A flawed token model encourages short-term trading and hinders the long-term growth of the crypto market.
Important points
Many tokens have flaws because they encourage selling rather than holding. The current token model provides disproportionate benefits to founders and investors. Securities law concerns hinder innovation in revenue sharing models. The shift from investing to short-term trading disrupts the incentives for holding tokens. The bear market encourages further experimentation in the cryptocurrency space. The DAO’s current governance structure has not proven to be effective. Locking up quotas helps startups increase their valuations. The idea that crypto projects can operate without responsibility is nonsense. Long-term thinking is essential for founders to succeed in the cryptocurrency space. The BGD team is essential to Aave’s success and innovation. China is reportedly using bot farms to reverse engineer AI models. The intersection of large-scale language model inference and robotics will rapidly emerge. AI can quickly analyze large codebases, speeding up security research. The geopolitical landscape surrounding technology is more polarized than expected. Human greed is creating a feedback loop that prevents the necessary adjustments in AI technology.
Guest introduction
Namik Mudroglu serves as Chief Strategy Officer and founding team member of MegaETH Labs. Previously, he worked as a strategic business developer at Consensys. At MegaETH, we developed a launch strategy for the project, including an oversubscribed $20 million seed funding round backed by Vitalik Buterin and Joseph Lubin.
Structural issues of token economics
“Most tokens are structurally broken because they encourage selling rather than holding.” – Namik Mudroglu Brian Flynn’s viral article focuses on the race to the exit in token design. Current solutions such as lock-ups and stock buybacks are considered band-aids. “He basically said it’s like knowing that band-aid solutions don’t actually solve the underlying problem.” – Namik Mudroglu In the future, governance models with direct revenue sharing may be included. “The amendment he proposed is…token holders control 100% of the protocol revenue.” – Namik Mudroglu Founders and investors benefit disproportionately from the current token model. “Founders and investors have been stuck in a double dip for too long.” – Namik Mudroglu Insiders have benefited too much from the status quo, and the status quo is about to change. “Insiders were too happy with the status quo, which is now gone.” – Namik Mudroglu Concerns about securities laws are hindering innovation in revenue sharing models. “People are afraid of being jailed or fined under securities laws.” – Namik Mudroglu
Impact of trading behavior on token economics
The shift from investing to short-term trading disrupts the incentives for holding tokens. “Everything has changed from investment to trading.” – Namik Mudroglu Projects need to provide clear incentives to encourage long-term holding. “The only way to solve it is to find a way that people want to hold your tokens.” – Namik Muduroglu Investors are still hesitant because the difference between equity tokens is not clear. “Until it becomes clear what the difference is between equity tokens…people don’t want to subscribe to them.” – Namik Mudroglu Bear Market Encourages More Experimentation in the Cryptocurrency Space. “A bear market that allows for more experimentation.” – Namik Muduroglu The DAO’s current governance structure has not proven to be effective. “DAOs will solve the problem of not needing legislation…that didn’t work very well.” – Namik Mudroglu Structural overhangs in the token market make pricing difficult and opaque. “It becomes opaque and pricing becomes very difficult.” – Namik Mudroglu
Governance and regulatory challenges in cryptocurrencies
Locking up quotas helps startups increase their valuations. “It’s better to lock people up and give yourself a chance to grow to that reputation.” – Namik Mudroglu The idea that crypto projects can operate without responsibility is nonsense. “The idea that we are just friends hanging out with disagreements is nonsense.” – Namik Mudroglu Investors often join projects to make a quick profit, rather than believing in the project. “They are buying because if they can participate, they can sell for 10 to 100 times twice as much.” – Namik Mudroglu There is hope that the cryptocurrency industry will create real value even after it hits rock bottom. “I hope we finally hit rock bottom at this point.” – Namik Mudroglu The behavior of market participants is driven by incentives. “Incentives drive action.” – Namik Mudroglu An ecosystem’s focus on short-term token flipping is detrimental to long-term development. “The ecosystem wants to get serious about token exchange.” – Namik Mudroglu
The role of long-term thinking in cryptocurrency success
Long-term thinking is essential for founders to succeed in the cryptocurrency space. “You’re not going to be great in the end…it’s worth knowing $500.” – Namik Muduroglu Many founders who raised money through ICOs ended up failing. “There are a lot of people who stuck with it and built something, but it still turned out badly.” – Namik Mudroglu The ongoing governance tensions between v3 and v4 of the protocol are significant. “This is about Sections 3 and 4.” – Namik Mudroglu The BGD team is integral to Aave’s success and innovation. “Most of the revenue that V Three is generating today is coming from the BGP code.” – Namik Mudroglu In the current regulatory environment, it seems unwise to create a DAO. “Why on earth are you going to build a road now?” – Namik Mudroglu There are large financial claims associated with the organization. “My guess is that Mark knows what he’s talking about.” – Namik Mudroglu
Aave governance and token distribution complexity
Aave Labs holds the majority of the token supply. “A quarter of the token supply is held in the ave team.” – Namik Muduroglu The situation surrounding Aave is complex from the perspective of various stakeholders. “Actually, the situation is quite delicate.” – Namik Mudroglu The current situation with Aave seems to have escalated beyond negotiation. “I don’t think there is a happy way out of this situation anymore.” – Namik Mudroglu Frustration at the DAO stems from the complexity of working with multiple stakeholders. “It causes frustration and upset.” –Namik Muduroglu China is reportedly using bot farms to reverse engineer AI models. “China is apparently building these bot farms.” – Namik Mudroglu The number of fake accounts used by Anthropics appears to be insufficient. “Only 24,000.” – Namik Mudroglu
Rapid advances in AI and robotics
The intersection of large-scale language model inference and robotics will rapidly emerge. “Things like LLM inference and robotics will soon intersect.” –Namik Muduroglu AI can quickly analyze large codebases, speeding up security research. “It’s like AI has gone to town.” – Namik Mudroglu There is a risk that AI will inadvertently perform harmful actions. “How likely is it that he will try to log in?” – Namik Mudroglu The geopolitical landscape surrounding technology has become even more polarized. “This geopolitics is very interesting.” – Namik Mudroglu The non-deterministic nature of AI makes the transition to new forms of machine interaction different. “This is like old math that is non-deterministic.” – Namik Mudroglu The anxiety surrounding advanced AI is rooted in its potential autonomy. “It’s really going to take on a life of its own.” – Namik Mudroglu
Ethical and strategic considerations for AI in cryptocurrencies
We should be wary of giving autonomous agency to powerful individuals. “Do we really want them to have autonomous agents too?” – Namik Mudroglu The integration of AI and cryptocurrencies is inevitable. “That’s exactly what’s going to happen.” – Namik Mudroglu AI trading bots can inadvertently cause serious financial disasters. “The bot got the decimal point wrong.” – Namik Mudroglu The rise of AI will fundamentally change the way people interact with cryptocurrencies. “It will be done through agents, but agents are not decisive.” – Namik Mudroglu Recent developments could literally reduce the economy to zero. “The economy could literally go to zero.” – Namik Mudroglu The acceleration of AI-related problems could get worse before it gets better. “It’s going to get worse before it gets better.” – Namik Mudroglu There is a 30% chance that AI development will progress rapidly. “The chance of a fast takeoff is about 30%.” – Namik Mudroglu
The future of AI containment and coordination
The focus should be on containing AI, rather than stopping its progress. “The best place for them to focus their energy is basically to sit there and not try to stop it.” – Namik Mudroglu Once AI surpasses human intelligence, we have no ability to control it. “We don’t have the mechanisms to involve them.” – Namik Mudroglu Human greed creates feedback loops that prevent AI from adjusting. “There are feedback loops like human greed.” – Namik Mudroglu There is a risk that uncalibrated AI will cause serious problems. “If it doesn’t work out, you know it’s over.” – Namik Mudroglu Polymarket doesn’t make a profit because it doesn’t take commissions. “How do they make money if they don’t charge commissions?” – Namik Mudroglu The prediction market space is full of opportunistic behavior. “We do worse.” – Namik Mudroglu
Insider trading dynamics and market perception
Meteora has publicly stated that it will no longer engage in insider trading. “We don’t do what we used to do anymore.” – Namik Mudroglu When Zack makes fun of something, it shows he’s done his research. “Forcing him is like giving yourself a deadline.” – Namik Mudroglu The name “Straw Maps” for Ethereum’s new initiative is confusing. “Who came up with the name Straw Map?” – Concerns about possible insider trading related to Namik Mudroglu project announcement. “People basically thought who was going to do insider trading.” –Namik Muduroglu Ethereum’s roadmap suggests it could potentially achieve unprecedented transaction speeds. “There is a magical moon math Ethereum that can perform a trillion transactions per second.” – Namik Mudroglu If Ethereum successfully implements its roadmap, it will be difficult for other blockchains to compete. “Is there another blockchain that can compete with this?” – Namik Mudroglu
Challenges and opportunities for Ethereum growth
Ethereum has been suffering from marketing and communication issues. “There was a big problem on the marketing side, there was a big problem on the communication side.” – Namik Mudroglu A new generation of leaders is emerging within Ethereum. “There is new blood in Ethereum and the old guard is being nuked.” – Namik Mudroglu
