it might as well have. Financial institutions have put up walls around their products and services in order to gatekeep access to their tools of power and control. And by charging a toll for this access, they can create power for themselves and use it to dictate the future direction of our society. Where is defy in the traditional world? It's behind the walled gardens of banks and brokerages. When you deposit your U.S. dollars into Wells Fargo, they take it and then they go yield farm it with it inside the closed doors of Tradfi. There's a world of financial activity going on behind the walled gardens of Wall Street,

only accessible by banks, brokerages, hedge funds, and Nancy Pelosi. As a result, the majority of us are under their control. If you want access to financial tools of the world to get a mortgage, a student loan, a credit card, we must pay for access. So the inherently free and open institution of the marketplace is currently owned by the many,

oh, excuse me, owned by the few, and sold to the many. The place in which we discover what we value is kept away from the majority of society. which restricts people from being able to express their opinions about how the world should look. Platforms can enable our expression. The assets we trade on various marketplaces are reflections of what we value as a society. It's not Bitcoin that imparts its value upon us. It's us that imparts our values upon Bitcoin.

Bitcoin doesn't tell us that we're valuable. We tell it that it has value to us. We provide the value. We value provable scarcity. We're the ones that like peer-to-peer money. Because Bitcoin aligns with our values, Bitcoin has properties that we value, we collectively produce a price for it on the secondary markets. And it's important that we have platforms that enable us to fully express the value of the

assets that we trade. In addition to having marketplaces that do not throttle our ability to express ourselves, it's also crucial that we have platforms that are unconstrained in what types of assets that we can trade. Tokens. A token is just a vehicle for value. They are empty containers for us to deposit our perceptions of value into. A token is just a blank slate of an asset, and it's up to us to ascribe value to it.

And we use smart contracts. Smart contracts are the writing. They're the language upon we etch value into these blank slates. The EVM is the writing we use to say, this is valuable because, and then a bunch of code. If we want to fully express what we deem valuable in this universe, we need to open up the design science-based for financial assets. If we want capitalism to more closely align with our human values, we need more assets to trade that aren't just equities on the stock market. Defy tokens, Dow tokens, social tokens, JPEGs, one-of-ones, membership NFTs, music NFTs,

beam coins. How limited are we in our ability to express what we value and the only values that we have out there to receive that expression are equities, bonds, and derivatives. The difference in human value expression between our current options on traditional markets versus the endless possibilities in ERC 20 and 721 tokens is a difference between a dystopia and a utopia. So I'm going to diverge out of the article. Something I said in the talk that I wish I had included here, maybe I will, is like a lot of people in the world of crypto or that hate the world of crypto are like, we don't want

crypto because it's hyper-financializing everything, especially the NFT haters out there. They're like, you're putting finance into art. Like, I don't like that. get your money away from my art. And I mean, yes, point taken. But also, when you inject finance into something, you give it an economic foundation to stand on. And so Ethereum seems to be intent on minting any and every token possible.

And it's allowing more, it's allowing the funding of the arts, the funding of culture. And it's allowing more and more culture to become more viable. So while one critique is like, crypto's going to financialize everything. And it's going to take the, soul out of it. But on the on the flip side of things, what we're actually doing is we're hyper

culturalizing finance. We're making finance into culture. So it's a meeting in the middle. And this is why like this is this is where I say if we if we want capitalism to more closely align with our human values, we need more assets to trade that aren't just equities on the stock market. People think that finance is culturalist because we only have like equities and securities and bonds, things that are boring. But if we have artist tokens and like Dow tokens and community, community tokens, we get the power of finance to instead of create capitalism, we can make it create culture. I should put that part in.

Okay. Fungible tokens and non-fungible tokens. These are all of the tokens. These are all of the types of tokens. There are no other types of tokens. Non-fundurable and fungible. Between these two token standards, we have the tools we need to create any token that the market decides has value.

And using these tools, humans are enabled to maximally express our human values, using markets that never turn off. Asset issuance in Tradfai is intensive, expensive, and fundamentally constrained, whereas token issuance in Defi is cheap, easy, and limitless. We're going from marketplaces that only work 19% of the time and only allow for like three categories of assets to unstoppable, always-on marketplaces that allow us to freely create any possible type of token we could ever come up with.

And so this is how we go from a Wall Street-centric version of the world to a world centered around cultural expression. This is where we put money into our culture and how we put culture into our money. Societal change. Living in a paradigm of trust in intermediaries prevents value from being able to flow outwards. When a new source of value is discovered in the world, intermediaries descend upon it like vultures and then like they encircle it and capture as much as possible. Prevent it from getting out because they capture it.

The tolls that intermediaries take limits how far this value is able to permeate through. society. Every intermediary adds friction to this outbound flow of value and prevents it from reaching the margins. This is a movie that I kind of enjoyed. It's kind of cheesy, but it's pretty good. It's a vertical jail. Every jail is just one room, and there's a hole in the center of the room and this platform once a day with a bunch of food on it, like just descends down the jail. And so the jail is a level like, you know, floor one, floor two, floor three, four, four, like going down. And you want to be at the top because that's your closest to where the food is. Like if you're in floors, like, and the platform just slowly just lowers, it just like

slowly gravitates just like downwards with all the food on it. Uh, and you, if you're in like floors one through 50, you're like pretty chilling. Like it's a good spot to be. You're going to have plenty of food. 50 to 100. There's like food there, but it's kind of the shitty food that sucks. Like, you know, boring food. The bad food, the reject food. And then beyond like below 100, it starts to get real scarce. Like the food starts to have gotten eaten. And then like it can go, you can go real low. And like this movie is just about this like thought experiment basically. And this is just a metaphor for intermediaries. Like there's flow of value. Look, look. I mean, you can see like there's cakes and like, you know, delicacies. It's like a, it's a comment on, you know, society and luxury and all the

luxury is at the top. But then the luxury doesn't make it to the bottom because intermediaries eat it up along the way. There's not of enough value to make it all the way there and it gets eaten. Okay, so that's that. Because, because of this paradigm, um, yeah. Because of the paradigm of intermediaries, the world is one of inwardly concentrating wealth. This makes the long-term equilibrium of Web 2 and Tradfy conclude to inner billionaires competing for power using their respective platforms. We got Jeff Bezos and Amazon. We got Mark Zuckerberg and Facebook. We got Jamie Diamond and Goldman Sachs, Tim Cook and Apple.

And so much of our lives are captured. Most of the world's population are captured by some mechanism somehow. Banks capture us via interest payments on our student debt. and mortgages, and as a consequence, we become vulnerable to capture by our 9-5 wave jobs, which can become toxic and exploitive as a relationship as a result, because if they know you can't go anywhere because of your mortgage, they can bully you around, basically. And as a result to that, you can become locked down to specific geographic areas, forcing us to engage in domain-specific behaviors that we might have not otherwise have chosen to express. And the net effect of all of this

can even result in being locked in by toxic relationships with those around us. You just have to say yes to things that you would have otherwise said no to, but because you have all of these financially capturing systems, you can't. So as a society, we currently operate inside of a social structures that extract from us rather than enable us to be better. This is not always true. Facebook once created a free and open social network, and Instagram unlocked tons of creative potential.

and Twitter unlaught a torrent of free thought. Going back even further, double-entry bookkeeping unlocked a defy for the 1500s. Like previously before double-entry bookkeeping, the value was just stored in like the vaults of the church in like the king, the monarch. And then double-entry bookkeeping allowed for finance to be able to be expressed by the common man

because all you need is a book and a pen or pencil. That's like permissionless technology. It's decentralized technology. and boom, defy happened and then the Renaissance happened and because the defy, the finance happened and then all the finance people went to the arts and funded all the arts and then boom, we had a cultural expression of the Renaissance.

Episode 63 out of banquets, if you want to unpack that more. But as society adapted to the new normals that these social systems brought, they in turn evolved from enabling to extractive. The long-term equilibrium of these systems ended up being wealth concentration at the center with a bunch of vultures around the periphery

and the rest of society at the margins. New equilibrium via private keys. Long-term equilibrium of Web3 protocols places power and wealth, which are the same things. This is another bankless episode. Joel Mnegro talks about how governance, capital, and wealth in episode 62,

one went before 63, are all the same concepts. It's really just a function of which one allows you to impact the world the most in the ways that are favorable to you. money, wealth, capital, these roles, the same things. Okay. While Web 2 tradified billionaires are summoned to Congress to answer for nation-state jealousy, Web3 protocols disappear in a cloud of airdrops and community exits.

T-Rexes can't see you if you don't move, and nation-states can't find you if you're decentralized. By pushing power to the many rather than the few, these protocols invisibly walk among us. They're owned by the people on the bus, the mom at the grocery store, the laptops in our bags, and the desktops in our homes. There are the tokens in our ledgers and the cold storage wallets in our brains. Access to private keys is essential for this new equilibrium to emerge.

Previous systems of value did not favor the individual. Bold was large and heavy. Fiat had backdoor theft via the money printer. Equities are held in brokerages. And ownership over these assets ultimately just comes down to court rulings, which are a third party that can be influenced. Like courts are gamable.

Like, do you really own something if a gameable court, if you have to rely on a court that can be gamed. Usually yes, sometimes no. Sometimes when it's important, no. Cryptography puts power into the hands of the individual. With cryptography, we rely on math and math alone and no one else. Private key cryptography enables self-sovereign property rights to exist at the margins of society, disproportionately empowering those that needed the most,

by allowing value to route around the value extractors and be directed directly to the value creators. So you combine this with a financial system as ubiquitous as the internet itself, and no two people can have differential access to asset ownership and financial possibility. Cryptography sets us free. So inward versus outward flowing value.

Web 3 and D5 reverses the natural flow of value from inwardly concentrating wealth to outwardly distributing wealth. This is an inversion of the equilibrium of value, and its impacts upon how society organizes are going to be massive. Inward flowing value in Web 2 and Tradify makes work an uphill batter. Work is harder. You need to work hard to just stay in the same spot.

Outward flowing value in Web 3 and Defi turns progress from being uphill and makes it go downhill. With aligned protocols at our backs, humans will be able to venture further into the frontier. We've seen eras in which value was discovered outwardly rather than inwardly. The 1400s to 1750s era of gold, God, and Glory was about the extrinsic motivational forces that convinced many adventurers into seafaring explorations, which expanded the map beyond Europe and onto new frontiers, new wealth, new opportunity. Same thing with the American westward expansion during the 1800s. It was motivated by the economic opportunity of the West and desire to access more freedom

than the East Coast had to offer. The space race, there was the moon out there, and we wanted to go. go there. So we made this space race happen and all this awesome fundamentally important technology was created as a result of that because we wanted to claim something on the frontier. Web 2 concentrates power into Silicon Valley and Tradfly concentrates wealth into Wall Street. But in contrast, Web3 takes a $10,000 air drop and just like chucks it over the horizon into the metaverse and sells you like, go fetch. Like you got to go get it. You can't stand the same spot. You got to move on to the frontier. So if you want some of the value that these protocols

are spitting out, you got to get your private keys and you got to journey into the frontier. Web3 social structures. The Metaverse is the frontier, by the way. Web3 social structures. Cryptography allows us to design social structures with a baked and assumption of strong individual property rights. Access to private keys is permissionless and free, enabling Web3 structures to have the maximum ability to choose how it distributes power. Web3 and defy can access the maximum number of individuals. It can also, it also has the two types of tokens needed to maximally express the best way of generating value. So we have the maximum number of individuals combined with the maximum number of ways to express value. It has collided these two

particles together, unleashing a new paradigm of what finance even means and how society will engage with it. Extract to enable. Our relationships with the platforms we use are going to evolve from extraction to enablements. And here's a tweet from Kevin O'Waqi that says, Web 2 is endothermic, as in it sucks in heat, and Web 3 is exothermic, exothermic, as in it pushes out heat. It produces and pushes out heat, like energy, volume. The capacity for our systems to compete for our attention using financial assets over hearts and likes fundamentally changes how these platforms will behave. Both Web 2 and Web 3 protocols want once best for themselves. In the Web 2 world, this meant concentrating wealth towards those who fight for the protocol the most, the founders,

the CEOs, the inner billionaires. Platforms that try and distribute the value quickly discover that is captured by the nearest intermediary. Therefore, Web 2 and Tradfi keeps power at the center because they don't have the option to push it out because it keeps on getting up. Pushing power to the margins in... Pushing power to the margins in Web 2 is lossy. Like you lose the signal. The electricity doesn't go through the wires. Web2 platforms do not have a path to distribute value to their users. The best they can do is provide social connections with likes. With no monetary value able to push out, the flow of value becomes one way, from the users to the center. And so, like, we, they can't give us money. And we just give it our attention,

which ends up being our money due to advertisements. And so there's only an outbound flow of money. out of us to the center of Web 2. This is why we have a toxic relationship with our Web 2 platforms. They are a narcissistic bottomless pit of our energy, attention, and emotion. They'll take whatever you give with no thought of returning the favor. In juxtaposition, Web 3 protocols do have the power of distributing value efficiently to the margins. They have the ability to granularly issue assets and send money directly to the users. This gives these protocols the ability to answer.

to the desires of their users with perfect fidelity. The ability to send users value is a powerful new primitive that is going to be a source of significant amount of competition between protocols for decades to come. And competition is good for the consumer. This is a new vector that the apps that we use in this world have to compete on. This is a new tool in the tool belt that it's a fight to the bottom

of who can make their users the most enabled, to give them the most money, spread around the create the most value, and spread it around to the most people, because those are going to be the protocols that generate the network effects and generate adoption. And like Facebook and Twitter, they weren't able to compete on this factor. They weren't able to compete on giving their users money. Our Web3 protocols, our DeFi protocols, have that tool in their tool belt, and now they're all forcing each other to use it. Because one can use that tool. Others also have to use that tool. This is what yield farming is. This is what air drops are.

This is whatever. like this is what this new paradigm is. Private keys and unlocked this. Instead of Web 2 platforms competing on which can capture the most attention, Web 3 protocols compete on which can sustainably create and distribute the most value. How can I extract from my users evolves from how wealthy can I make my community? How can I generate rage adapts to how can I answer to the needs of my people? How can I take some of that turns into how can I amplify that?

Where the Web 2 platforms suck our attention, so billionaires can compete in their billionaire games, Web3 platforms compete on which platforms enable their users the most. Yeah. This is Web 2. Starts attracting all the users, and then once it hits adoption, it extracts from them. And this is Dow's and Web 3s in Defi,

where first it attracts the users, but then at the end it enables them. All right, aligning with the systems around us. When systems find alignment with each other, good things happen. Once upon a time, humans learn to cooperate with plants for the mutual benefit of both species. Humans used plants to produce food and plants used humans to grow more plants. Humans did the bidding of the plants and the plants supplied the humans with nutrients. This was able to sustain more humans, which were then able to sustain more plants.

When we find resonance with the systems around us, really good things happen. We once learned to domesticate plants and animals and we will also learn to domesticate the protocols that dictate our lives. As our ancestors once trained wolves to become dogs, so too will we train our protocols to provide us with unconditional love and appreciation for who we are as humans. In the 2020s, our relationship with our social structures will evolve from eating poisonous mushrooms to learning how to cultivate farms and grow crops. And as a result, there will soon be protocol-level abundance. Protocol artificial selection. The open and permissionless nature of Ethereum produces an intense and highly iterative foundation for

experimentation. Competition in Defi is fierce and the rate of protocol adaptation is faster than any technology development cycle we've ever seen before. Artificial selection experiments typically use organisms that have a high rate of generational turnover. You can get like 20 generations of fruit flies inside of a month, allowing scientists and researchers to be able to produce desired results quickly. The same is true for Defi and Web3 app development. Defi was born in December of 2017, and it's already morphed through many, many app development cycles since then. In December of 2017, MakerDAO launched, and people were absolutely blown away by that you could mint a token called die from your collateral called ETH. And today, that's so basic, so boring.

Like, we're used to that now. We've iterated and developed so many more generational cycles beyond then. And that was just like four years ago. It was like four months, four years and three months to the day. not to the day, ish. Since then, we've invented and appended many new genes into the Ethereum ecosystem, yield farming, governance, NFTs, et cetera. Every new gene into these protocols gives them better tools to be able to reflect the desires

of the developers building them. Not only are we refining our genes to be more precise by improving the tools we have, but we're also finding new genes to help create more elaborate structures. We get more tools. And in addition to better tools, we get more of them. As we are capable of making new protocols from these new tools, they will in turn add their own tools to our tool belt. At first, our Web3 and D5 protocols are dull and precise and rounded,

but as we iterate, they become precise and effective. They become precisely and effectively capable of expressing the values that we embed into them as we build them. In the same way that we give treats to our dogs to get them to sit, stay, and shake, we will also train our protocols to behave and be nice to us. Becoming the best version of ourselves. I've had the privilege of personally being set free by crypto. I've had a taste of what Web3 has had to offer,

and my previous bias towards saying no has turned into a bias of saying yes. Simultaneously, it's become easier to say no to things that I was previously cornered into saying yes to. Because of Ethereum, it's become easier to discover how I truly want to spend my time on this earth. and it's become easier to learn what is my own true nature as a human. After becoming unbridled by the shackles of misaligned social structures,

Kobe discusses the same phenomenon from a different angle in a clip that reverberated across crypto-twinter. Before I had money, I thought everything was a scam, and it was all rigged and blah, blah, blah, blah, blah, blah. And now having money and being able to help my family out, for example, and seeing my parents' personalities change because they don't have to worry about certain things anymore, like making ends me or like what's going to happen when they retire.

Seeing their personality's changed and getting to know them more as people because some number changed on a screen makes me, A, like everything seems like a giant scam, but B, feel like I was also slightly robbed of experiencing that while I was growing up or while I was younger because they had these burdens and had to worry about them. So it doesn't weigh on me so much, but I do think a lot about that.

Like it feels like everything is a bit of a scam for some like weird numbers on a screen. And it means that people like live their lives in ways where they don't get to properly know the people around them because everyone's always worried about short-term stuff. Financial insecurity plagues the planet. In order for society to evolve into the best versions of itself, we must solve for abundance at the protocol level.

We've actually not yet met the best versions of ourselves. Who will we discover when we become collectively enabled by the protocols that guide our lives. How does society change when our social structures turn from extractive to enabling? What happens when we replace soul-sucking doom scrolling with invigorating actualization? What happens when the net effects of our platforms are for us to be more free and experience more things rather than capturing our attention and filling us with rage or envy? What happens when we combine strong individual autonomy over our money with a permissionless

financial platform that seems to be intent on minting every type of of token possible. What happens when the maximum number of people are unable to express their values upon an infinite ray of possible tokens? What happens when our protocols compete for our love rather than our rage? Thanks to the decentralized power

of the printing press and double-entry bookkeeping, 1600s Europe became completely unrecognizable from 1400s Europe. 200 years is a long time, but in comparison to the progress we made from like zero to 1400s, it was a blink of an eye. The 200, the 2050s, will be completely unrecognizable from the 2020s.

And it will be because we found much better answers to what is our true nature that we've ever had before. In 2050, we might have flying cars and editable genes, but that won't be why society will appear so different. It will be because we produce social structures that align with our interests and have a stake in our betterment. Culture emerges out of the social structures that guide us. And Web3 is building social structures that produce emergent positive behaviors for us and

those around us. So here's a meme that I made. Everyone thinks that crypto is here just to give you $1 million so that you can finally complete yourself. But here's what crypto actually is. What crypto actually is are producing social systems that empower you. There's a reference to this at the end. Rising tide. The future of Web 3 is where we live inside of a sea of protocols. Like nature, protocols will grow to fill the void around them. The protocols that will enable us in ways that are the most aligned with what we want are going to be the systems. that propagate to the furthest reaches of the world. As humans, we will bounce from protocol to protocol as we go about our day,

and as a result, we'll receive generalized economic outputs from the inputs that we contribute to the protocols around us. Generalized economic output is the most sustainable form of UBI that I could imagine, universal basic income. Rather than a government-issued UBI, we can have protocol-issued rewards. And rather than receiving money unconditionally, our protocol-issued income is dependent on actually being active members of society. You actually have to engage with things in order to contribute to the protocols in order to get the value back.

You will actually have to be engaged to members of society in order to receive this basal level of income. Yet this income is still permissionless, censorship resistant, and universally accessible. By returning value to its participants, the web of Web3 protocols produces an emergent safety net for all of society. Building a better future. We will need to be careful as we advance into this future. The power of Web 3 is that our social structures will naturally reflect the values of the communities that compose them. They will resemble and represent our wants and desires upon the world. It's been a huge unlock that we can have protocols that reflect our values, but also it's pretty damn terrifying.

The biggest weakness of Web 3 is sometimes humans suck. Humans are shitty. Like we're flawed. We get corrupted. Humans made the Holocaust happen. That was us. We did that. having social structures that reflect our human values is a double-edged sword.

It will also reflect our flaws. Worst case, it's that actually amplifies them, as we've seen in late stage web two. There have been plenty of ways to reread this article using a dystopic lens. The Chinese social credit system and protocols that enable us if we do good kind of sounds like the same thing. Who decides what's good? It's great if our protocols reflects the values of the majority, but does that mean that they will oppress the values of the minority? Will these protocols funnel us into homogeneity and restrict our ability to think outside the protocol?

What if we make social structures that ultimately come to box us in the same way Facebook has, but instead of with likes, with money, which is worse? How we build these things is important. And what values we embed into them is really important. I take solace in the fact that the development in the space is rapid and iterative. The foundation itself is highly conducive to experimentation. allowing us to easily amplify what works and move on from what doesn't. Our ability for us to abandon one protocol and migrate to another is always just one transaction away.

In Web 2, we can't easily migrate across protocols. Facebook doesn't allow us to export our social graph, neither does Twitter. They have us locked into their system. And this feature is how these systems slowly turn from enablement to extractive. Web 3 drops the cost of protocol migration down to zero, forcing protocols to fight tooth and nail to keep us aligned and contributing to their system. Converging on values. The legacy that crypto will leave us with is an infinite array of assets with market capitalizations that reflect our human values.

Market value based on human values. As this industry develops and matures, we will be able to audit ourselves as a society. Our ledgers are transparent and our assets are infinite and our markets are unstoppable. And so once crypto platforms are as adopted as the internet currently is, there will be no hiding from who we are. We will be able to clearly determine who we are as a society be and because where we collectively choose to put our money will be viewable on coin gecko.

We can just go look at what we care about and sort it by market cap. It's like, oh, we care about this, this much. Like, kind of crazy. This is why we must have free markets. This is why we must have the ability to mint any kind of token, which trades on markets with 100% up time. What we value and what our values are will be the data that our nodes gossip

over our peer-to-peer communication networks. These technologies will enable us to come to a global consensus about what we care about. Only once we know the answer to this question, can we begin to iterate and improve upon it. This is how we scale Dunbar's number from 150 to planet Earth. Say that aliens visit Earth.

They see our city, our tech, our moral code, they're curious. They say, what are you guys doing here? What you're up to? And humans, in our current form, we respond, we're trying to get coordinated. Like, we're trying to figure that out. Humans first need to get coordinated

so that they begin to formulate an answer to the question, what is our collective purpose? Where phase one of humans is everyone trying to get on the same page, and then once everyone's on the same page, then we can be like, all right, guys, what do we want to do now? that we're on the same page. Like, what's next?

That's the face two. Answering that question comes later. Right now, we're just trying to get on the same page. So two phases of crypto. As it stands, crypto isn't so hot on the whole reflecting humans' values thing. Saying that crypto reflects human values would indicate that we're all greedy pump and dumpers

who are trying to get ours and leave. Will crypto be about greedy pump and dumpers and rug poles for the end of time? Or will it actually mature into social structures that produce long-term stable equilibrium for the next leg up of humanity. From the wise words of Kevin O'Waki, while greed is necessary for the blockchain system to bootstrap itself,

it is not the final form of the ecosystem. Greed is just the bootloader. Crypto is a multi-stage rocket. Phase one is the rocket of financial incentives, where we get rich. And then, boom, we blast off and into orbit. And then phase two is more sovereignty. Once we're in at orbit velocity,

escape velocity, once we're past escape velocity, that is when we become more free. Crypto wasn't here to make you rich. Crypto is here to set you free.