DeFi Gigabrain Tarun Chitra on ETH Staking, Restaking and Why ‘Financial Nihilism’ Is a Real Consumer Product

I, serving as an analyst, would like to share that Chitra, known for taking thoughtful pauses before responding to queries, is scheduled to present at Consensus 2024, which will take place from May 29-31 in Austin, Texas.

I recently had the pleasure of chatting with CoinDesk about the latest trends in Decentralized Finance (DeFi). Known for his vibrant appearance with his colorful hair, glasses, and clothes, this DeFi influencer shared intriguing insights on new financial primitives and innovative technologies like artificial wombs. He also expressed a unique appreciation for hecklers, explaining how their criticisms fuel his passion and drive him to continuously innovate in the crypto space.

This interview has been lightly edited for brevity and clarity.

I thought maybe we could start off with a quick round of overrated/underrated. You could skip any of them or clarify your statements if you prefer.

Sure.

Life extension?

In my mental categorization, there are two types of life extension methods: passive and active. Passive approaches refer to making lifestyle changes for better health, such as eating nutritious foods and taking supplements. Active approaches, on the other hand, involve undergoing experimental therapies and procedures, including surgeries and injections, which can be more complex and esoteric in nature.

I was thinking more of the former.

Probably overrated. I think the latter is rated correctly.

Yeah. Healthy living is good.

But that’s why I wanted to sepaarrate those.

Artificial wombs?

In my opinion, they are being reasonably acknowledged, perhaps even slightly underappreciated. However, they have gained quite a bit of recognition recently.

CLOBs [central limit order book exchanges].

Overrated.

Could you say why?

In the past, CLOBs (Consolidated Tape Lists) reigned supreme as an effective solution. However, with the emergence of Automated Market Makers (AMMs), CLOBs seemed outdated and inadequate. Now, in the realms of perpetuals and low-latency blockchain, there’s a growing sentiment among some that CLOBs are superior once again. Yet, it’s important to note that many have not actually returned to CLOBs, but rather there’s a renewed interest. The debate between CLOBs and AMMs seems to be cyclical, with each having its proponents and detractors.

Dutch auctions?

One shot Dutch auctions are overrated. Multi-shot Dutch auctions are underrated.

Omnichains?

To put it plainly, I’ve come across the term more as a marketing gimmick than a tangible concept. Frankly, it strikes me as overhyped and lacking substance. There isn’t a specific technical definition or set of equations that comes with it.

That was the impression that I got as well. This is maybe a mean one, but AAVE.

Decline to answer.

Who are your intellectual heroes?

Paul Dirac and John von Neumann are two highly influential figures in the field of theoretical physics. Dirac is renowned for his work on the theory of relativistic particles, particularly the discovery of the electron hole, later named the positron. Von Neumann made significant contributions to various areas of mathematics and physics, including quantum mechanics, game theory, and computing.

I’m glad you brought up my previous take on DAO governance from 2021. Reflecting on it now, I’d say that there have been some advancements and progress made in this area. However, it’s important to acknowledge that the crypto landscape is ever-evolving and dynamic, so there are still challenges and improvements needed.

As a crypto investor, I’ve noticed that the governance processes within many Decentralized Autonomous Organizations (DAOs) have undergone significant changes. Some have deteriorated due to rigidity or inflexibility, while others have been taken over by centralized entities. Various factors contribute to these outcomes. However, I believe there’s been a lack of focus on new mechanisms to enhance DAO governance because investors don’t receive direct rewards for making such improvements.

See also: DAOs Beware: Neo-Imperialism Is on the Rise

Using Compound in 2020 felt like a winning team effort as we enhanced DAO governance mechanisms, which was subsequently recognized and rewarded by the platform. However, since then, most innovations in governance have occurred outside the DeFi (Decentralized Finance) realm, with few making significant strides.

A significant amount of mechanical innovation remains unexplored. The primary reason for this is the lack of sufficient funding in comparison to other areas, such as robot development receiving far more financial support than the creation of new governance systems.

When is it appropriate for crypto to embrace financial nihilism? As in, lean into it?

As a researcher, I’m intrigued by your query regarding the appropriateness of financial nihilism and its relation to crypto applications. However, it seems we might be treading on ground where the event has already taken place or is ongoing.

As an analyst, I’d rephrase it as follows: I acknowledge the existence of financial nihilism as a consumer product, which is a hard pill to swallow for some. However, innovations like Pump.fun have found a way to make crypto trading on Binance more engaging for those who are not fond of analyzing candlestick charts. This application offers the same functionality in an alternative package that users seemingly enjoy due to its novelty and difference from traditional trading platforms.

Despite the significant financial investments poured into consumer cryptocurrency by many individuals, unfortunately, this is simply the reality of the situation.

“Is there a chance that Farcaster could completely replace Crypto Twitter, and if so, would it be detrimental for Farcaster if CT were perfectly replicated on Farcaster instead?”

As a crypto investor looking back on the past, I’d describe Farcaster as a platform where the authentic members of the WAGMI (we are all gonna make it) community from 2021 sought refuge. It was filled with individuals who genuinely believed in the movement’s positive outlook during the hype surrounding WAGMI NFTs, despite the toxicity that came with it.

Those who were genuinely committed went ahead and developed Farcaster. I have my doubts that the trader-like individuals will seamlessly blend together, making it unlikely for us to perfectly recreate the “degenerate side.” Farcaster feels much more pure and wholesome in comparison.

Are there any financial fundamental concepts or trends emerging that you believe will grow in significance over time?

In simpler terms, when discussing the concept of re-staking and its role in the multi-chain world, I believe it falls under the category of solutions that offer equivalent network security guarantees without explicitly revealing the underlying network. Re-staking is one such approach, while aggregation techniques and Zero-Knowledge (ZK) solutions are other examples. By employing these methods effectively, we can enhance the user experience of multi-chain systems to approaches as seamless as Solana’s.

See also: The Investor’s Definitive Guide to Proof-of-Work

As a crypto investor, I’d explain it this way: In proof-of-work systems, the cost of launching an attack isn’t immediately clear due to the dynamic nature of network participation. The lower bound for such attacks is therefore more challenging to estimate. Consequently, mounting an attack becomes a more complex and uncertain proposition.

In simpler terms, I believe the scenario will continue to evolve. Emerging technologies like Zero- Knowledge Proofs and advanced encryption can lessen the amount of required investment. However, it’s essential to note that this isn’t set in stone. The level of usage by applications plays a significant role in determining the demand for ether.

How many pairs of glasses do you own?

Probably like 10.

And lastly, is there anything in particular that you’re looking forward to at Consensus?

Doing another live podcast.

I was there last time. It was good!

Yeah, the live podcasts are fun. Especially if you get like an audience heckler.

I’ll try to think of something clever to heckle.

Yeah well, thanks for stopping by.