Welcome to the first edition of web3 weekly, a newsletter from a16z crypto that curates resources from us, and from others, for those seeking to understand and go deeper on all things crypto and web3. We aim to help cut through all the noise and share the signals that matter – whether data or resources from the builders, the researchers, the creators – for anyone building the next generation of the internet (aka web3). If you’re receiving this dispatch, then you’re still early!
1. The question: How do blockchains, crypto, web3 relate; where’s the product innovation?
Sonal Chokshi, Chris Dixon, Eddy Lazzarin, Tim Roughgarden, Ali Yahya
Crypto and web3 are overlapping but distinct movements built on the same underlying tech, of blockchains: Programmable computers that “live in the sky” that anyone can use but no one owns, and that enable technologies like smart contracts, tokens, more. The arc of innovation here is long, but given recent market sentiment, what are the best mental models and metrics for making sense of it all? There may be a method to the madness; check out the inaugural episodes of our new podcast for more:
listen to the episodes/ subscribe to ‘web3 with a16z’ in your podcast app
2. The data: price-innovation cycles, crypto activity, impact
Chris Dixon, Robert Hackett, Eddy Lazzarin, Daren Matsuoka
Where are we on the journey towards a web3-decentralized, community-owned-and-operated alternative to the centralized tech platforms of web2 – especially as these touch creators and developers? We believe we’re in the middle of the fourth “price-innovation cycle”: a feedback loop between price/ numbers that drives interest, which generates ideas and activity, which in turn fuels innovation. Our first annual State of Crypto report digs into all the data here, from monthly developer activity to where layer 2 trends like optimistic rollups and zero-knowledge rollups will change the landscape of blockchains. But the real stunners are what the data tell us about what web3 pays out to creators:
3. The text & the subtext: Cryptoeconomics
Tyler Cowen, Alex Tabarrok
Crypto is one of the economics ideas that has been most discussed over the past decade – yet is still not a common topic in economics classes, observe noted economists (and authors of the highly influential economics blog Marginal Revolution) Tyler Cowen and Alex Tabarrok. So in this new chapter of their popular textbook Modern Principles of Economics, they examine crypto through the lens of economic reasoning and explain smart contracts, bitcoin, DeFi, NFTs… and the possible “tokenization of everything”. Cryptoeconomics not only combines cryptography and economics to produce new methods of communication, cooperation, and organization; but, the authors argue, it might also “bring the invisible hand to computation”.
4. The trend: Metaverse!
Liz Harkavy, Eddy Lazzarin, Arianna Simpson; Scott Duke Kominers
There has been a lot of buzz about “the metaverse” since its coinage in the ‘90s, but lately the term has gotten especially muddled. What is a metaverse exactly, and where does one draw a line between a metaverse and just another virtual world? Simply put, a metaverse is “a more social, immersive, and far more economically sophisticated” evolution of the internet: decentralized, interoperable, open, and owned by the communities that build and maintain it. And… it’s got property rights. Speaking of: what happens when metaverse platforms can give digital spaces a sense of physical place and geography? Given that digital space is infinitely expansible, does the concept of owning “land” in the metaverse even make sense?
5. Building blocks: reads & resources
Business strategy evolving with web3
On how digital currencies can help small businesses / Shai Bernstein and Christian Catalini, Harvard Business Review
On how web3 changes traditional web2 advantages of network effects, launching products, and notions of business competition / Jad Esber and Scott Duke Kominers, Harvard Business Review
MPC in theory and in practice
On building the ability to access web3 directly from a dapp wallet and browser using multi-party computation (MPC) technology / Coinbase blog
On software, workshops, and other resources for MPC / Dragoș Rotaru on GitHub
Deep dives, foundations
On privacy-preserving computing in the blockchain era / Ghada Almashaqbeh and Ravital Solomon, IACR
On probabilistically checkable proofs (PCPs) and how deep algebraic tools are making it into practice with cryptocurrencies / Mordechai Rorvig, Quanta Magazine
On elliptic curves for proof systems, a survey of / Diego Aranha, Youssef El Housni, and Aurore Guillevic, IACR
In the news – signal/ noise
On visualizing the recent block reorg on the Ethereum beacon chain, understanding proof-of-stake, and more / Barnabé Monnot, The Price of Agency
On the TerraUSD de-peg, an on-chain investigation / Aurelie Barthere, Beili Baraki, Louisa Choe, and Yong Li Khoo of Nansen
On evaluating automated stablecoins, a couple thought experiments / Vitalik Buterin
— Sonal Chokshi, Robert Hackett, and the a16z crypto team
You’re receiving this newsletter since you signed up for it on our website(s) or elsewhere (you can opt out using the ‘unsubscribe’ link below). Please note that this newsletter is provided for informational purposes only, and should NOT be relied upon as legal, business, investment, or tax advice. Furthermore, the content is not directed at nor intended for use by any investors or prospective investors in any a16z funds. This newsletter may link to other websites or other information obtained from third-party sources, but a16z has not independently verified nor makes any representations about the enduring accuracy of such information. Please see a16z.com/disclosures for additional important details, including link to list of investments.