MEV, explained: what it is, what to do about it [newsletter]
Editor’s note: This post originally appeared in our newsletter — a guide to trending topics in crypto with insights and resources from engineers, researchers, and others on the a16z crypto team. Subscribe to see it in your inbox every other week.
MEV, explained
Pranav Garimidi and Joseph Bonneau
MEV has long been a hot topic in crypto, particularly in decentralized finance (DeFi). But it’s only by understanding MEV that protocol designers can help manage it. So in this post we explain the basics of what MEV is, how it affects blockchains, and ways to address it.
Simply put, MEV is the value that can be obtained by including, excluding, or reordering transactions in a block, in addition to standard block rewards. MEV once stood for “miner extractable value” when blockchains still relied on proof of work, but now it commonly stands for “maximal extractable value.”
Why does it matter? MEV is fundamental to how blocks get built on nearly all blockchains, naturally arising from the fact that block producers — who are responsible for coordinating users’ preferences — are also in a position to profit from information asymmetries. Because there are many ways to coordinate preferences, block producers can gain value by strategically performing the coordination task in a way that benefits them. And while MEV isn’t necessarily good or bad, it does drastically affect protocols by changing the incentives of people participating in them.
Marketing 101 for startups: Token launches, memes, reaching developers, and more
Kim Milosevich, Amanda Tyler, Claire Kart
Marketing in crypto is different from marketing in traditional tech in many ways. So we take a candid look at what it takes to build and navigate the industry’s many cults and subcultures on the latest episode of the web3 with a16z podcast.
a16z crypto CMO Kim Milosevich hosts this conversation on what works and what doesn’t when it comes to building reputation and community, attracting developers, hiring teams and agencies, launching tokens, raising founder profiles, and more — with guest experts Amanda Tyler, who was most recently Head of Marketing at the Optimism Foundation; and Claire Kart, Chief Marketing Officer at Aztec.
Lessons from the U.S. launch of World
A guest post from Christian Catalini, Co-founder of Lightspark and the MIT Cryptoeconomics Lab
Recently, Alex Blania — CEO and co-founder of Tools for Humanity, the team behind World app — unveiled the company’s latest plans in a noteworthy debut. But the more interesting question is what this move signals for the crypto industry’s leap from early-adopters to more mainstream users.
Convincing Americans to swap an iris scan for a cryptographic “I’m human” badge is no easy sell, privacy guarantees or not — but the team has quietly de-risked the plan on several fronts in recent years. So what lessons can other crypto founders and builders take from World’s evolution?
- Build real utility
- Navigate crypto’s infrastructure flip
- Win through great execution
Regardless of how the future of World plays out, the hope is that more crypto teams will tilt the spotlight away from token economics and blinking price tickers, and toward building products people actually use every day. That decidedly unglamorous pivot is the bridge the industry must cross if it ever wants a seat at the mainstream table.
How to keep yourself — not just your tokens — safe
In light of recent attacks on crypto founders and their families in France, we wanted to share this resource on personal and physical security from a16z crypto head of security Carl Agnelli. Agnelli has protected presidents, among other dignitaries, and offers a professional yet personal perspective on how to stay safe and secure — for everyone, but especially those in crypto. It’s not enough to have a secure wallet if you’re in physical danger.
Catch up on all the stablecoin news: what does it mean, and why does it matter?
Stablecoin legislation moves in the Senate: The GENIUS Act — which would establish the first regulatory framework for stablecoins in the United States — passed cloture with bipartisan backing, setting it up for a vote by the full Senate later this year.
The last 6 weeks are some of the most important in payments history: Want to catch up on all things stablecoins in 30 minutes? a16z crypto data scientist Daren Matsuoka and deal partner Sam Broner will get you up to speed on the flurry of recent stablecoin news — and what it means for the industry. Listen here.
— a16z crypto editorial team
***
The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the current or enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.
This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://a16z.com/investments/.
Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.