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Crypto Users’ Crosses of Gold

American history’s greatest populist would not have been a bitcoiner. 

William Jennings Bryan — “the Great Commoner” and, at 36, the youngest person to ever receive an electoral vote for President of the United States — believed in easy money, not hard.

Hard money was a tool of our establishment oppressors — the fat cat bankers lobbying to keep the gold standard so that the value of the dollars owed to them wouldn’t be inflated away.

To be a man of the people was to be for easy money.

Bryan framed the debate over pegging the dollar to gold as "a struggle between the idle holders of idle capital and the struggling masses who produce the wealth and pay the taxes of the country.”

He wanted the US dollar pegged to inflationary silver instead, so that America’s struggling farmers could more easily repay their crushing debts.

It's no different today, really — you wouldn't want your 30-year mortgage denominated in bitcoin, would you?

No one has a bitcoin mortgage, fortunately, or does anything else with their bitcoin, so its high fees and ever-appreciating price are no one’s cross to bear.

But Bryan would not have approved of the small Bitcoin blocks that have so benefited idle HODLers at the cost of would-be users.

Nor would he have approved of the Ethereum community’s decision to turn ether into ultra-sound money by charging users high fees — and the thought of handing those fees over to fat cat stakers would have made him apoplectic.

Perhaps he would have been more of a Solana man (or “manlet,” in crypto parlance) then?

Unlike Bitcoin and Ethereum, Solana has welcomed the crypto hoi polloi with open arms and users have responded by going where they’re welcome (to trade memecoins, mostly). 

Bryan would certainly approve of the Solana community’s foundational belief in keeping transaction fees as low as possible. 

But I think he’d still have concerns — because even there, users are now being crucified.

Maximally extracting users

The Great Commoner would not at all approve of the windfall profits currently being enjoyed by Solana validators. 

The surging purple bars above represent money being transferred from the struggling masses of crypto users to Solana’s plutocratic validators in the form of MEV — $3.2 million on Tuesday alone.

MEV (aka, maximal extractable value; aka, frontrunning) is surging on Solana, while its retail users, scrambling to get in and out of illiquid memecoins, are regularly getting fleeced.

This appears to be a necessary evil in blockchain-based finance where 1) prices constantly have to be arbitraged back to where they belong and 2) someone has to be granted the right to order transactions in each block of a blockchain.

Users should be happy to pay for those services, but, still, $3.2 million in a single day? In MEV alone?

Solana co-founder Anatoly Yakovenko once guestimated on a podcast that the cost of validating the Solana network is maybe $50 million a year (accounting for hardware and electricity).

If that estimate is directionally correct, it would suggest that validators are currently making profit margins that would make even a 19th-century robber baron blush.

William Jennings Bryan would not countenance that type of plutocratic profitability being extracted from the hard-working masses of memecoin traders.

Fortunately, it may not last.

In a recent Blockworks research report ($), magicdhz notes that “the Jito Network is enshrining standards against sandwiching for Solana validators and aligning values with users,” which is welcome news. (Social consensus seems to be working on it, as well.)

Ethereum layer-2s are, of course, far cheaper and more user-friendly than mainnet (although blocks still fill up and bridging is still decidedly user-unfriendly).

And even Bitcoin may soon have an ecosystem of low-fee layer-2s that encourage HODLers to be less idle. (Although technical people seem skeptical of this.)

Let’s hope it all progresses quickly, because crypto’s long-suffering users have been bearing their crosses of gold for quite some time.

― Byron Gilliam

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Watch or listen to Empire on YouTube, Spotify or Apple.

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