Welcome back to another issue of Vault. Hope everyone is doing well, and using the bear market + crypto winter + (actual) summer to spend some time outside and take a break from screens, news, and negativity.
This issue curates a reading list you can use to gain a deeper understanding of crypto/web3. During bull markets, everything happens so quickly that you never feel like you have time to do the deep reading necessary to understand the space.
So, now is as good a time as ever to do just that. Here is an assortment of articles, tweets, books, and papers you can use to head deeper down the rabbit hole.
What I’m Reading
SBF’s thread on use-cases. Always a good sign when the market leaders and builders focus on use-cases and good products. This is how we get back to fundamentals. For what it’s worth, I agree with his take on payments. Moving towards peer-to-peer transfers with fewer intermediaries would be good for efficiency. Also, something resembling a decentralized, global WeChat would be wildly useful.
A Samurai, a Knight, and a Yankee — Arthur Hayes
Hayes presents a solid thesis contrasting Japan, Europe, and the U.S. on the topic of Yield Curve Control. Arthur Hayes is one of the most prolific writers in the crypto space. A few weeks ago, Vault featured Hayes’ article on the 3AC implosion. Note: the first section of this essay is hilariously overwritten, but it gets much stronger if you can make it through the opening.
The Sovereign Individual
A classic. This book is often cited for its clear presentation of one of the defining traits of crypto. Sovereignty is what we’re all about here, and this is the godfather of all books on the topic. I’ve read excerpts here and there and seen plenty of quotes, but I haven’t read it cover to cover.
Token Design for Serious People
This article from Jump Crypto provides an overview of tokenomics for protocol builders.
“The calm of winter can allow builders to craft well-grounded token designs. In turn, those designs can deliver sustainable outcomes for the next generation of protocols.
This piece offers a perspective for designers. In particular, we argue that protocol tokens should follow two basic design principles:
Tokenomics should coordinate common goods that participants would struggle to provide efficiently and economically on their own.
Tokenomics should channel value towards those who create that value, prioritizing value distribution (aligned with value creation) towards high-utility groups over value transfer between participants.”
What do I think about network states?
This is Vitalik’s response to the launch of Balaji Srinivasan’s The Network State. I’ve read about half of the article so far, but there are already many good points that refine the concept of the network state and propose new directions to take the idea. It also coins the term Balajian, to describe Balaji’s thoughts, which works surprisingly well in context — see the section on non-balajian network states.
Further reading from Vitalik’s archives:
Where to use a blockchain in non-financial applications?
Lightspeed raises over $7 billion across four funds, launches new 'crypto native' team [The Block]
Despite the bear market, there is still plenty of money flowing into the space. I like to keep an eye on fundraising announcements as one health metric for the ecosystem. The influx of builders and capital is the signal among the noise. Criticism, cynicism, snarkiness, media attacks, mean words on Twitter—all of this is noise. The only thing that matters is talent and money flowing into the space. The sentiment will turn around on a dime when the time is right.
Setting the record straight
Nic Carter got into some hot water for not being sufficiently maximalist enough for some Bitcoin folks. His article here is a well-reasoned response to these critics and represents the stance that I believe many in the space will adopt over time. His opinions here are much more relatable and sustainable than the maximalism that a small minority of the space tries to force onto everyone else. Most people want to participate broadly and have fun experimenting, not participate in strange technological zealotry.
Coinbase’s most recent 10-Q
Not exactly light beach reading. Coinbase is crypto’s foremost publicly-traded institution (at least in the U.S.). In my opinion, their financial health is a proxy for the current state of the industry. I’m hoping to dive into this more over the next week. At first glance, though, the $6 billion in current cash stands out as strong—especially in the face of the drama over the past week about Coinbase cutting their affiliate program.
Bitcoin Net Zero
This paper from Nic Carter and Ross Stevens lays out the environmental state of Bitcoin and the contrarian take on how the Bitcoin network will impact energy usage (contrarian compared to the media narrative). I’ve been meaning to read this one in its entirety for some time. It will be a herculean effort to convince the mainstream to get on board with the ideas laid out in this paper—but that would effort well spent.
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