Permissionless 2, Day 2
To identify the truly dedicated congregants of an American church, there’s no need to go every Sunday and take attendance.
Instead, you need only attend a single service when the regular preacher is on his summer vacation.
Whoever shows up on those Sundays, when the regular preacher isn’t there to notice, are the ones who show up every Sunday.
These are not the tourists, to be seen only at Easter and Christmas.
These are the natives, present week in and week out, in good times and bad.
The same goes for crypto conferences.
At a bull-market crypto conference, it’s impossible to tell who really means it.
But at a crypto conference held nearly two years into a grueling bear market, everyone you see means it.
In hindsight, it’s clear there were a lot of tourists at Permissionless I — which is great.
Like a charming Italian town that needs a critical mass of tourists to keep the cafes and restaurants open for business (or a church that needs those Easter and Christmas offerings), crypto needs tourists to buy its coins, use its apps, and pay some fees.
But just as too many tourists will make an Italian town feel a little too much like Epcot, too many tourists will make a crypto conference feel a little too much like a party.
In contrast, Permissionless II has had a reassuringly business-like feel to it.
If you’re still here after Luna, 3AC, FTX, DCG, and all of your altcoins going to zero, you must be serious about getting something done. Or learning something. Or networking.
You will also hit the early-evening bar crawl, yes. But that’s mostly to keep the day’s conversations going — and you won’t stay out as late as you did last year.
If you’re here this year, chances are you’ll be here next year, too — by which time, the tourists might be back.
Let’s hope so. They’ll be more than welcome.
But remember: it’s the people you saw this year who really mean it.
Don’t call it a comeback
No one would mistake the day’s first panel for a group of tourists.
The protocols they either founded or represent (AAVE, Uniswap, Synthetix, Compound) comprised much of DeFi 1.0 — and after failed experiments of DeFi 2.0, DeFi 1.0 is looking better than ever.
Kain Warwick, co-founder of Synthetix, summed up the spirit of DeFi 2.0: “We’re going to take all the sensible stuff, throw it out the window, and make it 10x crazier.”
10x crazier did not work out.
But the sensible stuff of DeFi 1.0 is still here.
Mary-Catherine Lader, COO of Uniswap Labs, offered this advice to DeFi builders: “Keep the simple and boring stuff simple and boring.”
At Permissionless I, that would have sounded far too cautious.
But at Permissionless II, it’s sounding like timeless wisdom.
Aave founder Stani Kulechov reminded us that the original innovation of DeFi can still have value, despite its egregious misuse in DeFi 2.0. Token emissions, he says, remain an “interesting way to distribute ownership of a protocol and bootstrap activity,”
Done correctly (i.e., not the 2.0 version), DeFi could still help “capital be formed and distributed on-chain.”
But “that reality isn’t here right now,” according to Stani.
Robert Leshner, founder of Compound Labs and CEO of Superstate, thinks that we may be going in the right direction, at least.
“DeFi is professionalizing and growing up,” he told us, while also staying true to its roots. “It will have purple hair sometimes and sometimes put on a suit and go to Wall Street.”
Either way, “DeFi is not going away.”
(You might say the same about bear-market conference attendees.)
1 million chains?
David Hoffman’s question as to whether a million blockchains are coming prompted a discussion of a “superchain,” which, confusingly, is not one chain, but many.
Optimism co-founder cleared things up with a concise definition: “Superchain is a chain that’s super, baby.”
That seems important to know because Jones believes this network of chains will “become the new backend of the internet.”
He also sees these chains becoming “the new smart contracts,” of which there will be a lot. “I see a world where a single game session creates a chain for that game session and then goes away.”
Even better: “It could be that we see a chain per user, to prove their state.”
His answer to Hoffman’s question, then?
“I think a million was too low, bro.”
It may not happen soon, however: “It’s going to be decades of building out the new internet infrastructure,” he predicted.
So, let’s make a note to revisit this at Permissionless XXXII in 2065.
(Proposed venue: Mars.)
Other super chains
Ethan Buchman, co-founder of the Cosmos Network, still thinks the Cosmos ecosystem is super enough to provide every chain the world will ever need.
So confident that he was nearly stumped by host Sam Martin’s question on what it would take to change his mind.
But he did think of something: “You might have to break the laws of physics. You’d need to make a thermodynamic argument.”
His co-panelist Sam Hart of Skip thinks Cosmos is super because “it attracts the best and brightest,” in large part because “you have to be kind of insane to want to reinvent the consensus protocol.”
Those best and brightest have already produced “a lot of sleeper hits,” according to Hart. “You just have to look for them.”
Solana co-founder Anatoly Yakovenko thinks Solana has a few hits, too.
Hivemapper “is probably the coolest AI intersection with crypto product in the world,” he said.
Another contender is Helium, which he hopes could soon be “fully rolled out [with] 10s of millions of people getting $5 mobile plans.”
Solana itself he envisions becoming a singular, super chain that could render the plural Superchain unnecessary.
“The ultimate end state of Solana is you have this massively performant state machine.”
What does “massively performant” look like? “Be as good as major exchanges,” he says. “That’s my dream.”
My dream is that any one of these dreams come true.
Are the institutions really coming this time?
The afternoon’s institutional track looked a lot like church on Easter Sunday — it was standing-room only.
The first panel addressed the question of whether macro still matters to crypto and concluded with a unanimous decision of “yes,” “no,” and “maybe.”
Two of those answers came from Mark Yusko of Morgan Creek Capital, who thinks that, in the long term, macro is irrelevant to crypto — “A bitcoin will always be worth one bitcoin.”
But in the short term, “the price of bitcoin is being manipulated” by the vested interests of Wall Street, because manipulating prices “with paper” (bitcoin futures, in this case), “is extremely profitable.”
Jim Bianco of Bianco Research thinks macro does still matter.
He warns that if you’re counting on a return of US interest rates to the pre-pandemic norm of 0% to kick start the next crypto rally, you will be disappointed.
“What 2019 was you can send to the anthropology department because we’re not going back there anymore.”
The case for “maybe” was made by the next panel, which discussed the evergreen prospect of real-world assets coming on-chain.
Lucas Vogelsong of Centrifuge noted that “finance runs on spreadsheets” and made the simple bull case that crypto offers the promise of replacing all of those spreadsheets with “a single source of truth.”
This, he says, is already possible, but he reminded us that you could order a pizza from Pizza Hut online as early as 1997, but ordering pizza online didn’t become a commonplace thing until about 2015.
So even if the institutions are coming, it could still be a long wait.
How long? “Six to eight years, or so,” according to Markus Infanger of Ripple, “for large-scale adoption.”
The case for “no” was made earlier in the day by Robert Leshner, who declared flatly that “the institutions aren’t coming.”
“The institutions aren’t interested in … trading some shitcoin that was invented last night,” he explained.
“The idea of DeFi, everyone loves, [but] they don’t want to use DeFi for our assets. They want to use it for theirs.”
Some of this is semantics.
Lucas Vogelsong noted that “the thing about real-world assets is that they're not assets.”
Instead, they are the on-chain representation of an asset that remains off-chain.
When the institutions are said to be coming, what’s usually meant is that they’re coming for the technology of blockchain.
What’s often heard, however, is that they’re coming for crypto.
But “crypto” and “blockchain” are about as alike as East and West Texas (i.e., in name only).
So, the final answer to “Are the institutions finally coming” is a definite “maybe” — depending on what you mean.
Takeaway
As ever, there was much, much more.
But the TLDR of Permissionless 2, Day 2 is that the sessions were well-attended (people want to learn), the hallways were buzzing (people want to network) and the after-hours were lower-key (people want to get things done the next morning).
Tune in tomorrow for another well-attended and buzzy, yet low-key Permissionless newsletter.
