Decentralized incentivization and disincentivization is crucial for a sustainable and scalable economy

When I say crypto solves a lot of things, I'm frankly not exaggerating, I've looked at the tech, I've read what's there to read, I've run several ideas by the offered frameworks, and I find hard facts, it's programmable, it's functional and it all boils down to one thing: The Risk and Reward factor.

It's A Value 4 Value Economic Framework

If you pay close attention to crypto, you'd realize that it never escapes the “value 4 value” economic framework, it's built-in by design that there's no backdoor to receive from the system without putting into it.

What does that even mean?

Now I understand that to some level, that might sound like crap talk and there's a perfect reason for anyone to have this sentiment and it's down to the fact that some “ecosystem” may have value flowing “centrally” that in turn seems less of a “fair system” of value 4 value as stated here but that's merely the difference between decentralized blockchains and VC funded centralized to the tiniest code blockchains and we are frankly not here to debate over that.

Focusing on blockchains that respect the fundamentals, we can always see this economic framework which is really the base level upon which “Risk and Reward” is formed.

Using a proof of stake chain for example, in order for an individual to become a validator, he has to spend money, acquire tokens, commit that to the chain(risk losing it in the process) so as to access the rewards.

Clearly, there's two transactions here. First, a collateral(value) is offered up by the individual and as the network receives this, it pays the individual with value gathered and generated by the network(gas fees and block rewards).

How most people miss how effective this in the grand scheme of things is crazy. I mean, think about our traditional governance systems for a second, where one man with his army of minions who have nothing to lose but so much to gain from a system make decisions for the entire nation of millions of people, try to spot the problem.

If it wasn't already obvious its the absence of risk of losing anything to the very body that pulls the strings, it's fucked up, there has to be some layer of disincentivization for a body to stay in check and crypto and blockchain solves this.

Building the economy of sustainability and scale

I thought a lot about Luna today and realized that there was so much that could have been done easily to stop the exploits that robbed the ecosystem of billions of dollars.

It's kind of also funny at the same time that some crypto folks will come out and talk trash about the Luna crash even whilst being amongst those who leveraged the depeg for a profit, literally being part of the exploit, ruining the network.

But all is fair right? it was only arbitrage.

That said, given the governance framework of crypto, the Luna exploit could have easily been contained without the project needing to touch its bitcoin reserves which only led to industry-wide bleeding.

The network could have easily ramped up fees to disincentivize transactions, lots of steps could have been taken to back people the fuck up because the design of the network literally allows this.

How clueless they were for the most of this was crazy, imagine trying to fight off an entire industry trying to exploit your chain from its depegged stablecoin with some couple billions in Bitcoin - if my memory serves me right - it really was insanely stupid moves being made.

Crypto has a design that allows the system to build sustainable and scalable economies, one that can effectively handle crises without compromising on security or creating a centralized funnel for value to flow through.

This is the technology a lot of people are sleeping on.

Posted Using InLeo Alpha