Hi!

Welcome to Web3 Bits, where I share a few of the most interesting web3 bits for you to consumer over the weekend.

Markets are selling off after a loooong time with dampened volatility. Hope you all have your playbooks ready and stick to your game plan and not emotions 😉

Seems like most of crypto has been arguing about rollup approaches, infrastructure and MEV recently. This post by 0xIdan does a good job covering it, which is great because I'll be focusing on more tokenomics and governance related items below!

Writings

• How can creators, artists and fans use tokens to grow their fans/users/business? I'm diving into this in a four part series, breaking this down. Here's parts 1 & 2.
• Join me in Telegram for Web3 Weekend stream of consciousness - a private broadcast channel where I keep notes of thoughts/insights throughout the week.
• ​Practical takeaways from the recent draft bill for crypto market structure

Interesting things

• NounsDAO introduces a new forking + rage quit mechanism. It seems like ages since I've seen innovation in governance, which is why I was so excited to see this (h/t to 0xJustice.eth for telling me about this). NounsDAO has set a fork mechanism where if > 20% opt to fork, the dao forks and creates a new one with a novel mechanism: rage quitting. In DAO terms this lets a nouns holder quit the dao and take their proportional stake of the treasury with them. The goal is to let minority, capital poor, players have an out that, in theory, serves as a balance to the capital rich members of the dao who control it today.
  This is an interesting mechanism. I've been working on a similar vanilla mechanism for DAOs that are built on tokens (not NFTs), and found that this makes governance complex in different ways. It's important to remember that companies and joint communities don't run this way - where you can get up and leave + take your share.
• New kinds of bonding curves, MEV, AMM design, IL LP research (now called LVR) due to launches from Uniswap, Cow Swap and Carbon finance.
• Restaking is now fully front and center with the launch of EigenLayer and will change tokenomics for a lot of protocols. Recommend taking a look at this thread with active research areas.
• EthCC takeaways: after spending a lovely week in Paris seems clear that:
  1. Everyone is building infrastructure and not apps that use that infrastructure. Between the debates on MEV, modular vs monolithic chains, decentralized sequencers and restaking, literally everyone I met was building or funding something related to infrastructure.
  2. Everyone in web3 is looking for users. Not surprising, given that everyone has built infrastructure and there's only so much that infrastructure can buy from other infrastructure projects.
  3. Despite tons of smart people (really. Tons.) it looks like next cycle we're going to make a lot of the same mistakes regarding stupid tokenomics. Please - let's not.

Resources

• ​Algorithmic game theory and mechanism design: excellent in depth course on the algorithms of mechanism design.
• Talks from CryptoEcon day at EthCC. Highly recommend Gabe Pohl-Zaretsky's talk on liquidity mining incentives.

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Thoughts always welcome.