Permissionless II, Day 3
Thanks to the skyrocketing oil prices of the 1970s, the state of Texas became a symbol of ostentatious wealth and conspicuous consumption — all while the rest of the country struggled with stagflation.
The tables turned when the oil boom turned into an oil bust.
While the 1980s became a decade of conspicuous consumption for much of the rest of the country, the mood in Texas was summed up in a commonly seen bumper sticker:
“Lord, give me one more oil boom. I promise not to piss it away again.”
Crypto people will know the feeling.
No one would argue that the crypto industry made the best use of the boom that ended with the Luna bust of early 2022.
But we’ve learned our lesson, right?
If we could just have one more bull market, we would do the right thing.
Instead of chasing dog coins and 80,000% APR Ponzi schemes, we would build real products with real use cases that would convert mainstream users to the empowerment of decentralization.
It’s possible!
There were none of those old bumper stickers in evidence in Austin this week because Texas did get another oil boom (thanks to fracking and horizontal drilling) and appears to have put the proceeds to better use.
Would crypto do the same?
If the speakers I saw today at Permissionless are any indication, I think it just might.
Vitalik
If we do get another crypto boom, the goal will be to act more like the 2010s version of Texas and less like the 1970s one — i.e., more Vitalik and less Do Kwon, SBF, and Alex Mashinsky.
So it was fitting that Vitalik himself kicked off the final day of Permissionless in his typically thoughtful, low-key, and non-promotional way.
Asked about his hopes for Ethereum he imagined making decentralization mainstream by easing people into it.
“The holy grail would be to try to create an on-ramp” that would allow people to create an Ethereum address with, say, a Google account, but with the ability to convert that address to a smart contract when they’re ready to decentralize.
“Instead of your Ethereum address being backed by your Gmail, your email becomes backed by your Ethereum address.”
Why would that matter?
Ethereum’s primary mission, as Vitalik sees it, is to 1) provide an alternative financial system where “the traditional system is either unavailable or too oppressive or has other disadvantages” and 2) be “a laboratory for testing out new systems and ideas [that can] trickle up to the wider world.”
There are risks, however.
One of his “biggest fears,” he told us, is that “the adults in the room” say “Hey, actually the crypto stuff just has to be window dressing” and force so much centralization on us that “you’ve basically reentered the existing Web2 dystopia.”
But if we can navigate a “tightrope of increasing security and increasing decentralization” the industry will “be in a really good place.”
If you’re interested in helping get to that good place, “there’s a lot of fascinating things you can get into at this point.”
Top-of-mind for Vitalik are Merkle proofs, validiums, anti-Sybil protocols, decentralized social media, and making DeFi safer — much of which was discussed in depth at Permissionless by some of the builders working to make it happen.
Product reveal
Vitalik was followed on the main stage by this week’s most-anticipated unveiling of a new tech product.
Blockworks Research launched its Analytics offering today — another big step in Blockworks’ mission to “move the industry forward with better information,” according to co-founder Jason Yanowitz.
(Note: The mission of this newsletter is to move the industry forward with funnier information.)
The new product really is great — and, unlike this week’s other big product reveal, Blockworks Research promises to never make any of your cables or chargers redundant.
If you do any kind of investing work with crypto data, you pretty much have to subscribe.
Who’s still investing in crypto?
Blockworks Analytics will help make crypto “investing” feel a lot more like real investing (you know, with valuation metrics and balance sheets and stuff).
Appropriately, the following mainstage panel featured four investors who have long been thinking about crypto in those terms.
That still seems unusual to me — most of crypto still seems to be in the “valuation is a meme” camp — so it was great to hear what these four are thinking about right now.
Kyle Samani of Multicoin Capital said layer-two tokens are “crazy undervalued vs. ETH” — but mostly because he thinks ETH is overvalued.
Vance Spencer of Framework Ventures countered that the “bear case for L2s is that they are going to drive the price of blockspace to zero.”
Spencer prefers OG DeFi projects with “moats.”
MakerDAO, for example, is expected to have $100 million of earnings this year, which makes its $900 million market cap look modest relative to TradFi valuations, according to Spencer.
In early-stage crypto investing, Spencer still sees too much money chasing not enough good projects.
Santiago Roel Santos, however, sees the opposite, with “super-attractive” early-stage deals pricing below $10 million.
Qiao Wang of AllianceDAO took a higher-level view.
He also looks to back founders that surprise him: “It might just be one sentence, that makes you say ‘Wow, I’ve never heard that.’”
(Really, he should invest in this newsletter, then.)
Two panelists agreed that non-crypto companies are now more bullish on crypto than the crypto natives are.
The natives appear worn out by the bear market and that may not end soon, according to Qiao: “I don’t think 2024 is when crypto comes back.”
That would likely be just fine with Vitalik, who would prefer we not let number-go-up distract us from working on the important stuff — lots of which was discussed in the final afternoon of Permissionless.
Regulation
I regrettably missed the breakout session on crypto’s US regulatory issues, but the headline of this morning’s press release tells you all you need to know on the topic: SEC Charges Creator of Stoner Cats Web Series for Unregistered Offering of NFTs.
As the saying goes: First they come for the Stoner Cats…
Stuff you can do
By the afternoon of the third day of a conference, most everyone’s social battery is fully drained.
But the final panels of Permissionless were still well-attended by engaged conferencegoers.
For good reason — the speakers I saw were all builders and all building toward the big-picture things that Vitalik spoke on in the morning.
Payments
On crypto’s original use case of peer-to-peer payments, Andy Brombert, CEO of Eco App and Beam, noted that, 15 years after Satoshi’s white paper, there’s still “not a whole lot happening.”
He thinks, however, that that’s about to change thanks to account abstraction, which will be “the catalyst for a golden age of payments.”
Account abstraction has enabled the team at Beam to build an “on-chain Venmo” which makes “sending someone money on-chain … as simple as sending a text message.”
I tried it and it really is amazingly simple.
It’s also the first time I’ve ever been early enough to something to have a first-name address, which was exciting. (I’m @byron on beam.eco.)
L2s
On scaling Ethereum, a panel of developers settled “the most contested issue in the crypto space” by answering the question “What is a rollup?”
Declan Fox of Linea helpfully defined a rollup as an “on-chain database … that inherits security and liveness from a layer-one” blockchain.
This should “enable new things” in the space.
“If we can unlock some of these opportunities,” according to Arjun Kalsay, “then the magic happens.”
Kalsay echoed much of the sentiment from Vitalik’s earlier talk: “The reason why we do all these things is the belief in decentralization and how it can make the world a better place.”
“Adoption happens slowly, slowly then all at once,” he added. “We need to make that ‘all at once’ happen.”
Online identity
Asked what’s at stake in crypto’s quest to provide proof of personhood, Jeremy Dillingham from Gitcoin responded, “I would say everything.”
I’m generally not one for hyperbole, but I may make an exception here.
“A world with AI and bots will just overrun people…if you don’t have Sybil defense,” according to Dillingham.
Proof-of-personhood is crypto’s defense against the AI Sybil attacks that will soon overrun the internet.
“For the first time, intelligence is not how you prove you’re human,” according to Tiago Sada of Tools for Humanity. “CAPTCHAs don’t work anymore.”
It’s an impossible problem to fully solve but I agree with Tiago Sada that “identity could really make the world better.”
Crypto may be the only way to provide it.
Closer
That felt like an appropriate note to end the conference on — because “making the world better” in one way or another is ultimately why we’re all here.
That has not always been obvious amid the headline-making booms, busts, and frauds.
But the industry has come a long way between the more-party-than-work Permissionless I and the more-work-than-party Permissionless II.
Will the tourists be back for Permissionless III?
I’ll see you in Salt Lake City either way.
