Thinks 513

Sangeet Paul Choudary: “In the midst of all the hype and buzzword soup that plagues Web3 discourse today, the answer to this lies in reshaping our mental models about network effects. What we’ve learnt in a Web2 world (covered in my book Platform Revolution) may not apply as directly in a Web3 world. To understand network effects in a Web3 world, it’s helpful to rethink network effects from first principles and understand what changes as we move from Web2 to Web3.”

Matt Levine: “Here is how an algorithmic stablecoin works. You invent two tokens, call them Dollarcoin and Sharecoin. You list them on the crypto exchanges. Sharecoin trades for whatever price is determined by supply and demand. It might be $0.01 per Sharecoin, or $1, or $100, who knows. But Dollarcoin is supposed to trade at $1. If it trades at $0.99, you have some automatic process in which you print more Sharecoins and use them to buy Dollarcoins until it is back to $1. If it trades at $1.01, you have some automatic process in which you print some more Dollarcoins and use them to buy Sharecoins until it is back to $1. The result is that Dollarcoin is firmly pegged to the dollar. The process is sometimes compared to algorithmic central banking, where the central bank maintains the value of the currency (Dollarcoin) by adjusting its supply.”

Divvy’s interesting business model: “A consumer selects the home of their dreams, which Divvy buys and rents back to them. A portion of every rent check is used to build consumer equity in the home, resulting in approximately 10% ownership after three years. At the three-year mark, the consumer may choose to buy the home from Divvy (using that 10% equity as a down payment) or cash out their savings.”

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.