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“Crypto is a new form of capitalism — a new way to form capital that's participatory.”

— Josh Rosenthal

Permissionless III, day 0: The participatory asset class

What is there to do on-chain?

When tokens aren’t going up, it might feel like not very much.

We were promised every-day payments, full-fledged banking, and AAA video games — but all we got, it sometimes seems, is memecoins.

Here’s the thing, though: No one's ever asked “what is there to do” in the stock market.

With stocks, you buy a claim on a company’s future earnings and then you do, well, nothing.

Ideally, you do nothing for a long time, because stock market investing is about “time in the market,” as the saying goes.

Crypto investing, by contrast, is about creating the market.

Crypto is a new, participatory way to form capital, as the historian-turned-investor Josh Rosenthal explains: “Yes, you can invest like in the old world, but you can also earn ownership through participation, using a product, running a node, mapping with a dash cam, turning on mapping with your mobile service…”

This makes it much more fun than stock market investing.

In a way, it makes it more important, too.

When you buy a stock, you're not usually funding a company; instead, you're acquiring a claim on a company's earnings that was created by someone who funded the company a long, long time ago.

Microsoft, for example, does not need anything from its shareholders, not even their money: the last time they sold shares to investors was the IPO in 1980 (and they didn’t even need the money then, either, just a market for employees to sell into).

Crypto protocols, by contrast, typically need quite a lot from their token holders, often asking them to simultaneously be investor, customer, and supplier to a project.

DePin is the purest distillation of this, as Rosenthal explains here.

Nearly all Hivempper investors, I’m guessing, will have a dashcam in their car that contributes to Hivemapper’s mapping service; most Uniswap investors probably provide liquidity in Uniswap’s decentralized markets; many Ethereum investors provide security to the network by staking their ETH tokens — and some even contribute to decentralization by running their own nodes. 

I don’t do any of those things currently — my Hivemapper dashcam is on back-order, providing liquidity on Uniswap seems like a terrible deal, I don’t know how to run a node, and I’ve swapped all my ETH for stablecoins.

But even just with stablecoins, I can still participate — I lend them out, stake them in insurance funds, add them to market making vaults, and occasionally try to farm a new token with them.

All these things keep me interested even when (like now), I don’t feel like losing any more money by being outright long crypto.

True, I could well lose my stablecoins and I’m not sure what the odds of that are because I don’t totally understand the risks I'm taking in some of these pools and things.

But I do it anyway because I like to participate.

I’m not the only one.

Providing liquidity on decentralized exchanges, for example, seems like a purely charitable endeavor to me given the (probably) negative returns on offer.

By contrast, I don’t think any Microsoft shareholders would contribute their shares to a liquidity pool to be perpetually picked-off by hedge funds. 

But that’s what many token holders do with their tokens, just to participate.

This may also explain why there are so many podcasts about crypto.

The stock market is at least 25x bigger than the crypto market, but how many podcasts are there about individual stocks?

I can only think of two good ones (Business Breakdowns and the Yet Another Value Podcast).

In crypto, there are loads of good ones and I think that’s because crypto enthusiasts are always looking for new ways to participate.

They’ll even go so far as to fly to conferences, which no one does for stocks.

This note is a little short because I’m writing it en route to one of those conferences, where I’m hoping to find some fun, new, participatory things to do.

And productive things, too, of course.

Josh Rosenthal thinks the participatory aspect of crypto will not just be fun but “totally transformative.”

Beyond decentralized finance, participatory capital is working on cheaper mobile plans, more accurate GPS, democratized AI, and virtual power plants, among other real-world-improving things.

It doesn’t always feel like that transformation is happening fast enough — nothing I’m currently doing on-chain feels particularly historic or world-improving.

But things are happening and they’re happening because crypto investors are willing to not only invest, but participate.

So, what is there to do on-chain?

Simply the fact that people ask that question of crypto is what makes crypto different.

— Byron Gilliam

P.S. Tomorrow night is going to be a blast! Join us for the Official Permissionless III Pickleball Tournament at 6 PM! 🏓✨ Blockworks is throwing the ultimate pickleball competition at 11th Avenue Park, and you won’t want to miss it. We’ll have live betting thanks to BRACKET.GAME to keep the energy high!

Need a ride? No problem! Midnight is offering free shuttles from the Salt Palace Convention Center, Hyatt Regency, and Pickleball Courts, starting at 5:30 PM. Game on.

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

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