It's important to highlight that crypto is a backend innovation, akin to the first Internet innovation, and very different from mobile, which was a user experience innovation. Just as the first web pages looked a lot like newspaper or magazine pages translated onto a computer screen, we’re still in the early skeuomorphic phase of crypto application... See more

They’re perpetual because they will always run forever if the blockchain is running. You don’t have to keep “hosting” the application like you do for a Web2 app. And they’re decentralized because they’re running everywhere all at once.

Crypto and “Web3” are really all about blockchain tech. And what a blockchain lets you do is run perpetual decentralized applications.

If you were hanging around when they first started wiring computers together and you said, “One day this simple innovation is going to let people make millions of dollars selling pictures of their feet to strangers,” Al Gore would say, “please put on some shoes and get out of my office.” But that’s what the Internet did!

Crypto is EARLY. Painfully early. If you’ve ever used any of the types of applications I talk about in this newsletter then you know the user experience is usually terrible. If you make a careless error you might lose all your money. If you pick a token at random it’s more likely a scam or shitcoin than anything legitimate.

We’re at the fun part of the market where crypto has lost trillions of dollars in value and people are scrambling to make up reasons why it’s useful.

Buuuuut of course shady trading bots also come with their downsides. Various MEV strategies can result in greater slippage (worse prices) on token swaps, failed transactions because trades were front-run, and have historically contributed to higher gas prices for all users as bots spammed the network with transactions.

MEV trades also benefit the blockchain ecosystem at large by making markets more efficient. For example, arbitrage bots ensure prices are stable across exchanges, and liquidation bots allow collateralized lending applications to function properly.

Profit-maximizing strategies can be benign (e.g. builders prioritizing transactions that offer fees for being included) or more problematic (e.g. if the builder observes a profitable trade, they can front-run it by including their own copy of the transaction first).