Many mushrooms form partnerships with roots of living trees, and the resulting fungus-root is called a mycorrhiza. The mushroom's mycelium weaves itself around the root and actually alters the shape of the root. - Ministry of Forests
The collapse of FTX threw my week off. Another case of a centralized entity crashing and burning. To me, this is a reminder of the need to decentralize. DeFi is fine. Ethereum is fine. Music nfts are fine. Just the centralized, traditional, entities having issues. 🏦
Mushrooms and trees.
Walking in the forest, hug a tree, take a step back & observe. Look at how much life one tree supports. Grasses, colonies of insects, bird’s nests, and, if you’re lucky, you might even spot mushrooms poking out of the group. The mushroom absorbs water and minerals for the tree, but in return the tree gives the mushroom nutrients, too. They have a symbiotic relationship. Often, what is simple above ground, is much more interconnected & complex beneath the surface.
The tree is FTX. It grew really fast, provided many nutrients to our ecosystem, and encouraged smaller fungi to build relationships across the web3 ecosystem. However, unlike the tree in nature, FTX was not providing us healthy nutrients. Instead FTX was pumping artificial FTT tokens into the ecosystem. This was fine during the bull market, when the sun shines bright and the soil is fertile. The challenge came when the ecosystem was struggling, and needed to lean on the strength of the tree. When the mushrooms tried to rely on the nutrients from the tree of FTX, all they received was an empty FTT token. This is how one tree, and its ecosystem came crashing down. While I have empathy for those impacted, we can find paths to support ourselves, by
self-custody - taking control of our private keys
decentralization - replacing central points of failure with community ownership
transparency - building in public
Self Custody
When FTX went under, they stopped withdrawals. This means your money, money you trusted to FTX, was no longer accessible. Need to buy food with it? too bad. Need to pay rent? sorry. Don’t like SBF and want to move to coinbase? tough luck. Self-custody fixes this.
When Russia invaded Ukraine, Russians were cut off from bank access, exchanges & other services. Self-custody fixes this.
If you are a digital nomad living in Argentina, your US bank account might flag your travels, preventing you from having money abroad. Self-custody fixes this.
In the wood wide web, self-custody is the default. A mushroom can’t store excess nutrients in a fungi-bank. All nutrients are stored in the mushroom, or, within reach of its roots. Humans get scared of self-custody. Our pessimism kicks in:
what if someone robs me?
what if I forget where I put it?
these other guys seem trustworthy, and they tell me they can keep my important stuff safe…
Until they can’t. Custodial institutions like banks, centralized exchanges, and marketplaces seem like a safe place to store assets. But it’s not sustainable. Humans make mistakes. Centralized entities create complex organizations with double-accounting and security flaws. They’re not just code. They’re layers of chicken-scribble bureaucracy, illegible terms of service, and, of course, emotionally-driven humans to run it all. Keeping your assets in self-custody and in DeFi keeps your stuff within reach of your roots.
Are you more trustworthy to preserve the safety of your assets? Maybe not, maybe you still don’t feel ready to buy a hardware wallet, keep your seed phrase safe, and take full custody. But when is a better time to start? Start small. Buy a hardware wallet. Add a tiny amount of your assets, as you build up the knowledge and confidence to stand on your own.
decentralization
Mint Songs failed when the 2 equity holders wrote a tweet saying “we’ve started the process of winding down”. FTX failed when SBF filed for bankrupcy. Failure is not falling down, it’s refusing to get back up.
https://twitter.com/mintsongs/status/1570127200925384706?s=20&t=Zi0HvFyH55rjVNzcdqFFMQ
Decentralized networks don’t die. They might go into hibernation for awhile, but decentralized networks are antifragile: they get stronger with increased stress. Linux, Ethereum, Uniswap, etc. These are decentralized systems with no single-point of failure. When one tree feels stress, it communicates, using its network of roots, to surrounding trees, allowing other trees to be aware, respond, and support the network.
If mint songs was decentralized, I’d still be building on it. If the codebase was open & keys were owned by the community instead of Dwight / Garrett, it would still be running today. Nobody in the community wanted mint songs to die. I loved mint songs. We helped create more music nfts than anyone out there. But, when the bear market hit, the leaders got scared, laid off the entire team, and chose to die quietly instead of turning over the keys to the community as they’s promised.
Lesson Learned: do not trust humans, decentralize ownership.
Build in Public
“Building in public” is an important facet of web3. When we open-source our design process, we invite the community to scrutinize our decisions and ask questions. More eyes lead to better feedback, increased transparency, decreased reliance on any one, centralized, entity, and reinforces the decentralized network of trustlessness.
https://twitter.com/losingmyego/status/1582762866918424576?s=20&t=Zi0HvFyH55rjVNzcdqFFMQ
It’s a constant battle I have with some of my clients. Businesses have a need to make money. How can we make money if all our code is public? How can we find investors if all our proprietary technology is given away for free? How can we have a competitive edge if we are always sharing our next move, publicly, with competitors?
The biggest example I have is Ethereum. Coming up to the merge from proof-of-work to proof-of-stake, I started going to the weekly All Core Dev calls. You show up to a YouTube livestream and hear everything the Ethereum devs are working on. All Ethereum Imporovement Proposals are stored publicly on Github. You can see the live data for the Ethereum network in realtime on ultrasound money. Every part of the Ethereum network is being built in public for everyone to see. While it is only one anecdote, I believe this is how the most successful organizations will be built, moving forward, with 100% transparency & community involvement.
Final thoughts
One tree does not determine the health of the ecosystem. FTX is an example of how to not make a light bulb. I’m grateful for moments like these so I have an easy answer when people ask “why should I keep custody of my own assets?”. Luckily, I was not negatively impacted by FTX. If you were, I’m sorry. Things might looks dark now. They will get better. Lean on your family, friends & community if you need support. We are here for you. Ethereum is stronger than ever. viva la musica.
Some questions I would like to chat through
Is it better to start maximally centralized and increase decentralization over time?
Or, start maximally decentralized and add centralization over time?
How important is it to build in public?
In which cases is it unhealthy to build in public?
Are these examples of VC funding skewing incentives?
How can we make it easier for normies to practice self-custody?
