Jul 26, 2018 · 37m · a16z
Cryptonetworks and Cities: Analogies
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
This panel discussion featuring Devon Zuegel and a16z crypto team members Ali Yahya, Jesse Walden, and Denis Nazarov explores how urban planning analogies, open-source software paradigms, and token economics illuminate the governance, architecture, and funding of decentralized crypto networks.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 4.3 Guest teaching 3.2 Guest disagreement 0.5 The host pushing back 0.8
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 4:57 Reframing Host's Initial Conditions Premise
Jesse explicitly reframes Devon's question about initial protocol conditions to shift the focus toward the temporal dimension and visionary whitepapers as scaffolds.
Hardest push from the host ▶ 7:24 Challenging the Physical City Analogy BoundariesDevon pushes back on the city analogy, pointing out that physical cities rely on existing geography like river basins whereas crypto networks must create their environment from scratch.
Biggest teaching moment ▶ 22:45 Illustrating Open-Source Value Capture Failure via HeartbleedAli educates the host on how OpenSSL powered global web security yet failed to capture value, leading to severe vulnerabilities like Heartbleed due to underfunding.
The host holds their own ▶ 24:06 Analyzing Uncaptured Externalities in Public InfrastructureDevon demonstrates deep domain expertise by synthesizing economic concepts of positive externalities in urban transit like BART and mapping them to internet protocols like TCP and Ethernet.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Introducing Cryptonetworks as Cities Analogy | 2 | 3 | 0 | 0 | Devon introduces Ali's tweet comparing crypto networks to cities and asks him to unpack the concept. Ali explains how decentralized networks behave like emergent bottom-up cities rather than corporate firms or individual organisms. | |
| Initial Conditions and Open Source Scaffolds in Ethereum | 3 | 4 | 2 | 1 | Devon asks about initial protocol conditions, but Jesse reframes her question to emphasize the element of time and visionary whitepapers. Jesse explains how early visions galvanize open-source developers before code exists. | |
| Crypto Networks versus Natural Physical Cities | 6 | 3 | 1 | 3 | Devon actively pushes back on the boundaries of the analogy, pointing out that physical cities leverage natural geography like river basins while crypto networks start from nothing in the ether. Ali acknowledges her point and extends it to Nakamoto consensus. | |
| Top Down Inefficiencies and Parallel City Experiments | 3 | 3 | 1 | 0 | Devon asks about trade-offs between modular and top-down development. Dennis argues that top-down efficiency is an illusion, while Jesse cites Ethereum's Casper and sharding pivot as bottom-up convergence. | |
| The Process of Rough Consensus and the DAO Fork | 3 | 4 | 0 | 0 | Devon prompts the guests on how decentralized systems reach consensus without central control. Jesse explains the principles of rough consensus and details the community dynamics during the Ethereum DAO hard fork. | |
| Balancing Top Down Infrastructure and Bottom Up Anarchy | 2 | 3 | 0 | 0 | Ali discusses how protocols balance top-down structure with bottom-up anarchy to maximize experimental surface area without losing system coherence. Devon asks the panel for historical open-source comparisons. | |
| Public Goods and Value Capture in Open Source Ecosystems | 2 | 4 | 0 | 0 | Dennis compares open-source innovation to startup competition in physical cities. Ali contrasts Linux with JavaScript/NPM, citing OpenSSL's Heartbleed bug as a classic failure of open-source value capture. | |
| Solving Positive Externalities and Monetizing Public Infrastructure | 8 | 2 | 0 | 1 | Devon delivers strong expertise, connecting uncaptured positive externalities in urban transit systems like BART to foundational protocols like TCP and Ethernet. She highlights how funding gaps lead to corporate centralization, which Ali illustrates via Google's TensorFlow. | |
| The Tragedy of the Commons in Protocol Funding | 7 | 3 | 0 | 1 | Jesse frames protocol maintenance as a tragedy of the commons, and Devon offers first-hand developer expertise writing Solidity smart contracts to explain how developer tooling is systemically underfunded. Dennis adds insights on semantic versioning and protocol forks. | |
| Blockchain Governance Experiments and On Chain Protocol Taxation | 7 | 3 | 1 | 2 | Ali outlines protocol taxation ideas, while Devon turns the premise around to explain how traditional political systems like the Electoral College can learn from crypto governance experiments. The group concludes with a discussion of Sapiens and shared myths. |
Statements from this episode (17)
Ali Yahya: Crypto networks resemble cities more than corporations
“Crypto networks are actually much, much more like cities, which could be Considered a specific kind of organism than they are than they are like individual organisms or firms or coral reefs.”
Ali Yahya: Bitcoin and Ethereum emerged from bottom-up community collaboration
“Ethereum Bitcoin to a considerable degree emerged out of communities working together as opposed to necessarily a top-down monolithic design that's imposed upon an organization or a group of people who are working together by a single person or a small group o…”
Ali Yahya: Bottom-up architecture gives crypto networks long-term resilience
“Cities like crypto networks may have this property in common. They tend to live for a very long time because of their bottom up nature. That makes them sort of more robust and more resilient. They have fewer central single points of failure.”
Ali Yahya: Protocol decision-making must rely on first principles, not analogies
“And of course, I think it's a very good point to clarify that analogies only go so far and they're like a good tool to explore the maze of ideas, but ultimately when we actually have to make decisions or, Rigorously think about something we should think about …”
Ali Yahya: Ethereum Foundation balances top-down control and bottom-up autonomy
“The Ethereum foundation has figured out a way of striking a balance between these two ends of like top down monolithic design and imposed control versus completely bottoms up Anarchy.”
Ali Yahya: Traditional open source captured very little value created
“And what's interesting is in, in neither of those two worlds, at least historically, like pre-crypto, has much of the value that those open source contribute been captured.”
Ali Yahya: Crypto tokens enable open-source developers to capture value
“So what's interesting with this brave new crypto world is that now we can have modular components that are built in an open source way that are granularly incentivized. So people can work on building those modular components, and if there is some crypto enable…”
Ali Yahya: OpenSSL underfunding highlights open-source value capture failure
“Even though SSL is a critical piece of infrastructure and is used by sort of every single person in the world who connects to the internet only a couple of people were really in charge of maintaining the implementation of OpenSSL. And so, not enough of the val…”
Ali Yahya: Crypto combines open-source collaboration with free-market capitalism
“What's exciting about this new technology is that it brings together two of the most powerful forces in history. There's what makes science tick, say the free flow of ideas and the universal freedom for criticism and discourse about those ideas on one hand, an…”
Devon Zuegel: Misaligned open-source incentives cause corporate centralization
“The irony behind open source is it's supposed to be this big decentralized thing where everyone can democratically participate, but because the incentives aren't nicely tied to the contributions people make, all of the funding ends up coming from massive compa…”
Jesse Walden: Not every crypto project needs its own token
“And not every one of these projects necessarily needs its own token. Some of these projects could be just sort of core infrastructure at the base layer of the protocol but there's not an incentive or there's at least no mechanism by which the community can for…”
Devon Zuegel: ConsenSys is almost alone in building Solidity developer tools
“Like, whenever, as I write Solidity Smart Contracts, like, the developer ecosystem is just not there at all. Like, now there's a few exceptions. Like, ConsenSys has built a lot of good tooling but besides ConsenSys, like, Basically, no one's building tools.”
Ali Yahya: Ethereum incentivizes application developers but fails core protocol development
“Ethereum, Hasn't yet succeeded at incentivizing core development or development on the core protocol and has succeeded massively at incentivizing people building on top of it. Developers that is not users yet.”
Devon Zuegel: Crypto governance experiments could improve real-world election systems
“If we can experiment with the ways we elect leaders or vote on different proposals within smaller communities, perhaps those lessons can, like, bubble up to the real world as well.”
Ali Yahya: Bitcoin is organized around digital gold, Ethereum around technology
“But in the case of Bitcoin, or at least the later form of Bitcoin, the current Bitcoin, the shared meme seems to be fixed supply, store of value, digital gold. In the case of Ethereum, it's more of a meme around technology. Say we're building a technology, it'…”
Ali Yahya: Network forking acts as a governance mechanism of exit
“And what's interesting about forking is that that is, that in and of itself is a mechanism of governance. It's a form by which communities can decide to run a different experiment. It's a, in a sense, if you, if we go back to the analogy to cities, it's like s…”
Ali Yahya: Expensive forks force consensus while preserving exit options
“It's good that it's expensive because it, it's good that it, it's hard to do that, Because it encourages the participants of a network to try to figure out their differences, but it's also very good that that always exists as a possibility, because you don't w…”