Venkatesh Rao ☀️
@vgr
You know, now that “gasless” UXes with creative social subsidy patterns are becoming common, the industry is finally putting the crypto in cryptoeconomics. It isn’t about using encryption. It’s about hiding the economic layer altogether so it all looks like magic free abundance to low-value transaction flows.
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Venkatesh Rao ☀️
@vgr
Is there a term for this? Account abstraction is an enabler at the individual level but this is like social/cultural abstraction of economic activity. It’s still market economics looking for efficiency under the hood, but you don’t need to know or deal with that fact below a threshold.
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Venkatesh Rao ☀️
@vgr
Economics offers valuable social design mechanisms but creates low-income problems to manage at the bottom. Transaction costs also make it an an inefficient class of mechanisms at small values. Traditional economics used a mix of tax-based redistribution, philanthropy, and advertising to solve for low-value flows.
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Venkatesh Rao ☀️
@vgr
Web2 got hung up on “micro transactions” as the problem frame, never managed to solve it, and turned to fracking attention with ads till things started breaking. Initially crypto was framing it the same way, and high fees looked like an existential problem. Now it’s clear the solution is transaction automation.
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Venkatesh Rao ☀️
@vgr
SaaS and subscription models are the last, best idea that’s possible with Web2 and tradfi. Microtransactions (by trad standards) “rolled up” via a decoupled billing contract to make it worthwhile for everybody to provision < $1/week things (eg $5 substack for 1-2 newsletters a week). That’s the limit.
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