Why DePIN matters
Your guide to decentralized physical infrastructure, also known as DePIN. Plus a roundup of DC news.
Decentralized physical infrastructure networks (DePIN): A guide
Guy Wuollet
Existing physical infrastructure networks like telecommunications, energy, water, and transportation are often natural monopolies — markets where it’s cheaper for one company to deliver a good or service than it is to encourage competition. In most first world countries, they’re overseen through government oversight and regulatory capture. This creates little incentive for innovation — not to mention lackluster customer experiences, user interfaces, service, and response times.
These networks are also notoriously inefficient and poorly maintained. Look no further than the recent California wildfires, or regulations protecting incumbent telecom companies. In the developing world, the situation is even worse: Many of these services either don’t exist or are costly and scarce.
We can do better. The decentralization of physical infrastructure networks offers an opportunity to leapfrog atrophying incumbent monopolies and create networks that are more robust, easier to invest in, and more transparent.
For more on what DePIN is, why it matters, and questions to ask when evaluating or building a DePIN protocol…
SEC request for information
In late February, Securities and Exchange Commissioner Hester Peirce, who is now chair of the commission’s Crypto Task Force, put out a request for information (“There Must Be Some Way Out of Here”) — 48 questions about how the commission should regulate crypto assets. This process is one effort that will shape the crypto industry in the United States for the foreseeable future.
Peirce writes, “Five years ago, I remarked that ‘figuring out how to deal with the SEC on crypto issues [was] like a regulatory version of an escape room.’ Now it is time to help open the door.” Peirce’s Task Force is working on providing greater crypto clarity — notably, with the public’s input.
We welcome this process, especially after the lack of constructive engagement by regulators over the past four years. a16z’s policy team has begun submitting responses to some of the questions, including offering a framework for decentralization. You can read our responses here (part I, part II, part III). We’ll continue to develop and send in answers to the SEC’s questions, and you can too.
From Peirce: “Members of the public interested in providing input on these or other related matters may do so using the written submission form for input to the Crypto Task Force on the Commission’s website. Members of the public also may request a meeting to discuss their feedback on these and other related matters via the meeting request form on the Commission’s website.”
Stages for zkVMs
Justin Thaler
zkVMs (zero knowledge virtual machines) promise to “democratize SNARKs” by allowing anyone, even those with no specialized SNARK expertise, to prove that they have correctly run any program on a given input (or witness). Their core strength lies in the developer experience, but currently they present enormous challenges in both security and performance.
For zkVMs to fulfill their promise, designers will have to overcome these challenges. We lay out the likely stages for their development, the completion of which will take several years. Don’t let anyone tell you differently.
Bonus: Ingonyama announced a “novel multi-precision algorithm that reduces computational complexity from n² + n to n² + 1 digit multiplications — significantly boosting performance in key primitives like NTT [number theoretic transform].” What does this mean practically? Almost all cryptography deployed today involves adding and multiplying large numbers; this breakthrough speeds that process up by ~20%. Jolt, our open source zkVM, uses this kind of cryptography and will benefit.
Lessons from a computer scientist turned crypto founder
Sreeram Kannan and Ali Yahya
From computational genomics research to building “humanity’s coordination engine,” Eigen Labs founder Sreeram Kannan shares his path — and lessons learned along the way — in conversation with a16z crypto General Partner Ali Yahya on the latest episode of web3 with a16z.
The two dig into big ideas, like what people mean when they call blockchains “truth machines.” They also share practical advice and insights, like how to go about deciding on your life’s work; what you can do to keep increasing — and compounding — your leverage; plus, how a bungled interview question can change your life. Many more valuable mental models and heuristics within.
Updates from DC and beyond
Stablecoin bill… The House Financial Services Committee introduced a stablecoin bill on Wednesday. This comes two weeks after its Senate counterpart was passed out of committee. Senator Kirsten Gillibrand (D-NY) told attendees at the D.C. Blockchain Summit that Congress could pass stablecoin legislation before the August recess.
SEC roundtable... The Securities and Exchange Commission's first gathering on crypto issues framed new approaches as a “restart.” The SEC’s vision for crypto regulation demonstrates broad consensus in two key areas, says a16z crypto Head of Policy Miles Jennings:
that the SEC should regulate primary sales as securities offerings
that a “principles-based approach” should be used for secondary sales
Consensus here provides a middle ground between two unworkable extremes: the first, to subject all sales of tokens to securities laws simply because people are investing; the second, to exclude all sales of tokens from securities laws because there isn’t a legal relationship between the issuer and investor.
— a16z crypto editorial team
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