Finding Equilibrium #10: Terra, Napoleon, and why we have infinite resources
Hello Everyone,
Welcome to issue 10! Web3's been taking over my newsletter, and this week's no different. Some of you suggested adjusting the format by topic (crypto, bio, etc.) instead of medium, so I'll play with that soon too.
And if you’re new here and like what you see, feel free to sign up below:
With that, let's jump into 3 reads, 2 tweets, and 1 podcast for the week:
Reads:
Terra: Secretly making crypto mainstream
Terra is web3's Stripe. Just like most people didn't know they were paying through Stripe, Terra's 2M+ users don’t know they're using a blockchain! Successfully abstracting complexity into simplicity is rare in web3, so this is an enormous feat.
What problem does it solve? One is payments: Terra makes e-commerce payments fast and secure with stablecoins (stable digital currencies pegged to fiat currencies like USD). The second problem is with the stablecoins themselves: you usually need billions in collateral to create a stablecoin, but with Terra you don't. Instead, Terra algorithmically maintains price stability.
By balancing the supply of its two token categories (its fleet of stablecoins and its governance token, LUNA), Terra has a self-reinforcing loop to keep its stablecoins stable and its governance coin valuable. For example, if UST (its stablecoin pegged to USD) rises above $1, the ecosystem "burns" LUNA into UST. This increases UST’s supply which decreases UST's price. It works the opposite way too - the ecosystem constantly self corrects.
This article is a long one, but so worth the read. Instead of "this coin will rule them all", Terra's narrative focuses on enabling the creation of usable digital currencies throughout the world. For all we know, we'll soon use them without knowing it!
A checklist for Layer 1 Blockchains
This article outlines an incisive framework to evaluate emerging blockchains as economic ecosystems. An economic ecosystem needs four things to thrive: production inputs, competition, supporting sectors, and high-quality demand. A thriving layer 1 blockchain needs all four too! They come through human capital, venture investment, developer activity, and, crucially, devoted users.
I love this way of thinking through blockchains. Instead of rejecting the past, it compounds lessons from companies and economies to create evolved mental models. Checklists aren't sufficient ofcourse (we’d all be stupidly rich otherwise), but this is the best crypto starting point I've found yet.
Knowledge breeds infinite resources
Over the past few months, Naval Ravikant has been distilling potent lessons from a dense but fascinating book, The Beginning of Infinity. In this quick read, he and his co-host outline how our ever-expanding knowledge yields infinite resources.
They use the example of Europium, the first element used in color televisions. Back then, the common sentiment was we'd run out of Europium and hit a limit on color TVs. But we still have color TVs today and have no reliance on Europium. The root cause? Expanding research and knowledge. That same theme applies to many areas: whether in climate change with Carbon Dioxide-absorbing concrete or new forms of batteries, it’s rational to be optimistic about solving our many problems.
Tweets:
An enhanced map can change your worldview. This is a fun thread of ~12 eye-popping map perspectives that do just that. It's bound to get some wheels turning - let me know which ones you liked best!
One of the paradoxes around blockchains is their "anti-network effects". Unlike Web 2.0 projects (Facebook, Airbnb, etc.) that grow more valuable with new users, blockchains get worse when more people join. For example, thanks to 2020/2021s adoption, Ethereum's transaction fees soared from $10 in January 2020 to $200 in November 2021!
But Zero-Knowledge Proofs could be the solution. They take computation off the blockchain, retain privacy, and make transactions faster and safer. This is a light intro to them - they get pretty funky, but I'll be sharing much more soon.
Podcast:
I stumbled onto this podcast a few weeks ago, and it’s absolute gold. Ben Wilson studies prominent historical figures and teases out patterns between them. He dives into Napoleon here and connects dots from him to modern leaders like Bill Gates, discusses Napoleon’s uncanny ability to organize his mind, and covers the importance of embracing constraints by doing more with less. There’s a lot we can apply today, and Ben surfaces many of those lessons from Napoleon’s life.
Thanks for spending the time with me 🙏🏽 Hopefully this gives you some reading as you wind down for the holidays - please send over any feedback or comments as always!
See you next time,
Aqil