Web3

The shift underway is not unlike past financial revolutions. Just as industrial finance shattered feudal constraints, transforming economies once bound by land ownership and hereditary wealth, the cryptoeconomy is removing the final inefficiencies in capital formation and allocation. Where feudal lords once controlled economic opportunity, and... See more

It also follows, as noted, that duration and liquidity should typically correlate together: more liquidity forces investors into longer duration investments. Another irony in this story is that technology stocks are long duration i.e. high P/E investments and largely outside the ‘value’ framework. However, they are exactly the assets that gain most... See more

Consider cash to have a zero duration, technology stocks to have long duration (because they pay-off far into the future), counted, say, in decades, and Bitcoin to have a near infinite duration, because it pays no dividends and is never redeemed. If follows that, with just these three asset choices, an investor with an investment time horizon of,... See more

Not only have finance and economics lately drifted even further apart, it gets worse: rather than economics (or economic expectations) driving finance as the textbooks tell us, finance seems to increasingly drive economics . Bitcoin and crypto, for example, fit badly into the traditional framework because they lack conventional ‘fundamentals’.... See more

But the opportunity for Attention Assets goes far beyond pricing equities. We believe that predicting attention is an economically valuable activity. Attention is a leading indicator to consumer preferences and spending. Businesses allocate R&D, hiring, and marketing dollars depending on where attention goes. It is a matter of figuring out new... See more

The goal of an equities research analyst is to determine the price of a stock. There are established methods to calculate the DCF component but what about the memetic component? As more assets trade off of their memetic value, it will become necessary to develop methods to model memetic value. Sophisticated investors already use things like... See more

The most obvious tradeoff of our proposed oracle is that the inputs are difficult to obtain. If you want to construct a LeBron James attention oracle, you must first create many different liquid prediction markets for topics related to LeBron. In addition, those markets must stay liquid over time and be replaced with liquid markets as existing ones... See more

Coming back to our LeBron James example, let’s say you want to trade the attention of LeBron. To construct an Attention Oracle for him the first step would be to take in (or create if they don’t exist) many binary prediction markets for topics about LeBron, such as “Will LeBron James have over X million followers by the end of the month?”, “Will... See more

One observation of UGAs is that their prices typically start at zero. This is a feature rather than a bug because if you invent a new meme from scratch, the attention of that meme is zero at the time of creation. It intuitively makes sense that you can enter at a low price. This also allows people who are good at spotting trends early to monetize... See more