The Tiramisu Theory of Crypto
Here’s a phenomenon I’ve observed often in the industry:
First, something brilliant and revolutionary is introduced. It could be a new coin, a blockchain platform, or a decentralized application.
Then stupidity ensues, almost immediately. Copycat projects that barely improve upon — or are outright inferior to — the original are rolled out. A speculative mania takes off, christened with its own memecoin, and the degeneracy goes to 11. The brilliance of the original is thus overwhelmed by a rickety scaffolding of actions and decisions that’ll end badly.
And yet, there’s still a meta-brilliance to it. You just have to zoom out to keep seeing it. Copycatting is proof that crypto has lived up to its promise of being permissionless and void of censorship. Financialization shows the tech is exceptional at money-legos type interoperability. The energy to the mania shows there’s something interesting happening.
It’s a beautiful chaos that will end badly for most of the people involved but still be beneficial to the cause.
The catch to this phenomenon is that you can’t just have one aspect of it. The brilliance has to be followed by the stupidity and every breakthrough must end in a temporary bubble. It’s a layered cake that wouldn’t be the same without all of its parts. This is the Tiramisu Theory of crypto.
It’s been with us all along. Bitcoin was followed by a dozen other PoW coins that pumped, then faded to oblivion. The success of Uniswap led to Sushiswap and KimchiSwap. Fiat-backed stablecoins led to the algorithmic variety, and the stupidity of Ohm (no relation) inspired many forks. NFTs revolutionized art, gaming and collectibles, but most NFT projects were naked money grabs.
In each instance the crypto community went from inspired to insipid in the blink of an eye.
We are now seeing the tiramisu in full glory with liquid staking, restaking, and — wait for it, wait for it — liquid restaking. I think EigenLayer is one of the most interesting projects to come out of the Ethereum ecosystem in a while and that restaking itself will be a force for reducing the stupid.
So of course it had to be overrun by derivative projects that have attracted billions in deposits. There is now over $9b deposited into EigenLayer, hot money that’s all dressed up but has nowhere to go because the first service to utilize restaking hasn’t launched. The team at EL is being serious and methodical about what they are doing, but the rest of the restaking ecosystem isn’t waiting.
Yield-farming is often the fattest layer of stupid. What was once an elegant way for projects to bootstrap adoption and decentralize ownership is now an industrial activity that attracts mercenaries. There’s some benefit to a surge of initial activity for QA testing, but too much capital too fast can doom a project.
Most liquid restaking projects have serious founders and legitimate aims, but even the best founders can be tempted by dreams of avarice. Their success will lead to endless copycats, including on ghost chains that have no demand for basic cryptoeconomic security via staking, never mind restaking. The more forgotten the ghost chain, the more likely it’s about to roll out a restaking solution nobody asked for.
I’ll be annoyed by this when it happens. I’ll complain and write about it. But I’ll still take it, all of it. Because that’s crypto. We build by speed running through history and learning the hard way.
Plus, I love a good tiramisu.
