James Talks | Three major genres in the blockchain jungle

The blockchain world is also like the corner of the country with genres of thought. Different genres have different styles and philosophies. Outsiders will follow these styles and philosophies and put on various labels to distinguish them. Over time, people in the community will gradually be tainted with certain characteristics so that the style of the genre will be further strengthened and confirmed and gradually set down.

From my point of view, the blockchain world can be divided into three major genres: Theorists, Marketists and Capitalists. These three genres all have followers and their own “truths”. Some genres are popular at the moment while some are rising in the dark. Some are in the wind while some are in the long run. In the new world of blockchain, they are all shining and competing freely with each other. The community is at the mercy of anyone who wants to pick and choose. We are fair to them here and just describe the characteristics of these genres, including advantages and disadvantages, contributions and shortcomings.

Theorists

First of all, is Theorists. This genre is called Crypto Native when it is good in people’s minds and fundamentalists when not. Theorists believe there are first principles of blockchain and some basic principles and logical laws that need to be adhered to, especially when it comes to guiding innovation, it is more efficient to insist on thinking and asking about the essence than a one-off.

This genre emphasizes logic, rationality, and atomistic analysis of blockchain. There are various terms such as “computation”, “storage”, “communication”, “game equilibrium”, “mechanism design”, “incentive compatibility”, “formal verification”, “zk-SNARKs”, “degree of consensus”, “anti-attack cost”, “network effect”, and so on. These basic concepts form the starting point of the Principlists.

In the view of the Principlists, concepts that are not clearly defined, conclusions that cannot be returned to the basic concepts, and judgment criteria that cannot be quantified are incomplete as the result of cognitive incompleteness. Therefore, this genre is characterized by strong theoretical and logical rigor and is concerned with the provability of models, rather than the integration of patchwork.

In terms of originality, this genre is the most likely to drive innovation of blockchain and ultimately industry-wide awareness. Projects such as BTC\ETH\NEST are typical of this genre. The drawback of this genre is also obvious: there is often a large information threshold in design and presentation and it takes more time for common people to fully understand them which are even paradigm revolutionary. As a result, the genre is not easily recognized at first and many people will find it too abstract, too esoteric or too theoretical, lacking some concrete description and highly communicative presentation. When the innovation degree is too high, it is easy to be misunderstood or included in some negative situation: when BTC was spread in China, it was easy to be taken as something like STAMP & COIN.

Theorists represent a certain underlying belief in the blockchain world: the defenders of decentralization. Sometimes it is difficult for them to get a balance on this belief. Insistence on decentralization on the one hand, and the temptation of user experience on the other. Such contradiction is even constructed by the theorists as the theory: Impossible trinity. These basic theories build the boundary between blockchain and the traditional Internet. It can be said that if Blockchain can rise to the flag one day, only theorists can carry the flag. They are the prime mover in the blockchain world which is actually developed from 0 to 1.

Marketists

Marketists actually believe in more of a pragmatism: Existence in possible and it doesn’t matter if it’s decentralized or not. As they are not so obsessed with innovation, marketists even heavily fork other projects and may do very well. AAVE, for example, was previously a peer-to-peer lending protocol that did not very well in the bear market. But then it essentially forked the emerging lending protocol Compound and did surprisingly well that could be compared with Compound. In the view of Marketists, what’s valuable is users and using. Whether it comes to exchanges, Bitcoin or DeFi, where there’s a demand, where they go. And the Marketists don’t necessarily accept a “law”, they think it’s too dogmatic to be as practical as the present survival. Marketists have used various tactics to push the popularity of users and continue to lower the threshold of awareness in the blockchain world, eventually attracting the uninitiated and participants from the traditional world.

For example, the recent explosion of NFT is basically driven by the Marketists. Because there is no need to look deep into the theory of blockchain. Just by mentioning the word “Tamper Proof”, NFT such as JPG/TXT can be made into a hype object and even promoted by wash sale. NFT with people playing is God, which has created a boom in the blockchain world.

The marketists aim to go from 1 to 100 and have made great contributions to promote Blockchain. However, they have some shortcomings: they often make concessions for the sake of short-term “survival” and lose the possibility of long-term success. Or rather, they do not realize how blockchain really works and the essential difference of the valuation model from Internet enterprises. They eventually quietly stepped off the history stage. We think EOS is the typical one that has sacrificed its insistence on decentralization for user performance and eventually become a pseudo-blockchain project. Although EOS was once so prosperous that it reached half of the market cap of ETH, it eventually fell to less than 1%.

Marketists fail to realize that blockchain is not about reaching partial equilibrium and solving uncertainty of a specific group of people, but about creating general equilibrium and solving uncertainty at the human system level. As we have said before, solving human trustworthiness is far more valuable than solving the availability of certain people. Bitcoin hasn’t spent a dime on usability but invested multi-billion dollars each year to improve trustworthiness in a decade. No project designed specifically to address this weakness can replace it. In contrast, BCH, a forked one designed to address usability with large blocks has lost ground all the way from 40% to less than 1% of the market cap of ETH. If BCH is any guide, just allow BSC, Layer2 and so on to go their respective ways.

Capitalists

The last genre is the capitalists, talking about which is you really untold. There is no faster way to get a layman than “pumping and dumping”. So the capitalists use various so-called “Economic Models” and “Market Value Management” in the secondary market to push the small climax of innovation promoted by the first two genres in the blockchain world to a feverish level so that the most peripheral people can notice it. They have created the biggest wealth effect and the following effect in the blockchain jungle and indirectly promoted everyone’s eagerness for success. As the saying goes, the full moon is to lose and the prosperity is to decline. The overly naked behavior of the capitalists has increased a lot of negative influences. All kinds of criticism for the Ponzi are incessant and bring about intense regulation.

Objectively speaking, capitalists are not useless, especially when it comes to value production in non-cooperative games. When equilibrium has not yet been established and stabilized, external liquidity has a strong positive driving force which can accelerate the construction of equilibrium or make the equilibrium stable at a high level, early out of the game’s “weak equilibrium trap” to avoid the game’s negative cycle (equilibrium tends to 0). It should be noted that blockchain trading must be an activity with high URPI in the early stage. Only when the project gradually crosses the “weak equilibrium trap” zone, risk-averse investors may gradually intervene and reach a stable equilibrium.

However, the benefits of such liquidity may not be the intention. We see more pyramid and Ponzi schemes with promises of profits, price manipulation, pump and dump as well as unbelievable “exit plan”. All of these are more or less related to liquidity involvement, some of which are planned as naked frauds. This genre as a whole is more of a negative one.

Summary

In any case, the genre itself may have something to do with one’s inherent Risk Appetite and the belief strength of one’s pursuit of truth. Or rather, it’s actually a question about values. The blockchain jungle is still in its very early days, and you will see some genres dominate or some are more likely to be recognized in different geographic areas. But in the long run, the development of society will always encourage innovation and reduce the risk of instability. It’s just currently that the order is yet to be formed and even with many opportunities. Those who are interested in blockchain should learn more theoretical and practical knowledge. Keep the good side, improve the bad one, and converge in the final pattern.

This article is a personal opinion and does not constitute any investment advice.

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