Editor’s note: This article from the chain ChainNews (ID:chainnewscom), Wen wrote: Dan Zuller, Vision Hill password monetary investment agency partner, translation: James Juan, authorized reprint by Odaily daily planet.
With many projects to support intelligent public chain contract gradually on-line, the attention of the market gradually from the “magic” of technological breakthroughs, to their development of ecology, ecological value, ecological value in the ability to capture. The operation level and the economic model of the ability and project design.
The smell of public number push chain recently famous blockchain investment firm Multicoin Capital co-founder Kyle Samani to write the article, he put forward a theoretical framework to explain the Layer 1 and Layer 2 of the agreement on how to capture value.
Almost at the same time, Vision Hill partner Dan Zuller investment institutions also wrote an article on how to create intelligent contract platform should be “monetary premium” value premium, it becomes a public chain competition winner, and points out that the etheric Fang still has the advantage in these areas. Dan Zuller in the text with the “value” refers to a programmable network public chain project can support the generation of these smart contracts.
I’ve been thinking of programmable value network, especially the etheric fang. From afar, there seems to be many “competitors” to become “smart contract platform area leader winner”; in the two class market, we have a square, EOS, Tezos, Ethernet Zilliqa, Cardano and so on, not to mention the new line of Cosmos, but not on the line in a market, there are DFINITY, Coda, Near, Polkadot, Oasis, Kadena, Thunder etc..
The purpose of this article is the analysis of each block chain network relative to other merits, and is a “win” the possibility of a specific network – I even do not think that the emergence of a “winner”. In this article I will be more focused on one point: “the currency premium”.
I believe that for those who want to achieve large-scale application and success of programmable value network, which is a necessary component.
What is the “premium” currency
Here the “premium” currency, simply refers to the sensitivity and can withstand the test of time ability of information assets. That is to say, to be used in the transaction of assets, users should not worry about the future value of it, and does not mind its economic history. Anti censorship, safe, predictable and stable monetary policy, and other reasonable and sustainable value proposition, the key is to achieve social scalability.
But the social scalability is how to achieve it?
We know that monetary assets must get a lot of physical capital support, in order to make its internal value is reasonable and sustainable. But the physical capital is not appear out of thin air, it also needs social capital.
The interaction of physical capital and social capital.
Social capital, or some people say “cultural capital”, refers to the relationship between the network of people living in a particular society and work. It includes interpersonal relationship and common sense of identity, common understanding, common norms, shared values, trust, cooperation and mutual benefit.
Then, the relationship between material capital and social capital is?
Is the material capital lead to social capital or social capital lead to physical capital? The relationship between the two is or cycle?
If there is no monetary assets physical capital substantial, so a human society may not be willing to support it. However, as we have learned, can be encrypted network at first case as an early supporter of scanty idea started, but as time goes on, it will be able to attract physical capital. This is one of the most typical example is the bitcoin. This shows that social capital will initially attract capital.
However, in order to continue to expand the scale of capital needs over time to attract more social capital, and social capital in turn need to continue to attract more capital. This indicates that the relationship between social capital and physical capital is the circulation, especially in network encryption. I believe more people willing to tell the story, the more it people; more people about this argument, transmission of the higher frequency, this cycle is repeated.
How to realize the positive cycle?
Recall that the block chain creates the financial incentive mechanism. In this mechanism, community acquired catalysis, combined to provide to the center of the digital products or services, then the digital products or services, or network specific digital products or services to pay.
In general, the encryption network involves 3 main characters: developers (Builders) and workers (Supplier) and investors (demand side). The investment company Placeholder encryption with this point of view is similar, but slightly different argument, workers replaced the miners, developers changed their mouth users. One type of network participants may not more important than the other participants. On the contrary, the right combination of these roles, and coordinate their behavior towards the common goal of consistent, is necessary to create and capture value network, such as the star represents the position shown.
Investors will be injected into the physical capital to the center of the encrypted network, expect these investment capital returns in the future. Similarly, workers by non Byzantine ways to provide all kinds of service supply side to lead to the center of the encrypted network, and is expected to put into labor after the network can get rewards, or return. As a result, consistent with investors and staff motivation, and hope the tangible capital and labor into their money can provide attractive benefits in the network.
To attract and retain developers
The developer is the lifeblood of encryption network, but also the need of the development of social capital. Without the developers, the network will not be able to maintain its future security will also be questioned.
It should be clear that the developers do not directly protect their constructed encrypted network; this task is by the verifier, namely above the “workers”, the completion of the.
Each network has different security mechanisms, some of which may be safer than others, but this need to find a separate post analysis. The key is that developers need to maintain and upgrade and participate in the management of their support in social network encryption. Appropriate financial incentives are strong, but the social incentive and mutual connection can be said too strong.
If the developer because of certain from an encrypted network transfer, investors and workers will be very difficult for them to physical capital and labor allocation value. They need the material capital and social capital to create economic value, they contributed to the design of support value. Therefore, the ability to earn money online premium depends largely on the strength of the developer alliance.
If the calculation efficiency of a better user interface / user experience, based on a higher developers, or just a better community or a sense of belonging, give up a network to build another, if the early network developers did not get full complement, catch up with or exceed the level before, then, the initial network the currency premium may not with the passage of time still maintain its value. In this case, investors and workers speculative currency premium is only an illusion.
Then, the square and the ether and other programmable value competitors have what relation?
The etheric Fang is still leading
Around the square and 2 Ethernet 1.x roadmap, implementation plan and schedule, there is a lot of controversy. DeFi/ open financial fanatic issued various complaints, pointed out that there were more than 2% ETH supply is locked in intelligent MakerDAO protocol, but also be used for other ETH DeFi/ open financial (Dharma, Uniswap) application, which indicates that ETH is a global digital value reserves and reserve assets, there is bullish trend. However, it is important to remember that the ERC20 token is transferable, can be transferred to other network. Therefore, should continue to focus on staff development activities.
According to the Electric Capital March 2019 development report, in the past year, the etheric Fang showed extremely strong and sustained growth in active developers, including bitcoin, the most valuable public projects, it is the core and the overall number of developers. Therefore, although the development of Ethernet network route Fang choppy, uncertainty, and execution risk can be very high, but the developer activity continues to increase, which indicates that it has a very broad base of social capital.
If these trends remain unchanged, in time, in physical capital attracted more and more, the etheric Fang may get sustainable and reasonable premium currency.
However, this is not to say that the etheric Fang faces too many challenges in the future will not. The execution risk inherent in ETH 2 roadmap is ignored, in addition, to attract more physical capital, you need to have a predictable and stable monetary policy and anti censorship resistance. From the network of social capital in the current situation, the trend seems to be moving in the right direction.
We should also remind ourselves, DFINITY, Near, Polkadot and other private programmable value network has not been on the line. If these items are “better”, will lead to the development of staff leave the etheric Fang? Other programmable value network can also produce equal or greater currency premium? Now it seems that the future is not likely to happen, however, could not say impossible.
Another thing to remember is that we should not ignore the point: with respect to the upcoming on-line programmable value network, Ethernet Fang has great regulatory advantage, because it is not regarded as securities regulators.
Nevertheless, when these projects into the grid and fully operational, should continue to pay attention to the etheric Fang developer activity; so far, because the main competition is limited to a certain extent, these developers in considering where to build, may not have too many attractive options. The real test is yet to come.
However, as mentioned earlier, the etheric square community relationships, common sense of identity, common understanding, common norms, shared values, trust, cooperation and mutual benefit are “sticky” factors on the likelihood of migration will bring no small resistance. In other words, I have told the story.
Disclosure: the author holds ETH and BTC, Vision Hill and some other assets through the indirect holding.