(WIP) Network Effects and Value Accrual in Crypto | Kyle Samani

Network effects increase the value of a network with each new user, illustrated by a telephone network analogy.
The traditional meta law of network effects, suggesting value equals the square of nodes, is debunked in favor of S-curve growth, showing most networks eventually taper rather than grow exponentially.
Each network has a unique S-curve shape, but all demonstrate some form of tapering, countering the belief in endless exponential growth.
The misconception that network effects follow a simple N squared formula is corrected with the reality of S-curves.
The value of a network shows diminishing returns, highlighted by Facebook's user growth not significantly benefiting users from distinct regions.
Discussion extends to different types of network effects and their implications on blockchain's future state.

Anti-network effects in blockchain, especially Ethereum, are showcased by the dilemma of rising gas fees as the network scales.
A comparison of fixed resources in blockchain to internet bandwidth elucidates constraints on scalability and performance.
The advantages of aggregating applications on a single protocol enhance the efficacy of encoding mathematical relationships in DeFi, using Uniswap and borrow/lend protocols as examples.
Discusses the complexity of flash loans and the challenges in streamlining collateral pools across varying chains.

Blockchains hold value for trading and payments, with skepticism cast on the necessity for individual asset ledgers.
The control over contracts and front ends is enough for revenue capture without consensus control, adding layers of complexity for users managing multiple bridged assets in wallets.
Decentralized control in games or localized economies is considered a viable use for side chains or L2 solutions, supporting specialized needs.
Highlights the global impact of financial markets, particularly in DeFi, and the viral nature of markets as seen in Solana meme coins' popularity across cultures.