Financialization of Everything

PREAMBLE: I wrote this before the launch of SKY so you will see terms like SubDAOs (now Stars) and not hear about SKY vs MKR, but it ALL HOLDS.

-Midjourney Prompt: “People involved in a money fight. they are outside in the Garden of Eden but they are battling each other with weapons that shoot money”

I fell asleep last night to a podcast where they were going deep on liquid staking and how Celestia’s staked TIA would imbue TIA with moneyness. It got me thinking that there must be a Dunbar’s number for currencies. I feel like I’ve heard Toly say he doesn’t care about the value of SOL. It’s hard to imagine Vitalik caring about ETH having value. They want The Innovation.

I am not saying specifically “financial” innovation isn’t important. Economic downturns or recessions used to be called depressions. Did you know what they were called before that? Panics! Around the time of The Revolution, the French found themselves facing bankruptcy. Forced into a corner, they created the Assignat, tradable paper representations of shares in crown land. It created an uptick in the economy. And so, they printed more. The inevitable bank runs were so severe people were crushed just trying to get inside the banks. But financial innovation continued. Panics gave way to depressions which, possibly as a sign of respect to the hardships of the soup lines and dust bowls, gave way to recessions. Now that Powell seems to have executed a soft landing, maybe we will start calling them descents.

Maybe this is boring. You might think I am being tactical falling asleep to a conversation about the minutiae of modular money, but we live in amazing times. Money is evolving. Money is becoming programmable, stateless, and permissionless. And, as the bull market prepares another hot ball of money to warp our space and time, I feel compelled to put my own stake in the ground. I have seen money’s endgame. It is Dai.

It’s Alive

This section was written by ChatGPT:

In the rapidly evolving landscape of cryptocurrency and artificial intelligence, we stand on the cusp of a paradigm shift, heralded by the imminent arrival of artificial general intelligence (AGI). This technological juggernaut, akin to a spaceship hurtling towards Earth, promises to redefine our place in the order of intelligence, rendering us the second smartest species on the planet. The existential question that looms large in this scenario is the relevance of cryptocurrency in an era dominated by AGI. With its capacity to fulfill the foundational promises of crypto — security, provenance, and the democratization of access — AGI seems poised to transcend the very need for blockchain as we know it.

Imagine a world where the complexities of smart contracts, the intricacies of currency conversion, and the authenticity of digital art ownership are effortlessly managed by conversing with an AGI, rendering traditional blockchain technologies obsolete. Such a future challenges the current fervor with which we pursue advancements in blockchain speed and security, exemplified by the endeavors of Solana and Ethereum. Yet, amidst this technological upheaval, the core value proposition of permissionless innovation emerges unscathed, promising a landscape where the fluidity of creation and exchange remains unbounded by current limitations. This vision extends beyond the mere financialization of assets to a realm where programmable money becomes an entity that is not just functional but alive, embodying the essence of permissionless innovation. In this future, the ultimate frontier of human endeavor may not lie in mastering the external world but in the introspective journey of self-improvement, where the real work is on oneself, and currency, in its most evolved form, is not just programmable but endowed with the vibrancy of life itself.

Scale Dai Damnit

Rune Christensen established MakerDAO in 2014, marking a significant milestone in decentralized finance. As a decentralized banking platform running on the Ethereum blockchain, MakerDAO utilizes smart contracts, enabling users to collateralize assets and borrow its stablecoin, DAI. On July 20, 2021, Rune announced the official decentralization of MakerDAO. Presently, DAI holds a share of approximately 3% of the $140 billion stablecoin market. MakerDAO’s MKR governance token boasts a market capitalization of $2 billion, driven, at least in part, by an anticipated annual revenue of $240 million. As impressive as MakerDAO has been, it is hard not to look at that 3% number and feel like there’s a problem. Recognizing this, Rune returned to MakerDAO to propose a substantial transformation named “Endgame”. This initiative aims to enhance governance and foster innovation, propelling MakerDAO forward amidst the rapidly evolving landscape of decentralized finance.

Endgame includes some very deliberate tactics to drive innovation. At its core is an effort to integrate MakerDAO with LLMs. Trust me on this, it is painstaking work. If you thought I was smart to fall asleep to technobabble, good luck staying awake for the creation of the Atlas.

The Atlas Immutable Alignment Artifact (Atlas) is the foundational set of rules that govern MakerDAO. It provides a high-level description of the DAO, its actors, incentives, and work areas. Together with the Scope Bounded Mutable Alignment Artifacts (Scope Artifacts), the Atlas defines the operational framework of the DAO.

The Atlas is currently unfinished but active. Once the Endgame State is reached, the Atlas will become immutable. https://endgame.makerdao.com/maker-core/atlas

Attempting to integrate an organization with an LLM is remarkable. Ignoring an all-powerful AGI that would effortlessly replace Dai and all other currencies, as it viewed MakerDAO’s Endgame much like we view a kindergarten Christmas Pageant. In a landscape of incrementally advancing LLMs, MakerDAO strives to leverage that revolution.

Beyond AI aspirations which might seem odd to some, Endgame is predictably designed to reflexively optimize through decentralized innovation and permissionless governance. To accomplish its emergent goals MakerDAO is being reorganized into SubDAOs that can be created, funded, assessed, and even disbanded. There are SubDAOs for styles of representative governance, SubDAOs for the allocation of capital and risk, SubDAOs for operations, and even SubDAOs (or MiniDAOs) for innovation. Some SubDAOs will become institutions, some will be ephemeral, and everything in between.

It is all on the table. Wholesale rebranding, new stablecoins, new governance tokens, everything. The central goal of Endgame is beautiful scale. Currently, Dai can be used across a large swath of DeFi. But what if this is only one leg of the proverbial stool? What if other legs like payments, labor and services transactions, in-game currencies, DePin scorecards, and modular monies are essential to scale? MakerDAO should eventually work on these too.

Reviewing my bio, you will see that I have spent a good deal of time focusing on web3 labor and services so you might understand why I think prioritizing labor and service transactions is paramount. There are obvious and immediate benefits to improving the DAO itself. Funding MakerDAO’s bounties with Dai is table stakes. A MiniDAO that pushes the broader integration of Dai into the world economy should be expected to unlock innovation along with transaction fees and other revenue. US freelancers alone earned an estimated USD 1.3 trillion in 2021. I have seen estimates showing that labor transactions amount to USD 85T annually. This isn’t a large market. It’s gargantuan. What if the platform that meaningfully brings global labor and services on-chain discovers that some components of these transactions work better if they are part of the currency itself? What if it helps to be able to innovate the token as well as the platform?

To my eye, investing in these efforts will be essential engines to scale Dai.

Valhalla

Bitcoin makes for a great hedge. Maybe Satoshi was the AGI traveling back in time. Bitcoin is also an unfortunately sub-optimal way to do things. I’m happy it exists. And I find it fascinating that you can convert energy into currency, but can’t we all agree we should at least try to do this another way? Maybe being relentlessly deflationary might be reckless. Yes, you can ossify as other tech advances, but… look at what Bitcoin has already missed out on (see most of crypto). I say this jokingly, but if humanity lives tens of millions of years, we will almost certainly lose all our keys. Are Bitcoin maximalists suggesting we can’t survive at the top of the food chain as long as reptiles did?

And then there’s the emergent monies — the Ethereums and Solanas and staked Tias. My quip on these is why should we all trade cigarettes? You know, like in prison when cigarettes acquire a moneyness. You benefit when you are on the platform/ in prison, but when every instance of value can be digitized and disambiguated from its place of origin when everything strives for a monetary premium, we are left with barter. If you were omnipotent, barter would be more efficient. People are not omnipotent.

I don’t need to make an argument for or against fiat. Dai is a globally democratized money that is forever a moment away from trading its USD peg for a peg to a basket of commodities or countless other schemes. It isn’t perfect, yet. Endgame is a risky and ambitious gambit. It is currently climbing some very steep, possibly Sisyphean, hills. But it is what we are looking for, a global currency that is digital, open-source, platform agnostic, diversified, decentralized, programmable, permissionless, AI-optimized, benevolent, and available to, and for all of humanity.

Let it be known.