Crypto Attraction Flywheel

The crypto landscape is overwhelming. If your brain is poisoned with business jargon like mine, then one way to navigate crypto is to think of it as a marketing flywheel. This piece of work is designed to attract, engage, and delight new users, bring them in as champions of the ecosystem and driving further growth. In our case, the ecosystem is Crypto, hence the Crypto Attraction Flywheel. If you can think of another name that doesn’t look like it came out of a consulting analyst’s powerpoint slide, I’m all ears.


This came directly out of Powerpoint.

Crypto Attraction Flywheel drives each boom and bust crypto cycle, consisting of the following: 

  1. An attractive tagline
  2. Real products to fulfill #1
  3. New participants attracted by #1, but stay engaged with #2

In 2017, the tagline was explicitly: “come get rich”. Before that, it might have been: “come share Libertarian or ideas of a decentralized future”. Those ideas still exist today, but each cycle adds additional surface area to attract new participants who might not care about prior ideals. For example, there are more people that care about making money than those who care about decentralizing everything, which is why 2017 expanded the base of users beyond the ideological. In the 2020–2021 cycle, the surface area for attracting participants has expanded well beyond “come get rich”.

At this stage, the below are a list of well developed areas. I’m sure there are budding areas I’m missing:

  • “Come get rich while building and participating in a weird, new, and nerdy new financial system” — Decentralized Finance (DeFi)
  • “Come take part in a new artistic medium, artistic culture, and support artists” (you can still get rich) — Non-Fungible Tokens (NFTs)
  • “Come join a decentralized community of like minded people and organize financially towards some common goals” — Decentralized Autonomous Organizations (DAOs)
  • “Come play crappy games that fuse some aspects of all the above” — Crypto Gaming

Crypto ecosystem has a predecessor: The internet. The internet was once a crazy idea and today it is integrated into daily life and culture. Between “crazy idea” and “integrated into daily life” lives a spectrum of improvements, innovations, and use cases that brought more people to the internet.

While I wasn’t born before the internet, I do remember the time before everyone had a smartphone. I was a late adopter of mobile technology — I didn’t get a smartphone until 2011. One day while sitting at home, a friend called me. He was lost somewhere in Los Angeles after taking some turns to avoid traffic. He needed help getting home, so he called me and asked me to pull up Google Maps and navigate him step by step. We still laugh about it today. The use case is obvious now, but there was a time where we questioned the usefulness of smartphones.

I believe we are in that phase with crypto: questioning the usefulness of the technology and ethos. Rightly so. There are a lot of tools and innovation that need to be built, but it’s happening at a lightning pace that missing a month feels like years. It’s an exciting time to jump in, get involved, and be an early participant and contributor.

The best piece of advice is to get your hands dirty in the real, unpredictable, and fast-moving world of crypto. It reminds me of the famous quote by Alfred Korzybski: “The map is not the territory”. For the food motivated, Alan Watts’s quote might better hit the spot: “The menu is not the meal”.

Descriptions, tweets, and essays (including this one) is only a menu of what can be experienced in the crypto world. The meal itself happens the moment you begin to interact with the ecosystem and it opens up an experience a menu could never describe.

So, go make and collect some NFTs, participate in a DAO that piques your interest, play one of these crypto games, or trade tokens and move money around in DeFi. If none of those are interesting, sniff out the edge cases that seem interesting to you — it might be the next item on the flywheel and you’ll be rewarded for being early.

Lessons from a Failed Whole 30 Attempt

A few moments ago I had taken a big bite out of the steamed egg, covered in green onions and well, steaming. I was mid-chew on some beef short rib as my mind already wandered over to the grilled brisket when Kim chimed in: “Whoa, that steamed egg is really sweet”.

Without even thinking about it, I knew what she was talking about. If she hadn’t mentioned it, it would have been a passing moment in my mouth, barely worth a thought.

We were eating Korean BBQ only 4 days after we started Whole 30. I had flung us into Whole 30 without even looking at what the diet entailed. No added sugars (natural sugars from fruit are fine), no grains, no legumes, no alcohol, no dairy, no soy, no processed foods — just meat, seafood, and vegetables. Needless to say, it was a restrictive diet.

The justification for going to Korean BBQ on Whole 30 went as follows: only eat the non-marinated meats, wrap with lettuce, dip in the sesame oil with salt — avoid anything else that looks suspect. 

Only a few minutes after we discussed the sweet steamed egg, we noticed a strong tingling sensation on our tongues. Numbness is the closest description, but inadequate in capturing the feeling.

Upon further research, we discovered that processed sugar comes with a genius biological mechanism: it turns off the ability to taste the processed sugar itself, creating a positive feedback loop to eat more sugar. This compels us to consume more refined sugar without our awareness.

Barely a week into our Whole 30 diet and we experienced a revelation. How had we not noticed this effect? Have our taste buds been numbed into oblivion? Did our meals turn into a dopamine ladder, requiring each bite to trump the previous?

As someone who eats like a ravenous bear, just noticing the sensation on my tongue was a step towards enlightened consumption. This sounds hyperbolic, but my eating habits earned me a nickname amongst friends: “Taiwanese Panda”. I mindlessly gorge on food, battling my last meal on earth like there’s a shortage of food resources.

18 days into the Whole 30 diet, we failed, succumbing to alcohol and pasta at a good friend’s wedding. As it relates to completing the diet successfully, I can only recommend attempting the constrained diet outside the holidays. 

Like any diet, it forced a higher level of awareness of the ingredients in our food. For me, the sugary steamed egg mistake resulting in the tingling tongue sensation revealed the critical takeaways:

  • as processed and refined sugars permeate everything in the grocery store, stay alert to how hidden ingredients affect our bodies
  • at a time of food abundance and easy meals, stay conscious of foods that cause overeating

Now, off to learn how to perfect a steamed egg without using any refined sugar.

4 Years Living in 196 Square Feet

In the midst of a competitive San Francisco rental market in 2018, I signed a lease on a tiny studio unit. The location was perfect: carless commute, plenty of delicious restaurants, and proximity to Golden Gate Park. One small thing: I needed to learn how to live in 196 square feet. Though friends describe me as a minimalist, this would be a challenge.

There’s a sticker shock response you get when you tell someone you live in 196 square feet of space. Not as large as when you tell them you live without a refrigerator, but an emphatic response nonetheless. I’m not here to tell you how to live: you are entitled to live how you want. I’m here to share what I learned in 4 years bounded by 196 square feet.

My favorite effect of a small space is the mental calculation required before purchasing and accumulating anything. In a larger home, you can buy something and determine where it will fit later. In a small space, there’s no room to accumulate extra things by accident. With square footage at a premium, you cannot buy something without explicitly wondering where am I going to put this? The default fallback cannot be let’s throw it in the garage for 3 months before we decide.

In fact, the calculation is reversed from let’s buy it and figure out where to put it to how much space will this take up and do I need it? The end result is a home equipped only with what’s necessary, items with high utility-to-space ratios, and an allergy to accumulating waste.

Floor plan of 196 square foot studio drawn by child.

Rearranging large items in a small space presented a puzzle-like challenge. Certain large items can’t be avoided — the bed is an obvious one, but there was only one place in the studio for the bed. My bicycle, on the other hand, took up an enormous percentage of space in my studio but I needed it. Non-negotiable. It sat against a wall until I realized it was eating up extra space, so I ordered a vertical bike stand and it instantly saved me enough space to add a bookshelf and other storage. With enough iterations over time, a small space grinds towards peak efficiency.

It took several configurations before I found the layout that worked for me, but there is a clear bedroom (full sized bed), living room (mini sofa, ottoman, and coffee table), kitchen, and office (equipped with standing desk). There’s even a space for yoga, stretching, meditation, and indoor workouts.

The downside to a small space is the inability to host friends or family. While I’m not trying to throw massive gatherings, being able to comfortably host a small group of friends for a night is impossible. Luckily, there are public spaces to combat this issue. The small space encouraged me into long walks with a friend or placed me in the backyard for long bouts of reading. But, hosting the occasional poker night to take money from my friends (and see them!) would be nice.

I’ve come to the realization that I don’t need tons of space to live happily. A small space necessitates creativity around furniture arrangement. Live simply, then lavishness becomes a nuisance. These 4 years in 196 square feet remind me of my minimum requirements: healthy sleep, access to social networks, the outdoors, and a comfortable space.

Carbon Credit Markets and Reforestation

Why is there a market for carbon credits? What is it looking to solve? Carbon credit markets is humanity’s first attempt at putting a financial value on nature.

Two concepts before we jump into credits:

  1. “Tragedy of the Commons”. A group of people live by a small lake filled with fish, the lake is shared by the people. Each person has an incentive to take what they can from the lake. If you don’t take fish from the lake, then someone else will take it. The end result is that everyone frantically harvests the lake for fish and all of the fish disappear — hence the “tragedy of the commons”.
  2. “Negative externalities”. A negative externality is a negative impact generated out of a specific process (making toys, food, cars, sending electricity or mail) that does not impact the original parties. The negative externality directly affects a 3rd party. For example, a chemical plant upstream of your house might be dumping waste into the river at the end of their chemical creation process. The waste is a negative externality, directly affecting a party not involved in the creation of the original product. Earth is often the 3rd party affected by negative externalities, but it could also be people or animals living in a particular area where waste or dangerous chemicals are dumped or tested.

Carbon Dioxide (CO2) Emissions are a negative externality. Our planet suffers from the tragedy of the commons. Human processes pollute planet Earth and drives climate change. By pricing CO2 emissions in the form of carbon credits, emissions become a business variable creating an incentive for people and businesses notice and mitigate their emissions. 

You can make the arguments that there is no such thing as a negative externality — if you are producing corn with mass use of pesticides and herbicides, you’re really poisoning your own land (not to mention aquifers, waterbeds, rivers, food supply etc.) and that it isn’t good for you long term. But as we’ve seen, if businesses can get by without short term consequences, harmful practices will continue.

So, we created the carbon credit market. It’s our first attempt to price nature, resulting in a cost for polluting Earth.

There are two carbon credit markets: compliance and voluntary.

The compliance market is regulated by a central governing body. The centralized registry says specific businesses have a budget of how much emissions they may emit. Going over those budgets results in fines, so companies are incentivized to optimize their processes to reduce emissions. When a company has done everything possible to reduce emissions, they are allowed to purchase carbon offsets. Carbon offsets are 3rd party programs or projects that sequester carbon and often have nothing to do with the company itself. Carbon offsets act as a funding mechanism for forest protection, reforestation, renewable energy, and other projects that otherwise wouldn’t receive funding. For example: Project A needs funding to protect a tropical forest. Company B needs to offset emissions from their business, so they fund Project A in exchange for the offsets. The compliance market size is well over $200B annually.

The voluntary market is not regulated by any central governing body, but there are multiple Carbon registries that evaluate, certify, and price carbon credits. Nobody is required to take part in the voluntary market, but there’s good traction — the voluntary market will reach $1B in size in 2021 and growing rapidly (up from ~$400m last year). Companies do this because they believe it will mitigate some kind of risk to their business, whether regulatory, supply chain, or consumer perception. 

Growing voluntary carbon market from 2005 to 2021. Source.

How are carbon credits priced? There are centralized exchanges that specialize in carbon credits, but no true global exchange — for example you can’t go to one place to buy a carbon credit at market price like you can for say, stock in a company like Apple or Amazon. Most of the carbon credit transactions are done “over-the-counter”. This means a broker working to connect large institutional buyers with large scale projects. As a result, the prices of carbon credits are often opaque and fall within a wide range rather than a specific price. Adding to the confusion, carbon credit prices vary drastically between types of projects. 

Variance of carbon credit prices, both between and within registries. Source.

Within the voluntary market, Verra.org is the dominant player, with over 75% share of the carbon credits. Other notable players include Gold Standard and American Carbon Registry. Multiple categories exist within carbon credits: renewable energy, forest carbon, waste, industrial gases, to name a few. 

The range of carbon credit project categories by registry and region through 2019. Source.

I will dive into the specific category of carbon credits I’m most familiar with: forest carbon. Forest Carbon includes three sub-categories: Afforestation/Reforestation (R), Avoided Conversion (AC), and Improved Forest Management (IFM). The startup I work at, Terraformation, focuses on native reforestation projects to fight climate change and our projects fall in the Forest Carbon category.

While forest carbon seems like it should be dominated by forest growing projects, the dominant sub-category in forest carbon are avoided conversion and improved forest management. They are exactly as they sound: protecting an existing forest or improving how an existing forest is managed.

Why don’t we see more forest restoration projects? It comes down to the economics of a reforestation project: price of carbon credits and the cost associated with reforestation.

An example: The price of a carbon credit is about $10 per ton of CO2. A fully mature tropical forest sequesters about 700 tons of CO2 per year per hectare. A mature tropical forest is the biggest type of land based carbon sink — but it can take tens and hundreds of years for a forest to reach that level of maturity. On a per hectare basis, that’s $7,000 in carbon credit revenue. So if you’re looking at 1,000 hectares, that’s $7,000,000 a year. The costs includes the work required to acquire, manage, and maintain 1,000 hectares. Additionally, the carbon credit potential of $7,000,000 is due to decades, if not hundreds of years, of natural growth. These numbers are for a still-standing, untouched forest. 

Compare this with a denuded piece of land — it sequesters no carbon to start, thus no carbon credits to claim. The land needs to be revived, requiring human labor and energy to fence and clear land, gather seeds, nurse seedlings, generate water, physically put the plant in the ground, water plants, and manage the forest growth through infancy — and infancy can mean 3 to 5 years, if not longer. During those first ~5 years, the land is not sequestering much carbon due to its infancy.

For any project, carbon credit verification with a registry is a fixed cost, costing about $100,000, sometimes more. In the case of forest protection projects: they perform their verification every 5 years with the registry. They allow carbon credits to aggregate over multiple years so the fixed cost is a smaller percentage of their total revenue. It doesn’t make sense to collect carbon credits every year given the cost associated with performing a carbon verification through a registry. If you apply that to a reforestation project that isn’t sequestering any carbon to begin with, the economics become nearly impossible. 

So, working with an existing forest that is already capturing CO2 is easier than reforesting land that will take decades to reach the same level of carbon capture. This is a good reason why stopping deforestation today is critical: saving forests now means more carbon sequestration today.

While reforestation projects are difficult, the pay-off is growing to match the effort. Overall, carbon markets saw 4 times the demand in 2020 and there are predictions of carbon credit prices shooting up to $100 per ton of CO2 in the years to come. By starting the process of building forests now, we’re investing in an asset that is clearly valuable in the long term and as those forests come to maturity, carbon credit prices should reach more attractive prices for project owners.

In other categories like renewable energy, many of these projects were funded early on — but as the efficiency of solar has improved, certain types of renewable energy projects are no longer capable of earning carbon credits as determined by the governing body. The idea is that if the market has reached a point where renewable energy is cheaper to build than a coal plant, then capitalism will naturally move that market.

Carbon credits was a regulatory attempt to create a global market for emissions. This successfully used market dynamics to move financial resources to protect and revive our planet. As our first globally coordinated iteration at a free market for natural resources, I’m excited to see what we add in the future to account for biodiversity, native species, and large scale sequestration.

Water Desalination: Reverse Osmosis and Environmental Impacts

Water is a hot commodity in the Western states of America, with the two largest reservoirs fed by the Colorado River at record lows. This is causing panic for everyone downstream, leading to water cuts this year: 

“Lake Mead provides water to roughly 25 million people in Arizona, Nevada, California and Mexico, according to the National Park Service. Under the complex priority system…Arizona will see an 18% reduction…Nevada will need to adhere to a 7% reduction in its Colorado River water supply in 2022”

In the backdrop of the world’s shrinking freshwater supply, this post explores the dominant water desalination technique for “making” clean water for humans and irrigating crops: reverse osmosis. The goal of this is to provide an overview of the process and the corresponding environmental impact.

Water desalination falls into two classes of technologies: membrane filtration processes and thermal filtration processes. Thermal filtration uses thermal energy to heat and evaporate, then subsequently condense water. We’ll spend our time on reverse osmosis, which is the dominant membrane filtration process. 

Osmosis was documented in the 1700s, but it wasn’t until 1950 when two researchers from UCLA and the University of Toronto discovered a commercially viable membrane for a large reverse osmosis system. Since then, we’ve steadily grown the capacity of reverse osmosis desalination plants across the world. Today, reverse osmosis accounts for 70% of all water desalination plants in the world, with over 16,000 desalination plants with a capacity to generate 120 million cubic meters of water per day. Based on New York City’s 2020 water usage, the current capacity of worldwide water desalination could support 32 cities with similar water consumption.

Membrane filtration works like a coffee filter, but on different scales. In a coffee filter, you have ground beans and hot water on one side and you push all of that through a coffee filter of your choosing. The beans stay on one side, but the extracted caffeine goodness (or the decaf for you savages) along with water move to the other side.

Water molecules are tiny, the smallest non-gas molecule known to humans. Everything else, is a tad bigger — salt molecules, microbes, viruses, you name it. So, we created a membrane that is just a bit bigger than water molecules, but smaller than everything else. Then we apply a ton of force (paying in energy, more on this in a moment) and we force the saltwater through the membrane and only water molecules remain on the other end.

Energy is a critical input for both water desalination processes and while both utilize mountains of energy, reverse osmosis is a bit more energy efficient and one reason it owns market share in water desalination.

Reverse Osmosis comes with 3 major environmental impacts: energy use, water intake and outfall of brine water.

On the energy front, it costs about 10,000 gallons of oil per year to desalinate 1,000 cubic meters of water per day (source). How much is 1,000 cubic meters of water? For context, Palm Springs, home to over 100 golf courses, averages 3,800 cubic meters of water per day, per course.

This is a staggering amount of energy consumption via fossil fuels. However, there’s a clear path to making water desalination more sustainable and reduce reliance on fossil fuels. Ever decreasing costs for solar power systems and technological improvements in battery technology will aid this transition to more sustainable energy.

We impact the environment in another key way: water used for desalination is imported from the ocean. The biggest environmental concern is sucking in marine organisms from fish to larva and creating an uninhabitable zone for marine life.

The lowest environmental impact way to take water from the ocean is to do it from a seabed aquifer. These are locations close to open ocean, but often segmented by sand and rocks. By drilling underneath the seabed or drilling a beach well — called galleries — the system takes seawater filtered by rocks and sand instead of directly from the open ocean.

Unfortunately, this method does not meet the capacity needs of the largest systems. The largest desalination plants must take water from the open ocean. This creates a current that brings seawater and all marine life in proximity, such as fish and larvae, into the system. Mitigation techniques include: speed limiters, mechanical exit gates, and screens.

Lastly, there’s the outfall. After we desalinate water, we are left with a brine water solution. Two concerns about this brine water: it’s higher salinity and temperature than ambient seawater, creating an unnatural zone for sea life. It can also have chemicals from cleaning and treatment of the reverse osmosis membrane and corrosive materials from pipes.

Salt is heavier so it will tend to fall to the seafloor — the concern is salt aggregating on the seafloor at an unnatural level. Desalination plants address the issue by directing exit pipes upwards, shooting the water upwards and using diffusers to speed the mixture of salt into the ambient ocean water.

The higher temperature creates an unnatural temperature zone, affecting sea life. A common mitigation technique includes releasing the water at deeper depths where there is less marine life or using diffusers to increase mixing with the colder ocean water.

While impossible to remove the environmental impacts of reverse osmosis, this critical process for humanity has a number of methods for lessening the impact on our environment while ensuring our own livelihood.

As water has floated to the top of critical items facing humanity, more innovations have occurred in smaller scale water desalination, utilizing renewable energy and nature inspired processes to desalinate water, targeted at smaller consumers. These solutions are interesting because they are decentralized with lower power draw. We’ll explore these in a future post.