I'm back in school, taking on a 18 units, but my mind keeps jumping to the world of MEV (Miner Extractable Value).
This summer was my most productive one yet. I interned with the consumer onboarding team at Coinbase, diving deep into React Native and TypeScript. I picked up some cool hacks and tricks, connected with a bunch of smart people, and now I'm ready to jump back into the DeFi space.
Crypto Interests: A Look Back and Forward
Back in 2019, I discussed a few areas of interest within the crypto space:
- Market share among emerging smart contract platforms: My gut feeling was spot on. Ethereum has proven to be the most stable and user-friendly solution. While projects like NEAR and Solana are trying to make waves, I don't see them overtaking Ethereum anytime soon (call me biased, but I don't think we need to rebuild an entire chain just for a few people to capture value).
- Crypto/Blockchain as a utility: We're seeing some growth here, albeit sluggish. Outside of DeFi, crypto offers numerous opportunities for verifying ownership and more.
- Credibility/Establishing Trust: This problem persists. In 2020, there's no reliable way to verify, trust, or cross-check an Ethereum address. 3Box seemed promising, but it hasn't gained significant traction.
I'm intrigued by the idea of combining on-chain good-faith actions and tracking them. This could unlock a new design space where access to dapps is based on an address's history of good-faith activity.
So, what constitutes a good-faith action?
- Liquidating accounts on money markets: Helping a protocol stay solvent and function properly
- Providing liquidity: This has been done (with COMP and others) and is a massive milestone in advancing crypto.
I'm still brainstorming this concept, but liquidations seem like a solid starting point. Hit me up if you have any ideas!
DeFi: From Telegram to Niche (DeFi 1.1)
Initially, DeFi seemed largely useless, with marginally better interest rates than traditional finance. Few understood its value proposition, but those who bet on code commits over hype cycles came out on top. At its core, DeFi demonstrates the potential of trustless interactions. Moreover, the DeFi gold rush of 2020 is relatively distributed (not dominated by Valley-based companies) and focuses on a new strategy: Exit to Community. We all know there's a certain big fund pushing the crypto industry forward, along with many alternative funds. A16z now believes that successful, progressive decentralization is the right way to build Web3 protocols, which I think will be the prevailing narrative for the next few years.
Code: What I've Learned (1.2)
I've explored a lot on the coding front. I tried out GraphQL, TypeScript, Python3 + asyncio, and a bit of Go. I still feel most comfortable with JavaScript, although TypeScript can be a time sink at times. Python3 is clean for discrete one-off problems. I'm starting to dive into deep Ethereum development (yes, dark forest style) and have been playing with seth lately. The mempool fascinates me. This fascination started when I discovered dydx and on-chain liquidations during my internship last summer. I began tracking data and noticed an explosion in the number of liquidators, recognizing it as a race condition (first come, first serve) and an intriguing problem to tackle. Coupled with the flash-loan exploits in February and the unfortunate events of Black Thursday (March), my interest in Ethereum's inner workings has been reignited. At its core, Ethereum is an adversarial environment, and transactions are getting front-run and back-run left and right. I want to dig deeper, explore the mempool, and uncover what's really happening.
My current toolkit includes:
- Lerna: I now use monorepos for almost everything
- Tmux + Nvim: A valiant attempt to ditch IDEs
- GraphQL: I try to use this to stitch apps together and quickly pull on-chain data from TheGraph. In general, I want to move away from REST and use GraphQL exclusively.
- Python: Some of my projects required learning asyncio, and I now see how I can apply it
- DevOps stuff: I built a system in Kubernetes this summer. It was an amazing experience and dev environment. I plan to dive deeper into Docker to set up a full-blown EC2 instance for personal use.
The Future of Crypto (1.3)
I believe we'll see new protocols, more complex financial instruments, and tremendous amounts of capital slowly pouring into DeFi. Of course, this also means we'll encounter more:
- Rug pulls, spectacular screw-ups, and smart contract bugs
- Desperate calls for attention (looking at you, ETH killers and maximalist battles)
- Mind-boggling irrationality (it's crypto, after all)
Protocol Wars
The forkable, easily cloned nature of most open-source DeFi protocols introduces a new attack vector. Building a moat will be the #1 priority to optimize for, or else protocols will get rekt (shoutout to Chef Nomi for the wisdom drop). On a serious note, this is a fascinating, probably underexplored area. Mechanism design and economic modeling come into play here. The goal is to answer a simple question: How do I ensure user 'X' sticks with my protocol instead of my competitor's? The answer is not so simple. It involves incentives and tight security measures. We're barely scratching the surface of what's possible. If Compound Finance still has $800 million locked, is it because of the brand, the fact that they pioneered on-chain money markets, or because they've never been hacked and have a strong community? The answer is likely a combination of all these factors. After several discussions over the summer and listening to some insightful podcasts, I've concluded that populism is quite visible and real within crypto. We have the SNX Spartans, LINK Marines, and whatnot. The community sticks together through rough patches (bear markets, protocol hiccups, etc.). On the brighter side, we'll see crypto grow by a small margin, bringing us closer to what this niche aims to achieve as a whole. No, this doesn't mean 'decentralize everything.' It means builders will iterate and present to a larger audience, value will accrue to protocols generating actual fees (Uniswap > many chains combined right now), and we'll see a renewed importance placed on anything on-chain. My current area of exploration is the mempool. Guess I'll see you in the dark forest, eh?
DeFi as a Design Space, Crypto-Natives, COVID (1.4)
This year has undoubtedly been a rollercoaster. While not diving into the other details, we've quickly embraced remote culture, defaulting to Zoom, Google Meet, and the like. To me, COVID is a forceful experiment asking people to spend more time online. I think about the implications and changes in online behavior. No, I'm not talking about TikTok (although it's interesting from a Gen Z perspective). I think this opens up new avenues: productivity-focused apps (e.g., Superhuman, Linear for anything).
Online Games & Crypto (1.5)
I spent a good part of my childhood playing games like Runescape, farming stuff in-game, flipping items on the 'Grand Exchange' (a kind of limit order book for any item in the game), trading accounts, and learning how to type fast in-game.
Other games like CS:GO have similar characteristics. People come for the game or the hype, and they stay for the uniqueness, drops, merch, and a desire to flex on others.
This is generally how humans behave. They're addicted to exclusivity in a way.
CS:GO had skins (paint on top of whatever gun you're wielding) and a variable (float) attached to each skin. The lower the float, the rarer and cleaner your skin looks in-game.
There were alternative markets where you deposit your skins to a bot, which then lists them on a private site frequented by collectors and traders.
A subreddit and in-game servers helped you meet, negotiate, and trade.
To me, ths sounds like a hacky fix to a problem (you're stitching together Reddit, self-hosted versions of CS:GO, and unofficial sites to create a trading environment), which could probably be solved by crypto. Worst case: learn from the activity here and adapt it to crypto.