The greatest trick the devil ever pulled was convincing the world good crypto micro-economists exist
Yes, some do exist and more will in the future but the point is it's hard AF and requires a rare set of skills
WTF do you mean “crypto micro-economist”?
I’m glad you asked. Please see the tweet below.
To expand on that, these people have two core responsibilities within a crypto project.
Design the token economic structure at the start (it’s the complete crypto asset structure actually, but more on that later)
Adjust the structure as needed on an ongoing basis
This is really important because it applies to every project with a token and is crucial in creating long term viability of that token as well as that project. Whether it’s an L1 token, a crypto game currency, a DeFi token or something else, they all need some level of this. Also, this doesn’t apply to only tokens. It’s really the entire crypto asset ecosystem. Many of the same principles & challenges I will outline below can be applied to NFT assets within a crypto micro-economy.
Why is it hard AF?
This is really hard and doesn't exist yet at a high level of competency because of the skills required and the level of difficulty of the problem. Many think they can do it but might not realize the eclectic mix of skills needed to do this well.
“Skill Stacks”
There’s a concept called a “Skill Stack”. The idea is that someone is apt for solving a problem or accomplishing a goal not because they are an expert in that field but they have a collection of skills that are needed to solve that problem. This is particularly true in dealing with complex systems where you can’t be just an expert in one thing because there’s too many variables in different domains that impact the outcome.
What skill stack does a crypto micro-economist need?
In my opinion, there are 3 key things;
Academic understanding of economics
Crypto native understanding of how social and economic interactions occur in this new crypto world
Startup/iterative mindset of trial & error (because this is so new and continuing to evolve, you won’t get it right the first time. You need to be able to adjust quickly & try novel approaches)
Now this is all good theoretically. But as I say in the tweet below, in practice it’s quite hard. Those are usually three very different people. You will find ones that may have two of those skills at a high level but three is extremely rare. Also, it’s not just about having experience in those areas but also applying those skills effectively, at the right time and compromising where appropriate. By compromising I mean, you will have decisions where say a startup person and an academic may be completely at odds. You need to figure out which one needs to be favored within that specific decision while also realizing both mindsets are necessary for putting together the whole system and you may favor the other in the next decision. All of which is much easier said than done.
Conclusion
The role of a crypto economist/micro-economist is super underrated & likely a very important job in the future. It’s also extremely difficult because not only is creating a thriving economy an extremely hard problem but also the “skill stack” needed to do it is quite rare and challenging to cultivate.
Link to Twitter thread referenced above about Crypto Economists