By definition, the thing that nobody prepares for, is the very thing that hurts us the most. - xh3b4sd

This past week ADA got finally pushed out of the top 10 crypto assets by market cap. The new entrant taking ADA's place is TON. Recollecting some background information here. ADA is the native asset on Cardano. TON is the native asset on The Open Network. Both are L1 blockchain networks. Cardano was founded by Charles Hoskinson, who was also a co-founder of Ethereum. TON was founded by Nikolai Durov, who was also the founder of Telegram. The reason why I am mentioning all of this, is because Cardano never amounted to anything, despite of uninformed retail participants continuing to bet on it. We say in the short term the market is a voting machine, and in the long term a weighing machine. While many keep voting, the market does now finally start to weigh Cardano relative to other forms of economic activity in the crypto industry. Those kinds of reratings are absolutely necessary for the sake of our industry. We are still seeing the most useless grifts being funded for years and years on end. And it is about time that the actually useful projects get clearly separated from the rest. To be fair, it is hard to tell the good from the bad. The technologies are complex. The numbers are confusing, and we don't always know what to really pay attention to. One rule of thumb that I would like to give you on the way, dear reader, is to look out for publicly verifiable economic activity. And with that, try to get an idea about how sustainable this economic activity in front of you really is. TRON and BNB have quite the economic activity, but it is not fully clear to me who is running and thus controlling the network. SOL and BTC have quite the economic activity, but it is not fully clear to me how either network can operate sustainably for the decades to come, given that their current security budgets are broken. What we do know is that ETH does already have a sustainable security budget today. What we do know is that ETH nodes are run by tens of thousands of individuals and organizations. What we do know is that ETH secures the second highest amount of crypto economic activity in the entire world. And what we do know already today is that ETH is the collateral underwriting all of the cutting edge onchain innovations that this space can possibly muster. Some have whispered their fears that ETH could be the next XRP. Nothing could be further from the truth. And I am underwriting this very conviction again with this week's Powerlaw memo.

We cannot fully protect ourselves from black swan events. That is impossible by the very definition of what black swans are. Black swan events are those events that are critically impactful to the downside and happen by surprise. The element of surprise is paradoxically the fateful key component here. What wasn't anticipated, took us down. Our job in general is to anticipate and protect against as many scenarios as possible. I am mentioning this because we heard politically motivated allegations from the US, that Russia is circumventing sanctions by using Tether for financial transactions. Whether this is true or not, the important bit here is the idea of US regulators eventually finding more reasons to justify going after Tether in more creative ways. As to why the United States would attack Tether in any meaningful capacity we can only speculate, but that is exactly part of protecting against all eventualities. One conspiracy we could utter would be the fact that Tether and therefore USDT is not a purely US controlled export. And one way to change that fact would be to declare Circle's USDC king in stablecoin land, while trying to cripple Tether's USDT. We are wandering the shadows of financial warfare, dear reader. Now, how could the US government possibly tip the scales between stablecoin competitors? As a reminder, Tether is the largest stablecoin issuer in the world and a lot of crypto trading is denominated in and collateralized by USDT. And as we can see in Tether's own transparency reports, Tether is one of the largest holders of US Treasury Bills, with an allocation of over 70 billion USD backing its stablecoin. Treasury Bills are financial assets that the US government ultimately controls. And with that control comes the power to allow or prevent certain market participants the access to said financial assets. In an escalated war scenario between geopolitical superpowers it does not sound too far fetched to me that the Treasury Bills owned by Tether get either frozen or seized. Even without seizure, simply freezing Tether's Treasury Bills, and be it only temporarily, would be enough to send all of our industry on a pretty wild rollercoaster. The Tether Truthers would be ecstatic.

Just this past week Eigenlayer and EigenDA launched. Checking the numbers, there are over 4 million ETH restaked in Eigenlayer, which is roughly 15 billion USD of economic value. I am super excited to see how this ecosystem will evolve over the coming quarters. And another number stands out to me. For quite a while now the ratios between the ETH / BTC pair and the SOL / ETH pair are both within range of each other at around 0.05. I find it so funny to think that the relative distance of those asset valuations are actually equal. I find that so interesting because I cannot explain why that would possibly the case long term. And so for now I keep feeling fooled by randomness. Study powerlaw dynamics.

At last, I would like to invite anyone of my readers to reach out, if there are any questions or ideas for collaboration. I want to write about your startup, strategic execution and elegant mental models. My brand archetypes are sage, outlaw, magician and creator. If you would like me on your cap table as an angel investor, then feel free to send your pitch my way. If you would like my feedback or engage in an interesting conversation, then I am happy to chat or have a nice dinner over some sweet red wine. If you are a writer yourself, then I would love to talk about the art of writing and maybe get your feedback on my writings here. If you think we should work on something cool together, then please reach out and let's be friends.

By definition, the thing that nobody prepares for, is the very thing that hurts us the most. - xh3b4sd

This past week ADA got finally pushed out of the top 10 crypto assets by market cap. The new entrant taking ADA's place is TON. Recollecting some background information here. ADA is the native asset on Cardano. TON is the native asset on The Open Network. Both are L1 blockchain networks. Cardano was founded by Charles Hoskinson, who was also a co-founder of Ethereum. TON was founded by Nikolai Durov, who was also the founder of Telegram. The reason why I am mentioning all of this, is because Cardano never amounted to anything, despite of uninformed retail participants continuing to bet on it. We say in the short term the market is a voting machine, and in the long term a weighing machine. While many keep voting, the market does now finally start to weigh Cardano relative to other forms of economic activity in the crypto industry. Those kinds of reratings are absolutely necessary for the sake of our industry. We are still seeing the most useless grifts being funded for years and years on end. And it is about time that the actually useful projects get clearly separated from the rest. To be fair, it is hard to tell the good from the bad. The technologies are complex. The numbers are confusing, and we don't always know what to really pay attention to. One rule of thumb that I would like to give you on the way, dear reader, is to look out for publicly verifiable economic activity. And with that, try to get an idea about how sustainable this economic activity in front of you really is. TRON and BNB have quite the economic activity, but it is not fully clear to me who is running and thus controlling the network. SOL and BTC have quite the economic activity, but it is not fully clear to me how either network can operate sustainably for the decades to come, given that their current security budgets are broken. What we do know is that ETH does already have a sustainable security budget today. What we do know is that ETH nodes are run by tens of thousands of individuals and organizations. What we do know is that ETH secures the second highest amount of crypto economic activity in the entire world. And what we do know already today is that ETH is the collateral underwriting all of the cutting edge onchain innovations that this space can possibly muster. Some have whispered their fears that ETH could be the next XRP. Nothing could be further from the truth. And I am underwriting this very conviction again with this week's Powerlaw memo.

We cannot fully protect ourselves from black swan events. That is impossible by the very definition of what black swans are. Black swan events are those events that are critically impactful to the downside and happen by surprise. The element of surprise is paradoxically the fateful key component here. What wasn't anticipated, took us down. Our job in general is to anticipate and protect against as many scenarios as possible. I am mentioning this because we heard politically motivated allegations from the US, that Russia is circumventing sanctions by using Tether for financial transactions. Whether this is true or not, the important bit here is the idea of US regulators eventually finding more reasons to justify going after Tether in more creative ways. As to why the United States would attack Tether in any meaningful capacity we can only speculate, but that is exactly part of protecting against all eventualities. One conspiracy we could utter would be the fact that Tether and therefore USDT is not a purely US controlled export. And one way to change that fact would be to declare Circle's USDC king in stablecoin land, while trying to cripple Tether's USDT. We are wandering the shadows of financial warfare, dear reader. Now, how could the US government possibly tip the scales between stablecoin competitors? As a reminder, Tether is the largest stablecoin issuer in the world and a lot of crypto trading is denominated in and collateralized by USDT. And as we can see in Tether's own transparency reports, Tether is one of the largest holders of US Treasury Bills, with an allocation of over 70 billion USD backing its stablecoin. Treasury Bills are financial assets that the US government ultimately controls. And with that control comes the power to allow or prevent certain market participants the access to said financial assets. In an escalated war scenario between geopolitical superpowers it does not sound too far fetched to me that the Treasury Bills owned by Tether get either frozen or seized. Even without seizure, simply freezing Tether's Treasury Bills, and be it only temporarily, would be enough to send all of our industry on a pretty wild rollercoaster. The Tether Truthers would be ecstatic.

Just this past week Eigenlayer and EigenDA launched. Checking the numbers, there are over 4 million ETH restaked in Eigenlayer, which is roughly 15 billion USD of economic value. I am super excited to see how this ecosystem will evolve over the coming quarters. And another number stands out to me. For quite a while now the ratios between the ETH / BTC pair and the SOL / ETH pair are both within range of each other at around 0.05. I find it so funny to think that the relative distance of those asset valuations are actually equal. I find that so interesting because I cannot explain why that would possibly the case long term. And so for now I keep feeling fooled by randomness. Study powerlaw dynamics.

At last, I would like to invite anyone of my readers to reach out, if there are any questions or ideas for collaboration. I want to write about your startup, strategic execution and elegant mental models. My brand archetypes are sage, outlaw, magician and creator. If you would like me on your cap table as an angel investor, then feel free to send your pitch my way. If you would like my feedback or engage in an interesting conversation, then I am happy to chat or have a nice dinner over some sweet red wine. If you are a writer yourself, then I would love to talk about the art of writing and maybe get your feedback on my writings here. If you think we should work on something cool together, then please reach out and let's be friends.