⟠

For any person in the world, the goods & services accessible by them are determined by the extent of their trade network. A larger trade network increases capacity for specialization, resulting in new goods & services and making existing goods & services better and cheaper. The size of a person's trade network depends on the total friction of their individual circumstances. Economists refer to this friction as "aggregate transaction costs". They use a much wider definition of "transaction cost" than, for example, a gas fee. Any kind of added friction cost whatsoever reduces the size of a person's trade network, and that reduces the quality, affordability, and variety of their available goods & services. Costs of all kinds play a role in determining the extent of a person's trade network: Does the person live in a city or on a farm? Is their city separated from neighboring cities by a mountain range or a flat highway? What regulations or taxes exist to restrict or enable commerce? Are there any wars, famine, natural disasters, or other circumstances? Does their country have good physical infrastructure? All types of costs and friction play a role. How does a person's trade network move information? Do they rely on wagon loads of clay tablets hauled by oxen to move information, as was done in some ancient civilizations? Do they use morse code telegraph lines? Or, do they have digital information transfer, ie. the internet? Is the same information transfer technology available everywhere in their trade network? How does their trade network move goods? Do they haul wagons of wheat on dirt-packed roads? Or, do they have a modern network of vehicles and highways, of ships and shipping lanes? What loss of goods occurs during transit? To disasters? To theft? Perishable? What technologies and systems work to prevent these losses? Political systems? Security cameras and national ID databases? Is the level of risk similar throughout the trade network, or are some parts safer than others? How does a person's trade network move money? Do they pass around IOUs by messengers on horseback? Do they pass around digital IOUs in a rigid banking federation based on privilege and relationships (web2 finance)? Or, do they have a global internet financial system that's an open access level playing field and lets you "hand cash" to anyone in the world (web3)? Jason asks, "How does web3 improve economic output?" The answer is that economic output depends on the quality, affordability, and variety of goods & services available to each person, and this depends on that person's unique vantage point into the global trade network, and that depends on each person's trade network's aggregate transaction costs, and these transactions costs are greatly reduced by web3. Web3 - reduces information transfer transaction costs (secure open data for prices, markets, etc) - reduces money transfer transaction costs (bearer ownership, instant settlement, etc) - decentralization reduces risk which further reduces transaction costs. Example: erc20 transfer on BSC vs Eth L1, both are the same token transfer, but the one on Eth has much lower risk because BSC is centralized. That lower risk is a type of transaction cost reduction. - public chains are global and open-access, so these beneficial reductions in transaction costs can apply to everyone in the world's unique vantage point into the global trade network. Web3 helps everyone, not just people in wealthy countries. Every major benefit of web3 tends to reduce transaction costs: ERC standards, public composability, trustless bridging among L2s, censorship resistance, strong property rights, open innovation, etc. In short, web3 increases economic output by reducing friction costs that limit the extent of the global trade network and therefore growing the quality, affordability, and variety of goods & services available to everyone in the world.

Full deleted thread by Brian Chesky. imo a massive Ethereum bullpost

This post is from the heart, motivated by Brian Chesky's bullpost last night. We're so close now. It's been 3 years since I wrote the below essay explaining precisely how Ethereum reduces friction to enable bringing the global economy onchain and enhance productivity. It got 540 likes which is pretty good for an account my size. It was my pinned post for years. Last night, Brian Chesky (Airbnb Founder & CEO) became the most famous, successful, and high status trad tech CEO to finally say the quietest part out loud: The most special thing about public chains is friction reduction. In doing so, Brian effectively endorsed Robinhood L2 and Eth's whole L1+2 model. I have been a big fan of the podcast EconTalk for my whole adult life and of its most frequent guest Mike Munger. This gave me early exposure to the theory of friction which economists refer to as "transaction costs"... not to be confused with gas fees. It helped me see the global friction reduction benefits of eth, which I have been writing about since 2019. That being said- During these early years, the world's onchain adoption has had and will have 3 distinct phases. Phase 1: Admitting the tech is pretty great. We saw this gradually ramp up from 2017-2024 in the form of early failed private blockchains, early institutional discussions and uptake of programmability, etc. Phase 1 is about institutions, corps, governments, central banks, and silicon valley recognizing that our onchain tech (almost always EVM) is a 1000x improvement to their offchain systems. Phase 2: Admitting that public chains are special networks. This started approximately with Facebook's Libra and has exploded after GENIUS, with the launch of many new corpo L1s. Phase 2 is characterized by trad folks all agreeing with each other and aping into the fact that public chains embody "come for the tech, stay for the market". The growth of international tbill demand from stablecoins played a key role in this. Brian's post has taken us to the bottom of the 8th inning here today in Phase 2. What happens next is Phase 3. That's where we win. Phase 3: admitting that the additional friction reduction-- above and beyond EVM tech and just any public chain-- from the Ethereum L1's decentralization and the L1 being the hub for defi/L2s is extremely valuable at global scale, and not available anywhere else. Phase 3 is where the world collectively realizes that the Ethereum L1 has a monopoly on being maximally decentralized and on being the global defi/L2 hub with the deepest liquidity, and also realizes that the world desperately needs this, or else the global economy literally can't come onchain. It's too risky and inconvenient to bring trillions in assets/activity onchain without Eth L1+L2. Skipping going onchain is not an option, specifically because the world wants to capture all of the magical apps/UX/markets uniquely enabled by Ethereum. Ethereum is inevitable. Friends... fellow Ethereum and ETH lovers and holders... it has been a long and frankly brutal road. As of today, we have never been closer and more certain to the realization of the incredible outcomes that used to merely exist in our dreams. We are near the end of the beginning. In the coming quarters and years, the world will enter Phase 3 of early adoption and hit the ramp of the global adoption S-curve. The entire world will realize that not only do they need to be onchain, but they need to be onchain on Ethereum L1+L2, where the friction/risk are lowest, protocols are strongest, and liquidity is deepest. Ethereum will achieve its potential to provide a level economic playing field for all of humanity. ETH will achieve its potential as a global treasury-grade SoV. Both will dominate for decades, maybe centuries. From the heart- love all of you that have been on this journey together for so long. And a huge welcome to everyone joining us now. The best is truly yet to come. So close now.❤️🚀