Almost all people around you are lying almost all the time. And the more power they have the more they have to lie to you. Because if they wouldn't lie to you, they couldn't maintain their power. - xh3b4sd

Somebody said the other day that religion was once so very important for basically everyone alive, and that religion as a concept has lost so much of its influence today. Let's get just one thing out of the way first. More than 80% of the world's population is still estimated to be religious in one form or another. That is the vast majority of everyone alive today. A thousand years ago that nunmber was roughly 100%. Looking at the trends all around the world, it is true that more and more people, on a relative basis, experience a spiritual awakening, away from some of those rather ancient traditions. And yet, everybody keeps holding on to their very own spirituality, which is frankly quite beautiful and certainly very important for every human to purely exist in the first place. What I would like to emphasize about religion is the difference between institutions and belief. Institutions are basically power structures like any other committee. Governments, Churches and Banks are prime examples of institutions as we know them today. And since institutions are basically power structures, they are subject to corruption and thus full of MEV. There is always a little bit more value to extract if only you bend the rules a little more. Give it some time and institutions become extractive, a net negative for society. Belief on the other hand is something uniquely individual that every person experiences and exercices for themselves, whether they are aware of it or not. That doesn't mean every belief is net positive for society. It simply means that the only corruption of belief has to come from within. Within yourself that is. Others may lead you down the wrong path maliciously, but it is on your own competence to believe in their flaws, and it is on you to corrupt your own belief and your own self in the process. Now, why is religion as a topic so interesting and relevant for us here in the Powerlaw memo? Why was religion so very important in the old days? And why are those ancient institutions still very powerful all around the world? Because religion, like money, is coordination technology. The best way to survive through the bleak midwinter has always been to stick together. To be united as a group that cares and protects one another. To that end, humans had to believe in something. Something uniting. Something, that one too often, took it to extreme ends. And to those ends, power structures brought us power struggles. The struggles here are solely endured in order to maintain said power. A form of order that benefits me more than you. I read a quote the other day that said something to the extend of this. The essential art of civilization is maintenance. What that essentially means is that there will always be an inherent struggle to stay alive. You may choose the struggle, but in one form or another, this very fight must be fought, or else the natural order of disintegration may take a hold of you. And once it applies its firm grip around your neck, you are never going to come back from it. The coordination technologies available to us today have come a long way. Throughout the millennia we have learned and adapted. Come war, come death, come famine. And so we came right up to this point, at which the coordination technologies of today are far superior in some very important provable regards. We are building systems today that allow us to prove objective truth on top of blockchain networks. We can unmistakably differentiate between individual property rights, no Church required. We know exactly how much money you may own onchain, to which I do not have any legitimate claim. We are building systems that seemingly maintain themselves, given the appropriate incentives. And in that way, mechanism design enabled us to build systems that are antifragile, because the more people engage in the inherent struggle of maintaining those blockchain networks, those very systems become ever more lindy. This is to the unsung heroes of our time, the mechanism designers. Believe in something, Retardio.

An extremely important legal development took place this past week in the United States. For the first time a court ruling has decided that the Tornado Cash smart contracts on Ethereum are not considered "property", which means that immutable smart contracts themselves are not subject to legal liability claims. The effects of such a ruling are going to be profoundly consequential, because it fosters parts of Ethereum's ethos saying "Code is Law". A piece of software that cannot be changed and is not owned by anyone is therefore deemed a public good, meaning anyone may use it within the bounds of the law, without that public good being subject to the law itself. This is relevant because the Treasury’s Office of Foreign Assets Control sanctioned several smart contract addresses in a way that made it simply illegal for those smart contracts to be used. The Fifth Circuit Court of Appeals has now ruled that the Treasury's Office has overstepped their authority by claiming certain smart contracts to be illegal. The takeaway for us is basically that writing open source code is not a crime, and neither is deploying immutable smart contracts that are not owned by anyone. The legal difference here lies between freedom of speech and what is being called "conduct". Humans are by law free to express themselves. Conducting anything illegal though, like being involved in money laundering, may still be subject to prosecution. Last week's ruling is an incredibly important milestone for frankly all of mankind, because the legal acknowledgement of trustless code execution will be one of the most fundamental corner stones that all future societies are going to be build upon. How much I love the fresh smell of winning.

Ethereum is an N of 1. That means Ethereum is very unique across multiple dimensions, and it's not even close. One of the many things that set Ethereum apart is the continued research and development happening around MEV. Not only did the Ethereum community invent this very field of study, but also does the Ethereum community continue to lead the way in understanding and mastering the externalities of MEV. This is not to say that everything is perfect. Far from it! What we have to acknowledge though is that Ethereum is actively doing something about MEV, while other ecosystems, most famously Solana, claim MEV to be a source of revenue and indicator of success for blockchain networks. Well, that is like saying cocaine is such a wonderful thing for self esteem. The thing is. It won't be for long. With all of that background, I simply want to say that BuilderNet was announced to be open for business this past week, which is a coordination attempt to decentralize Ethereum's block building process in order to ensure and increase the network's credible neutrality across all layers of the stack. Under the hood, BuilderNet utilizes Trusted Execution Environments, which are special purpose computer chips allowing for the verifiable execution of arbitrary programs. On top of that, execution is confidential. Those privacy and integrity properties allow for the creation of block-building marketplaces, that ultimately make for more robust systems that are those very decentralized and credibly neutral blockchain networks. In one word. Ethereum.

Our number for the week is 5%, because blobs and calldata do now account for about 5% of ETH burn on a weekly basis. That is important because the economic activity on L2 rollups is accelerating, and in the process, burning more ETH. On another dimension, 5% is also the marketshare that DyDx has today in Perps Trading onchain. This is interesting for the combination of the following two reasons. First, DyDx was once a dApp on an L2 rollup and eventually made the decision to migrate away from Ethereum in order to run its own Cosmos app chain. And second, DyDx's Perps Trading market share was far greater than 50% around the time of its migration. There is probably not one single reason for this dramatic loss of relative relevance that DyDx has now experienced as an onchain trading platform. In any event, it gets to show that network effects and distribution are still the largest powerlaw like forces that matter for any kind of economic activity. And it gets to show that leaving the Ethereum ecosystem might be the final nail in the coffin for anyone thinking that the grass is so much greener on the other side of the fence. Because chances are, it isn't. In other news, it looks like the ETH ETFs have had net inflows north of 450 million USD this past week, which is now also reflected in quite some bullish ETH price action. And I say we are going so much higher!