Building in Vegas
08-15-24

Last weekend, I visited Las Vegas for the first time. The constant buzz, the promise of fortune, the energetic frenzy of the Strip all felt eerily familiar. As I stood in the heart of Vegas, watching people navigate the carefully designed casinos, I couldn't help but draw parallels...

For nearly four years, I immersed myself in the world of crypto, co-founding and leading a venture-backed startup right out of college. It was a whirlwind of innovation, ambition, and, yes, speculation.

Both Vegas and crypto are elaborate human pinball machines. You launch yourself at exciting targets only to be violently bounced around a closed simulation. The infrastructure perfectly pours thousands in foot traffic through a hazardous pinball course. People come from all over to play the games: seeking status, making it big, having fun, simply fucking around. The ball–your attention, assets, intrigue–inevitably falls through the pinball course holes. But the thrill of being close enough ensures you give it another go.

Both environments are designed to captivate, to excite, and sometimes, to disorient. They're realms where fortunes can be made or lost in the blink of an eye, where innovation and risk-taking are celebrated, and where the lines between game and reality often blur.

The parallels:

Casinos are blockchains (Ethereum, Solana) competing for foot traffic, each offering their own unique gaming experience. Just as casinos vie for players with different themes and amenities, blockchains compete for users with varying transaction speeds, fees, and smart contract capabilities.
Poker chips are cryptocurrencies (BTC, ETH, USDC) used to play the games. Like casino chips, these digital assets have assigned values and can be exchanged for different denominations or cashed out.
Casino cashiers are exchanges (Coinbase, Uniswap) where you convert your "real-world" money to enter the game. Traditional exchanges like Coinbase act as the main cashier's cage, while decentralized exchanges like Uniswap are more akin to chip-swapping between players at the table.
Games (blackjack, slots) are the apps (DeFi protocols, NFT marketplaces). Each offers a different risk-reward profile and complexity level. DeFi protocols might be compared to poker or blackjack, requiring skill and strategy, while NFT marketplaces could be seen as the crypto equivalent of slot machines—easy to play, with the allure of a big, flashy win.

These ecosystems offer countless variations of essentially the same games. To play the game most effectively, your job is to know what tables are hot and offer you the best chance of inserting yourself into a lucky break.

Newcomers, in both worlds, often don't grasp the rules. They play because everyone else is but don’t understand the vigilance required to effectively engage. It’s an insiders game: know the dealers, know the players, know the odds. You might be the lucky one who hits it big, but more likely, you'll sit next to a jaded veteran who tosses you a chip to keep you engaged.

I had a front row seat to the inside track – which tables to watch, who the big players were. But I often lost sight of the bigger picture:

I was building in a desert with limited natural resources that thrived off its unique regulatory edge/uncertainty. [Just as Vegas originally thrived in its unique gambling legal carve-outs, crypto has uniquely operated in a grey regulatory space.] We pumped water in from miles away to create the allure of abundance, attracting flashy spectacles to make their debut. The frenzy similarly operates on a 24/7 schedule that ensures a nonstop cycle of chaos.

[overdone young founder trope smh] I was young and bushy-eyed, and genuinely believed the potential to evolve the space beyond the speculatory games I saw around me. But the reality was sobering. The tools we built rarely shifted where the chips ultimately fell.

The biggest winners so far have been the "casinos". Coinbase’s entire business is built on speculation: people trading crypto for the sake of trading. They're not villains, they built compelling product experiences around a lucrative attractor.

While I believe Crypto has immense potential as an agnostic assurance mechanism, capable of backing assets, identities, and relationships. It could disrupt intermediaries that currently dictate the rules [insert boring altruistic jargon]. But today? It's mostly a high-tech circus.

This isn't a hit on crypto, nor is it a glorification. There is still massive opportunity to “build rational business models around irrational attractors” (line from one of my favorites: Jonathan Wu). The current crypto industry boils down to two things: building the game or building infrastructure for the gameplay. It’s still exciting to participate in a market with such strong, alluring, product forces. But those promising it's more than that currently? They're probably the ones constructing the pinball machine.