Thanks for brunch Lincoln, our conversation inspired some of these research questions.

There are a variety of options that builders have when launching an application. Each of these exist on a cross-sectional spectrum of Ecosystem Alignment & Composability, and Value Capture & Performance. While the debate around which set of solutions will win out is nuanced, a more logical conclusion is that there will exist an increasingly competitive nature for the infrastructure available to builders.

Before the dominant rise of Solana as a chain-maximalist ecosystem (especially after performance increases with Frakendancer/Firedancer implementations), we noticed an industry-shift from chain maximalism around Ethereum mainnet to a more modular environment. This is a natural economic progression since specialization lends itself to efficiency per layer and increased flexibility for builders. Now, we have options at both ends of the spectrum - modularity with Ethereum and a monolithic approach with Solana. 

However, we’re seeing a reversion now, where folks are either working to further modularize and become application-focused, or push for a future that is more intertwined with Ethereum. I think it's a fair conclusion that this is inevitable with any monolithic chain, so long as the market demands a certain level of decentralization at the base layer.

On one end, we have self-sequenced applications (or ASS s/o Tarun), which prioritize feeding extracted value back to the application. This creates a strong competitive environment for startup applications as they compete on the quality of order flow and how much returned value they redistribute to their users. An issue I see here though is a chicken-and-egg problem: new applications need strong activity and order flow to compete, but can’t garner a strong user base without some of these redistributed incentives. A default solution is token incentives and/or points, but this is unsustainable given how difficult customer lock-in is for protocols (s/o Maanav). It may be interesting to explore other sustainable vectors of overcoming this cold-start problem.

On the other hand, we have based rollups, which are an optimistic outlook for utilizing Ethereum to sequence transactions, and as ancillary benefits, rollups gain atomic cross-rollup composability. While this is a great solution for direct value accrual to Ethereum, based rollups lose out extracted value to the base layer transaction supply chain actors. This can be analogized as a “tax” that builders have to pay to Ethereum. With modular solutions on the rise, forcing builders to pay an additional “tax” to the Ethereum base layer to effectively be Ethereum aligned seems like an uncompetitive feature. I welcome some counterarguments here.

Lastly, we have our traditional appchains and rollups, which will continue to serve applications that have enough of a network effect and initial funds to support launching their own ecosystem. I think these will continue to dominate the landscape as builders with enough leverage demand customizability, flexibility, and expressibility.

The implementation of these solutions not only raises interesting questions about which will win out and what competitive landscape will exist, but also how these solutions impact the value accrual to certain assets? How does $ETH get impacted in the face of modular architecture? What about the interoperability of app-based tokens? These are all interesting questions to think about going forward, and I welcome any and all debate, comments, and thoughts about it.

The views and opinions expressed on this article are solely those of the original author and mentioned contributors. These views and opinions do not necessarily represent those of Placeholder Management LLC or its team.

I stumbled upon an interesting discussion over brunch and later on with the Placeholder team about stablecoins and what major American political parties think about them. 

Until centralized stablecoin issuers continue to dominate the stablecoin markets, why are they not being more aggressively welcomed by regulators? Major centralized stablecoin issuers (Tether and Circle) hold a decently large share of U.S. treasuries as collateral for their stablecoin issuing services. Demand for USD-denominated stablecoins are only increasing, so demand for U.S. treasuries by these issuers will also increase, thereby strengthening government economic security.

As stablecoins increasingly capture mindshare, it makes logical sense for regulators to step in and establish frameworks that support this cyclical value capture. Some of the cautious approaches entail capping how many dollars worth of stablecoins can be issued and who can issue them. This seems contradictory to the value stablecoins provide for the U.S Dollar, and its in U.S. government's interest to support them openly, while embodying some of the following values:

• 1:1 collateral backing with verifiable proof of reserves

• Limit or prohibit rehypothecation of reserve assets

• Compatibility with existing banking and issuance regulations

It seems that the value accrual of stablecoins are cyclical, and in direct benefit of the U.S. government. Stablecoins have found PMF and will be a major onboarding tool for global users onto crypto-native financial applications. If achieved at scale, not only does this proliferation eat away at foreign economy’s financial sovereignty, but it also strengthens the U.S. Dollar. This implies that stablecoin proliferation introduces awkward global economic ramifications and strengthens the centralized U.S. monetary system in an international economic context. 

Isn’t the entire ethos of blockchain-enabled financial applications to rid individuals of centralized financial systems in favor of decentralized rails? How, then, can we not only promote global stablecoin proliferation, but tout it as one of the only valid use cases of the technology?

Regardless, it's surprising that both campaigns haven’t actively embraced stablecoins, especially considering its ability to serve as a vehicle to promote U.S. Dollar dominance within global markets.

The views and opinions expressed on this article are solely those of the original author and mentioned contributors. These views and opinions do not necessarily represent those of Placeholder Management LLC or its team.