Decisions

The right decision is often the one you make.

When questions linger, they get heavier over time. When I talk about writing a book with aspiring authors, I share how a sense of paralysis occurs. Whether it’s from the writing or publishing process, this mental jam is not from a lack of options, but instead, so many. While it’s important to understand options, the key to momentum is to simply make each decision.

This is not as easy as it sounds. No matter how big or small the decision might be, the fear of getting it wrong stands in the way. Fortunately, while life or death decisions do occur, most of the time, a wrong decision only requires extra resources to make it right. Bad decisions add up, but if it’s just one decision that’s part of a longer sequence, even slight missteps can still move us closer to where we want to be.

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What decision is holding you back?

The decision I’m wrestling with, is if I should continue with my weekly writings. I’m so thankful for the reading room that is Roasted Reflections. It’s been a privilege and a blessing, but I’ve made sacrifices to ship this art every week for almost three years. I hinted at this in Recursion, but with the end of 2023 in sight, it’s time to decide if/how I should continue with this ambitious cadence.

Perhaps I’ve written what needs to be said, at least for now? Would these jolts of energy be missed if they were gone? Writing helps us understand our thoughts, so it’s nice to know if I do turn down the volume, the Roasted Reflections library isn’t going anywhere. I could still occasionally add fresh writings and we’ll stay connected with new episodes of You Don’t Need This Podcast brewing every week. What could I do with the extra bandwidth? Hmm…

I think it’s time. I’ll make this decision here and now.

The next four months (17 weeks) will be sequenced to say farewell to my weekly writings at the end of 2023. I’m so thankful for this remarkable ride we’ve shared together. Every writing will continue to be pure human, thoughtfully crafted, and brewed to keep us building. This will be an emotional process, but we are one my friends. People like us, do things like this, so cheers to all that is next.

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“How do you write every week for three years?”

Endless community-driven experiences, the privilege of time, building into connecting things I care about, metrics beyond money, publishing YDNTB, staying curious, finding comfort in uncertainty, and an efficiency that comes with consistency helps me continue to articulate written relics I’ll always be proud of.

Writing has become a part of my practice, but it’s not easy and never will be. Life is beautifully busy and what happens when there’s seemingly nothing to write about?

Can I call it writer’s block and hope nobody cares when Roasted Reflections doesn’t land in their inbox on Wednesday? No. Writer’s block is an illusion. An excuse not to ship. This paralysis is a symptom of prioritization within our practice.

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Don’t wait for inspiration.
Let the work inspire you.

Whether you listen to yourself in private (journalling) or share your heart in public, when you know you’re going to get it done, you become more consciously introspective. You stay more in-tune with what needs to be synthesized, while recursion and the indexing effect helps sustain a healthy obsession. Even when the moment’s thesis is not obvious, you’re strong enough to explore what needs to be said. This becomes a habit that invites anyone to reach higher without fearing the generous act of making a ruckus by shipping the art.

Indexing

Create a library of written works.
It can unfold into a timeless asset.

Imagine if you had already started writing. With no index cards required, welcome to your very own collection of organized, articulated thoughts, eh!

You will have embraced the moments of your own thoughts. You will also have felt the nourishment of released energy that awaits within the art of writing. Even more, you also moved past the fear and began “shipping your art” by sharing it within a community as well.

With your library of writings in place, even if traffic is low, your future self can become a real-time index. Available any time, from any device, and you’ll remember them all because you created them!

This treasure trove becomes super handy and very valuable! You can effectively add thickness to any interaction. What a timeless gift to yourself and to those you seek to serve, beyond so many beautiful, but brief sparks in time.

Quick temperature check. The world is experiencing a mainstream surge in AI, but don’t let that become an excuse. Anyone can now unleash AI and #ChatUX is so sweet, but those who show ingenuity will never be out created. Along with helping us all maintain intensity, your own writings can represent a honest heart connected to different topic you’re also talking about… maybe even building realities around as well!

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“Reading helps us understand the world.
Writing helps us understand ourselves.”
– Ben McDougal, Roasted Reflections

Does writing take serious time? Yes. Does publishing your writing online spark hesitations? Yes. Will writing welcome a creative release and potentially deliver more art for you to ship? Also yes.

Start writing my friend, then get generous by sharing it with us.

Organizational Shift

DAOs are a revolutionary way for connected humans to organize, coordinate, and pool resources without the need for centralized authorities or intermediaries.

These community-led groups transparently establish operating agreements and manage a shared treasury. By leveraging smart contracts, all decisions made by a DAO (“Decentralized Autonomous Organization”) are recorded on an immutable blockchain and governance tokens are used for gathering consensus.

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This caffeinated contribution was written by Alex Myers. This certified futurist is a DAO Agility Coach at Aragon, a web3 platform for building DAOs on open-source infrastructure with governance plugins. Alex is also a web3dsm organizer who believes the more we teach, the more we learn.

There are over 11,000 DAO’s in operation, encompassing $11B+ in treasuries, varying widely in size, scope, and AUM (“assets under management”). All of DeFi utilizes DAOs to govern their treasuries, yet many are simply small groups of like-minded individuals who want to quickly gather, pool capital, and make decisions. 

DAOs, like companies, come in many forms. Venture funds, investment groups, grant committees, philanthropy, media, and more. Here are the world’s largest DAOs and here are different types of DAOs.

Besides a wallet and owning cryptocurrency, no technical skills are required to create a DAO. Several no-code operating systems (Aragon, Tally, Colony, DAOHaus, and others) enable anyone to create a DAO in minutes by simply selecting governance capabilities, funding options, and voting requirements. Given many DAO operating systems are open-source, custom smart contracts and powerful plugins can add tailored functionality without additional cost as well.

To join a DAO, new members go through an onboarding process. Once confirmed, members can be given a digit asset, such as an NFT, to verify the details of their participation. Members are then granted access to a communication tool (like Discord, Telegram, or Slack) to collaborate with other members as decisions are made on which projects to pursue.

DAOs are different from traditional companies in that there is no hierarchy and decision-making is done through pre-set protocols and smart contracts. This decentralizes power and allows for more operational versatility. Members can work from anywhere and focus on work management rather than people management. Contributors can work in multiple DAOs and choose to remain anonymous or more identifiable within the group.

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Cheers to this web3 series brewing on the future of how we connect, communicate, and collaborate online!

As hype cycles and funding began to deteriorate in 2022, due to (mostly) macroeconomic forces, DAOs realized that community over performance was unsustainable. Today, sustainable DAOs utilize battle-hardened methodologies like Agile and KPIs to enhance coordination and productivity, while still maintaining a sense of community.

While all DAOs use crypto-assets to establish themselves, the size and scale of a DAO can impact its operations. Larger DAOs require more planning and coordination around governance optimization, commonly breaking into smaller, goal-oriented teams to define their own budget proposals, objectives, and success metrics. Since treasuries are often much more significant, DAOs members expect historical performance and analytics before voting to allocate funding.

DAOs are built on open, borderless, neutral, and censorship-resistant blockchains. This distribution is paradigm-shifting and a big reason for DAO growth. However, such dispersion also exposes DAOs to legal ambiguity. Since DAOs aren’t beholden to country-specific laws backed by traditional business structures (LLC’s, S-corps, C-corps, etc.), they must consider incorporation to minimize liability for members. Smaller DAOs with reduced financial capital are not as complex and more nimble, which allows them to define budgets, proposals, and goals with less effort.

Depending on the size, composition, ongoing activity, and how a treasury is funded (seed funding, ICOs, airdrops, grants, etc.), taxation and regulatory compliance is another presiding element for DAOs. This is especially true if a DAO is generating revenue by charging fees and distributing them back to token holders, as they could be redefined as securities and create taxable events. In short, the larger a DAO becomes, the more professional legal support, financial strategy, administrative attention, and overall leadership is required.

As we consider the future of work, DAOs have the potential to revolutionize the way organizations are structured and operated. DAOs re-imagine human coordination to be more equitable and transparent. With exponentially improving blockchain technology, alongside network effects, joining and contributing to DAOs will become a self-sustaining cycle of growth. As the world digitizes and becomes more decentralized, DAOs are poised to become a powerful force for change, disrupting traditional institutions and fostering a new era of innovation.

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You’re now ahead of the curve! Welcome to Web3 is a shareable reference and follow the Web3 tag for more reflections flavored in futurism.

Mechanized Money

What enables us to have truly programmable money? After your Welcome to Web3, let’s keep curiosity fed with hot sips on crypto and how decentralized finance (“DeFi”) galvanizes web3!

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This caffeinated contribution is by Scott Herren, a blockchain developer building at the forefront of web3.

Blockchains

As we dive into web3, we must grok the traditional finance world. One of the primary challenges that bitcoin and blockchains seek to solve is the double spend problem. Double spending occurs when digital tender/fiat/currency is sent to multiple parties simultaneously or after a sender’s balance has elapsed. (There’s a ton more to learn about consensus and the Byzantine Generals’ problem, but we’ll leave that for another cup.) This, effectively, creates money from thin air and is what banks and the central banking system have helped prevent for the last few centuries. This power can be abused, so bitcoin looked to democratize the process of approving transactions by folks called miners.

The Bitcoin network went live in 2009. Initial traction was modest, but the “unspent transaction output” (UTXO) model for tracking transactions and balances proved to be groundbreaking. Bitcoins are “fractured” from their initial whole. These fractions are used as currency, which makes accounting inclusive, verifiable, and very transparent.

Blockchain technologies have evolved toward mainstream adoption, but cryptography has been studied since the 1980s. Bitcoin was first to crack the code, but different blockchains and more on-chain layers are being combined in powerful ways. Today, there are four main types of blockchain networks: public blockchains, private blockchains, consortium blockchains, and hybrid blockchains. It’s impossible to count private blockchains, consortium blockchains, and hybrid blockchains, but there are hundreds of public blockchain that are permissionless, meaning they are fully decentralized and anyone with an internet connection can equitably access the blockchain as an authorized node. Bitcoin and Ethereum are the two largest, with 10% of the global population owning some form of over 2,000 different cryptocurrencies.

Within each blockchain, layers provide infrastructure for web3 developers. Hardware, data, network, consensus, and application layers make blockchain technologies more usable, with each layer offering unique functionality.

The last ingredient in the blockchain recipe is hashing, which gives blockchains verifiability. With hashing algorithms, miners are assembling a historical ledger where any tampering of previous transactions will disrupt current calculations. With verifiable ledgers storing only valid transactions, the next cool thing we can do is automate value.

Smart Contracts

Smart contracts allow us to program, exchange, and intermediate value using the storage mechanisms first introduced by Bitcoin.In 2014, Ethereum introduced a new programming language called Solidity, which allows smart contracts to store value and other data. Gas is paid in Ether, the native token of Ethereum, for transactions that interact with smart contracts. Computationally intensity and network activity determine gas fees at any given time. These primitives have helped developers explore a vast array of mechanisms for coordinating value. Some have been successful while many others have taught us valuable lessons about this antifragile system.

One of the earliest successful smart contracts of Ethereum, The DAO, had a catastrophic contract bug (flaw in the programming) which we now refer to as a Reentrancy Attack. The DAO had coded a “shared bank account” where stakeholders could deposit Ether into the contract and receive a proportional share of tokens back. The goal was to collectively fund projects via token-weighted voting. While tokenomics and technical improvements have addressed many of the early missteps,  the major mechanisms are still widely used in token governance today.

Tokens & Standards

As the Ethereum Improvement Proposal (“EIP”) process matured in 2017, smart contracts began conforming to implementation standards. ERC-20 was the twentieth iteration, which included a request for comment offering a fungible token standard. To support an endless variety of projects, this token standard became the default for initial coin offerings (ICOs) that were sourcing funds to solve blockchain challenges. The power of this mechanism led to many overly ambitious projects that damaged trust with unfulfilled promises, but some of the powerhouses of today were launched during the ICO bubble.

Some other notable token standards are ERC-721, the non-fungible token,, and ERC-1155, the semi-fungible token. The adoption of these standards across the ecosystem allows for tight composability and interoperability across protocols. These “money legos” act like building blocks for DeFi, but before we get to decentralized finance, let’s first cash in on the most prolific tokens within our global economy: stablecoins.

Stablecoins

Stablecoins peg their value off another asset, generally something stable like the US Dollar or gold. Stablecoins can also derive value by being fiat-backed, collateral-backed, and algorithmic. 

Fiat-backed stablecoins are backed by fiat money in an auditable bank account. Fiat money is a government-issued currency not backed by a commodity such as gold. Popular examples are Circle’s USDC, Gemini’s GUSD, and Tether. While fiat stablecoins are quite easy to scale they also have trade-offs with their decentralization properties. The blocklists of these stablecoins are growing as more projects comply with jurisdictional requirements.

Collateral-backed stablecoins are backed by assets that are locked on-chain and transparently auditable at any time. The largest of these, Dai, is mostly backed by Ether. When done right, these types of stablecoins have great decentralization properties, but are much more difficult to scale and can have liquidity issues from a market squeeze.

The final type of stablecoin is algorithmically balanced with a system known as “seigniorage shares”. It’s important to mention “algo-stablcoins”, as implementations have not been successful to-date, so you may want to avoid these types of stablecoins until technology can unequivocally support the ideology. Alright, with tokens and places to store value, let’s look at innovating within traditional financial exchanges.

Lending & Exchanges

After the rush of late 2017, the buidl market set in. Organizations committed to building, have delivered on overcollateralized lending and borrowing on-chain. Lenders can lock their collateral to earn from borrowers, but borrowers need to be lenders of another token and ensure their loans remain sufficiently overcollateralized. Lending and borrowing rely on asset prices to determine liquidation thresholds, but if these can be manipulated, then the system is vulnerable. The Oracle Problem is one that doesn’t often get surfaced, but is becoming more crucial as the value of attacks increases.

Early experiments around what order books looked like on-chain were clunky. Each bid, update, acceptance, or cancellation required another transaction and gas. This changed in 2018, when Uniswap used the Ethereum blockchain to provide a simple interface to swap tokens. Uniswap flipped the concept of traditional order books on its head. Instead of creating offers to buy or sell, a market maker can provide two tokens in a pool and the protocol holds the ratio of the tokens in the pool equal. These pools are called automated market makers (AMMs) and the pools leverage the equation  k=x*y, generally referred to as the constant product market maker (CPMM). You’ll see AMMs often, with the CPMM formula occasionally cited. This supports a very simple token swap without accepting a costly series of orders. Being a non-custodial, decentralized exchange you also never give up control of your tokens until the swap actually occurs.

As crypto is managed, liquidity incentives were initially implemented by Yearn Finance, a protocol that automates the lending process to earn yields from on-chain assets that could be held or traded on the market. Many incentives came from token inflation that hadn’t found value loops and proved to be unsustainable. Since 2020, years of rapid experimentation has revealed innovations that are continuing to push DeFi forward.

DeFi’s Destiny

This magical dark forest can be treacherous, but system level engineering takes time and it’s liberating to build with so many intrepids learning together. As we complete this download, here are a few interesting use cases to keep us thinking about what’s possible beyond traditional finance.

  • Instead of getting paid every two weeks or each month, smart contracts can create payment streams. Instant access to financial capital furnishes more financial freedom, while still maintaining refill or cancellation options. Along with incoming compensation, outgoing subscription fees and self-repaying loans are also use cases where automation can further optimize financial control.
  • Also known as no-loss lotteries, prize-linked savings accounts, are not uncommon in the traditional finance world. Local municipalities and credit unions have generally handled them. Pooling capital and lending it to others is also used in smaller communities to help with small, low-cost loans. With an end-to-end process, smart contracts enable little to no overhead, which makes nearly all of the earnings available to participants.
  • The most magical of our new tools! Flash loans allow for borrowing a near-infinite amount of a token, given the loan is paid back within the same transaction. This visualization of a flash loan transaction will add clarity, but in short, if there are transactions that require more capital and can be facilitated within one block, they have been democratized to anyone with access to a scripting language and a relaying node.

DeFi provides composable tools for traditional and innovative finance primitives. Being able to mechanize your money and the value it delivers within a network is super powerful. When web3 concepts hook into the financial primitives of crypto, the global economy can leverage faster, more equitable, and safer peer-to-peer commerce.