Cryptoeconomics of Public vs Private Networks


I’ve been thinking a lot about attacks for cryptoeconomic systems, and it seems like there’s consistently an order of magnitude more attacks (at the cryptoeconomic level, not security/privacy) for public systems. When all information is public knowledge influence and manipulation through signaling or coercion become significant factors. While the base layer protocols are cryptoeconomically secure, the applications and platforms built on top of the base layer, or even applications and services related to the blockchain that aren’t on the blockchain at all (I’m looking at you marketing/advertising), are bottlenecks where censorship and permission allow for walled gardens and regulatory influence. These are also the layers where 99% of people actually engage with and use applications.

Think about the internet: all of the protocols themselves are relatively ok, and for a while the web promised the same goals of permission-less innovation and decentralization that we love talking about, but it’s the applications built on top of those protocols that captured all the value and hold all the power. While the protocol might not censor emails, Gmail certainly can. While Ethereum might not censor a tx, Coinbase certainly can. Most users don’t care, but the promise of cryptoeconomics (in my mind) is to create positive sum incentive systems where users of the system are rewarded for contributing to that system (and punished for not). This really isn’t possible if all data is publicly available and 2nd layer solutions and on/off ramp services can influence and censor access for their own interests rather than the interests of the on-chain communities.

I’ve been thinking about this, a lot, and would love to jam if anyone agrees, disagrees, or is excited about emerging technologies like ZK-crypto, STARKS, dandelion routing, etc… that can help prevent corporate capture on public blockchains :slight_smile: