Where there are humans there are power structures. - xh3b4sd

Across human history, everyone has the same correct insight, but many draw the wrong conclusions, often in the wildest possible ways. The correct insight is the following. Everything in life is a power struggle. That statement is about energy, and energy can only be conserved. Throughout its conservation, energy does always materialize in some way or another. The very state transitions of energy as it is being conserved, describe the very power struggles that we are referring to here. That is then also why there will always be MEV, whatever shape it takes. The role of mechanism designers is to define systems that prevent unhealthy capture and dominance. Because what can be captured, will be captured. And since everything in life unfolds on a distribution, there will always be some kind of capture and dominance, regardless how well it may be distributed. In a way, capture can be a tool. You may really want to have a set of super powerful actors that are putting their forces to good use within the confines of your system. Harnessing power for the greater good is just as desirable as harvesting the crops to feed the people. The challenge for people is then maybe to create an experience that is as smooth as possible for as many people as possible, so that no one actor may force their unreasonable will upon another. Where there is energy, there are power structures, and with power structures there come the struggles. This is all very natural, very simple and very logical. And there is nothing wrong with that. We have to take the world for what it is, regardless of what we want it to be. Even further, the state of the world does not automatically imply that we can't try to make it better. The world around us is a malleable place after all.

In order to understand the framing of complex systems in the spirit of mechanism design, we have to lay some ground rules. The common terminology used by us was in parts already described in past week's Powerlaw Memo, where we articulated the conceptual differences between action spaces and rule sets. As a reminder, an action space describes what is possible, whereas a rule set describes what is allowed. Rule violations may be possible if the underlying action space allows for them to happen. For instance, murder is a crime for most parts across all of civilization, but a heavy stone or a sharp knife may end a life real quick, crime or not. For the purpose of our discussion about power struggles, let us define the difference between a system and its actors. A system is defined by an action space, and free agents exercising behaviour within it. Any action space has been defined by a mechanism designer, which is not to excite the creationists amongst us too much. Actors other than the mechanism designer may try to force their own will upon other free agents. Configuring system constraints is a form of power, but modifying the available action space does not imply to give somebody power, nor to take it away. Changing the action space simply means to change the game. As an example, an apple tree's ability to grow more apples is not equal to giving you more apples. You still have to know where the apple tree grows, and you still have to be tall enough to reach for the fruit. And even further, you may not even like apples in the first place. The point here is that the idea of giving power is completely absurd, because whatever may be "given" may not be usable or may not be of any interest to the agent. So, what is there must be taken, and therefore power must be exercised. Unexercised action potential, the ability to do something, is not more than a hypothetical, until energy of your own making affects the world around you. Only what actually happens is the realization of power. Or in other words, it is not power if it is not realized.

Power is always taken. Taken by the able. And the question for mechanism designers is always how much should be up for grabs. When people say that power may be given, then what they are actually saying is that some actors may be allowed to do something within some predefined action space. But the definition of a rule does not automatically imply that anyone is actually able to behave entirely according to that rule. The history books are full of malicious kings and rulers who claimed to give power to the people, only to use the exercised rights of their citizens against them. The constitution of Stalin's Soviet Union, drafted in 1936, assured freedom of speech and all the wonderful rights that people ought to have. And we all know how that worked out for them. In that sense, a rule is not more than a glass to be filled. Filling the glass is on the actor. And if the actor has not enough water, or if the actor has a broken arm and can therefore not fill the glass, then all of the granted rights to fill it are of no use after all. In a similar fashion, when people say that power may be given, which it is absolutely not, then what they are actually saying is that some actor may be allowed to go through any of three magic doors. Said actor may even be allowed to go through all three magic doors simultaneously, because that action potential is defined by the mechanism designer. But can the actor go through all three doors at the same time? If the actor operates within our physical world, then that kind of power cannot be exercised by any of us. We can also look at it from the opposite angle. Let's make the argument that your government changed a law that now prohibits the possession of firearms. If the power to not own firearms would be literally given to you, then you could in fact never own a firearm anymore. But the world that we live in is constrained by the available action space, and not by artificial rules within some social construct. You can always own firearms if you find a way to create or receive one, law or not. And that very act of creation or purchase is then exactly that kind of realization that constitutes true power, because despite the limitations of artificial rules, it is on you to exercise your own ability within the available action space. Power is for the taking.

Linguistically, we are living in a world of distorted social reality. That concept is called linguistic relativity. Because what does it even mean to take power anyway? We are not taking power literally from the shelve in the supermarket. When we say to take power, we simply refer to the act of carrying out some behaviour. Ergo, power is doing. All of that is to say that the colloquial expressions of giving and taking power are socially influenced idioms, and they are not literal in meaning. That should also become apparent by the mere fact that power is an abstract concept, which is somehow proven by the circumstance that you cannot simply touch it. We can also look at the linguistic evolution of those two idioms. The phrase "taking power" originates from military and political conquests, in which actors seized control through force. Acting through force is exactly the definition of realizing action potential within the confines of the available action space. The phrase "giving power", originating from early legal systems, granting authority by divine right or royal delegation. Giving power is an oxymoron like the infamous deafening silence. It is rather an expression that contradicts itself. Taking power is rooted in the physical world, based on actions actually carried out. Giving power is a social construct. It is not more than a promise, like the value of a Dollar bill. And with that we tried to square the circle, to talk some blockchain once again.

For this week we picked the number 300, because according to Coingecko there are almost 300 L1 blockchains out there. How many can you name from the top of your head? Every quarter we hear from more blockchain networks being launched. I am always left wondering, how all of those L1s are going to bridge the gap between the user in the real world and their own siloed technology stack. How are all those L1 going to integrate in world full of networks of networks? So many blockchains out there command market caps of hundreds of millions of USD, but they are effectively ghost chains, because nothing is ever happening there other than providing venture capital with some lofty paper returns. The fundamental issue between L1 blockchains are their separated security contexts. If you want to move from one L1 to another L1, then you have to take third party trust assumptions for granted, which implies that your money may or may not be stolen eventually. That is why we are building L2 rollups in this space. Because the security context between an L1 and its L2s is fundamentally the same, given some solid mechanism design and proper software engineering. So every time I see another Layer 1 blockchain launch, my first question is this. Why is this not an Ethereum L2? And you know what? The answer is never good. I guess power must be for the taking after all.