ETHcc was interesting because it contrasted our community’s slight shame at the outlandish returns ETH and DeFi has generated vs our beloved brothers and sisters in the BTC world whose predisposition for diamond encrusted lambos is well known.
Vitalik’s statement at ETHcc that he wants Ethereum to “take decentralization, trust minimization and mechanism design experimentation far beyond finance.” is a sentiment I share and have talked about in our blogs and newsletter. Before starting to criticise the big man (Vitalik, not God), I want to state early and clearly that I wish he was right. I wish that the building for all things decentralised had already started and that social media users were able to collectivise data and be paid for their time online. I too hoped for a vast array of experiments around monetising data to form a different type of revenue stream that resemble a kind of universal basic income to be in play.
However I think I was looking at it the wrong way and Vitalik is making the same mistake. Good tools have unintended consequences and sometimes you don’t know if something is the end application or a tool to facilitate other applications. The benefits brought by the internet are too many to mention, yet viral misinformation, vast erosion of privacy, and the diminishing patience of society as a whole were all unintended consequences. Not even medicine is free from positive and negative side effects. In relation to Ethereum, I realised I was wrong when I worked out that DeFi is not really the end application, it’s a tool. So Ethereum has not found finance rather finance has found Ethereum.
This means that DeFi based on Ethereum is not simply one application and we need more. DeFi offers a set of lego blocks in the form of securitisation, money markets and arbitrage tools. You can stick these blocks onto and into a wide range of business models at a low cost and with relative technical ease. ‘Onlyfans’ and ‘Human IPO’ are new businesses that can use these lego bricks and they are just the tip of the iceberg. The securitisation of labour, non-conventional assets and data has barely begun.
We expect to see native decentralised businesses using these tools to build value for their customers, synthesising data and capital in new ways. SWIFT, BACS and faster payments were fantastic tools of global trade and businesses that were born of the Washington Consensus. DeFi tools on Ethereum are a functional upgrade for the decentralised business and governance models that are emerging and for which government and regulators are struggling to find a narrative for. There is no grand unified theory or Mckinsey deck that is going to tie it all together and we will have to wait 10 years before Adam Curtis puts it together in one of his Disney junior classics.
So I am not waiting or watching for new apps on ETH, nor should Vitalik. Instead watch for new decentralised businesses that give their customers value, utility and the opportunity to earn that use DeFi as their tooling, just like lastminute.com used Word Press to lower the cost of travel and bring about a new concept of traveling.
To the development community who have made London possible, we give thanks. Hopefully Marvel will one day understand that you are real life Avengers and Thanos is a small 7 piece turd compared to the Merge. Next step Altair