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Mr.Charlie’s

One of my favorite restaurants in San Francisco is Mr.Charlie’s. They are like a knockoff McDonald’s but serves entirely plant-based food. While it’s not recommended to eat there every day for a balanced diet, their food is delicious. I also love how they troll McDonald’s by using red and yellow in their design and offering menu items like ‘Not a Hamburger’ and ‘Not Chicken Nuggets’. The funniest part is that they opened their shop across the street from a McDonald’s in downtown San Francisco. However, the founder, Taylor McKinnon, doesn’t seem to know what McDonald’s is. lol

The founder, who was once homeless, says they want “to bring approachable plant-based food, fun, and support to communities.” Mr. Charlie’s donates nearly all of its revenue after expenses to local charities. They also hire people who are losing opportunities in a broken system.

i’m lovin’ It!

December 26, 2023

Learn With Stories

I find it effective to learn something new through stories. Stories are not only enjoyable but also easier to understand, especially when it comes to complex subjects like math and science. By teaching these subjects from a historical perspective, rather than just focusing on their functional aspects, they become more accessible. Stories also stick well in our memory because they bring information to life.

Story-based learning is particularly effective for understanding difficult concepts. I love reading the history of a hard concept because complex subjects often begin with simplicity. For example, “The Code Book” by Simon Singh illustrates the origins of cryptography as a basic method of sharing secrets, using techniques like letter shifting to encrypt messages.

Starting with the origin of a concept also helps us to gradually understand it. We can learn the logical progression and purpose behind each step, which greatly enhances our understanding. For instance, “The Code Book” taught me how encryption evolved from symmetric to asymmetric in response to the risk of key leaks during transfer.

If there is something you want to learn, but you find it overwhelming, you might want to start with stories. :)

Here are some examples of subjects I learned through stories(books and documentaries):

and more…

December 24, 2023

Randomness in Plain English

You might think that 32535354 is more random than 00000000. After all, the first sequence of numbers appears to be completely arbitrary, while the second seems to repeat the same digit over and over. However, the concept of randomness is not always as straightforward as it may seem.

Suppose there are 100 potential events, and if their likelihood is evenly distributed, meaning no outcome is more likely than the others, we consider them to be random. Conversely, if the chance of a specific event, let’s say A, is 90%, then it’s no longer deemed random. Randomness is about probability distribution.

When you roll a dice, the probability of getting any particular number from 1 to 6 is 1/6. This probability is equally distributed among all the possible outcomes. Thus rolling a dice can be seen as random events.

So even though 00000000 appears less random, if the probability of getting 00000000 is the same with that of getting 32535354, then there isn’t much difference between them in terms of randomness.

April 9, 2023

Semantic Versioning

Semantic versioning helps developers understand the compatibility and impact of changes to software over time.

It uses three digits separated by dots to represent a software version number. e.g. 1.3.0

These digits represent the major, minor, and patch versions of the software, respectively.

MAJOR.MINOR.PATCH

  1. You increment the MAJOR version when you make incompatible API changes.
  2. You increment the MINOR version when you add functionality in a backwards-compatible manner.
  3. You increment the PATCH version when you make backwards-compatible bug fixes.

Now, when you install software, how do you specify a range of compatible versions?

You can use the tilde ~ and caret ^.

The tilde matches the most recent minor version (the middle number). ~1.2.3 will match all 1.2.x versions but will miss 1.3.0.

The caret will update you to the most recent major version (the first number). ^1.2.3 will match any 1.x.x release including 1.3.0, but will hold off on 2.0.0.

Here’s a comparison of the ranges specified by tilde and caret:

  • ~1.2.3: Accepts any version from 1.2.3 to 1.2.x
  • ^1.2.3: Accepts any version from 1.2.3 to 1.x.x

March 25, 2023

How to Design a DeFi Protocol

I started to design Carapace protocol in 2021. It has been one of the most intellectually challenging and stimulating experience.

I’m nowhere near a position to give advice yet but I will share some lessons learned. Hopefully, my future self and others will find these lessons useful.

Talk to Users

My biggest mistake; I didn’t talk to users enough. The earlier you talk to them, the better. Our users usually asked the toughest and critical questions. They gave us good insight that nudged us to change our protocol design. It’s even better if you are building something that you want.

Collect Mental Models

There are mainly two sources to collect mental models for your DeFi protocol. The first is traditional finance. DeFi protocols usually have something similar in traditional finance. The second is other DeFi protocols. There are some design patterns in DeFi such as an automated market maker, cToken model, veTokenomics, a cycle system, protocol owned liquidity or governance minimization. Keep collecting these models and integrate them into your protocol if it makes sense.

Figure Out Your Design Principles

In my humble opinion, all the DeFi protocol should follow some design principles such as fairness, security, market thickness, aligned incentives, simplicity, composability, privacy, the secondary market liquidity, usability, capital efficiency, and gas-efficiency. But there will be trade-offs you need to make. For example, if you want to make your protocol secure, it might become more complex. Moreover, the magnitude of importance in each principle varies from a protocol to protocol. There are some principles like the secondary market liquidity that some protocols do not care much. You want to make a decision about which principles you value the most.

Get Good At Math

I designed the first version of most of the formulas in our protocol but they were imperfect. I needed some help from an ex-Wall Street quant. I don’t think a single person needs to design every part of a protocol but at least as a founder you need to know enough mathematics to understand a mathematical formula in depth.

Understand Underlying Technology Well

If you want to build your protocol on top of the Ethereum blockchain, deeply understand how it works and start writing code on top of it. Otherwise, you will design something that doesn’t need the blockchain or something that is not feasible. I programmed and tinkered with technology to figure out how it works and what’s feasible. If you are not technical, work with technical people and try to teach yourself how underlying technology works as much as possible.

Keep Refining Your Model

Designing a DeFi protocol is like having a bunch of pieces in your brain to solve a puzzle. You constantly combine them in new and different ways to figure out the right model. It’s challenging because you don’t know how many pieces you need, which pieces you need or how to fit them together in the right way.

And you never want to stop. You want to keep refining your model every time you encounter a new problem and opportunity.

Steve Jobs articulates this point well.

Make a List of Questions

We keep a list of hundreds of questions. I categorize them into critical, key and normal questions, and continuously update them.

Think With Specific Numbers

Once you have a somewhat coherent model, you want to inject data into your abstracted model to see if it works as intended.

We often fall into a victim of thinking in high-level and not thinking about specifics. What happens when you have $1m liquidity in a pool? How does the capital level in a pool affect your price and user behavior?

Ideally, you want to write a script(e.g. the Jypyter Notebook with Python) to simulate your model, but you can start manually by thinking about some specific examples with numbers.

Hack Your Protocol

Put yourself in a position of a malicious hacker or profiteers. How do you game your system? Can you cheat for your financial gain? Can you front-run? Can you flash-loan attack? What happens if there is a bank run? Can you manipulate your system with the Sybil attack? Can you collude?

Talk to Smart People in Your Field

I’ve talked to smart people who ask tough questions to find holes in our design. And of course, I discussed it my team almost everyday to continuously improve our idea and push things forward.

Don’t Give Up

People have told me that our protocol won’t work. I’ve had existential questions that I could not answer right away.

Although there is always a chance that we may be building what people don’t want, I never stopped thinking about the questions and finding the right solutions.

MakerDAO was inspiration for me. I used to think that building a decentralized stablecoin was impossible(back in 2014/2015). But MakerDAO did it and they proved me wrong. Ever since then, I decided to start from an assumption that something that seems impossible can be done.

Over time, despite many problems yet to be solved, I, simply assumed that any remaining issues would be overcome by the hard work and determination.

March 16, 2023