So far I have anlysized through page 20 of Only The Strong Survive by Allen Farrington & Big Al. The paper is a categorical critic of cryptocurrency, blockchain technology, and a proposition that Bitcoin is the only blockchain project with a value proposition.
I wouldn’t say I have a “calling” as an Ergonaut, I just like the protocol. This Bitcoin Maximalist paper outlines many issues that the Ergo Blockchain addresses.
As far as we can tell, the intention behind the handful of ways this (creation of 2nd/3rd generation Blockchains) has happened is to attempt to improve upon some parameter of the Bitcoin timechain’s operation: its block time or regularity, its inflation schedule, its programmability, its privacy, the difficulty at the layer ofthe timechain to either introduce total token fungibility or definable nonfungibility (arguably a special case of programmability, but also, an enormously poifficulty at the layer ofthe timechain to either introduce total token fungibility or definable nonfungibility (arguably a special case of programmability, but also, an enormously popular one) or more exotic goals as well.
^Ergo fits this description.
Here are a handful of interrelated characteristics that constitute the real innovation of Bitcoin and that delicately balance to give it unprecedented functionality. These are:
i) The proof-of-work algorithm
ii) The difficulty adjustment
iii) The native unit of (only) monetary value
iv) The lack of a founder or acknowledged leader
v) The economic incentive created for distrusting individual actors to achieve distributed consensus, unforgeably and immutably.
This all allows Bitcoin to realize endogenous value as an asset grounded in its security, and endogenous provision of security as incentivized by this asset. Our thesis is that all non-Bitcoin crypto projects, usually in an attempt to add functionality deemed to be an improvement on that offered by Bitcoin or that is even fundamentally impossible to offer on Bitcoin, necessarily sacrifice at least one element just outlined. … the hoped-for functionality is likely to slowly but surely emerge on Bitcoin … which we believe to evidence short-termism: that decentralization is put at risk.
^Ergo fits the description of all of these benefits of Bitcoin, except point iv. Satasohi Nakamoto does prevent a cult of personality. However, I don’t see Kushti reaching cult God-king status in our Ergonaut sphere.
If a timechain is structured so as to contain more than a bare minimum of information (either in the form of economically loaded content that takes up far more data than validation of monetary balance transfers, or just too much validation) then it may reach such a size that it becomes practically or economically impossible for many to either run a node or contribute to security.
^I believe Ergo addresses these concerns with logarithmic mining and storage rent .
Processing approximately 1.5 million unique transactions per day, Ethereum is already at its current max capacity, and transaction fees have spiked as a result. But notice “transaction fees spiking” is good for security! So we have a somewhat perverse situation in which the more secure the protocol becomes, the more its value proposition suffers. In order to become “more usable” it has to become less secure.
^Yes, Ethereum gas sucks for users. If I have USDC I have to pay ridiculous fees to transfer it between addresses. @Grayman Does the EUXTO model address this concern?
67.5% of ethereum nodes hosted on cloud services:
^How does Ergo address this concern? @Grayman
For example, crypto proponents will often cite “overcollateralization” as a reason to be reassured that things can only go so wrong, or that, if things go wrong, we can be relatively sure the various structures in place can be unwound safely and the originators of capital made whole. To be clear on terminology before we get into the weeds, by x% collateralization, we mean every $100 of synthetic asset is backed by $x (i.e. x% of $100) of collateral. By y% overcollateralized, we mean that a synthetic asset is 100+y% collateralized. We will try to stick to the former to avoid confusion unless it cannot be helped.The idea that overcollateralization grants safety might be nice were it nor for a naive arithmetic glitch in the reasoning just presented: only 200% collateralization (or greater) can achieve this systemically. For any lower ratio, there will be some number of iterations of rehypothecating collateral such that the value outstanding ex-initial collateral is greater than the initial collateral.
^sigmaUSD has 400% - 800% collateralization.
As liquidations and collateral calls ripple through the ecosystem, there would only be two ways the bleeding could end. Either nearly all of the leverage in the system would need to be wiped out, which of course would be a catastrophic decline in aggregate value, particularly so given our outline above of just how much pseudo-leverage can exist globally without anybody being locally aware. The alternative option is simply that more capital flows into these assets than the forced selling via the liquidations. The practicalities of new capitalflowing in is worth pondering also. It is possible that this would simply take the form of buying pressure to counteract forced selling pressure; but it is also possible that the buys would be of newly minted assets, hence recycling the liquidity unlockedby collapsing leverage immediately into new leverage. This would have a naturally magnified effect on the valuation of a Blockchain.
^LUNA was an experiment in this. Billions in Bitcoin reserves depleted, LUNA token falls to zero, stablecoin collapses.
edit: formatting, spelling