We did not evolve to see reality, we evolved to survive. - xh3b4sd

Repeating the same characteristics across different scales is a very common phenomenon that can be observed everywhere in nature. When you are not taking good care of your own body, then you are probably not taking good care of your home either. If you have a dirty kitchen counter all the time, then you will probably have quite a messy life in one way or another too. A very distinct property, and be it yet so small, may cause ripple effects from the micro into the macro structures of our lives, our world, and our universe. The Math Wizards amongst us may already realize that we are talking about fractals here. Fractal patterns become visible by ever repeating geometric shapes, visualized by the notorious Mandelbrot Set. Fractals literally rule everything around us. We can see them in the shape of broccoli heads, ice crystals, lightning bolts, neural networks and even in the arrangement of galaxies across the observable universe. Fractals enable the world, from small to big. In a similar fashion, paying attention to detail helps us to get the big things right. Based on studies in psychology and behavioural economics, we know that people commonly neglect details due to several cognitive biases and environmental factors. Humans often prefer to focus on rather broader patterns instead of specific details, because they perceive those details to only have minimal impact on overall outcomes. I understand how people arrive at those conclusions, because an increasingly complex world causes decision fatigue simply based on ever higher cognitive loads. Humans need to utilize shortcuts in order to navigate the world. But the decision as to what constitutes a valid and rather sustainably useful shortcut, separates those who tend to succeed in life, from those who tend to fail. I am not here to proclaim what is right or wrong. I am here to point out that the best roof is no use without a solid foundation. I am here to point out that parenting advice from people who have no children is rather useless. I am here to point out that, unsurprisingly, there is a causal relationship between cause and effect. One comes before the other. Big builds upon small. If anyone out there is still thinking that MEV counts as revenue, then we shouldn't be surprised to wake up one day, finding ourselves surrounded by short term games within an extractive player versus player environment. Call it Crime Chain. Blockchains evolve from, and into fractals too. L1s for instance are like single cells, or single servers. They are integrated and optimized for performance within their own range of control. But they can only get so big or so useful on their own. Eventually, they will crumble under their own weight. The universe consists of fractals of fractals. And so it should not come as a surprise that the digital realm consists of networks of networks. Which is then also why the rollup centric roadmap, as pursued by Ethereum, will eventually prove to be the right approach for the cryptographically enabled world economy.

Every so often we talk about the concept of an action space within the context of mechanism design. Let us explore what an action space is and why it is important in order to understand complex systems. An action space simply defines one or many actions that are possible to execute within any given environment. The physical reality that humans live in is constraint by the action space of physics. Colloquially we are then referring to the laws of physics. We can only do what we are physically able to execute. Therefore we cannot move faster than the speed of light, and our bodies are subject to gravity, wherever we go. Above we mentioned the laws of physics, which is a bit of a misnomer, because laws and rules typically have the purpose of artificially constraining the available action space within society. And in the case of physics, those laws are in meaning exactly equal to the action space defined by our physical reality. To our knowledge, the laws of physics are not artificially constraining the physical action space. In this case, the laws of physics rather accurately describe what is possible and what isn't. Note that we are only referring to the proven facts of what we know to be true when we talk about physics. For the sake of this argument, let us ignore all the wild theories of unproven multidimensional universes, whether they have strings attached or not. The point I would like to make here is the differences between rule sets and action spaces as they play out everywhere around us all the time. The difference that interests us here is the delta between what is allowed and what is possible. Those two notions are not the same. And mechanism designers usually learn this the hard way by getting their DeFi protocols exploited for millions upon millions of United States Dollars. As a side note, and as reported by DeFi Llama, in all of 2024 alone, we registered about 1.25 billion USD in losses due onchain related hacks and incidents. Most of these losses are typically incurred due to insufficient protocol logic and infrastructure related failures. So it turns out that we can put a number on the difference between the allowed rule set and the possible action space. And that number for all of 2024 is in fact one and a quarter billion US Dollars. The rules of a smart contract and its underlying blockchain network try to enforce how you as a user are supposed to behave. If the associated mechanism design is strong, then this rule set encoded in smart contracts will be very good at forcing some desired user behaviour. But if the associated mechanism design is flawed, then the encoded rule set allows for a gap that bleeds into the onchain action space, effectively allowing for unintended behaviour to be exercised, which then may result in financial losses for the underlying protocol and its users. It is like the difference between combat sports and human conflict. One supersedes the other in entropy. Training how to behave during a knife fight may have not much to do with the reality of a real knife fight. Because what most combat sports are actually teaching you is not so much how to win a fight, but rather how not to behave. The later almost always implies that not to fight is the real win. Taking it even further, knowing how to prevent a likely fight from happening in the first place, and knowing how to not get caught up in situations that may culminate in a real fight eventually, those kinds of strategic foresight are what separates adults from children. Related here is then also the importance of mechanism design. Because understanding complex systems is usually not to create or become the apex of its kind, but simply how to survive and prevent disaster and certain death. All fancy ideas at the speed of light and all preparedness for knife fighting situations typically go out the window at first contact with reality, once somebody comes along with a bigger stick. Mechanism design rules everything around us, because all that matters in this world, is what you can and cannot do.

28 billion USD is the number of the week, because this is the amount of onchain trading volume generated on Solana over the past 7 days. Why bother? I wanted to highlight the amount of trading volume here this week, because the typical comparison of trading volume is usually made between two distinct chains. It is always Solana vs Base, Ethereum vs Solana, Base vs Arbitrum etc. But what we have not yet realized as an industry is the fact that chain specific metrics may not be too relevant anymore in a world in which we build networks of networks. Solana generated 28 billion USD in onchain trading volume over a 7 day period as a monolithic system. But what also generated the exact same amount of trading volume, and that is the funny part about it, is the entire Ethereum ecosystem measured by L1 and all of its L2s. The takeaway here is that the onchain trading volume between the Solana and the Ethereum ecosystem is actually equal, which most dashboards and hot takes on Crypto Twitter do not acknowledge just yet. I believe that there will come a time when blockchain infrastructure and onchain apps have matured to the point where normal everyday users cannot tell the difference anymore between using one chain over the other, because then everything will just work. In that brave new world, it won't matter which configuration of AWS instances served a user transaction. What will rather matter in this brave new world will be the onchain equivalent metrics of hours watched online versus cable. Maybe try to pay a bit more attention to detail, as to getting the big things right one day.