Bankless - Tarun Chitra on whether Code is Law | Layer Zero

Episode Date: March 15, 2022

Tarun Chitra, in addition to being Founder and CEO of Gauntlet, is a gigabrain, polymath type in the Ethereum space. His fluency in mathematics results in a creative, almost artistic approach to a traditionally rigorous and analytical field.   Perhaps related to his search for beauty, Tarun observes the structural changing of massive systems happening in the broader geopolitical ecosystem today. We explore the relationship between regulation and finance in a unique light. Finance itself is fundamentally a legal practice—it’s money plus law.   Finance becomes more elegant with smart contracts, and we muse on the idea that broader governance structures can improve with smart contracts as well. Is code law? Can we generalize capital efficiency?   ------ 📣 OPOLIS | Sign Up to Get 1000 $WORK and 1000 $BANK https://bankless.cc/Opolis    ------ 🚀 SUBSCRIBE TO NEWSLETTER:          https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST:                 http://podcast.banklesshq.com/    ------ BANKLESS SPONSOR TOOLS:    ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum    🍵 MATCHA | SMART ORDER ROUTING https://bankless.cc/Matcha    🚀 SLINGSHOT | LAYER 2 SOCIAL TRADING https://bankless.cc/Slingshot    🏦 GEMINI | TURN FIAT INTO CRYPTO https://bankless.cc/Gemini    🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave    🦄 UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants    ------ Topics Covered:   0:00 Intro 4:30 Tarun Chitra 8:15 New York City & Boom Cities 14:00 Global Crypto 18:00 Leapfrogging the US 27:45 Governance & Regulation 31:55 The Fundamental Crypto Shift 35:53 The Great Re-Shuffling 43:08 What Works vs What Doesn’t 48:07 Core Blockchain Governance 52:40 Scaling with DAOs 1:00:00 Upgrading Financial Law 1:09:00 Code is Law 1:14:05 Tarun’s Approach to Life 1:20:34 Optimism through Beauty 1:26:00 Basins and Sinking to Elegance   ------ Resources:   Tarun on Twitter: https://twitter.com/tarunchitra?s=20&t=-Wk1FKVJz6cQrJM6EzusdQ   Gauntlet: https://twitter.com/gauntletnetwork?s=20&t=-Wk1FKVJz6cQrJM6EzusdQ   Episode with Santi Siri: https://newsletter.banklesshq.com/p/-santiago-siri-layer-zero?s=w   Fundamental Theorem of Algebra https://www.britannica.com/science/fundamental-theorem-of-algebra     ----- 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 

Welcome to Layer Zero. Layer Zero is a podcast of unscripted conversations with the people that make up the Ethereum community. Crypto is built by code but is composed by people. And each individual member of the crypto community has their own story to tell. Cypherpunks understood that the code they write impacts the people that use it. And Layer Zero focuses on the people behind the code because Ethereum is people all the way down and it always has been. Today on Layer Zero, I'm talking with Tarun Chitra, who's generally known as one of those gigabrain math wizards on Crypto-Twithers on Crypto-Twitter. and around. And Turun is so good at like math, so fluent in math that he actually comes out the other side and he's actually really creative about it. So he's like a creative math geek, I'd say. And you can definitely see that in like his style of his clothes and apparel. But this episode turned out to be less about the creative side of math and the beauty of math. We do touch on that at the end. But more about the relationship between regulation and finance. And we talk about how smart contracts are more of innovation in the legal space more than they are in the financial space. And we unpack the fact that finance is really just the combination of money and law.

Money and contracts is how you create finance. And we talk about how United States regulation is perhaps holding back the truer manifestation of this world of finance, not just inside of crypto, but outside of crypto. And how this incumbent regulation actually slows us down in the way that states can engage with each other. And what if we had interstate law agreements that were based on smart contract rather than a federal system, which was very slow?

So some very hypothetical zoomed out applications of what it means to have smart contract law is code law. So let's go ahead and get right into this conversation with Turin right after we talk about some of these fantastic sponsors that make this show possible. Slingshot is a decentralized trading platform

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Oh, absolutely fantastic. Trun, I think you have a very interesting position in the crypto industry. And I think it's one that what I want to parse apart is, are you more analytical and math-focused, or are you more creative and art-focused? And I actually don't know the answer to this question. And so, do you? I don't think I know the answer to this question, but I will say it's like a coin flip every day. I prefer it having some, like, randomness and kind of things changing. I also think there's kind of like a sense in which there's like phases and seasons

for things for me you know sometimes it's like I you know there's a time where it's like you people are more in the like production mode and creating things mode and other times you're like consuming things you want to read read things go see movies go places stuff like that and I tend to think of things more in that dichotomy

of like am I in a production mode or consumption mode and like how are how are things changing and that that usually guides that but I don't think I think kind of I try to stay in the middle as much as possible I think if somebody was watching on the YouTube they would look at you and be like oh that's definitely an artist like got colorful stripy shirt got colorful glasses got a colored hair but I think if somebody looked at your Twitter they would think like oh this is the biggest math gigabrain like theoretical physics type like brain person and so like it's interesting to see that you I think are very much on a barbell as in like you know math and cryptography to the nth degree but you know it so well that you've actually been able to make creative stuff out of it like

you're fluent in mass to the point that it becomes creative for you I think there's always like some element of that but I think one of the things that, you know, I prospect got lucky with I didn't go do a PhD. I think, you know, after undergrad I was like, oh, I got into a bunch of PhD programs I was going to go do my PhD, but then

effectively, it sort of became, I don't know, I just like got a little weirded out by like, hey, you have to like pick a field now and then you have to stick in it for seven years. Kind of had this like wanderlust of like, yeah, I like some fields. I like, you know, I like some math, many math related fields. Why do I have to pick one and get stuck in it for seven years? And then even after being stuck in it for seven years, there's like no jobs at the end and dot, dot, dot, dot, right? Like,

there are a lot of problems with academia. So I feel like that just led me to be like, all right, well, I'm going to try to optimize for what city you can have the most fun in. And then that just like led me to not, not real, like to kind of like move back. and forth between all these different different roles. And I think living in New York, especially like post-financial crisis, I feel like there was actually quite a bit of like unbridled creativity here. And, you know, I think that was like a fluke, a luck in time type of thing. I mean, you know, I think in general, it's easy to get like stuck in one thing. And I think, I just personally always had a little bit of an aversion to that.

When did you move to New York? 2011. Okay. So, like, just long enough after the financial crisis that, like, things started getting back to normal, I feel like. But also around the time that, like, San Francisco was starting to have this, like, you know, kind of grow and have this, like, economic boom. And from my perspective, attract all the assholes.

from New York to go ruin the Bay Area. So I found that also like to be like a great time to be here because a lot of people who were kind of shitty left. I know that's like a weird, weird reason to be like, I love this city because all these people left. But I feel like there was a while, you know, probably 2000s, where people were like, oh, New York, it's like the like finance bro, like stereotype, real estate, Trump, Wall Street, bro,

whatever type of thing. and like with the younger versions of those people a whole generation of them just didn't go New York and San Francisco which was great and that that actually I feel like was good for like music and arts here in a lot of ways. Yeah, how would you characterize the city now? Have you been in New York ever since 2011? Yes, I've been here for 11 years. I don't think the pandemic is over here.

So like I've like definitely traveled a bunch in the last. year and have kind of come to the conclusion that, you know, people in New York were very scarred by the original part of the pandemic and haven't quite got, like, okay, here's a great example. This week, I believe on Monday, all indoor mask restrictions were removed everywhere in New York. And yet, you cannot go on the subway and find very many people not wearing masks. In spite of the fact that, like, there's no, you know, like, things have, have gone. People are just so wired to that right now. So I would say things have changed a little bit because of that.

And people are more mobile. So there are a lot more people who are, me, myself included, who are like, kind of like, hey, I'll move around in winter and, like, go somewhere warmer and then come back. So I feel like there's kind of this interesting thing going on where like a lot of people are like part time who were full time New York residents or like part time New York residents. But there's also way more people here right now than I've ever seen. Interesting. So like it feels like post-pandemic, there were just like a lot of people who were stuck in the suburbs at home for like months. My theory is that they just hit some turning point where like we need to be around fucking people.

And lo and behold, you got this like huge, huge increase in the population, especially in Brooklyn. Like Manhattan, I think is actually lower than its population pre-pendemic. but Brooklyn and Queens are like way higher. And so that that's been like kind of an interesting thing I've noticed. Yeah. Would you say the Brooklyn has kind of turned into a new shelling point for definitely for crypto people. I don't know. I don't actually honestly, I don't know anything about any industry that's not crypto at this point because I'm so into crypto.

But like everyone seems to be moving to Brooklyn. I think that's definitely true for people in tech related fields. So like there's a ton of. of people who have come from SF, I call them the Fang refugees. And they've sort of like all moved en masse. And you can see this in New York in a funny way in that like kind of the shitty, the like not very artistic, but like very modern buildings are all all the rents for those skyrocketed, but like the rents for like the brownstones like are the same. So I think it's true for tech people, especially tech people who want to get out of California.

And then I also think like this whole like Miami, Austin, Denver thing was oversold. And having been to all three of those cities in the last 12 months, let's say, I'm not convinced they've like built up this like whatever tech hub shit that you see in like the New York Times. You know what I'm talking? And you were just there. Like I don't feel like it's really there. It feels like it's like kind of flimsy at best. Yeah.

Denver always has had some sort of presence in Web 3, but I don't see it like growing. Miami I do see growing and Austin I see a lot of people moving towards just generally. But again, Brooklyn is definitely up there in places that people are going towards. And it definitely seems to have like a frontier of technology, frontier of just like human exploration and innovation kind of vibe to it. Yeah, kind of in a weird way. Because like, you know, if you went to like another country and you're like, okay, what is like the most innovative part of the U.S.? And like 99% of them would just say like Silicon Valley. sF something like that right right does not seem to be true at all right now or at least like i feel like a lot of the

really a lot of really smart people took advantage of being remote and are just like i'm never going back to that shit hole and uh that seems to be what has happened i actually feel like europe also london also felt like this super super super alive i mean london is post pandemic new york is like on the precipice of crossing the rubicon but it's not quite there but like yeah london also felt like like really back alive in a way, like way more than I remember it. So I think it's cool that the world is like kind of having these new centers. But personally, I'm actually more excited for like Latin America. I kind of feel like in the same way that Asia like leapfrog the U.S.

by like skipping building landlines and like fiber and stuff like that and like went straight to mobile. Like I kind of feel like Latin America is going to like skip. like the Venmo era and go straight to crypto. Like it feels like they're just like way more primed for it right now. I was living and moving between cities and Latin America. And pre-pandemic, no one took credit card. Like absolutely no one to credit card. If you had a credit card, you're already looked at a little bit weirdly and someone would, you know,

it was already kind of like a weird thing. This time I went to like Mexico City, Bogota, other places south, like in Chile. everyone takes credit card everyone is taking like tap to pay stuff and i kind of just feel like there's this weird chance that like the u.s gets leapfrogged by like latin america and maybe africa although i haven't been there so i don't know what to say that that's definitely aligned with what i'm hearing from i did a podcast with santi sari santi syri yeah talking about the rate of crypto adoption in argentina and he says that everyone's got crypto on their phones and they use actually Binance, the Binance Exchange. They all have Binance accounts. And so when they're sending

stable coins, they go from Binance account to finance account because they can't pay for the Ethereum fees. So they're all using the Binance Exchange, not BNB, not Binance chain, but like Binance the centralized exchange. And that's how they pay, they pay with stables in just using the finance exchange. And he said that Vitalik's recognition, like Vitalik as a celebrity status is like bled out from the crypto community. And now like it's just the regular Argentine society that is where Vatelik is a superstar and regular like Argentine societies using crypto. I think Argentina has always been ahead of everyone because of all of their kind of debt failures historically.

Right. But like Mexico, you know, if you asked me in 2019, if like Mexico was going to be a big crypto place, I would have said not really because like I'd gone there a bunch of times. And I don't mean like Touloum and like that type of stuff. I mean like actual like Mexico City, like Mexican people who are using, uh, digital assets because I was like everyone wants to use cash there like no everyone's like we just want cash we hate credit cards and uh you know the pandemic you know for for them seems to have really made them suddenly embrace digital finance like way more and I think the interesting thing there is

that like the apps that people use are way more like one stop fits all type things like you know their app for like Robin hood like thing does like Rob it's like Revolut it's like an even more crazy version of Revolut. It's like you can trade stocks, you can send stable to each other, you can buy crypto, you can buy insurance like in app. It's actually kind of crazy because it's easier than anything you get in the U.S. I think we're seeing this trend across the globe. Like in China, they have the super apps, right?

And FTX is kind of turning into like a financial superstructure. It's a bank. It's a crypto exchange. It's got derivatives. It just got an integration with Stripe for payments. They're doing NFT. they're doing it all, right? And so I'm seeing kind of like a converge onto like, if you don't build an app that does everything,

then like you're going to be bought or your services are just going to be integrated. Are you seeing the same trend? For sure. I think in the U.S., you don't see it because there's tons of like regulation reasons. And like, for instance, insurance, right? Like the fact that I can go into an app in Mexico and buy car insurance and it's like five steps and like I'm done, I literally just take pictures of the car and then you have car insurance. And then here it's like every state has a different law. And like to be an insurer in

each state, you have to like have deposit capital with each state's registry. It's just natural that the US is going to be last in the aggregator game because it's just like there's just too much like state by state financial regulation. Whereas I think in like places like in Latin American Africa, this aggregator thing works like insanely well. Like the finance and FTX examples are like, they're American branches of all these exchanges are kind of not that great, right? Like volume wise, like user wise, but like their international stuff is like insane. And I think, you know, they're all private companies, so we don't know. But I would love to see like the breakdown of like Latin American and African users not in terms of dollar amounts. Because like if you try to like say like,

hey, like who transfers the most? Obviously it's going to be like the whales in China and like American like institutions or whatever. But, you know, like if we. actually do some more like transaction count based type of thing. How many users do you have who are regularly using certain things? I wouldn't be surprised to see like somewhere like Mexico went from like 50th to like second since the pandemic, which is like that's like an interesting trend. And so definitely recommend going and taking a little tour just to like see how like behavior has changed. Do you think that the leapfrogging of the United States just in general is because many other countries in the world just don't have the same, just sheer volume and magnitude of regulations that we have?

I mean, I think, I think part of it is the regulation, but part of it is also like, you know, Matt Levine, this Bloomberg columnist, he, he always says, like, everything is security law. Like, because, like, you know, someone can commit a crime or, like, kill someone. But then, like, if you look at the statistics, half the time it will be like, hey, they, they. They didn't pay their taxes, right? Like, that was like how all the mafia, RICO stuff happened in the 80s, right? Like, none of them were really arrested for, like, the murder crimes because of, you know, but a lot of them were arrested for, like, tax evasion. And so in the U.S. financial law, maybe a less pithy version of this is like in the U.S.

financial law is the strongest seeming law here, right? It seems like if you can convert some type of social moray into a, like, hey, like, Like, there's some financial mismanagement here. You can get your case through more quickly and, like, it worked. The system seems to work only for those cases. Hmm. And I just don't think that's necessarily true in most places. And so because of that, we have this somewhat onerous system.

And the leapfrogging, I think, will be interesting in that, you know, I remember, like, in the early 2000s, Japan was still kind of like the viewed as like the most technologically sophisticated country right whereas like right now it's probably like I don't know Taiwan Singapore right and Japan seems a little old like it's like still stuck in like sort of like the Sony era

and you know I think an interesting thing was like everyone was like oh Asia like completely leapfog the US they went straight to mobile never did you know everyone had 100 Mbit internet in their house but yet if we look at what products ended up being distributed the most, right? It ended up coming from South Korea and the U.S., right? Apple and Samsung. So the leapfrog might just, like, be a good way of like, you know, if we play the game

out two steps, you know, Latin America and Africa leapfrog the U.S., you see some huge companies get built out of there. And then people in the U.S. are copying that. And then, like, they are able to effectively lobby Congress to basically give some exemptions to things that look like the things they see outside that are working and successful. And then the U.S. can kind of innovate that way. Like, I could totally see that ending up being a thing. I think the mobile thing was actually, it's a similar regulatory thing, but sort of different. In the U.S., there's sort of spectra. So, like, you know, radio frequencies, the frequencies on the

electromagnetic spectrum, there's certain frequencies the government has dictated that they own. And you have to buy licenses to broadcast on those frequencies from them. And so there's a thing called the Spectrum auction. It's almost like a patent. Like the government gives you like the rights to that like 102.5 megahhertz to 102.7 megahertz. And like radio stations usually lease their frequency from someone else. So the Spectrum auction actually kind of kept the US back in a lot of mobile stuff.

Like that's the reason 5G is taking forever is like people can't actually get that. can't like there are few players who own the spectrum and they're not the technology providers they're like you know like the comcast type of companies that bought up bought up all the spectrum a long time ago and you know I think basically what happened is south Korea leapfrog the US and now there's like all this pressure and this is why 5G was in the news right before the pandemic uh where like the US government's like we can't get left behind we're willing to get do anything and it like plays catch up and I kind of feel like that's how it always is like someone figures out out how to do something somewhere easier and it like blows up in a good way like grows really fast

and then the u.s suddenly is like ah capitalism must run faster and like so i don't think it's necessarily a bad thing i think it's actually a good forcing function because it kind of is like a way to be like to give a narrative to regulators to be like yo this is fucking stupid like you should allow certain types of things to happen so is the pattern that's unfolding here is like we're America. We have American exceptionalism. We're in the lead. We have all the money. We have all like the talent. But then we rest on our laurels.

And like regulation perhaps kind of like disincentivizes innovation. And so because of this like disincentive to get up and do something because of regulation, we let somebody else do it. But then we see that being innovated somewhere else. And then we're like, all right, well, we were resting on our laurels too much. Now we've got to get up and go. And so we make an exception in the regulation to capture that new innovation that was made offshore to bring it home to America.

And then we innovate on that, build that out, and then we can rest on our laurels again. So it feels like we're the hair in a tortoise and a hair race where like we go really fast, we sit down, we take a breather, we rest on our laurels because we're Americans and we're awesome. And then innovation continues. The march of innovation continues elsewhere because they don't have the same regulations that we have. And then at some point something inevitably crops up out of just pure unbridled innovation that's

unbridled by regulation. elsewhere outside of America and then we just repeat this process. Is that a fair way to describe this? Yeah, yeah, yeah. It's like an iterated tortoise in the hair. Like the hair is like only realized that it's losing the race when the tortoise is like five feet from the end and then suddenly runs and like just tries to like play catch up. Right.

But I think that's generally the like the whale versus minnow dynamic that often happens even in other types of games abstractly where like the whale with a lot of resources gets lazy or like they have too much concentration of power, wealth, resources. And then that just like has a sclerosis thing effect. And then, you know, someone more nimble kind of takes advantage of that. And then like eventually the whale's like, oh, shit, I got to like save myself. The question is how many rounds of this can we survive? Right?

Like the pandemic was like a weird, you know, that was like someone like, that's like playing chess and someone just in the middle of your chess game randomly. removes like 50% of the board spaces. And you're like, all right, go, you have to play now. And anything that doesn't have a piece, you die. You know, it's like, so I think there's like kind of a question of like, is it sustainable to kind of always have this repeated tortoise and the hair type of thing? Or is it, is it like, is it inevitable?

Is there like no other alternative? Yeah. I think the crypto industry is generally a fan of just like, we have way too much regulation. let's reduce regulation by like 90% and go from there. Would you be in that camp as well? I don't know about like 90%. I think it like needs to be metered. I think the beauty of the U.S., right,

is like we built this union founded on this notion of like a very clear separation of like local versus national rights. And you could have the separation of local versus national in the same way you're supposed to have separation of church and state. I just think, like, in a world where internet commerce is larger than real life commerce, perhaps, then the state versus national thing doesn't really matter anymore. And so then you kind of end up needing a different legal structure. Otherwise, like, you're kind of always run to attention.

And, like, a very stupid example of this. But, like, one that's interesting is that, you know, if you go to, say, Mexico or Argentina, the delivery apps there can deliver you any type of alcohol basically any time of day. In the U.S., however, because certain states want to charge a liquor tax on stuff produced in that state, they don't allow delivery outside that state. And, like, there's this very complicated set of rules of, like, when you're allowed to deliver alcohol, and if you cross a state border, you have to pay taxes on both sides,

and, like, it just becomes, like, kind of a huge mess, right? And all that you wanted was just like, hey, guy in Florida making some small batch whiskey, I'm in New York. Why the fuck can I just order that online? And I was just like, New York and Florida just agree to split the tax evenly. Well, that doesn't happen, right? And so then you have these like turf wars between states. And then eventually that fragments the apps, right?

Like now the liquor app has to be kind of separate from like the Uber Eats DoorDash thing. So I think this like the maybe 10,000 foot view of this is actually, there's this challenge when you have so much commerce done on the internet. There's this challenge of like reconciling that with like these like state and national laws. And let alone international law. Like international is even more complicated. They'll just start with state and national. Like those things are even hard to reconcile. So I think the question is do we.

up with a different governance structure, which then would, yes, it would change 90% of regulation. But it's unclear if it would remove all of it or if it would just like reshape it or if like there would be some sort of like treaty. You know, because like in the articles in constitution, we have this interstate commerce clause. Right. And the interstate commerce clause is very interesting because that's the thing that ensure is that one state can't ban you from going to another state and selling stuff or, you know, basically

doing any type of. of business. And a very interesting anecdote about this is that in Australia, the western part of Australia, basically until, like, last month, from 2020 to last month, completely shut its borders to any other Australian. Like in the U.S., you can't do that. You can't just, like, have one state say, fuck you. You can't come in here.

And so there's kind of this thing that, like, at the time that the U.S. was founded, This interstate commerce thing was kind of a groundbreaking sort of form of governance in that it, like, allowed commerce to be free. And sort of the internet sort of also does that. But somehow, like, we have to reconcile the fact that with our current legal system. And that's going to be the tension, I think, of the next, like, 20 years in the U.S. Is the story of that just that we as humans are. coming together as a global society faster than our regulations are. As in like, we're all on the internet.

We're all having commerce with each other. The regulations still think that we're in a pre-internet, you know, not less bits, more Adams type of environment. And like it just hasn't caught up with this like globalized society that we're creating on the internet. Yeah, basically. Which is why I think crypto is, you know, one of the more interesting things. Because it's like, if we zoom out enough, you could argue that the entire

goal of crypto is to make organizations that can do commerce with each other on the internet. And those organizations can be as loosely defined as a club or as strictly defined as a nation state that has like capital flows. Like a defy protocol is more in that side. And then like, you know, these other types of more loose stows are a little more like clubs. But the idea that the internet lets you kind of have the same substrate for all different types of organizations versus like in real life, you can't have that. You have like some notion defined locality of like what types of structures you can create.

Kind of makes reconciling those two things quite difficult. I don't know if I would say it's going to be like a revolution, like a war. But I do think there's going to have to be some sort of generic reform of like how law in the real world interacts with. law in the digital world and like we're still living in the like surf days of europe you know like 1500s 1400s something like that like we haven't figured out how to reconcile those we didn't have the french revolution we didn't have the you know british empire growth and crash you know like there's still a lot of stuff in like the institution building phase that you know we're still waiting

for and so the question is like what is the catalyst for that right the pandemic was one catalyst for people to realize, oh, shit, you can basically build institutions online, whether it was crypto or whether it's not crypto, because people were forced to run their institutions online. And then they realized, oh, you can do that. There was a Planet Money podcast I listened to about the pandemic. And it was about all these regulations that maybe they were just like in the back of people's minds. No one of we're paying attention to them pre-pandemic. But once the pandemic hit, all these like regulations got in the way of stuff. one of the regulations was cross-state nurses, as a nurses couldn't go and do nursing in a different state.

And probably some of the similar regulations that you kind of listed off with commerce and alcohol, it's just like licenses didn't work cross-state. You would probably need to get a different license. But then that held so much of just like health care back in times where we needed it the most. And so the pandemic kind of just like took the regulatory cage and like rattled it and some stuff fell out. And we were like, all right, like let's get rid of that regulation. That's like holding us back. but I don't think that's nearly enough.

You just listed off like the French Revolution or the fall of the British Empire. I think we have so much like instead of technical debt, we have like regulatory debt as in where we have regulations that I think perhaps the paradigm of these regulations probably started post-World War II. Like just in the rebuilding of Western liberal democracies post-World War II and the culture of regulation probably got started right around there. But now we have this brand new regulatory paradigm with the Internet. and now also with crypto. And so what you're kind of alluding to is that we need this great reshuffling, reorganization, re-regulation, rewriting of the rules. And this kind of reminds me of what a lot of what Ray Dahlia is talking about with, like,

and also what people are talking about with like the whole fourth turning, where we're going from one paradigm to another, where there seems to be, like, the world seems to be ready for something new and we don't know what. And I think that perhaps regulation or the regulatory debt that we have is part of that. story is like we're trying to find new social structures. We're trying to find new systems of engaging with each other, but things are holding us back and it's making us as a global society frustrated. Yeah. And I think the, you know, like one thing to remember is that, you know, in history, the length scale of organization was quite limited by A, geography, B, resources, C, technology,

and D, sort of like, rate of population growth, which you could argue was metered by resources, but some version of that. And so we have these organizations into, like, cities, agoras, nation states, and the nation states sort of congealed into, like, state-ish things. And then we fractured the states, and once the state grew big enough, we had to, like, break it again. And, you know, there's sort of this, like, aggregation and disaggregation thing that we've had to do as we, like, built institutions and collectivism in human society. And somehow the internet makes it so that there's not like a clear length scale, right? There's not a clear size, a notion of a distance that is the right sort of organizational length scale.

But it's very clear that the ones we use in the real world of like state and nation and maybe city are not really good for the internet. They, like, they just don't work, right? Like, it's the wrong metric, the wrong distance function. And I think, like, once people decide whatever that is, that will determine what this new structure looks like. Yeah. If that makes sense.

Yeah, I think so. But also, I think there's room to say that, like, perhaps we can't find that new, like, frame of reference, that new meter stick between physical nation states and digital societies. Like, some things about the nation state really only operate on this. scales of atoms atoms and not bits and like the true aligned governance in the digital age especially in the crypto age I think probably is like nonsensical to ask that to come from a nation state because the nation state is really only good at governing over the physical world not the digital world and so like when they like all the the regulations that you talked about about like hey

like when I'm on the internet in New York why can't I buy that whiskey that's in Florida well that's a physical product that's going across physical supply chain. And it has less to do with like, and this is why I think like there's inevitably going to be like a coming, we're going to come to a head with crypto regulation and nation state regulation just because like so many things are gray areas in crypto that the nation state I don't think we'll ever really have a clear answer towards. Yeah. And I guess it gets back to this question of like, should a nation state really be able to regulate like these entities? Like what type of aggregation of people is the right one? to regulate these things. And like, it's not clear it's actually nations or states, right? It could be a larger thing, maybe. Nations want to regulate it, of course. But I don't think it's like very clear, like, who's, like, what level of like this many people agreeing is like the correct authority. And like, I think that, yeah, to your point, that that's where we're going to get in

trouble. And I think all of the supply chain shit we saw during the pandemic and like we still are seeing, right? Like the U.S. is still living in this like crazy supply chain world. I don't know if a lot of people have paid attention to this, but like the U.S.'s shipping infrastructure, like physical infrastructure is really, really bad. There was a story of this guy, you know, this like startup founder guy who like, I guess works in this logistics infrastructure space. And, you know, there's this law, I guess in Long Beach, California that you can't like stack shipping containers more than like three shipping containers up or something. And this led to basically lines of trucks just like acting as storage for shipping containers

like on the street in parking lots. And basically there were too many containers coming in and like you couldn't find them. And it's completely manual. There's not like these things were tagged and you could be like, oh, there's a GPS location for like where this container that contains X, Y, or Z good is. Completely not robotic, not automated, no tagging. And he just, like, wrote this, like, viral tweet. And then after that, like, apparently, like, the, I guess the county official, like,

changed the law for this thing. And, like, basically, you know, like, this two months backlog suddenly was able to get cleared pretty quickly. And compare this to places, like, I think the most, as far as I know, I'm not an expert in this, so this is just, you know, whatever little I've read on this. Rotterdam in the Netherlands has like this like fully robotic automated tagged shipping container thing. It's like processes like, you know, the US receives like hundreds of times the number of shipping containers, but Rotterdam could basically process more than what the

US does with one-tenth the number of people who are working on. And so there's this interesting thing on the supply chain side too of like, hey, we've kind of been like completely leapfrogged by a bunch of places. And I think now the last six months, you've seen like a ton of investment and like acknowledgement of this as like one of the bigger problems. But this gets back to this question of like, why did this guy's tweet suddenly get the law changed overnight? Right. Like the fact that it took that is already like a weird, a weird kind of thing that shows. that like the internet has changed our perception of like state like local regulations in a way that means that like the definition of a state as this regulating entity might be sort of boomer in like 10

years well this state is always like a lagging thing right like legislation is slow governance is slow passing laws is slow but i think especially with the technologies that we have these days and also triggered by covid because covid just made us feel like much more of a global society. It's like, oh, when all of Italy gets the COVID, it comes for us like two months later. All of a sudden, we start to pay attention to what's going on around the world a lot more just because that data means more to us now, especially during a pandemic. But then we're just getting better at taking a look around the world and saying, like, well, what they're doing over there's working out real well. And we have some problems back home. And so I think maybe

perhaps it's just like, especially with society just moving so incredibly fast, like technology makes time speed up. Like we innovate faster. We can produce things. faster and like our governance systems are going at the same pace that they were if not slowing down. And so like the juxtaposition or the dichotomy but behind things that are working and things that aren't working. I think people have a lot less tolerance for these things nowadays. And things like Twitter allow us to actually like discover the working things versus the broken things. And so like maybe it's just like actually Twitter was really the upgrade here rather than our governance didn't get any better, but our dissemination of information got better.

Yeah, I mean, I definitely think there's certainly a sense in which dissemination of information is important to this. Although there's this other problem of like, obviously, I guess this is like a topic de jour of like what is information and misinformation. Candleworms, I don't even know if we want to approach that. But there's a question to me of like, how is it possible that the people regulating this thing didn't know that there was this probably, right? Like, they needed this, like, external feedback loop to pass this information back. Well, they needed the kick in the butt because they were the hair resting on their laurels, right?

Yeah, yeah, yeah. And that's a good way of thinking about it. I just, like, kind of, there's kind of just something wrong, though, if, like, your legal system needs this other system to, like, kick it into doing anything, right? Like, at some point, it has to change, like, very dramatically, right? Bankless is proud to be sponsored by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans,

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up with a rate of innovation in society? Has any government structure in history ever been able to keep up with innovation? Maybe let's start with that. Well, it needs to, probably the answer is no, but it just basically needs to not fall off the end of the treadmill. Like, it doesn't have to keep up with the head of the chain, but it needs to keep up with it before it falls off. Like, it just needs to be able to go fast enough. And I think people are saying, like, hey, like, it's not fast enough right now. Like, you got to go faster. Yeah. And so the, like, physics analogy I like to make is, like, there's the second law of thermodynamics,

which kind of says, like, in sort of these open systems, open physical system, entropy is sort of always increasing. Like, the more, there's like this tendency to higher chaos always. And there's just inevitably going to be that when you have sort of like innovation in a society or even just unrest in a society. And the question for government is not, hey, can we actually live forever? Even though like, obviously that's like when you're writing this, the rules and structuring things, you're supposed to like be thinking of it like that like that. But the question is, how long can we live before the entropy of the universe eats us? It destroys us, right? Right.

And like the question is like there's this tradeoff between being really fast and reactive to changes and being very slow and methodical and like making few changes. And like, you know, governments are always like moving on that dial to try to like, they're trying to measure the amount of chaos and then like decide based on that where they are with that. And I think the problem is that the longer your governance structure exists just in naturally, just like humans themselves, even macro structures built of humans seem to have this thing of like they get more conservative as they get older. And we've yet to see a human structure that is like a block. chain in that it consistently replaces its leader without like lots of strife. I guess the U.S. is the best example, but it's not, it's not clear that it's going to just be able to continue that way without sort of. Can you unpack what you meant by that?

How does a blockchain consistently replace its leader? We're talking about pending blocks of the chain. I just mean like on every block, at least for sort of like leader based blockchain, right? You're sampling some distribution, whether it's a stake distribution, whether it's like hash power distribution, and you pick a new person at random. for that block. And yes, it's random, dependent on the resources they're providing, but it's still, you know, you trust the randomness.

That's the crypto part of this thing. And so I guess it's like, you know, do we trust the randomness, like the thing, the process that's like generating like either the new laws or the new sort of like structure? Or is it actually like eventually just scler, you know, type. up and you don't, you know, we can't, it becomes too much of a structure to re kind of fix and one you have to kind of blow up. And that's sort of where I just feel like the current system of like state and federal laws somehow has to adapt to the fact that like for some matters, you know, for some matters, you might actually only care about federal law. For other matters, you might say, like, hey, me and my neighboring states, we all need to have the same law. And for some matters, you might just say, oh, this only applies to this city, right?

It can, like, move between those scales. And DAWs basically do that, right? They have, like, different scales of DAWs in terms of, like, how much power or treasury or whatever they have. And coordination between them kind of lets them say, hey, we're, like, actually just only going to do this for the city. Oh, we're going to do this for this group of things. we're going to do this for this bigger group of things. And I think, like, eventually physical nature will have to be able to adapt to the internet by allowing all different scales of organization in that, if that makes sense.

And, like, that sounds like a revolution. Like, that doesn't sound like a, hey, we're going to just, like, tweak, like, state laws until we look like that, if that makes sense. Yeah, so just to make sure I'm up to speed with where you're a heads at, state laws and federal laws have a friction behind them because they're, if you pass a state law, then there's like regulatory overhead. So maybe it worked for doing the thing that it meant to do, but it also caused a bunch of collateral damage with other and also in the future you don't know about.

And so making the laws precise to where it wants to go is difficult in the physical nation state environment. But then you're saying with DAWS, like with UNISWOP raises or lowers its fees like 50 bibs or whatever, that's a big change because so much of DFI relates to UNISWAP, but it's also contained to uniswop at the same time. Same thing with like the MakerDAUS stability fee. But then you have like much more smaller DAOs, like, I don't know, friends with benefits. And they change like a bylaws and it only contains, that's only self-contained to friends with benefits. Are you saying that like, Dow governance structures just like are inherently more surgical and therefore much more aligned with what is being governed over?

Is that kind of what you're saying? Yeah, sort of. Yeah. Like imagine if like, you know, let's say we have a liquor law. but people in aggregate vote on its jurisdiction. Okay, are we going to make the liquor law only apply to the states of California, Oregon, and Washington? Or are we going to make it sort of apply to the whole country?

We're going to make it apply to like one city. And imagine if there was sort of a market mechanism for determining the scale at which a law gets applied. Dow's kind of do that to some extent. And that's a very different version of the law. we have now where it's like to create a new law you have to pick a sort of jurisdiction in which it is enforced right like a picket for the municipal government or i pick it for like the federal government it doesn't naturally move between those like maybe a law needs to be able to scale with its users like a law only impacts 10 people at the beginning but all of a sudden it impacts

10,000 people now its jurisdiction needs to also change i think dows actually allow you to have that like scale up and scale down. And whereas like laws in the world right now do not do that, right? You pick the jurisdiction size like boundaries first and then you say, hey, it's going to hold here. Can you illustrate the scaling up and scaling down of a law with the Dow just to make it super concrete? Yeah. Yeah, yeah.

So let's suppose that, you know, Uniswap raises their fee. Uh-huh. And then in response, curve raises their fee. And there's this natural market mechanism. of like people trading between them, which changes the volume and liquid de-structure. And then at some point, people say like, oh, we want to vote on actually like curve always following uniswoscopy. And now you've kind of merged the two laws, right?

Even though they're technically their own sovereign protocols, they can choose, like the users one can choose to just follow the other one's law, right? And they vote on it once and it goes into action. That's very not true in normal life, right? Like if Pennsylvania makes a law, it's not like New Jersey, it's like, yeah, we're going to follow the Pennsylvania law, right? Like, no. Instead, you have to like go to, you know what I mean? Okay. So it's like a bottom up federal law system where like if like curve agrees to follows uniswap and then, I don't know, sushi swap agrees to follow curve, which is then following uniswap. There turns into like this. Now you scaled it. You scaled it up. Right. You went from like, this pseudo universal fee that's determined for all of defy. And that's like the federal government's law.

because everyone in the defy ecosystem is using the same source for the fee structure, but that source is uniswap instead of a globally mandated law. Right, exactly. Like, there's some sense in which you can have market effects determine how widely applicable the law will become. Right. And, like, that's very different than state laws, right? State laws don't have this, like, competition between them in some sense. So, like, the power here is, of course, smart contracts where, like,

curve can just, like, build this into a smart contract just as, like, hey, like, called the unoswap fee number. Tell me what it is. Yeah, exactly. And so this is akin to like, California, pinging Washington and being like, all right, tell me what the liquor law is there, but they don't have that ability because they're not on smart contracts. And like, yeah, sure, they can find it, but it's not like they can copy it. They can't just, like, write a piece of law that says, hey, we're going to copy Washington and update it every day. Like, it's not going to work. They won't view that as sovereign, right? They're like, our law can't be superseded by there. is it can only be superseded by federal law, which covers everyone.

But what if California and Washington just want to have a little alliance, they want to have a little federation, right? And so, like, if you scale this out to, like, all the laws, like, imagine the states were some sort of, like, crypto-economic network of DOWs and organizations or whatever, like, is the idea that we can actually outsource the role of the federal government, just like this mesh network of interstate agreements about every different relevant laws? Like, all right, guys, like, what are we going to do for, like, the driving age? And what are we going to do for the drinking age?

and what are we going to do for like whatever this law is? And like it's just like this. And you could imagine there's like federations, right? Where there's like the Northeast Federation. So the max speed limit is 70 miles an hour. But Texas, Illinois and Washington State decided to make their own federation say, fuck you. We're going to make the speed limit 100 miles an hour.

And I feel like this idea of being able to like group together units and break them apart, this bundling and unbundling of laws that like, you can agree to or break apart from that does not happen like you can do it in normal but it's not built to do it so the system takes forever if you ever want to do something like that and during the pandemic we saw that right where like states tried to like join together to buy masks because like they then had better purchasing power but then they like couldn't agree and like one state would like apply instantly because they like had enough of a budget like allocated And another state would be like, no, we have to like go through our procedure processes.

Oh, wait, everyone has to come in person. Oh, shit, we can't do that. We have to even rewrite the law to like, you know what I mean? To rewrite the law to rewrite the law. And the recursion on this type of stuff makes it such that people don't do it. Whereas like recursion in the smart contracts easy. Right. Or like gluing together these things is easy.

And so like there's a sense in which the laws can now scale to the correct user base. And like to me, that's like the cool thing that like the internet lets you do. that like kind of normal law doesn't. You have to like kind of choose these boundaries beforehand. One of the big critiques of government mainly from libertarians, but mainly I hear it from the bitcoins, is that like the nation states never get smaller. They only get larger.

I think a different way to state that is kind of what we're alluded to is that like laws only get added. They only get appended rather than erased. And that adds on like regulatory complexity. And so like if we discover a problem, what we do is like we write a law to fix that. And then we discover new problems, so we write a new law. And it's like this patchwork of like laws, layered on laws, layered on laws.

And that adds friction. But what you're saying is that like the routing or navigating of all those different patchwork mesh network of laws becomes trivial if it's a smart contract because you could just have the code do it. Oh, you can also just fork if you say, fuck you. I don't want to be part of this. Right. Like you can't fork the liquidity and whatever. Sure. But my point is if you really, really are like, I hate this thing.

You do have this like exit criteria. So I'm not saying that the real law will copy this type of behavior, right? Like, it is hard to do in the physical world, right? Just by the nature. But I do think there will be some lessons that have to come, go backwards. We learn from like internet institutions like go back to real life institutions. And we don't know what that looks like right now. But I think that that's something that, you know, the next 20 plus years we'll see.

I think the question is like, do we exit serfdom? in our lifetimes or not. Going back to our metaphor of just like the United States resting on its laurels and then innovation happening elsewhere and then copycatting that, do you see a world where like we actually figure out how to do some sort of real world governance on Ethereum and then like kind of using the structure of like smart contract based laws or just like if this, then that statement's for laws. In like 10 years, the United States is like, oh, that's working out really well for them in the internet

world. Can we apply this to our world? And like, we actually have like governance innovation at the at the federal level. I guess effectively this would work if you were like, hey, the Congress is the oracle that like guarantees the data input from the real world is correct. Well, isn't Congress just an oracle of the desires of the people? Isn't that what they do? It's just like supposed to be. Yeah. Supposed. Supposed to be. Yeah. Supposed to be. Unclear if it's, uh, and clear if it's uh that's that isn't this is why defy is to me the place i find the most interesting and that it's very precise like the things defy dows do are extremely precise things and like i said in the u.s financial law dominates overall and so if you can show that this thing

can do better than existing financial law but with way less resources then you can now start to say like, you know, hey, maybe you should start thinking about replacing. And I think that's why, to me, defy is actually the pill towards this direction, more so than like NFTs right now. Because it is way closer to this like real world law thing. And like I don't see like liquor laws somehow being done this way. But liquor laws on the blockchain. I mean, I'm sure there's some shitty ICO that claim they would do that. But like, I do see like financial law going this way.

Like I really do see it could very well kind of move in this model. And then financial law for a lot of financial stuff is federal. Of course, insurance and stuff is not. But like broadly speaking, we could argue it's mainly, mainly federal. And so I just think it will kind of be the first test. And we're not, defy isn't like good enough yet for that to happen. But like, I think it will be the place where we, we get to this point of like, oh, this shit's working a lot better and uses less resources to maintain it.

Right. Right. I want to dive into the whole like financial laws getting forced the most because we brought that up and again. And I want to dive into that because like I think if you zoom out and view the nation state holistically, that actually makes a ton of sense. Because like all nation states are like these meta organisms of resource capture and management, right? like what nation state can capture and utilize its resources better than a nation state. Ray Dalio had this really good line in his book where like social structures, like cities have laws that we all follow and cities have to follow the state laws and the state laws and the state laws

and the state laws. But then at the nation state level, once you get to the nation state level, like there is no bigger structure than that. And so at the nation state level, it's the law of the jungle because we don't have any sort of meta organization behind all these different nation states. Like, we have the UN, but it's more of an agreement between nation states. Come on. The UN Security Council couldn't even, like, do anything for Ukraine.

Right. It's kind of a bit of a joke in some ways. Right. At the nation state level, there is no higher order of organization that forces the belower orders to, like, adhere. And so at the nation state level, it's just the law of the jungle. And that means resource capture and resource management. And so, like, that's why taxes are such a big deal.

And that's why we're watching, like, capital control. happen in Russia right now because capital is leaving the country or attempting to. And that's the number one thing that a nation state is concerned with, which is resources. And so this is in my mind, when you tell me that financial laws are the things that get enforced the most, to me that's the nation state doing its damnedest to make sure that the resources that are inside of its borders are properly managed and counted for and taxed by the nation state. Is that a fair assessment? I think it's also, to some extent, again, a form of this.

thing I was just saying of like they're very precise decisions relatively speaking like you didn't pay your taxes by this amount and this time right whereas like a murder trial is very different because there's so many ways in which a trial murder trial where say 90% of people pulled say like the person did it can still end up having them not be found guilty and so I think like there is a sense of though, and with the nation state for enforcing these like kind of more complex matters, it can only expend a certain amount of resource. Like the resources there are like the time it takes, time is a resource, the judges, you know, doing the whole jury process, like it is a laborious task and there's only so many you can do, right? Whereas with financial cases, there's so much more precise that there's like, they're almost automatable. And my argument is that in DeFi, you're basically removing all the lawyers and

automating as much of that as possible. So you actually might get to the point where it's like more efficient for the nation state to just use something that looks more like DeFi as a way of enforcing things. You know, obviously that's what these CBDC type of things want to do. It remains to be seen if anyone's smart ever wants to work on them. To me, that's like the bigger problem. It's like no one, no one's, super bright really is like yeah i want to work on like the you know u scbdc or like work at visa and like on one of these things really it's the talent differences like between cryptocurrencies and you know like visa or like you know these kind like the chinese digital dollar digital rim indi is huge right like

you don't see like really smart people going into doing that and like that should tell you something about like how feasible it is for a government to do it. And so if it turns out that like it just grows so big on its own, it might just become easier to just adopt Defi as the law for that. Right. And like I am sure small nations will be first to do that because they get free currency stability, possibly. And so that's why I'm much more bullish on defy being the kind of way of the real world kind of real laws kind of being restructured organizationally. Right. Okay. So the argument is that like all these financial laws when they go to court are just so incredibly objective because it's just like, all right, what are the numbers involved with what of

the parties? And did the numbers get transferred in the most appropriate ways? And so this is all like almost like math based, almost like trust in math, which is like part of like the crypto ethos. And so what you're saying is that like porting over this legal structure. onto defy allows us to just reason about these things better and also with the aid of smart contracts to make sure that we never actually have to go to court in the first place. It's just like all automated on defy. And so you're saying the gap between managing interstate commerce laws versus like interstate finance and tax laws is like much smaller to actually put that on defy versus like how do we manage

like alcohol like licenses on the blockchain. Exactly. Yeah. And it becomes easier. to adopt, right? Like, it just becomes easier to be like in the same way I was like, oh, Curve just adopted Uniswop's fee. A nation state can adopt an AMM's price as an Oracle for an off-chain contract, right?

It's not, it can go the other way, right? Like, we've spent all this time using oracles to like pump in prices. Right. But if it becomes the most liquid venue in the world, then you can also go the other way. And that's the equivalent of a nation state taking the rules of DeFi are now our law, right? That's a very simple case, like a, maybe not like a crazy case, but it's still, it's still like an example. And the case for that would be like in some sort of like courtroom. They're like, all right, well, the uniswap price for this token at this time was this amount.

Therefore, you owe this much in taxes or the settlement is like determined like this or something like that. Yeah, I mean, or a more like nationalistic version. Suppose that there's some nation whose currency is majority issued in a stable coin. and they instead of making a digital dollar, they just like act like circle or tethered. And they just like make an ERC 20 that is, I don't know, the Marshall Islands dollar.

I'm making up a currency. And they just issue their stable coin on there. And then there's a uniswap pool of USDC versus the Marshall Island dollar. And anything that the government needs to ever get the exchange rate for. And governments have tons of stuff where they need exchange rates and contracts. in law to enforce the law comes from yous law right that's another case where like you're basically adopting the laws of defy and so like there and like i think i think it you know there was a

lot of time in crypto i think in like especially in the bear market was spent on like i don't know i remember like ripple like tried to like get itself adopted as like the currency of some like random country or whatever right none of that shit works regardless of how much money like people were like giving these random countries. A more powerful version is the opposite, right? The thing that already has a ton of liquidity also has the sovereign coin. And now they're accepting the laws of defy.

And like that seems kind of not impossible. Do you believe in Coda's law? Like straight up Lex Cryptographia or whatever it's called? Not really, but more because it's so easy to write bugs. Okay. Do you believe in the philosophy, as in smart, contract laws supersede nation state laws? You still have to care about the users, right?

A lot of these smart contracts only work under some conditions of like there are certain types of users or providing liquidity, trading, doing whatever, right? At least for defy again. And it depends on the users plus the contract. And I think it is law, code is law conditional on some assumptions being met. And then without those assumptions being met, you can't assume, you can't say that. a causal statement. What's an assumption that needs to be met? I'll give you a simple example. Uniswop to be a good Oracle needs a ton of liquidity. And the cost of manipulating the price is

sort of like above a threshold proportional to like sort of a function of the liquidity in there. Okay. And, you know, if I'm going to use it, you know, if the code is like law in that like some governments like using that uniswap pool to like figure out how much to pay to some other country like there should be some condition under which that's true code is law when we're ready for it as a society basically yeah yeah yeah okay exactly um truan when you wake up in the morning what does your brain go towards what do you focus on naturally what's downhill for you uh where is caffeine like that's i mean you want the honest answer yeah sure first first thing is like okay when you're caffeinated what do you start to think about i don't know i feel like

Most of it is just like reading like the news and seeing what happened overnight. I mean, the thing about crypto, right, is like there's so many times I've woken up and there's just been like some crazy ass surprise and or like some crazy thing happened overnight in Asia. I don't know. Yeah, the world's gone crazy. I'm actually a late night type of person. So like actually in the morning, I'm kind of bleary and like, no good ideas. No good idea has come in the morning. I just take a long time of like reading things before I can finally start like thinking about stuff.

And then usually it's trying to understand what things in crypto are actually working by usage, not by hype or things like that. And then trying to see if there is, you know, my research process for coming up like paper story is like really trying to understand if there's something that's working in spite of the fact that the developers had no clue why it should work. They just, like, wrote the thing, kind of hoped it worked. And they duct tape and bailing wire put it together. And it's like 90% of time this thing should fail. But for some reason, it's like able to survive and not get exploited and not get people or not, like, you know. I spend a lot of time thinking about that and like trying to analyze the space of these things. Because I think that's how you find what the new primitives are, at least in Define.

So much of like, and we saw this with the internet. And it's also true with DFI. Like so much of it is emergent. Like when we started with the internet, we just were making newspaper websites instead of what we know of today as website websites. Right. What's that? Maybe that's dating me. GEOCities used to be this like, it was the first website that was like, build your own websites for free.

And like, it got bought by Yahoo. But like it was like Squarespace, but really, really like shitty, like, you know, it was most famous for invent. the following feature, which was the page counter, which at the bottom of the page would, like, show you the number of time visitors this page app. Okay, so, yeah, so a lot of the early internet stuff that actually never ended up, like, manifesting into what the internet is we know of today. And I think now that we have that primitive, we kind of can apply it to defy, right? Like, or at least with Ethereum, too, like, when in 2015, 2016, Ethereum, we had Peepeth,

which was, like, Twitter on Ethereum, as in, like, you would write tweets and they would be in transactions on the L1. and this was back when gas was like basically zero cents. But now it's completely ridiculous. Now we understand that like there's going to be some sort of emergence with what we build in Defi. We know that like the things that Defi will look like in 20 years, we're probably going to be completely different from what we're building out today.

And what we're building out today are probably skemorphic and backwards and reductive. So like is that when you think about Defi, like are you always on the like lookout for it's like, oh, well, like, is this really going to be what it looks like in 15 years? Or how do you navigate a world that we know we don't know what it will be like in the future? With Defi, it's like I feel like that the key is there is, you know, I prefer saying this and I say it maybe too much. But Defy has nothing to do with actually changing much in finance. Has everything to do with changing things in law and like removing law more than finance. So if you see something work, there has to be some analog that's existed in finance somewhere.

It might be an arcane, esoteric thing that, like, doesn't exist anymore or, like, blew up in some weird way. But there probably is an analog. For, like, NFT stuff, that's above my pay grade. Like, I have no clue how to think that way. And, like, I know there are these people who are geniuses, like, Andy, who are just, like, always on for that stuff. But, like, I just, I can't see that. Whereas here, it's more about, like, trying to draw analogies and also to understand kind of, like, the users really well. And like, yeah, for finance, it's just a little bit easier.

It's like, I just don't think we're going to like invent something that's completely new. It's going to be more like something that was very hard and could have existed or did exist somehow was able to be made really easily with smart contracts. Like before it was like too complicated, too expensive and the cost of it somehow went down 10,000 X and that made it an attractive product. And that's sort of how I feel with like a lot of. the financial part. Yeah, I think one of the things I've learned about you the most is almost exactly what you just said, where like, this isn't finance, this is law that we're working on. Like, smart contracts is an automation of law, not an automation of finance. But finance itself is inherently law based, right? You can't have finance without contracts because like, that's all

the finance is, is money and contracts, basically, and that's how you create finance. And I think a lot of money is a contract. Look at the back of the bill. It has all the philosophy. written though. That's a really good point. Yeah, I never even even thought about that. I think that a lot of listeners, probably people that think about defy, think of it as finance and don't really consider the law aspect of it. Yeah. And I think like when you make law cheaper, you change which products are used. Yeah, you change which products. Which products are viable. Yeah, exactly. Yeah. Teroon, when you wake up in the morning, what makes you optimistic other than your cup of coffee? That's coming. Um, you know, obviously,

humans seem to be unable to not cause strife for themselves. But I just think there's just so many kind of like pretty things in the world that come from very different aesthetic standards. Like, you know, certain types of math are very pretty. Certain types of, you know, people's, like, devotion to something is very pretty. Like, you know, like, people. I don't really find his art very interesting. I don't like it. But the fact that the dude did that for like so many days in a row and didn't get bored of doing it, you got to respect that. It's like, there's some joy, beauty to that. So I think it's more about finding, like, taking all of these kind of things that you see in the world, especially on the internet, in internet culture, and trying to, like,

be able to find some, like, little nugget of, like, hey, you know, like, I probably hate that thing. But it's actually kind of, there's some, like, you know, there's always something, a kernel of niceness in a lot of things. And, you know, to do that, you have to keep yourself only locked into certain parts of internet and away from others. To do what? Oh, to always be able to find some like nice nugget of like fun

like hey, this is cool. I appreciate it. Type of thing. And like finding those things every day. Like that's kind of my what makes me optimistic. It's the fact that there are. Why do you have to lock yourself

into the internet to find that? Oh, I just try to say like, I don't read 4chan. Oh. Like, you know what I mean? Like there's certain parts of the internet that there's some things where I, I'm like, I don't think I'm going to find anything positive here.

Okay. What's an example of a piece of math that's pretty? So what's the last pretty piece of math that you saw? So I think like my favorite proof of all time is like the one thing I think that's very interesting in math is like, the more powerful like a theorem or statement, the more A, it gets used, but B, the more people try to find different ways to prove the same result. And so the more fundamental and important an object is, the more you find like 500 proofs of it. And within those 500, there's many different forms of style and aesthetics. Some are, you know, they're pretty because they use really fancy machinery and the proof is really small.

Some of them are pretty because it's like very first principles. You don't need to know that much background. And some of them they're pretty because they like are a tour to force. They, like, are able to, like, glue together things that you wouldn't have thought would, like, work together. But I think my favorite proof is the fundamental theorem of algebra, something you kind of, like, learn in high school, which is, like, any polynomial has N roots in the complex numbers. Like, it has all its roots. And, like, when you learn it the first time, you always learn this, like, really ugly, super ugly proof.

But there's this one proof using Leuvel's theorem, which is, something in complex analysis that is just very, very clean. And I find, like, the fact, it's like a proof I have committed to memory. And I think, like, it's kind of like finding a poem you really like, you know. There might be 500 poems that are going to the same sentiment. But sometimes you find one where you're like, this is the one that, like, you know, you just insta commit to memory. And so that's probably it.

The way that I relate to that is when I'm doing my writing and I'm writing out paragraphs to make a point. And going through the revision process, I find a way to take, like, this three paragraph section that's making, what I think is like a really awesome, very strong point. But it took me three paragraphs to make it. And then in my editing process, I'm able to like actually like take the third paragraph, cut some stuff out and then like integrate that into the first two paragraphs. And if I'm really on my game, then I can actually find a way to cut that paragraph down into two paragraphs. And like the best theorem, if you will, is like, oh, I actually collapsed a whole entire section into these two sentences.

And these two sentences actually land so much harder with the listener, with the reader, than this whole entire paragraph. And Ryan always says, like, when we were trying to onboard, like, writers into bank lists, is that you're supposed to write, like, you tweet. Like, if you're actually constrained for characters, how do you get your point across? And, like, it's the art of, like, writing a whole entire, like, 10,000 word article, but that you get the point across inside of 500 words.

And it kind of sounds like the same thing. Right. Yeah, it's the same thing. But somehow you need to have struggled through the long one to figure out the short one. And like that process is also very can sometimes be pretty

to see like how that, how the simplification happens. Are you familiar with the concept, a mathematical concept? I'm sure you are actually with basins. You mean like basins of attraction in the dynamical system? Yeah.

Yeah. Yeah. So is it fair to try and extract I can extrapolate this out as then, like, the bottom of a basin is, like, the most simple and most reductive proof. Or in my world, the most simple, like, how do you collapse 10,000 words into a single meme? Like, do you think of the base of the attraction basin is, like, the bottom of it is, like, the most distilled thing of what we're trying to talk about? Yeah, I like the analogy. I will say it's not true for all basins because oftentimes they don't have unique points, like unique minima. they can have like many bottoms.

But like the sentiment's correct. For sure. Assuming you have a way of describing like a dynamical system that's like your thought process, right? But then again, neuroscience is very far from being that precise. Well, we can also extrapolate this at Defi, right? Where like maybe there's a desire to swap tokens on Defi. So what do we do? The first thing we do is we build Ether Delta.

And that was a very, very messy proof of trying to swap. tokens and then you know later we find uniswap we find x times y equals k and that seems to be like the most reductively simple way of swapping tokens and i feel like you could probably extrapolate this to like almost all domains of knowledge where like you can just find the most simple and most easy way to do something but then when you extrapolate that like do you get into the conversation of singularity like what is the most bottom most basin of the universe and if we all end up there like what happens did i just get way too far out there I don't know.

I feel like that's just like so. That's just like, yeah. I guess so. I think the interesting thing is I feel like the concept of the singularity seems to have like lost popularity. Like I feel like 10 years ago it was like Kurzweil was like, you know, really like hot character. And now instead we have his son making very cringe fake DAWs.

Wait, is that real? Bessemer Dow. Like this venture fund is like claiming their, making a Dow and they're like going to invest out of it. But I don't think they understand what the D stands for. Right. And his son is running it. I do think we actually kind of accidentally

went down like the wrong path with naming these things. None of these things are Dow's. Yeah. I mean, pets.com was an era, right? Like no one says like you know, bankless.com. Right. Yeah. So we'll, you know, you have to go through this. Again, this is like the, you know, we're going through this dynamical process, you know.

All right, Tarun. Do you have any, like, rule of thumb that you follow or a bit of advice that has been useful for you? Good question. Probably, like, you know, the thing I started doing in college and then, like, kind of have still done is I have this rule of, like, never eat a meal alone. And so, like, that leads you to, like, actually try to find to meet new crazy people. obviously pandemic kind of ruin that rule but like let's ignore that fact but i think like being able to like have some like very simple structured goal like that which forces you to like go you know

change your social behaviors somehow i feel like is a very good good thing so if it's dinner time and you don't have somebody to eat a meal with what do you go do go me to own random go eat at a bar Or eat at a bar. No AirPods allowed? Yeah, yeah, yeah. Sit out of a bar? Yeah, exactly, exactly. You're talking to a guy that, like, eats most of his meals at a bar with the AirPods in.

You know, in New York, though, I feel like it's very different. Like, there's, like, tons of people who just, like, go and hang out on their own. And it's not, yeah. So. All right, Banquist Nation, action items. Go to a random bar and get a meal and talk to a stranger.