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Optionality:
1/ Many analysts are describing the crypto assets as fixed snapshots in present.
SNX gives you claims for fees from trading synths.
AAVE accrues fees from lending.
The system works this way and this is what it does. Its an exchange, or credit facility...
1/ Many analysts are describing the crypto assets as fixed snapshots in present.
SNX gives you claims for fees from trading synths.
AAVE accrues fees from lending.
The system works this way and this is what it does. Its an exchange, or credit facility...
2/ These information are easily visible, we can price the present data and even extrapolate into the future.
We can list risks and price them somehow.
But I feel most are missing the emergent properties of these open protocols.
We can list risks and price them somehow.
But I feel most are missing the emergent properties of these open protocols.
3/ YFI currently captures some value between yield and LP protocols that exist in current form.
But its not limited to the that. It is a living thing, that can shapeshift with the industry. Recent hack of YFII farming gave us little glimpse into changing nature of emergence.
But its not limited to the that. It is a living thing, that can shapeshift with the industry. Recent hack of YFII farming gave us little glimpse into changing nature of emergence.
4/ Now, some protocols boast more emergence than others. If your protocol is closed, if it relies on fixed vision of one company or leader, it may be a good business.
But to become emergent, it must open it's gates to outside contributors, that can run their own ideas on it.
But to become emergent, it must open it's gates to outside contributors, that can run their own ideas on it.
5/ More open and flexible the protocol is, the more stuff can be build on it, the more valuable it becomes, the more upside it has.
Some protocols are explicitly high optionality, but lot of times its hidden, not priced in. Find it and bet on it.
Some protocols are explicitly high optionality, but lot of times its hidden, not priced in. Find it and bet on it.
6/ Having a solid protocol layer that can enable lot of verticals (without hampering them too much) is one thing. But then we also need a value capture.
Community of contributors need to be able to capture the value they are building on that protocol.
Community of contributors need to be able to capture the value they are building on that protocol.
7/ I won't build on your protocol if I feel I am making some VCs rich instead of myself. I need to be able to own a share in the protocol and also capture some of the value of the value created by my vertical myself. It needs to branch like a fractal.
8/ Now we introduce incentives. Many protocols do step 1: incentivise building, sponsor hackathons. Cool, but not sustainable. Incentives must be aligned systematically and sustainably. I must able to be inside, not the outsider dog that maybe gets a bone for doing the work.
9/ If the protocol allows you to 1. build on it without permission. 2. be the insider within it 3. reward you in a way that is fair and not subject to decisions of elites
- this is where emergence happens and optionality is likely to be super high. It will usually be underpriced
- this is where emergence happens and optionality is likely to be super high. It will usually be underpriced
