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NET Society is unraveling the latest in digital art, crypto, AI, and tech. Join us for fresh insights and bold perspectives as we tap into wild, thought-provoking conversations. By: Derek Edwards (glitch marfa / collab+currency), Chris Furlong (starholder, LAO + Flamingo DAO), and Aaaron Wright & Priyanka Desai (Tribute Labs)
00;00;00;00 - 00;00;16;19
Pri
GM, everyone.
00;00;16;21 - 00;00;21;29
Chris
MGM Grand monetary policy. To you. To.
00;00;22;01 - 00;00;25;23
Aaron
Is that what? Is that where we're starting? Chris?
00;00;25;25 - 00;00;31;08
Chris
Nothing gets the audience fired off like us. Laughing is, economists.
00;00;31;11 - 00;00;40;02
Pri
We wouldn't be in tech if we weren't laughing on the next big event. And being experts in it. Tech is very good at that.
00;00;40;04 - 00;00;53;09
Chris
You know, one of my most controversial opinions is, economists are not a real profession, that that is not a real craft. That is, it's just a bunch of control freaks trying to back fit their worldview. Yes.
00;00;53;12 - 00;00;54;20
Aaron
I tend to agree with that.
00;00;54;22 - 00;00;57;29
Chris
Like, imagine getting a Nobel Prize in pseudoscience.
00;00;58;01 - 00;00;58;27
Aaron
I mean, I'd taken.
00;00;59;04 - 00;01;02;17
Pri
I don't know, I don't think that's true about all social sciences, honestly.
00;01;02;17 - 00;01;09;23
Chris
I'm talking about economists. I'm not talking about all social sciences. I'm very targeted in my hate.
00;01;09;25 - 00;01;12;20
Derek
But what what do you got against economists?
00;01;12;23 - 00;01;40;26
Chris
I just told you, I think most financial market behavior is fundamentally driven by irrational human behavior of people whose sense of self is fluid and reacting to, like, the moment and the environment they find themselves in. And this notion, you know, that we have this detached, rational actor who behaves in certain principal ways that are like, you know, you can write textbooks and make models about is absolute bullshit.
00;01;40;26 - 00;01;54;14
Chris
And economists just like to take a bunch of stuff that, has all sorts of other pressures on it and jam old data to fit their theories, torture it, and then, go, look, the markets are rational, all right?
00;01;54;16 - 00;02;24;29
Derek
Fair enough. But my what? My maybe my one my one counterpoint here is that that is just like the sciences in general, right? It's just, trying to formulate theories and explanations for events. In this case, it's like behavioral. And in some cases, psycho psychological kind of actions around economic design and finance and the fluidity of money. But but in, you know, biology or, pharmacology or, you know, the study of other sciences, it's the it's the same idea.
00;02;24;29 - 00;02;34;20
Derek
But are you saying, one is inherently better than the other just because we're, we're dealing with, irrational humans on on this side of things?
00;02;34;23 - 00;02;46;02
Chris
All right? You can't compare. Like, you can't create an equivalency between, say, biology and economics. Right? Like biological systems do not have a rational human behavior.
00;02;46;05 - 00;02;56;21
Derek
But they have but they have biological entropy that like, maybe we don't fully understand. And so, you know, we're trying to design rules or thinking around how these systems work.
00;02;56;24 - 00;03;26;08
Chris
Here's the thing in economics, say the president of the country, as a reaction to a global pandemic, can make a bunch of calls in the Congress, can call the fed, can do pull this out or the other level, lever and suddenly double the monetary supply. If you have a bunch of birds with really small wings stuck on an island with a volcano and the volcano erupts, the bird can't say, double our wingspan so we can fly really fucking far away from this guy.
00;03;26;09 - 00;03;28;01
Chris
So it's like the the invisible.
00;03;28;02 - 00;03;34;02
Derek
That's the not so invisible hand. And, just the that that kind of, like, kills it for your hair.
00;03;34;04 - 00;03;35;03
Chris
Yeah.
00;03;35;06 - 00;03;37;23
Derek
I like, I like it, I can, I can accept that.
00;03;37;26 - 00;03;54;24
Chris
And look, apologies to like everyone who went to use Chicago or the London school or on the podcast right now. I don't mean to like, completely and totally invalidate, you know, the professional course. You've charted yourself down. We all have our, you know, our things. We choose not to believe in.
00;03;54;26 - 00;04;10;02
Pri
Your argument against economics, though it would be the same as it applies to like other social sciences, like psychology, political science, like it's still all like human kind of dynamic fabrication. Like it's not I don't get the hatred towards econ, but not the other social sciences.
00;04;10;05 - 00;04;45;06
Chris
I don't know it. There's just like critical theory, you know, rests upon a bedrock of the notion of like a rational economic actor who is always, you know, weighing the scales, measuring and and evaluating before putting capital to work. No, politics is power. Politics is influence. Politics is, like, intimately entwined with irrational human drives. And that is reflected in like the, the, you know, the the study of the topic.
00;04;45;09 - 00;05;08;07
Pri
Yeah. But I would also say that power politics or human like politicking is deeply embedded with markets and economics, too, though a lot of like a political theory. Political science does have a second or third order effect. You know, economies, I mean, for example, you see that now, it's why we were talking about the tariff, the dilemma a little bit.
00;05;08;12 - 00;05;14;25
Pri
They're all kind of intertwined. I don't think you can study economics without political science and vice versa, to be honest with you.
00;05;14;27 - 00;05;22;05
Chris
I mean, I don't think you can really study anything without every other thing. I, I'm, I'm a big, firm blender guy. So I'm with you there I agree.
00;05;22;12 - 00;05;32;04
Pri
Yeah. It's fair. All right. We can we can move on past past this. But why are we even talking about the chicken dilemma? Are we talking about this with respect to Bitcoin being a world reserve currency?
00;05;32;06 - 00;05;36;11
Chris
I think Aaron's questioning, the notion of reserve currency, period.
00;05;36;14 - 00;05;54;11
Aaron
That was funny. I was just, you know, talking to some folks about it. And I had to, like, independent people, make the argument that they're really like, in the future, it should just be a fixed rates. So basically like currency swaps and there's no need for a reserve currency. And I thought that that was just an interesting point.
00;05;54;14 - 00;06;11;11
Aaron
Like, to me, there's some intuitive logic to like having something kind of back. You're a currency, whether it's like a nation's currency or a networks currency, like like Bitcoin or with ease. But I don't know, I thought it was interesting to imagine a world where there is none of that, and it's just swaps, like all the way down.
00;06;11;17 - 00;06;34;17
Aaron
So that's why I was thinking about that. Chris, I know I've heard of the Triffid dilemma. I don't know much about it. Just thought is interesting, like a world where maybe we're just doing, you know, exponentially more swaps of different kind of local localized currencies, maybe more effective than than having, you know, some sort of gold back, bitcoin back or other backed asset and currency.
00;06;34;19 - 00;06;56;29
Derek
I would say, just like the Tldr on the trip and the limits just like to be completely reductive. The argument is that like if you want, you know, a world reserve currency or at least whoever is the the denominator for that world reserve currency, they they need to run a deficit, a trade deficit, in order to keep sending money and like sending dollars and the US case out into the global markets.
00;06;57;02 - 00;07;21;01
Derek
And if what you're doing is, you know, putting the international tariffs on everything and your aim is to kind of, you know, well, let me before I even go there, like the I think that the dilemma really stems from the fact that, like if you're running a big trade gap, then people will start to question over time. Like, was the dollar even worth as much if like the health and wellness of this economy is, you know, running at a deficit in terms of, trade deficit.
00;07;21;04 - 00;07;45;28
Derek
And so that's really where like the dilemma comes in, I would say it's probably being pulled up into like current conversation because we're now entering a different kind of regime. We're going to probably be importing less, we're going to be sending fewer dollars out. And so the question of the US dollar as the world's reserve currency is, I think, a I think a question mark in terms of how this both like what the the role of the US dollar is internationally, anything forward.
00;07;45;28 - 00;08;11;28
Derek
And then also just like the dilemma, the triple dilemma brought around like what this all means. So I think I don't yeah. That that's my like little whatever sixth grade knowledge on this issue. I don't know how it's going to net out. I did the the effect swaps commonly made is interesting. It's it I think in general like it sounds nice to have like one world reserve currency, but it's kind of like, you know, I just use like crypto parlance.
00;08;11;28 - 00;08;32;27
Derek
It's like every economy, like every crypto economy needs its own currency to, like, serve the role of that economy. Right. So, you know, we need, federal what a good example would be here. Like the Uniswap token is useful for, like, you know, pulling levers within the Uniswap economy or like the Superrare token is useful for pulling levers within the Superrare economy.
00;08;32;29 - 00;08;53;02
Derek
And the more you try and, you know, have a single denominated asset for lots of different economies, those things are kind of like it. You know, it's useful in the sense of like there's a shared standard that people can build around, but also maybe not as useful in terms of serving the interests of your people or like the, the, the economy within.
00;08;53;02 - 00;09;02;20
Derek
So, the pH swaps kind of is interesting to me. I admittedly haven't spent a ton of time here, but these are all cool questions, and I like that we're talking about it.
00;09;02;22 - 00;09;24;22
Chris
Yeah, I don't I don't want to live in a world without a reserve currency right now for the simple fact that, like, if you've ever had to like if you ever been in another country, have a ton of that local currency and need to go see the dollar guy to swap that out like the black market dollar guy is like a great dude to me, just like an absolute character, you know?
00;09;24;22 - 00;09;39;18
Chris
Like someone hook you up, you go up to, like, this apartment. You know, you throw like, wads and wads of, like, tiny little bills and denominations. You don't understand. And like, he gives you ten Ben Franklin so that you can go back home to America.
00;09;39;20 - 00;09;41;27
Aaron
Well, I think it would be done programmatically, Chris. Right.
00;09;42;02 - 00;09;45;27
Chris
Because, yeah, I don't want programmatically. Aaron I want my dollar guy.
00;09;45;29 - 00;09;48;09
Aaron
I yeah, you want the human.
00;09;48;12 - 00;09;49;06
Pri
Yeah.
00;09;49;09 - 00;09;52;01
Aaron
I mean, Chris is a colorful character.
00;09;52;03 - 00;09;53;12
Chris
He's a dude.
00;09;53;14 - 00;10;16;05
Aaron
That maybe like a, dated view though pretty soon, like, we can do it programmatically, right? Like, we can have and should have over time, like, reasonably reasonable man's liquidity where you can have a lot of currencies, right? Not just one. Not just, a dollar. And maybe that maybe that is more efficient over time. And there's probably some distortions with having a reserve currency.
00;10;16;08 - 00;10;19;27
Aaron
I'm, armchair. I guess we're all armchair economists now, Chris. So.
00;10;19;29 - 00;10;22;08
Chris
No, I'm not an economist. I don't believe in it.
00;10;22;10 - 00;10;38;14
Aaron
Oh, but you have an A, you have an opinion, so you can be an economist. I thought that that's what you were saying. But anyway, you know, I feel like, I don't know, I feel like there's probably some downsides to having reserve currency that are, I imagine, underexplored just because that's been the norm. So maybe maybe this is a better system.
00;10;38;14 - 00;10;39;03
Aaron
I don't know.
00;10;39;06 - 00;10;42;16
Chris
Aaron. I am here for you questioning all of our fundamental.
00;10;42;16 - 00;10;45;11
Aaron
That's what I like to do. Yeah. Let's question them all.
00;10;45;13 - 00;11;12;12
Pri
Well, so I'm like actually questioning that now. And I'm like thinking a world where it's like effects that would, you know, funny enough, when you think about economics and politics of a common earlier that would lead to like that would probably lead to more multi-polar reserve regime thereby multipolar world where power is so much of. So the U.S. power today is wrapped up in the US dollar, reserve currency and the currency wars that kind of silently.
00;11;12;13 - 00;11;44;04
Pri
We are under a lot of major conflicts and a lot of the trade with major and oil. Other things are all kind of wrapped up in the US dollar reserve as being that asset, that all this trade that if you do have effects and there is no reserve currency, inevitably there's going to be a power. You have to kind of have agreement to want to have, like this multi-polar reserve regime, but there's going to be someone U.S. or elsewhere that's going to then want to be the dominant world reserve currency.
00;11;44;07 - 00;12;03;01
Pri
And so how do you how do you disincentivize them from wanting to be the single world reserve currency? Like that part is, is a little bit confusing to me. Like, what's the incentive for someone to be like, yeah, no, let's make a multi polar reserve regime when we could just.
00;12;03;03 - 00;12;09;08
Aaron
What's it's like the wrong question. There's no reserve right. And then it would just be like swapping all the way down.
00;12;09;10 - 00;12;12;29
Pri
But then someone will want to be the reserve. That's I'm trying to say.
00;12;13;01 - 00;12;41;05
Chris
Yeah, there will be a need for the reserve and someone will fill that vacuum like, no, no, that's it from a power perspective, but also from a need perspective. Like, we can't we can't live in the age of the Holy Roman Empire or, you know, when, like the free city of Worth, an offer issued a, issued its own currency and like five miles down the road, you know, the Westphalia Guildenstern didn't also has a currency.
00;12;41;07 - 00;13;15;11
Aaron
But why not? Like, maybe the challenge there was just like it was. There's too much friction in paper based systems. Maybe that was like the natural state of things, Chris. And then we like intermediated it with your with your money guy like he fill that gap. We intermediate that with them computers and now we've got, you know, more decentralized, open, super fast, increasingly low cost networks that could enable rapid swapping of any asset over time without the need for it to, like, root through, like, you know, one monetary system.
00;13;15;13 - 00;13;16;11
Aaron
I don't know.
00;13;16;14 - 00;13;35;16
Pri
When the friction of the US dollar today actually make it easier to develop a, the lack of if you have it becomes pretty frictionless. Is it easier to have a single world reserve currency? I feel like that. That would be so easy. You don't have to go through the trouble of becoming. It would just be deals.
00;13;35;16 - 00;13;53;19
Aaron
And well, I think I think that like to pull back. It kind of like you just sidestep the dilemma, right? Like the dilemma is if you do have a reserve currency, there is a cost, right? You have to, I guess, print a ton of your currency. And so maybe a better approach. Is this where the dilemma just doesn't exist there, that tension just isn't there.
00;13;53;21 - 00;13;55;00
Aaron
And maybe that's more effective.
00;13;55;03 - 00;14;02;28
Chris
Yeah. But Aaron, if you can just print your own currency, you can print your own currency to build aircraft carriers, which then back your own currency.
00;14;03;00 - 00;14;03;17
Aaron
Let's go.
00;14;03;17 - 00;14;06;18
Pri
Yeah. That's actually could be the future though.
00;14;06;21 - 00;14;29;21
Derek
It's the it's the present. I will say, the one thing the one thing I'll note, you know, even if you do believe in, like, this dilemma and like, buy on shoring or spitting out less dollars out until kind of like the the international waters of commerce and and kind of just like the, the byproducts of that as it relates to kind of like this quote unquote driven dilemma.
00;14;29;23 - 00;15;05;11
Derek
I will say, you know, there is like a very clear appetite for digital dollars right now. And like, there is a really interesting flywheel that acts as a counterweight around some of this on shoring, which is just around like, you know, this, this flywheel around just more and more issuance of these digital dollars entering, you know, blockchain based environments like we're probably going to ten x or 15 X, the amount of dollars that are on chain over the next year or two, and at which point, like it creates a very, very sticky system for people to build on top of digital dollars and to take digital dollars into, you know, pay in digital dollars.
00;15;05;13 - 00;15;24;18
Derek
And so I don't listen. I'm not saying like we've got like a 40 chess game going on here, but there is something interesting about both the timing around this onshore and conversation for the US. And the proliferation of the digital dollar that is serving as kind of like counterweights to one another. So anyway, I just wanted to throw that out there.
00;15;24;20 - 00;15;36;16
Aaron
I do think those two trends are there's some relation to them. It's super fascinating. But, you know, we do live in interesting times, guys. We can now talk to Darth Vader and Fortnite.
00;15;36;18 - 00;16;02;09
Chris
So thank fricking God for I mean, the trend of the last 20 years. You know, there's a ton of them, but one of them is boomer anachronism in the face of like never ending digital expansion. Trump streams here are pissing in the wind against you know, Derek's like stablecoin nation of the world. You know, it's like you want to do one thing for one reason.
00;16;02;12 - 00;16;04;24
Aaron
But for now. So maybe it doesn't win in the long run.
00;16;04;25 - 00;16;11;02
Derek
Listen, all I know is that the one true money is crypto punks. That is the thing that I know for sure.
00;16;11;02 - 00;16;14;12
Chris
I mean, like, let's get in waters. We understand.
00;16;14;15 - 00;16;15;13
Pri
You know.
00;16;15;16 - 00;16;19;09
Aaron
It's not bad that economist pool and into the crypto punk.
00;16;19;12 - 00;16;22;15
Pri
Yes. Finally folks that talk about. Yeah.
00;16;22;18 - 00;16;24;01
Derek
Do you want to tee it up?
00;16;24;04 - 00;16;59;28
Pri
Yeah. I mean, huge news for crypto punks. So over. It's crazy. It feels like an eternity ago. But earlier this week, Node Foundation, who's run, and, you know, run primarily by Nikki Milk, recently acquired the crypto punk IP from Yuga labs. And so I believe most of the Cryptopunks themselves are still being held by Yuga, but it's kind of amazing that the IP itself is now held in a not for profit foundation.
00;16;59;28 - 00;17;16;09
Pri
Like, I think that's great. That's great news. It feels big. It seems like people are reacting very positively to it too. And I actually think that node is going to be a great node, Mickey. They're going to be great stewards of it. But I think it's very exciting news. I feel great about it.
00;17;16;11 - 00;17;33;08
Aaron
And I think my understanding is Matt and John may come back a little bit too, which would be great. You know, I think they were great stewards of punks and would love to have. They're even super creative and great hand around them or hands around the project. Again, I thought it was great. I think that's the right place for it.
00;17;33;13 - 00;17;35;10
Aaron
Like in a not for profit personally.
00;17;35;13 - 00;17;51;02
Pri
Me too. And like I'm excited for what, you know, node is going to do, whether or not they do a show or something related to that. I feel like there's just a lot that they can kind of play with there, and I think just having it out of like a for profit entity just feels a bit better for like the work itself.
00;17;51;04 - 00;17;55;09
Aaron
Are punks back are NFTs back? Is that what we're saying?
00;17;55;12 - 00;17;58;18
Derek
I'm pretty bullish. I mean, I'm always perpetually bullish on punks.
00;17;58;19 - 00;18;00;07
Pri
But I was going to say.
00;18;00;09 - 00;18;32;00
Derek
Yeah. So I take that obviously with a grain of salt. But yeah, I mean, like this is a big day for like the no external dependencies crew and I, I, you know, I think you got this is not to say you couldn't do an amazing job stewarding this thing, but at the end of the day, like they are a for profit company and taking kind of the management over this collection that people are, you know, treating as fine art and as a wealth preserving store value into, you know, moving it from that type of entity into a 501 C3 is like a it's a big deal.
00;18;32;00 - 00;19;07;25
Derek
It's like a it's a, it's a it's meaningful. And, I think it kind of sets the trajectory for that collection in the right way and tees it up nicely. And I think you mentioned this, but like, you know, you guys I think probably did like the optimal game theory move here as well, which is just like keep and retain exposure to the underlying, you know, objects, which is like the best way to express view on being long punks and separate it from the intellectual property constraints and, rights and put that into a vehicle that can't really be touched.
00;19;07;27 - 00;19;17;19
Derek
So I think, I think it's kind of like a win for everyone. I think everyone kind of wins here, which is which is a very rare W for, for all, all, all parties involved.
00;19;17;21 - 00;19;39;08
Aaron
Yeah. Completely. And I mean, I think it's important and not for profit because Cryptopunks are really the only liquid ish asset that trades at scale. Like for more than bitcoin. Right? I just think it's going to have an important place in the growing digital asset landscape. Like one punk is greater than one Bitcoin and has been for quite some time.
00;19;39;10 - 00;19;52;06
Chris
There's only 10,000 of them. You know, they're unique, digital scarce objects. People sometimes say they're Veblen goods, which is a economist term, I believe. And. But.
00;19;52;08 - 00;19;53;03
Aaron
What economists.
00;19;53;03 - 00;19;57;06
Derek
Human economists are just getting beat up today.
00;19;57;09 - 00;19;58;19
Chris
This is just that's.
00;19;58;21 - 00;20;04;04
Derek
That's so rare w for everybody except for the economists.
00;20;04;06 - 00;20;25;27
Chris
No, even the economists win here. I'm sure they can, like, back fit this into, you know, like in the emerging field of, like, altruism as a economic, you know, subcategory. But I think, like everything you guys said about Mickey, a node is is spot on, and it's fairly obvious, you know, why that side of the house is acting this way.
00;20;25;27 - 00;20;43;13
Chris
I think the UGA stuff is a little more interesting and, you know, encouraging to see, because to me, if you kind of look at the arc of their stewardship, you know, there were a couple of misfires in there. And I don't, you know, I'm not close to you. I know nothing about what goes on inside their house.
00;20;43;13 - 00;21;28;10
Chris
But, you know, they did bring in professional management for a while. I can't remember the name of the guy from from Activision, or Blizzard or whomever they they had running the place. But you know, that that Nina Chanel dropped, you know, it just felt so tone deaf and corpo and not understanding the ethos of, you know, what plugins for about and like the fact that Gargan now, you know, in his refocusing of the company chose this as the way to, you know, unburden themselves of like the question mark of like, what do we do with the intellectual property, you know, to really say, like, look, that belongs to a community that needs a good
00;21;28;10 - 00;21;53;16
Chris
steward, you know, was was great to see because you don't always see those decisions and you can see that it was made. I'm sure there's a lot of like, beneficial reasons to them. I think there's a lot you can probably do in terms of whatever they paid for it. Separating the value of the pawns. First of all, it looking at tax loss, you know, in this transaction, you know where like people go, oh, it's only $20 million.
00;21;53;16 - 00;22;06;15
Chris
I would have paid 75 for it. Well I think you have probably can realize a similar amount of value in other ways and that they chose to do the right thing, you know, that that to me was really nice to see.
00;22;06;18 - 00;22;08;23
Pri
That's a good point. So I just think.
00;22;08;23 - 00;22;29;03
Aaron
Also it doesn't fit whether my understanding of where they're going rate, which is more gaming, etc. like obviously points could appear in that universe, but it just feels like a little bit different than what the direction that you go appears to want to go, which is a little bit more consumer like, a little bit more game focused, as best I can understand.
00;22;29;06 - 00;22;52;14
Aaron
So I think it's it's smart for them as well. And I think they did do a good job kind of soon in that brand. Like they could have been very active and aggressive with, with punks and they, they showed restraint. So I do think they deserve some credit for that. And they did try to listen to what the community wanted, which was, restraint and, and aligned with that.
00;22;52;16 - 00;22;54;10
Aaron
I don't know if everybody would have done that.
00;22;54;13 - 00;23;15;22
Pri
I guess on that note, what do you think node does with the IP? I mean, I'm assuming just kind of be a steward of it and maybe, you know, take a similar I think Yuga was trying to be more museum capital, focused with punks, I assume like know kind of carry that mantle. I don't, I don't think they're going to do anything with it as far as like take the IP and develop anything out of it.
00;23;15;25 - 00;23;20;05
Pri
I have no idea though. But I'm curious if you guys think there's anything there.
00;23;20;07 - 00;23;47;18
Derek
I think I'll tell you what my preference would be, which is just like when I walk into whenever I go to New York, I, I always like try and just see what's, what's going on it at the MoMA and take in an exhibition or two and, and then I go downstairs to the, the lobby and go to the gift shop, and I get to see kind of books and literature and get to see kind of like, you know, fun, kind of like objects of expression that like people like and build resonance and they can bring it to their homes.
00;23;47;18 - 00;24;09;19
Derek
And there is a tasteful way, whether it's, you know, sometimes it's through furniture, sometimes just through like long form materials, sometimes just through prints where like, I think that stuff is great. And I'm like, it helps kind of network and and bring bringing like some, some enhanced intentionality to kind of like what the collection means or what the art means or what the artist stood for.
00;24;09;24 - 00;24;32;10
Derek
If like, those things are authentic, those objects are authentic. So, I mean, I would be open to that type of stuff. And like, I hope there is those types of things because at the end of the day, like even now, Cryptopunks are 140 K and they serve a very important role in like this fine art realm. And, and, and kind of like as an object of expressing a viewpoint around like where crypto art will be over the next ten years.
00;24;32;14 - 00;24;52;05
Derek
But for most people, like they're never going to be able to own a crypto bank. But would they own, you know, an object that touches back through kind of like the literature of what punks are or what they could mean, or, you know, cost $100 and can sit on their work table like that, that kind of stuff feels right to me.
00;24;52;05 - 00;25;00;26
Derek
And I hope there's still some of that as kind of that as kind of the project moves forward. That might be a radical opinion. I'm curious to hear what you guys think.
00;25;00;28 - 00;25;26;29
Chris
I kind of don't care either way. I mean, like, I think if you're doing it peacefully, you know, the Gift Shop Museum's a limited edition runs that. It's focused on reproduction of the objects and other forms versus, you know, exploitation of the name and the status via licensing for things that don't necessarily fit the vibe of the punk.
00;25;27;02 - 00;25;34;22
Chris
Right. Like there are ways to do it, I guess, is what I'm saying. And so, yeah, if you want punks in the gift shop, I got no, no beef with you.
00;25;34;24 - 00;25;52;23
Pri
I agree, I think that's kind of par for the course. You see that, you know, across across different artists in the States and I, but there's some artists like states that have done it better. Like, I love Basquiat I think is great, but like, it's everywhere, like it's on, you know, jerseys it's on t shirts at target, like it's too much.
00;25;52;23 - 00;25;55;06
Pri
I just think there's like a limitation on that.
00;25;55;08 - 00;25;59;01
Aaron
There was even a book in the lobby of this, a lot of offices in New York.
00;25;59;04 - 00;26;02;14
Pri
Yeah. Was it like the picture of him and Warhol?
00;26;02;16 - 00;26;07;22
Aaron
It was just. Yeah, it was like the pic, the most basic version of that. And it was there.
00;26;07;25 - 00;26;24;04
Pri
Like a boxing glove one. Yeah. Yeah. I mean it's like it's like great. But it's just like, I don't know, it's it's like diluting the brand of the artist, in my personal opinion. But at the same time, there's probably a group of people who feel like, wow, something like his brand has only grown, I think, for example.
00;26;24;06 - 00;26;48;25
Derek
Yeah, I think on that point that ties back to what Aaron was saying and kind of how McKee structured this, which is okay, so the IP now belongs in this 500 and C-3. Doing nothing would be the easy thing. It doesn't mean it's the right thing. The right thing is probably closer to this vision of just like building residents and building a network and a culture and making a cultural institution out of this project through different ways that are inauthenticity with the real project.
00;26;48;25 - 00;27;28;01
Derek
Okay, if that's the North Star, then what does that actually mean? Bringing in Lava Labs and Snow fro to kind of advise that process feels like the the thing to do. Right. And so like yeah, that that's why I feel like they Mickey did an amazing job here. It's like it's it's the, the dual the the dual, effort of, you know, breaking the IP off from the collection and then also reattaching the original artists and snow fro, who was a huge part of the original project Diffusion and also helped to help to actually write up the contract to put them on chain, putting them all in a room and just saying like, help us
00;27;28;01 - 00;27;32;01
Derek
guide this project moving forward. That feels like the all right.
00;27;32;04 - 00;27;34;15
Pri
So yeah, can't be happier about it.
00;27;34;18 - 00;27;44;07
Chris
So now that we've talked about our beloved punks once again, I love those things. So of course you do. You know, they're they're worth more than one Bitcoin.
00;27;44;10 - 00;27;50;11
Aaron
I mean but Chris, would you take one bitcoin or one punk. It's the question everybody should be asking punk.
00;27;50;13 - 00;27;54;18
Chris
Why not both. You know, why do we have to live in a binary choice. Why.
00;27;54;24 - 00;27;58;09
Pri
All right. Not all of us can do that.
00;27;58;11 - 00;28;10;16
Chris
Look, I have an abundance mindset free. You know, like my mindset says. Look, if we're the reserve currency of the world and printing is cheap and free, and it buys aircraft carriers, it backs the reserve currency.
00;28;10;19 - 00;28;13;21
Pri
Yeah. Why not keep it in the reserve currency? Yeah.
00;28;13;23 - 00;28;29;29
Chris
And then yeah, use use a wealth effect creation to buy pumps which then, you know, appreciate and value pegged to some other thing and then have equivalency to like some other foreign made up money like pure abundance mindset all the way up.
00;28;30;01 - 00;28;40;00
Aaron
Yeah. This is I think I think punk should be a core pillar of the Democratic Party. And Ezra Klein and Derek Thompson's Abundance mindset, it should just be all about Cryptopunks.
00;28;40;02 - 00;28;46;22
Pri
I'll just say Victor Klein change it to a punk. I'd be like you. I bought that very, incredibly based, actually.
00;28;46;25 - 00;28;52;22
Chris
Then I'm so happy. I live in Queens, where no one even knows who you're talking about.
00;28;52;24 - 00;28;58;21
Pri
Yeah, I hate that. I've listened to, like, 17 podcasts about that book Against My Will.
00;28;58;27 - 00;29;04;26
Derek
Can I just say how based it is that Jay-Z still has a crypto punk as his PSP?
00;29;04;29 - 00;29;06;06
Aaron
Absolutely.
00;29;06;08 - 00;29;07;24
Chris
Isn't that just like.
00;29;07;26 - 00;29;12;11
Derek
He he literally threw this thing up on the top and has just written, that's real.
00;29;12;14 - 00;29;13;18
Pri
I actually love that.
00;29;13;20 - 00;29;23;08
Derek
I love it, dude. It's like I just I was lucky because there well, you guys were talking. I was like, I want to go see Jay-Z stars as punk and he definitely still has his punk. I'm gonna drop the tweet here.
00;29;23;11 - 00;29;31;24
Aaron
That'd be great. We should ask NFT statisticians to like, to look like who had one and who dropped it and who continued.
00;29;31;24 - 00;29;32;21
Derek
Exactly the.
00;29;32;21 - 00;29;36;01
Chris
Longest celebrity HODLing duration. Yeah.
00;29;36;04 - 00;29;40;23
Derek
I think he's I think he's got it. Like, who else still has?
00;29;40;25 - 00;29;45;08
Pri
He hasn't retweeted anything since June 9th, 20.
00;29;45;11 - 00;29;45;22
Derek
Okay.
00;29;45;25 - 00;29;47;01
Aaron
Well details. Great.
00;29;47;06 - 00;29;48;09
Chris
Three don't tell.
00;29;48;15 - 00;30;08;03
Derek
Fredo tells me if I was Jay-Z's publicist and it's the year 2025 and nobody else is talking about Cryptopunks, I would be like, yo, there is way more you could be doing with the real estate on your 3 million follower Twitter profile than leaving this punk up. And you know what? I bet that conversation happened and Jay-Z was like, mom, I'm leaving it.
00;30;08;07 - 00;30;18;04
Chris
And the best part, Derek is like, this is a guy who has opinions about these things. He's a man. Totally. Rob. He dropped the line, I don't wear jerseys. I'm 30 plus.
00;30;18;06 - 00;30;35;13
Derek
Exactly, exactly. This is a this might be the greatest. I don't even know what the superlative the use here is this. I'm just impressive the conviction. Dude. I'm I'm I'm telling myself that this is, this is a pretty epic, epic statement of conviction.
00;30;35;15 - 00;30;38;25
Aaron
Also great handle essay. Amazing.
00;30;38;27 - 00;30;40;11
Derek
Yeah. Shawn Carter, baby.
00;30;40;13 - 00;30;43;27
Aaron
Yeah. We all aspire to have, two letter handles.
00;30;43;29 - 00;30;52;02
Pri
It's like that guy on the air who has, his candles, just. I like. That's pretty valuable. Let me see that.
00;30;52;05 - 00;31;00;20
Chris
How did you. You know, not try to claim that, you know, what does this dude have on Ellen? That he held his, username?
00;31;00;22 - 00;31;05;02
Aaron
Did you guys see that, grok system prompt got hacked? I thought that was pretty interesting.
00;31;05;09 - 00;31;12;20
Chris
Oh, yes. The rogue employee. Can we imagine which rogue employee out there has strong views about?
00;31;12;23 - 00;31;27;16
Aaron
I don't want to get into the substance. It was more that that like that got hacked. Like the substance. You know who you know in many ways. Like, not the most interesting part of it. I think it's really just the fact that somebody looked at that as like, an area to kind of like attack. I thought it was interesting.
00;31;27;19 - 00;31;40;01
Chris
It's influence. Like, why, why do you buy the The Washington Post? Why do you buy the Boston Globe? Why do you integrate your I start up with your social media platform.
00;31;40;04 - 00;31;59;18
Aaron
Yeah. No, I get all those pieces like, you know, he's looking to expand his network or, you know, has like some sort of meta game that he's, he's playing, which I don't think we're all privy to, but it's more like or it was one the fact that that was targeted as like an attack vector. I thought that was interesting to the response, which was opening it up, I thought was interesting.
00;31;59;21 - 00;32;22;07
Aaron
And then three, it just raises this question like, is that what it should be at the end of the day, for all these systems where the kind of the core framing pieces of, of these large models is open, is public, is more community governed. I hope that that's the case, because I think that that would be healthy. Like I would like to know what the like, the way the responses are, are, you know, getting framed or shaped.
00;32;22;07 - 00;32;28;21
Aaron
I could see that being an important question for people to debate and like, weigh in on and, and obviously make sure it's secure.
00;32;28;23 - 00;32;35;07
Chris
It would be fantastic if all the algorithms that ruled our world were, you know, publishing a GitHub repo for inspection.
00;32;35;09 - 00;32;44;21
Aaron
Yeah. And, you know, like putting aside like the good bad and the ugly, like around that story. I didn't think that that endpoint was actually pretty good. I thought that was pretty heartening.
00;32;44;23 - 00;32;59;14
Chris
Let's swing out of this one, kids, and talk about why yet another launch pad is the most important thing that we have to believe in, because internet capital markets are finally, finally going to make.
00;32;59;14 - 00;33;26;05
Aaron
Their their flexing their muscle. Yet to me, you know, I guess you're talking about the the believe token launches to me. It kind of reminds me of like after ICOs, people were pushing STOs for like about nine, 12 months. I feel like the cycles in crypto kind of compress and maybe there's something here, but it feels like it's going to be, you know, pretty a formal I don't know what you guys think about that, but there's nothing like super interesting about it to me at least.
00;33;26;08 - 00;33;28;26
Aaron
What do you think, Derek? Is this like capturing your attention?
00;33;28;26 - 00;33;44;27
Derek
It's I mean, I, I've spent a lot of time kind of like poking through. And there's two there's problems with everything. So, like, I'm trying. I try to keep an open mind, but I, I guess my, there's a couple of, there's a couple of things I'll just say, which is just like capital formation on chain like that has product market fit.
00;33;44;29 - 00;34;09;22
Derek
Like we've been seeing this for a long time. I think meme tokens are just like maybe the more recent manifestation of just like, can we can we fund an endeavor at the earliest point in as fair of a way as possible around an idea and like, that's, you know, a productive way to think about just like why meme tokens are working is because, like, there's a demand for that and people want to do it and blah, blah, blah.
00;34;09;24 - 00;34;43;14
Derek
I think the more complex stuff is like, can we fund a product at the very earliest stages when we don't have a regime for disclosures or for understanding what the, you know, make up of the token supply is without any kind of restrictions on being able to sell. And without any kind of transparency into kind of like how deadlines and deliverables are being met as time goes on, every, every day of the business, even though this asset is now mark to market and people want to speculate on it, there's a lot of edge cases in there for things to go wrong.
00;34;43;14 - 00;34;59;09
Derek
And like, I think that's what we're seeing with this new with this new product. Believe it's like I think this idea of capital formation around an idea is leading to kind of like hundreds of these web2 projects coming out of the woodworks to kind of like launch a token around what they're building and get people to speculate on it.
00;34;59;09 - 00;35;23;09
Derek
And I think like that idea is probably direction on the right on all time frames. Like, I think that's just the world we're heading to in the short term. Listen, like net worths are going to get vaporized in seconds, like on this stuff just because like the the, the rails, the restrictions, the rules, the transparency for how these things can optimally get built like that, that it's still the Wild West.
00;35;23;12 - 00;35;40;20
Derek
And so I guess my, my feedback for I've just been playing around with it myself and watching folks jump in. I think my feedback for those is just like, there's I would treat these very similar to how, if you're interested, like treat them similar to how people are trading meme tokens because like they are functionally still the same things, isn't it?
00;35;40;25 - 00;35;43;00
Aaron
Don't you think? It just repackaged? It's like the same thing.
00;35;43;07 - 00;36;08;03
Derek
I think they are. I think the intent is for them to be different, but the the current format of them is largely the same. Repackaged. Yeah, yeah. I think the hope is that some of these web2 businesses start to create flywheels where like the token itself gets burned as revenue comes in or the token itself gets used to provide access into kind of like the products where, you know, non token holders maybe don't have that same access.
00;36;08;03 - 00;36;26;08
Derek
Right. And so from that perspective like you're these things are different than the meme token stuff because it's like okay there's real products getting built in parallel. And maybe these tokens have sinks inside of those products. And so you're you're kind of trusting that the proliferation of the product takes off. And that means the token will run with it.
00;36;26;08 - 00;36;37;00
Derek
But I guess it gets back to my earlier point was just like, that kind of stuff is so hard to to, to build for right now. And the rails are just very murky and things aren't quite working out.
00;36;37;02 - 00;37;01;14
Aaron
Like the category. Like this idea of like more traditional businesses leaning into tokens. Like, I think that there's something there. I just don't think that these like, these kind of like a formal, you know, borderline, you know, fraudulent token launch platforms are going to be the place where that happens. And I think it is going to have to look a little bit different and be more carefully done and, and, and intentional.
00;37;01;17 - 00;37;25;23
Aaron
But I do think that there's a big opportunity to almost like vampire attack existing businesses by leveraging some sort of, you know, network tokenized economy around it. And I wouldn't be surprised if we see a bit more of that, like in a more mature, like, thoughtful way, putting aside kind of like the shenanigans and repackaging that this seems to me at least to be in the market.
00;37;25;25 - 00;37;51;20
Derek
You know, I'll say one thing on this to Aaron. It's like, I don't know if people realize this, but you, Aaron and Pree have been thinking about this for probably longer than 99.9% of people. It's like, actually, the first time you and I met Aaron, I came up to it like a consensus in like 2017 and 2018 because I was so impressed with what open law was doing around putting, like operating agreements on chain and tokenizing like memberships and like having fun distributions on chain with transfer restrictions.
00;37;51;20 - 00;38;16;26
Derek
Like this shit was so next level like almost a decade ago, that that has always been kind of like the way the world was going to evolve. To me, it's like, how can we map what like some of like the legal layer stuff using kind of on chain logic. And I loved the earliest vision of open law because like, you guys were pioneering this stuff and really thinking from first principles about how to do that, I think we've lost not this has nothing to do with like open law.
00;38;17;00 - 00;38;31;01
Derek
But just like as an industry, we've lost some of that desire to do that. And it's clear that like the capital formation part is thriving. But it feels like the other part has kind of been left behind in the, at the, at the same, at the same rate.
00;38;31;04 - 00;38;52;15
Aaron
Yeah. All the like Italian brain rot has just completely eviscerated all notions of of things we can build in crypto. I agree with that. You know, but I actually increasingly think like whatever that model is like this bonding curl curve, like quick to market model. I think that that's just like it's a path that people are going to keep on pressing.
00;38;52;15 - 00;39;16;06
Aaron
But it's a dead end. I think actually this idea of building out like a token network in a slow, measured way, like signaling that at some point it will be tradable, but building up like kind of the underlying utility for that to happen before you flip the switch. Seems like the path that I could imagine more and more companies and projects taking.
00;39;16;09 - 00;39;44;26
Aaron
And I think like the that Project Blackbird, which is in the consumer space, may, may have actually figured out the appropriate model to build networked, tokenized, high utility ecosystems. And I hope that the industry kind of looks at that as like a good model as opposed to the, you know, just like re wrapping some like D gen tech and hoping that there's going to be some different, you know, result from it, which there's not going to be like it's time to just put those experiments to bed.
00;39;44;28 - 00;39;47;11
Aaron
They know it's not going to work. That's what you're saying Chris.
00;39;47;13 - 00;39;48;25
Pri
I think it's a grift.
00;39;48;27 - 00;40;24;01
Chris
I can't believe and believe, and I can't believe in anyone who tells me to believe and believe because I understand that they're just trying to treat me as an extraction vector like everyone else. The thing I find more interesting about this whole, you know, launchpad, tokenized launchpad resilience is like how enduring it is, right? Like, to me, I can dismiss a product is out of hand pretty quickly just because, you know, I can see, okay, this this can't sustain.
00;40;24;03 - 00;40;47;26
Chris
But the fact that the the category, the concept, the packaging keeps returning over and over and over again that to me is telling and that that's the part where I pay my attention to because it's they're like barbarians at the gate and they pop up in different places and they keep testing these walls, and eventually they're gonna break through somewhere somehow.
00;40;47;26 - 00;41;13;23
Chris
Right? Like you said earlier, internet capital market have product market fit in crypto 100% true. The gen speculation has product market fit in crypto. This is the union of those two in service. Like this token is vehicle. And the fact that no one gives up. Right. Like you can understand why the people who you know know how to like industrialize grift on this.
00;41;13;23 - 00;41;22;01
Chris
Keep doing it. You can't really understand why. Like people who just want to throw their money in a furnace. Keep keep doing it.
00;41;22;03 - 00;41;51;02
Aaron
They keep playing that game. Yeah, I mean that that piece is fair, Chris. But to me, if we know that they have product market fit, which is both true, it's really a structuring question more than anything else. And it took time to kind of like structure capital markets, traditional ones. Right. Like it's not like we had IPOs and preferred stock and like, robust mechanisms for people to purchase that stock like that took cycles to kind of develop and was an iterative process.
00;41;51;02 - 00;42;07;13
Aaron
And I do think we're we're kind of going through that process right now. And the lessons that I'm drawing from it is one, there should be a period where it's almost like people. And I think we saw a bit of this with the the points. I don't think there was like perfectly executed, but I think there was a germ of a good idea.
00;42;07;13 - 00;42;26;05
Aaron
There where you're getting credit for some like useful work utility that you're providing to a broader network, but you're not turning on like the speculate speculative spigot like on day one. I don't think these organizations can handle it. I think it's why we see so many charts that just look like they go up and then like rocket to the floor.
00;42;26;08 - 00;42;46;19
Aaron
It also like avoids, because if you're building something useful that people are using, like the risk of rushing. So it feels like that structure piece is what people should be focused on. And they should just start walking down different paths or repackaging what may have worked a little bit before in a couple different ways, and twisting around until we get something that's sustainable.
00;42;46;22 - 00;43;07;00
Aaron
And I feel like the well-intentioned folks are beginning to do that, which is which is interesting. And I think if they do nail it, then, like every single web2 business is just they're going to go up in smoke. It's just going to be like the actual conversion from like web2 products and platforms to kind of more open, networked, tokenized ecosystems.
00;43;07;02 - 00;43;42;06
Chris
So one thing you said and all that that stood out to me was around the point, right? That's gone. Everyone has agreed that was a bad idea and it disappeared. I think it's fairly common knowledge these days that like yield farming, that locking your capital for governance token has become such a capture vehicle run by projects that to to participate in that process, you really have to find the exception to the rule to make it worthwhile to like lock your eath so that you can get a gov token, you know, six months from now.
00;43;42;06 - 00;44;09;22
Chris
And so in terms of like structuring, right, like those attempts have now been thrown off and it is really sort of like they're back to okay, internet capital formation D gen speculation, liquid tokens. We've gone back to the drawing board. We're going to pump that out there. But everyone kind of knows this is, you know, not not going to get anyone to a happy destination other than like a select few.
00;44;09;24 - 00;44;24;07
Chris
What is it? Right. What what is like to me, the sort of feels like you're it's an intermission between prior attempts and whatever the next one is to, to to get the model right.
00;44;24;10 - 00;44;50;03
Aaron
Yeah, completely. And I, I wonder though, if like the like staking did work though, right? If you look at like all the core ones, they're pretty much migrating in different ways to that. So like the mechanic of staking did work, it just didn't work at the like the capital formation level. And maybe governance tokens didn't fully work with staking or some of the other, you know, point space systems just because it they were trying to deal with this evolving regulatory landscape.
00;44;50;03 - 00;45;15;08
Aaron
But as it stabilizes, I think you could just see something that's like a little less complicated. But has like a similar spirit. And it just works. It feels like not to like Overindex on one project, but it feels like kind of Blackbird is doing that. Like you pretty much are earning points, right? You if you buy things at a Blackbird restaurant or check in or the restaurants themselves kind of earn these different, you know, fly tokens once they participate.
00;45;15;09 - 00;45;30;27
Aaron
But it's not anticipated anytime soon that that's going to be like completely publicly tradable. And that gives that network the opportunity to kind of grow in a steady way and then flip the switch when they're when they're ready to kind of do that. Right. When, like the entire network is healthy. I don't think we've seen that yet. Right.
00;45;30;27 - 00;45;50;16
Aaron
Like, you just see projects like, you know, YOLO, a token or issue token, like off the bat through like, you know, a fundraise like that was the ICO era. Like nobody's kind of taking the intermediate position, which is like, okay, like we know a token is going to come, but we're only going to turn on that speculative, you know, valve once we're ready to kind of handle it.
00;45;50;18 - 00;46;18;14
Chris
Well here, I'm going to like get abstract and callbacks at the start of this conversation around, do we need a reserve currency in what happens when we're just pegging things to a number of other things? Because I think that's part of like the magic of why Blackbird could succeed, right? Is on the one hand, you have like a real hard cost of money, which is, you know, a two and a half, 3% processing fee that they want to eliminate.
00;46;18;16 - 00;46;42;03
Chris
On the other hand, you have like the world of loyalty, rewards and loyalty rewards have this really hazy notion of cost of goods, because some of that may pull out of a marketing budget. A lot of that pulls out of markups. You know, if your loyalty reward is a cocktail, the cost 17 bucks, right? You can peg that to 17 U.S. dollars.
00;46;42;03 - 00;47;05;17
Chris
Backed by an aircraft carrier. But the cost of goods in that cocktail may be like three bucks. Maybe it's five bucks. Whatever it is, there's a huge amount of fuzzy margin that exists in these loyalty programs that can create aligned incentives in a way that like from a consumer behavior perspective, you're not thinking in strict like dollar back reserve currency terms, right?
00;47;05;17 - 00;47;16;23
Chris
Like you're thinking up in this fuzzy consumer equivalency of, well, this restaurant's just as good as the one that doesn't take Blackbird. And I get a free drink here.
00;47;16;25 - 00;47;35;05
Aaron
Yeah, completely. I think there are some advantages to these network businesses. It's like they can handle something like loyalty rewards there. So I don't I'm less interested in like what the specifics are. I'm kind of more interested in just like what's the form like how do how did this how does the next generation of tokenized networks like come to market?
00;47;35;07 - 00;47;54;20
Aaron
Right. Like we know that they could do some fundraising with crypto. We know like it could, turn on like the speculative spigot on day one. But, you know, whether we like it or not, there's like three projects that have been able to weather that, introduction into broader people's hands. And they're mostly like Bitcoin and Ethereum or like air ones.
00;47;54;23 - 00;48;19;17
Aaron
So I think that people need to try something different instead of just like rehashing the same stuff over and over again and maybe like delaying it, like signaling that it's going to happen because now we're permitted hopefully to do that under the regulatory regime, is enough to kind of attract people to start, you know, playing around in your network like it solves some of the cold start problem, maybe not as aggressively, but at the same time you can kind of build up that like base level utility.
00;48;19;25 - 00;48;39;00
Aaron
So you get the best of both worlds. I was kind of thinking of like Uniswap in this way, right? Like like the I don't know if the governance airdrop, while innovative, would have been better than them. Just like almost like signaling to all the, you know, Uniswap users, like, hey, like you're earning through your usage, you know, shared ownership related to it.
00;48;39;00 - 00;48;57;00
Aaron
And when we're ready to go, we're going to release a token. But they didn't really say that, right? They just kind of like randomly dropping, a token on everybody. And I think if they follow that ladder for the, for the version and they built up to it, like they'd be in a really, really healthy position and a lot of their users wouldn't have rotated out of uni, right?
00;48;57;00 - 00;49;02;15
Aaron
They would have just held it and felt like they were part of this, like shared, important infrastructure.
00;49;02;18 - 00;49;22;28
Pri
I agree, I think the one thing with like, like backward also just to kind of come back to that is like that there's like a true utility to the, to the ecosystem using fly or Usdc. Is that like even the restaurants, the incentive alignment there is just so strong because the restaurants themselves are trying to avoid, like the margin for restaurants is so small.
00;49;22;28 - 00;49;47;07
Pri
And then you had like the credit card fees on top of that. And, you know, most people obviously are transacting in credit card these days. It actually is like a material amount of the margin. And so if you can circumvent that with why or with like a stablecoin, like that's actually like the restaurant, like the core, you know, service provider here is incentivized to have the customer use blackboard and promote it and whatever.
00;49;47;07 - 00;49;59;01
Pri
Like I just feel like all the way around, like they have great line there, which, you know, sometimes is harder to come by depending on the product. But the way that their product works is like, yeah, it just aligns it very nicely.
00;49;59;04 - 00;50;16;15
Chris
Hey Derek, are you you still close to into the tensor world and do you have any thoughts around sort of this curate to type, strategy happening now where like people who are like really deep in the ecosystem are playing every single layer of it.
00;50;16;18 - 00;50;21;06
Derek
Yeah, I can do you want me to just like, refer for a bit on the tensor? What's going on over there?
00;50;21;09 - 00;50;23;28
Aaron
Please do because I'm increasingly interested in it too.
00;50;24;05 - 00;50;50;28
Derek
Cool. All right. So yeah, for just, kind of like, level set on on what the tensor is. It's a fair launch project mapping and mirroring the supply schedule of Bitcoin. 21 million tile tokens will will ever exist. They've got, you know, they've got a having structure in place and there was no pre mine. And the, the project launched, in the depths of the bear market, I want to say like three and a half years ago or so.
00;50;50;28 - 00;51;20;21
Derek
And the goal, the stated goal was create commodity money for incentivizing intelligence. So on top of that, kind of like that credible commodity money use case around the kind of like the Bitcoin economics, they allow anybody to kind of create what's called a subnet architecture. And that subnet is basically just like a protocol. And there's very strict rules on what you can do in, in, in a subnet and which direction kind of like incentives flow to people who contribute to the subnet.
00;51;20;24 - 00;51;51;16
Derek
But the idea is that if we can create kind of like this, this base layer for commodity money and a flexible structure on top of it that allows people to build protocols to incentivize some type of intelligence outcome, then you can create kind of this, this model where people, projects, teams, miners, validators are all going to want to participate in, kind of like, surfacing that intelligence to, to earn some of what is like this credible commodity money tor.
00;51;51;18 - 00;52;09;24
Derek
And there's been kind of like all roads has led led to kind of the current version of what exists today. It's all kind of been building blocks on top of each other, but the the very early stated goal that we would end up here, which is like this thing called detail and detail, is just another way of saying dynamic Tor.
00;52;09;25 - 00;52;34;11
Derek
It was like the final upgrade push to kind of like give life to these subnets. And so the way it works is these subnets basically are all competing at the same time against one another to earn like emissions at like varying rates. So the more people that are participating through stake the to your subnet, the more emissions that will flow to you.
00;52;34;13 - 00;53;08;20
Derek
And when you stake your Tor to a subnet, you're essentially locking up your time and getting exposure to an alpha token. So you can think about it like a Uniswap pool associated with every single one of these protocols across bit tenser when they made the Alpha tokens live during detailed dynamics how it basically now you not only had an environment where these subnets were competing with each other to earn emissions, but also markets could start to price the upside or downside of how these subnets could perform as time goes on by getting access to these alpha tokens.
00;53;08;20 - 00;53;56;07
Derek
Basically like the the subnet specific token associated with that pool. And that basically created just a open market for pricing intelligence outcomes. And it's led to kind of this onslaught of economic activity on top of it. Tensor. So there's now I think over 100 subnets. There's subnets that are, you know, attacking all sorts of different problems. There's, you know, subnets for doing pre-training runs, for doing fine tuning, for doing storage, for incentivizing kind of, miners to, to come together and, and create predictions for sports or for financial forecasts or there's subnets for you know, allowing miners to kind of run models to create the best 3D geometry for somebody who's prompting the subnet and
00;53;56;09 - 00;54;21;18
Derek
subnet owners are in control of how rewards are set up and how, you know, validators in the system grade the miners. And so it's like basically a fine tune economy for each subnet around, incentivizing some type of intelligence with the goal being the better you do, the more likely it is people will stake their tail and earn Alpha tokens, at which point you get more missions, at which point the flywheel continues.
00;54;21;20 - 00;54;52;15
Derek
And so there's this huge competition that's now happening on top of it, tensor, where all of these subnets are popping up. Really smart people from all over the world are either participating as miners or validators, or buying their own subnets to create their own type of commodity market intelligence outcome. And I think like at the same time, all sorts of tooling is getting created by by folks who see this kind of gold rush that's happening, on top of like this EVM layer, which, which, you know, now exists because of, detail and, and, some of, like, the recent upgrades.
00;54;52;15 - 00;55;02;10
Derek
So there's a yeah, I guess, that's a, abbreviation of what's going on over there. And it's a project that I've been involved with for a couple of years now, and I'm still pretty excited about it there.
00;55;02;12 - 00;55;30;28
Aaron
Do you think it's really that, like AI parts of it or just the incentive parts of it? Because if I'm not mistaken, aren't some of the subnets not even dealing with inference at this point? It kind of reminds me of like the vibe systems design that we were doing where there's like elements of that in the tensor. It seems like it just that incentive model that's like creating these kind of like mini networks where people are pulling some resource that doesn't necessarily need to be like resources to do inference.
00;55;30;28 - 00;55;31;15
Aaron
Right, Derek.
00;55;31;15 - 00;55;54;04
Derek
That's that's exactly correct. So there are I would say the vast majority of the sudden the the way the, the subnet structure was created was to pull out all sorts of intelligence outcomes through different layers of the AI stack. It could be inference, it could be model aggregation, it could be pre-training, it could be fine tuning, it could be storage of models.
00;55;54;04 - 00;56;15;19
Derek
It could. And basically the the minor validator tension there allows for kind of each subnet to grade based on like loss and checkpoints, so that, you know, these things can improve as time goes on based on incentivizing the least amount of loss. As time goes on, and selecting winners and incentivizing them to create kind of the optimal payload for whatever the subnet is, is creating.
00;56;15;24 - 00;56;43;00
Derek
But to your point, Aaron bit tensor takes a very agnostic view in terms of the types of of things that it can incentivize. So a some people are using the subnet architecture and tau emissions, the reward system to do things that have nothing to do with AI but but are AI adjacent? It just proves the demand for just like the way this like lowest common denominator approach to building an incentive market.
00;56;43;03 - 00;57;09;06
Derek
And so people really like it. Like, I think the, the cool thing is like, if you can create a product or service that can generate revenue, and you can use incentives that are emitted to just via the system to change the cost structure associated with delivering that revenue, you're going to opt to do it. If you feel like you can compete on the merits of like trying to bring steak over to your subnet.
00;57;09;06 - 00;57;29;22
Derek
So like an example would be like, let's just say I, you know, I am a person who wants to develop a product for delivering, I don't know, let's call it like bio research and for the for the goal of kind of like synthesizing and doing drug discovery. I sure I can like spend that money that create a cost structure associated with that in the lab and do it myself.
00;57;29;25 - 00;57;47;07
Derek
But if I can set up a system where I can get miners to do it for me and validators to grade the results, and I can get people to stake Tor against kind of the the fact that they know I can deliver meaningful product or service revenue to go back and buy back my alpha token, or to bring value back to the the ecosystem.
00;57;47;10 - 00;58;05;27
Derek
It's a really compelling way to kind of like bootstrap a new product or service in Web3, knowing that there's this incentive model already in place for you to latch on to. And so that has always been the the goal of the tensors, like, design this in a way, that's the least amount of friction for a subnet to get created with the opinion that, like a lot of this should be around AI and synthetic intelligence.
00;58;05;27 - 00;58;12;08
Derek
But like, hey, if you're bringing meaningful revenue and you're bringing it back to your economy, like you should deserve a home here as well.
00;58;12;14 - 00;58;30;28
Aaron
Well, that's the part I find the most interesting, right? Like because then it has like a more broad based use case. And then I think to your question or point, Chris, it's interesting to see people kind of play around at different levels or layers of that emerging ecosystem. So that's why like I'm like trying to dig in a little bit more.
00;58;31;01 - 00;58;44;14
Aaron
It's kind of that it's branching out beyond some of the early like, you know, pure AI stuff. Because I still have some reservations and questions as to whether or not that that is going to be the the final model or that useful, but we'll see.
00;58;44;16 - 00;59;15;17
Chris
So why I'm starting to get curious about this is to me, like the end point in design within these decentralized networks is to create regenerative systems, right? Like there's there's no there's no actual value here. If we're in strip mined extraction mode, value comes when we actually have regenerative systems. And when you think around like cost structures allowing for the creation of aligned incentives, right.
00;59;15;20 - 00;59;40;17
Chris
Intelligent is something that does it like, you know, it clearly has a fixed hard toss, right? Like you gotta spin petaflops, you gotta fire 100. But then what gets produced is those outputs and is available for transformation. The value of that. Right. Like there's a huge amount of margin floating around in there depending on the utility of what's produced.
00;59;40;17 - 01;00;05;19
Chris
And so everything you're talking about, you know, in terms of like the system itself is, you know, create an economic incentives for greater, greater efficiency in the output of this thing. Right? Where my head goes is, okay, I, I'm seeing, you know, deals come through where people want to be everything in the stack. And they want to do it because it's economically optimal to play, you know, all the different levels.
01;00;05;19 - 01;00;18;21
Chris
And but from a system perspective is, is that like desire aligned with like a systemic goal of like finally cracking this? How do we build like regenerative, decentralized network? Question.
01;00;18;23 - 01;00;43;14
Derek
There is a core insight in here that got me so excited about that answer when I first came across the project. This isn't going to directly answer your question around or your point around kind of like regenerative systems, where outcomes are a moving target and are much more fluid and less static. But it's an example which is, you know, like when I first came across Big Tensor, I think the big question was just like, how do you make money?
01;00;43;14 - 01;01;05;07
Derek
Like, let's just say I'm OpenAI. How do you create a business model and enduring business model, knowing that models are versioned out very quickly, and when you have an environment where like you've got, you know, deep sick and you've got perplexity and you've got clawed and you've got it, you know, a number of like these large labs that are all competing to kind of like bring intelligence outcomes to the market.
01;01;05;09 - 01;01;25;17
Derek
And they're constantly incentivized to version out what they have and put something else new out there. The the game theory around this stuff is just like intelligence is definitely going to be a moving target. It's really difficult to say, like, you know, like a finished good, like a book, like the book is done by the book. And I have riparian rights on the sales of this book for the next ten years.
01;01;25;17 - 01;01;47;17
Derek
That world doesn't really exist when we're talking about something as fluid as intelligence. And the thing that I loved about bits answer, it was like, we're not even going to take an opinion on trying to kind of like allow people to have IP rights on a, on a model version. That's really difficult to do. We're moving into a world where things are much more open source, enforceable state is out there in the world where you can copy and reproduce it very quickly.
01;01;47;19 - 01;02;09;25
Derek
What we're going to do is just own the incentive layer. And if we can incentivize the ongoing durability of intelligence, whether it's related to, you know, AI or it's related to some other payload, if we can get the incentive layer right by optimizing the unit of account for commodity money, and then building the subnet architecture on top, that allows people to slot right in very quickly and compete.
01;02;09;28 - 01;02;30;14
Derek
There's actually a world where like what you're monetizing isn't, you know, a static finished good. But this ongoing idea of fluidity around intelligence or intelligence like outcomes, which I think is a very compelling place to be in a stack that is very foreseeable and very easily reproducible, if that makes sense.
01;02;30;16 - 01;02;49;21
Chris
It makes a ton of sense to me, like in in my mental framing. Right? Like they're choosing to place the incentive on becoming over, on being because they're recognizing this is a complex and complex adaptive system that's always in flux. It's always exactly.
01;02;49;23 - 01;02;50;26
Derek
Exactly.
01;02;50;28 - 01;03;14;29
Chris
My job is simply to create a value for energy. If capital is labor, and the labor here is energy pushed into compute, right? Like I should have no opinion about anything else, really. I should just design a system in which this can continually flow and upgrade that.
01;03;14;29 - 01;03;32;10
Derek
That what you just said is the core insight that got me excited about that tensor a few years ago, and I think they have proven that they've been able to execute on that model and that it's working, and that their job in the stack is just to continue to focus on that layer. And I think the rest will sort itself out as time goes on.
01;03;32;12 - 01;03;51;09
Chris
I may have to like, peek back in over there. This is one of these things, right? Like when I first got my head around Ethereum, right? I was like, Holy shit, this is so cool. I can't do anything with it right now. But every six months I'm going to check back in and see where it's at. And like Bitcoin tensor sort of has like similar vibes to me.
01;03;51;16 - 01;03;53;06
Aaron
I, I agree Chris.
01;03;53;09 - 01;03;54;04
Chris
Yeah yeah.
01;03;54;04 - 01;04;16;12
Aaron
I'm feeling it too. Yeah. It was really that branching out for me that made it more interesting. Like, I don't know I still I hear all the arguments. You know we need tremendous mass compute. You know, it has to be decentralized. I hope that that's the case. Definitely believe like thematically in this idea of having, you know, shared control over these these systems definitely see the need to have like kind of like localized inference.
01;04;16;12 - 01;04;38;16
Aaron
There's that all makes sense to me. I'm just not fully convinced, like you need a crypto tokenized network for it. But the incentives design around, you know, the tensor could be pretty interesting, right? And like in many ways, like that's what made Bitcoin interesting to it was really the having cycle of Bitcoin that that is really its secret weapon.
01;04;38;18 - 01;04;55;17
Aaron
So maybe there's something going on here as well will be interesting. It's good I mean it's good to see also these like ecosystem just continue to plug along. Right. Like what we can all be like disenfranchized by you know, believing in things that are not worth believing in. Potentially. It's nice to see kind of like these core innovation.
01;04;55;17 - 01;05;00;25
Aaron
Just continue to like march forward. And it's great to see more and more folks get excited about Cryptopunks.
01;05;01;02 - 01;05;02;22
Derek
Let's fucking go.
01;05;02;24 - 01;05;04;02
Pri
Crypto punks subnet.
01;05;04;09 - 01;05;07;27
Derek
There we go. There. Yeah, now we're cookin. Now we're going.
01;05;08;00 - 01;05;08;27
Pri
To go with gas.
01;05;09;01 - 01;05;09;24
Aaron
Should we intro.
01;05;10;01 - 01;05;30;14
Pri
Yeah. So yeah let's intro at the end. Hey everyone welcome to Net Society. It's me Aaron Derek and Chris talking about crypto tech, art, AI and more. Just a quick reminder. These opinions are our own and not of our employer. Let's get it going.
01;05;30;17 - 01;05;32;18
Chris
Hello. Goodbye. Hello, goodbye.
01;05;32;23 - 01;05;34;05
Pri
Hello. Goodbye.
01;05;34;07 - 01;05;35;03
Aaron
Bio.
01;05;35;05 - 01;05;36;24
Derek
Good shit. Guys. See you guys soon.
01;05;36;27 - 01;05;56;29
Chris
All right.