Eddy Deep Dive

Part of this market structure legislation for crypto is distinguishing between tokens that are related to networks and tokens that are related to companies.

What is the difference between those two things and why does it need to be written down in law?

I mean, the Clarity Act's over 300 pages, I think, right? So forgive me for glossing it a little bit and oversimplifying.

What a network here to me means is that there is a wide array of people or institutions that are all interconnecting with each other in some way that the sum total of their interactions is more valuable in this thing than individually, right? And a network token is something that is the natural ownership asset for a decentralized marketplace.

That's the idea.

So there's a decentralized marketplace.

And if you can own part of that, we call that a network token.

So a blockchain is an example of a decentralized network marketplace.

It's a marketplace for compute, for storage, or for verified compute and storage.

That's what a blockchain is.

Uniswap or what used to be called Maker is now called Sky.

These are projects that are also marketplaces, marketplaces for liquidity, marketplaces for for leverage or for borrowing.

And because so much of those things can be fully automated, they can capture value in an automated way.

Because they can capture value in an automated way, and they can distribute that value even in an automated way, there ought to be an instrument that reflects that, reflects the ownership in the captured value and the ownership in the upside of that thing.

That's what a network token is.

Now, you can see how that's similar to an equity asset for a company, except there's a key difference.

I keep using the word automated.

A company may have components automated, but it's still under the direct control of its management, whereas a network token might be a part of a decentralized network that doesn't actually have direct controllers, direct management.

So it's just trying to get at this exact distinction about things that can be fully automated and these things that cannot be fully automated.

So tying it back to Clarity, the big picture is that previously a lot of legitimate players like founders, crypto founders who wanted to build real businesses didn't have the incentives to do that because they were afraid that trying to have a business model for their token would mean they were suddenly classified as a security.

And then all these other implications, you could have people come after you for the wrong reasons, et cetera.

And so like, what's the next step if this quote design space is unlocked?

If it's unlocked, people can look and say, here are the milestones.

These are the conditions I need to meet in order to be a network

token.