(0) I’ve been quiet for a while but that’s because the Web3 space today is in serious #buidl mode and I don’t have much to say. Some preliminary thoughts on gov, #DeFi, and CBDC after the past 2-3 months; as usual if I have more time, it’d be more coherent and shorter.

(1) Only users that contribute to network effect of protocol deserves to be rewarded. The pure value provided by a good service (for non-network-effect biz) is good enough for most users, giving them more value-capture is dilutive to protocol value. Most users don’t deserve shit.

(2) Control is needed to retain flexibility in times of shock / need for intervention. #DeFi apps before maturity are not L1/L2 where decentralization is foundational feature. To quote Bo @ Dragonfly, Web2 apps are trains where adjustments to carts & passengers are constant…

(3) … L1/L2 are like rockets where you have 1 shot to make it right; Apps on-top of L1/L2 feels more like planes: better make sure nothing is wrong before take-off, can land to make big adjustments, and man @ steering wheel still matters a lot.

(4) Standard BoD structure + voting shares + milestone-based incentives practiced via TradFi rather brilliant (after 400+ years of iteration nonetheless). All #DeFi apps can take a page learning from this. Shockingly little experimentation here still.

(5) Teams that “blew their load” via inflation without flexibility for further incentives will face dire competitive pressure when the space scales. 30% share of 10 unit of activity could mean little when 90 units of activity gets added – the 30% share now may not translate.

(6) Price-follow strategy in dex’es ($DODO, $BNT, $COFI) can have multiple pools, 1 of which via $LINK, but others even via discrete market-makers. Eventually, latency + cost of Tx will drop enough to make it viable, and rich strategies will emerge natively as tool to manage risk

(7) CBDC stablecoins will make their way to decentralized L1/L2s likely via structure similar to WBTC and could blow existing stablecoins out of water – afterall, most value convenient and great majority aren’t tax-evading / money-laundering / doing illegal stuff.

(8) #DeFi stack will get built on-top of CBDC rails likely by current FinTech juggernauts. Current #DeFi projs need to think long & hard on how they can play on various rails. Investors need to seriously ponder whether their projs have the chops to straddle multiple rails.

(9) …and to the last point, apps that don’t suffer from such “multi-rail” risk may be the tools & Infra plays – spanning the likes of Chainalysis, Nansen, Graph, Link, Gauntlet, etc – as well as highly technically capable cross-chain aggregators (that are effectively brokers).

(10) …of #DeFi stack that gets built (whether on CBDC or L1L2), a “Wallstreet” API is born – where “Finance Infra as a Service” (FaaS) for real biz emerges. CBDC may move faster for real economy, but I think real cool new stuff will be born crypto-native.