A Brief Study of Cryptonetwork Forks

Summary

  • The vast majority of child networks resulting from chain forks are in disuse and have lost significant value relative to their parent networks.

  • Despite lower use metrics, child networks trade at higher user and transaction value multiples (e.g., NVT ratio) than their parent networks.

  • Users and developers tend to remain loyal to the original network, while most miners are loyal to economics only, directing hashpower to the most profitable network of the moment.

Read More

Resource Distribution and Power Dynamics in Decentralized Networks

“The idealized vision of more decentralized forms of networking and social coordination triggered by the invention of Bitcoin continues to inspire entrepreneurs and drive innovation. At the same time, it is increasingly acknowledged within the broader crypto community that though the idealists are onto something, these emerging social systems are far from immune to problems and inequalities that have plagued human institutions historically.

This raises a question: how to conceptualize decentralized networks and “decentralized autonomous organizations” (DAOs) in terms of resource distribution and power dynamics, and by extension, governance? One option is to think of these systems as fields, allowing us to use the well-established framework this term has in sociology.“

 Link

Alex Evans

I’m thrilled to announce I’ve joined the team at Placeholder. I’ll be collaborating with Chris, Joel, Brad, and Mario to support the portfolio, work on new investments, and conduct research on the economics of the crypto ecosystem. 

I grew up in Greece through the financial crisis, which motivated my interest in economics and financial markets. In 2011, I moved to the U.S. to study economics at UVA, where I first caught the crypto bug while working on a decentralized microblogging project with some of my classmates. 

Over the last two years, I’ve cut my teeth on early-stage investing at Lowe’s Ventures, while spending much of my free time reading and writing about crypto (some examples of that work can be found here and here).

I could not be more excited to now focus full-time on crypto with the incredible team at Placeholder. As part of the interview process, I had the opportunity to dig into the Decred network and produce a report, which I’ve linked here as part of my introduction

I look forward to posting future work here on placeholder.vc and on twitter @alexhevans.  

Decred Investment Thesis

Decred (DCR) is a cryptocurrency with hybrid proof-of-work/proof-of-stake consensus that enables on-chain governance. Its proof-of-work mining is similar to Bitcoin’s, except each block has to be approved by a randomly-selected group of users who “stake” their DCR. In addition to approving a block, these selected stakers can also vote on changes to Decred’s consensus protocol, allowing them to influence the long-term evolution of the network. This architecture creates a fair system of checks and balances between users, miners and developers.

Click through to read our thesis.

Read More

Cryptoassets: Flow & Reflexivity

“We hypothesize that crypto’s heightened reflexivity is driven by uncertainty and confusion around the early-stage technology, virality of communication mechanisms, lack of standardized valuation frameworks, regulatory paranoia, and majority retail participation. All of these characteristics are amplified by the liquid nature of this emerging asset class, which creates sub-second informational signals that violently feed back on themselves.”

Link

Information Technology Market Cycles (A Brief History)

"Information technology evolves in multi-decade cycles of expansion, consolidation and decentralization. Periods of expansion follow the introduction of a new open platform that reduces the production costs of technology as it becomes a shared standard. As production costs fall, new firms come to market leveraging the standard to compete with established incumbents, pushing down prices and margins, and decentralizing existing market powers."

Link

Investment Thesis Summary

Around October 2016, we began talking about working together. On August 1, 2017 (the day Bitcoin forked), we officially incorporated Placeholder Management, and in December we closed our first fund. 

This is the thesis we shared during our fundraising process: https://ipfs.io/ipfs/QmZL4eT1gxnE168Pmw3KyejW6fUfMNzMgeKMgcWJUfYGRj/

The list of people who helped us get off the ground is long and we’re very grateful to all of them. In particular, we'd like to thank our mentors, Brad and Cathie, who taught us everything we know about investing. 

We look forward to developing these ideas with you over the next decade. 

– Joel and Chris