Today is day 2️⃣3️⃣ of my 30 day challenge - down to the last week ⏳
My Banff trip is over and I just got into Seattle this morning. I made the mistake of thinking I could sleep at the Calgary airport for my 6 am flight and that turned out to be a complete L on my part 😂 Check out my Whoop sleep score:
Anyways! Luckily I'm not trying to be like this alien and can afford one night of poor sleep.
In case you missed it, yesterday I wrote up a 2000 word train of thought on how I'm thinking about the future of creators, soloprenuers, and the unbundling of mainstream media. I did the whole post without internet....so no ChatGPT, twitter quotes, etc. Honestly, it felt intimidating at first, but was a super good exercise for me to try out.
"...with evolving technology and cultural shifts, the definition of a creator is set to undergo a transformation."
Check out the full post here: "Picture yourself becoming a creator"
Ethereum, though decentralized and not exactly a startup, follows the same set of values that high value full stack companies do. Oliver Hsu (a16z) gives a framework for what a full stack American Dynamism startup looks like and I make the case that Ethereum does in fact meet those requirements. However, I change the label to "full stack protocol" to better fit the picture.
Three main reasons why I believe Ethereum is a full stack protocol:
Aiming to break apart the high level of consolidation in traditional finance and media.
Serving as infrastructure.
Faces a high barrier of entry due to regulatory causes.
Full Stack Dynamism
Today, I did a bunch of reading from my saved readwise articles. I started with some Not Boring & Generalist posts which eventually led me to a rabbithole of different topics. One thing that really caught my attention while vampire reading was the concept of a full-stack startup.
After browsing through some of a16z's American Dynamism portfolio, I eventually stumbled on to a blog post on the website titled Full-stack startups in American Dynamism by Oliver Hsu. The article expanded on a Chris Dixon article from 2014 covering the idea of what a full stack startup is and why they are so transformational to industries such as transportation, education, utilities, etc. Essentially, the key takeaway is that most startups are just repeated variations of the same idea and that there are very few that truly try to rebuild the infrastructure from ground up for any given industry.
Suppose you develop a new technology that is valuable to some industry. The old approach was to sell or license your technology to the existing companies in that industry. The new approach is to build a complete, end-to-end product or service that bypasses existing companies.
The post by Hsu outlines a framework on how to think about full-stack startups. It's really well written and I highly recommend people to check it out.
As I was going through the framework, I couldn't help but correlate each of the points to web3 and how the same "full-stack case" could be made for Ethereum. Soooo, that's exactly what I do below - I go through 9 sections of the outline by Hsu and talk about how Ethereum fits in. For the most part, it's a really good fit and I think the reasoning is pretty straightforward and logical (at least that's what ChatGPT said); however, it's worth noting that fundamentally Ethereum isn't a startup but rather a decentralized network.
Though many of the core values match of the "full stack startup" idea, at it's core the Ethereum blockchain is a Full Stack Protocol. Let's dive into why Ethereum is a full stack technology that bypasses industry incumbents and will completely change the way society functions in the future.
The full stack framework proposed by Hsu is split into 3 main sections:
Why full stack startups arise in certain industries
How full stack startups create startup ecosystems
Patterns across full stack startups
Each section is then further sub-divided into 3 more sections. I'll go through the nine total sub-points and explain the case for Ethereum.
Let's dive in.
Taking over large centralized players
Hsu makes the case that full stack startups arise in certain industries that are particularly stagnant and are dominated by large bureaucracies.
Let's dive a bit deeper into the sub-points from the framework to consider in this section
High levels of consolidation
Ethereum is most clearly a threat to:
Traditional finance (i.e. banks)
Traditional media (i.e. social platforms, label companies)
Both of these industries are dominated by a few players that basically set the tone for their respective industries. For example, in banking J.P. Morgan and Facebook/Google for social media platforms. Ethereum's decentralized nature allows it to challenge the level of consolidation in traditional finance and media and empowers smaller players to participate in the economy directly with set rules that can't be changed by a single leadership team for ulterior motives.
High barriers to entry (often regulatory)
This one is obvious given the recent news cycle. Anything that is under the purview of the SEC and CFTC is just complicated and frustrating. I wrote two pieces earlier in this writing challenge covering how there is a huge barrier of entry in finance not only for cryptocurrencies but also web2 fintech companies.
High levels of fragmentation across the value chain
The best example as to how there is a high level of fragmentation in the tradFi space is the process of buying a stock. On top of that, because there are so many parties involved within and across asset classes, there is a significant time delay in just completing a single financial transaction (i.e. getting a mortgage).
As they grow, full-stack startups often enable other technology companies to enter these categories. They act as a catalyst for many more startups, especially those that do not take the full-stack approach
Increasing Competition & Technology Adoption
In terms of competition, just look at the number of cryptocurrencies inspired by Ethereum.
And in terms of technology adoption, Ethereum's open-source nature encourages competition by enabling any developer to build applications on it. This, in turn, spurs tech adoption as more and more businesses and individuals begin using these dapps and open source code.
Serving as Infrastructure
Ethereum serves as the base infra for markets such as:
Defi (i.e. Uniswap, Aave, etc.)
NFTs (i.e. Punks, Doodles, Open Sea)
DAOs (i.e. Nouns, PurpleDAO, etc.)
Creating Talent Vortexes
Just from the original Ethereum team back in 2014, we saw the rise of:
Cardano by Charles Hoskinson
Polkadot by Gavin Wood
ConsenSys by Joseph Lubin
Not to mention, the crypto ecosystem has seen the brain gain of thousands of top web2 engineers who are looking to build for the open metaverse.
Patterns Across Full Stack Startups
Processes and operations are as important as product
The Ethereum Foundation embodies this point. All the work we see towards scaling Ethereum, processing EIPs, redesigning smart contracts, building out the proof of stake mechanism, etc. are essential to the success of the protocol and all the dapps that live on the network.
Just the Ethereum ICO itself raised $18 million and the network hadn't even been launched at that point. This point varies slightly from the traditional VC rounds for startups. But it's clear that the launch of Ethereum required an overall belief system from hundreds of thousands of people to invest their money in the ecosystem to grow the underlying value of ether.
Also, it's worth mentioning that the idea of staking is also capital intensive for everyone involved. It costs 32 eth just to stake so think of that as an investment from just one backer helping to keep the network up and running.
Can become multi-product businesses
A picture is worth a thousand words (and more importantly, my fingers hurt and I'm really sleepy)
Ethereum has proven itself to be much more than just a cryptocurrency. Based on Hsu's framework, it clearly meets the caliber of full stack startups. Ethereum challenges traditional power structures and is paving the way for a new era of decentralization.
That's all for today's post - hope everyone has a great weekend!
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