Here are my notes from Week 4 of a16z Crypto's CSX. This week, which focused on research and engineering, included talks and breakout sessions on incentives, ZK, layer 2s, and security testing. It was one of my favorites and the most impactful week so far!

Talk(s): Tim Roughgarden And The Research Team

• The a16z Crypto research team

  • Releases major papers multiple times a year

  • Collaborates with a16z Crypto portCos

    • Help them succeed

      • office hours - what are the hurdles?

      • another set of eyes on a design

    • Sometimes deeply influences product/protocol

  • Helping portCos in an immature field is a competitive advantage — “18mo advanced notice on important papers to write by talking to founders.”

• Scott Komiers - Farcaster / Twitter

  • Excited about consumer crypto

  • Market design

    • economics - how does the world work

    • market design - how should the world work

  • Design incentives in the system to shift or change behavior

  • Dropping tokens

    • Think really hard about the users that are most valuable and the ones that are going to build with you — “Who are going to Invest to grow the ecosystem?“ - Scott

• You cant black-box the blockchain

  • computer in the sky, anyone can use and share

• The source of competitive advantage has changed

  • Web2

    • Platform lock-in

      • Hold everything in this enclosure

      • Become extractive over time (ads, charge more)

  • Web3

    • Break out of it

      • Web3 breaks a lot of it

      • Data to be individually owned

• Five forces of web3

  • The source gets stronger when you have interoperability

  • Value capture in traditional form is more difficult

  • Network effect forms around Protocol and digital assets

  • Embeddedness becomes a source of competitive advantage

    • difficult for anyone to disintermediate

    • value capture = small fees

  • Community cohesion

    • Want to engage in your ecosystem

    • Shared ownership is a powerful loop

• On Farcaster

  • Farcaster gives users a very powerful form of ownership

  • Users own their identity

    • They can use it and any value built up across any client

    • This is absent in web2

  • Places limits on how extractive any one client can be

    • Users can switch to Supercast

    • Users have more power

  • Farcaster did very well curating the early supply of users

• Reason to do additional work for creators

  • They have to do a lot of work to invest

  • They have a higher activation cost

  • Early platforms have to subsidize creators

• On cryptography

  • There’s always something exciting in cryptography

    • “Cryptography is resolving this physical paradox in the universe — kinda mind-blowing cryptography thinks about this” - Valeria Nikolaenko

  • 10 years is the median time for cryptography papers to become a reality

    • Rely on hardware to become practical

• Snarks

  • Close to crossing the threshold to where they’re much more useful

  • Crossing a performance and usability threshold

• More cryptography is better

  • “Richer the toolkit, the better. The more tools we have, the more free we are.” - Valeria

  • Our privacy toolkit is very poor

    • Data is leaked all the time

    • MPC you can shift it around

• How to nerd swipe cryptographers

  • Ask, “when will quantum computers arrive”

    • Very many decades away from being here — Very far from a cryptographically relevant quantum computer

    • Joke in cryptography: “Quantum computers are always ten years away”

    • Progress is very slow now

      • Once scaleable tech, it can grow exponentially fast

      • Maybe it will take another military conflict to motivate people to work on it - the US and China being a little afraid of each other helps

      • Thinking that problems are simple is good because it will attract more people to work on them

Session: Incentives and Market Design

• Breaking down a system (Titles.xyz examples)

  • What are the …

  • Components

  • Flows

  • Objectives with incentives

  • Ways we acquire users

  • Puzzles thinking over

• Note: Titles is cool, and Soren and Parker are great ✨

  

• Marquee users

  • Good for pulling in other users and creators

    • I.E., if Optimism is using, another chain will want to

  • At scale, marquee users get a lot from the platform

  • Have a different strategy for recruiting different types of users

• On fees

  • Easier to wrap a transaction fee when a transaction is already happening

  • Airbnb adds value at the time of the transaction (fee model) vs. the moment of access (subscription model)

  • Fees on spam

    • Minimal fee for anti-spam

    • Can kick back the first time there's a mint

    • Pay to create a model

Links that came up

• Fiids

  • Fiids is like a Hootsuite or Tweetdeck for Farcaster and web3 social. IMO, it’s the most powerful desktop client. DM Tiago for an invite.

• Farcon

  • Farcon, a multi-day conference in Venice Beach, CA, is like Woodstock for Farcaster. The event is sold out, but you can find a list of side events here, including Far(away)Con, our London satellite event.

• Spindl

  • Sindl is a suite of attribution products for Web3 companies. Its founder, Antonio García Martínez, writes an incredible blog on Web3 attribution and growth (h/t Eddy Lazzarin).

• Story Protocol

  • Story Protocol is building a protocol and universal ledger for IP. They have a bold and beautiful vision outlined here (h/t Jason Rosenthal).

• Gurley on ILTB

  • There’s a great new Invest Like the Best podcast with Bill Gurley and Michael Mauboussin (h/t maks).

Launcher Labs Progress

• Reboard and follow boards - Farcaster / Twitter

  

• Shoes of CSX - Shoes of CSX is a work-in-progress Frameboard highlighting the great shoes and founders in a16z Crypto’s CSX.

  

• We made great progress on the protocol and onchain side of Frameboard — excited to share more soon 🛹⛓