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All dissent is a function of time

Matti

2022-03-22 18:11

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Original title: " Unfollow The Money "

Original author: Matti

Original compilation: Kxp, Rhythm BlockBeats

It does not represent a good product, and the relationship between the two is not an equal sign.” The most classic example is the iPhone. In the era when major brands of mobile phones competed for new functions such as various keyboards, music playback, and slider folding and rotation, the iPhone came. There is no so-called "new technology" on this mobile phone. All the functions have been seen in previous mobile phones. It is just that they are integrated together to achieve the ultimate, and then there is an iPhone.

This article by Matti also mentions , Just like Uniswap with xy=k, Hayden is not the first to propose this formula, Bancor and Gnosis have both proposed it, but Uniswap has brought xy=k to the extreme, and now it is the world's largest DEX.

But we can say that the pursuit of keyboard, music playback , Did you do something wrong with a mobile phone with a sliding cover that folds and rotates? cannot. Did Bancor do something wrong? cannot. As Mable said on Now, "All the differences between us are a function of time."

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BlockBeats translated Matti's "Unfollow the Money" into Chinese, hoping to bring readers new perspectives and thinking.

Recently, seed stage valuations and funding levels have increased On the one hand, it is affected by inflation, and on the other hand, it is also due to too many choices and competitions in the Crypto field.

Sufficient funds give us countless choices, and since there are many choices, people will not rush to create something things up. The logic behind this is that money becomes especially precious in the face of countless choices, because with money you can try anything.

Compared with vertical innovation, the abundance of choices is more conducive to horizontal innovation, because this type of innovation has the least financial capital resistance. Horizontal innovation mainly relies on copying and pasting, with only minor differences each time, such as involving some small-scale technological advances. In contrast, vertical innovation is a genuine "from zero to one", which is the invention and creation of completely new things.

This does not mean that horizontal innovation is useless, horizontal integration of technological progress can create value for a wide range of applications and users (increased productivity, improved scale, customized services, etc.). At the same time, this process also transfers the value created by vertical innovation to the entire economic engine.

However, the more money invested at the seed stage, the greater the demand for new inventions. The high price of the seed round indicates that the project regards acquiring "resources" (capital) as the project direction, which means that they are planning to catch up with their competitors.

People always compete with each other for more resources, like an arms race. In essence, competition is about imitating what others do, but with better details. In this way, competition itself becomes attractive, and people's romantic pursuit of competition has become the origin of the trend of "competition leads innovation".

In the 15th century, Europe was caught in a zero-sum resource war. The Portuguese completed their voyage around the world and established their own maritime empire. Instead of participating in the struggle within Europe, they embarked on the road of "pay-as-you-go trade expansion".

Instead of participating in a war of attrition with sufficient resources, the Portuguese changed their minds and achieved several strategic victories in the face of equally well-matched opponents. Centuries later, in 2008, the best entrepreneurial model in the financial industry was not starting a new investment bank or hedge fund, but playing with Bitcoin and Crypto.

Relate this to start-ups and we'll see: if you have a great idea, you don't need to spend money and people in the early stages to verify it. But if your idea is generic, then you need to expend resources competing with other generic ideas. That way, you end up with mediocrity, constant competition, and at best some horizontal innovation.

In the early stages, it is often not capital that limits growth, including so-called human capital (developers). While we are delighted that more and more developers are joining the Web 3 ecosystem, we also ignore the fact that the human mind and creativity are the main factors limiting growth.

Can we force a great invention? I think that no matter how abundant the resources are, innovations and inventions cannot be forced. We may confuse superficial engineering with actual innovation, but true inventors seldom do much embellishment.

This goes back to Peter Thiel's monopoly idea. Monopolies don’t usually tout their superiority, but many seed rounds these days spend a lot of time explaining how they differ from their competitors. Generally, they will emphasize "we are the X project of the X ecosystem" (for example, we are dYdX of the Avax ecosystem).

Resource Threshold

Creativity is mostly the result of abstract thinking rather than calculation. But option (money) incentivizes the founders to achieve the more attainable goal - increase the amount of computation.

Creativity makes resources effective, and in turn, resources give creativity power.

In my opinion, we should set a theoretical resource threshold. That is, in order to try an idea or idea, your resources must exceed this threshold. Types of resources include time, authority, resources, etc. Most ideas have low resource thresholds, while some are surprisingly high (especially in the field of information technology).

The "base threshold" is the minimum capital required to develop an idea. The level of creativity of an idea is negatively correlated with the number of projects built on it, but at the same time the idea receives funding above the basic threshold.

To be sure, the more money people put into an idea, the more competition there will be and the more limited its development will be. Remember, "Only similar people quarrel, and people wage the worst wars for small reasons or differences of belief".

Large capital pools often hope to maximize returns because they have higher commitments. Therefore, these investors have to innovate horizontally according to the most successful models at present, so as to reduce the risk of failure.

Small players cannot enter the competition, because as the field narrows, the more money above the resource threshold, the smaller the amount of innovation in a given field.

Take the "Layer 1" blockchain with smart contract functions as an example. Compared with today, it did not require so much capital when it landed in 2013 , is a genius idea.

When this idea is recognized by the market, more and more applications are developed on it, the number of developers is also increasing, and the program income is gradually increasing. At the same time, people are increasingly willing to provide funds for the improvement and perfection of Layer 1.

I am not saying that the market needs only one "Layer 1" blockchain. In my opinion, each new "Layer 1" becomes less and less creative and more resource-intensive. In this way, the competition is indeed reassuring.

I can safely say that the hundreds of millions of dollars used to fund the development of various DeFi protocols have exceeded the basic threshold, and this has been the case for a long time It's time. Likewise, we may have some good ideas, but the landscape is narrowing.

Creative Execution

If you have the greatest creative idea in the world but don't have the skills to make it happen, that's not what this article is about. This article is about those who have a viable plan and the ability to get it started.

An example: Gnosis had a prototype of the xy=k AMM ready in early 2017. However, until late 2018, most people in the crypto space were unaware that smart contracts could do a lot more than raise funds without permission.

One day in 2018, in a Williamsburg apartment, a man named Hayden built a prototype xy=k AMM that would become Uniswap. At the same time, it is also one of the important forces to promote the coordination of DeFi innovation and liquidity mining.

On the other hand, Gnosis successfully raised $12.5 million in ETH (unit price is $50), fully mobilized treasury resources, and gained multiple income. By early 2017, it was already a powerful organization in the Crypto space. While Gnosis established one of the most pivotal innovations in the crypto space, it never thought of bringing xy=k to market. (Of course, they have built other important infrastructure products)

This is because they have too many choices. Hayden, by contrast, had only one idea, an idea he got from Vitalik. But if Gnosis has the same idea, why does the idea even matter?

Hayden just borrowed the idea for Uniswap and doesn't have as much resources as Gnosis. Although Gnosis had the same idea, it missed users because of too many resources and options.

It is not enough to have an idea, it is not enough to have the motivation to execute the idea. In this case, abundant resources and countless choices become a kind of burden.

There is an old saying: "necessity is the mother of invention". After people have abundant resources, they will no longer feel the necessity and urgency of inventing and creating. So, since money can distract us, it might be a good idea not to pay too much attention to it.