The evolution towards a financial metaverse is rapidly accelerating, with the growth in generative assets, profile picture avatars, the emerging derivative structures that build on their foundation, and DAOs that govern them. This article highlights the most novel developments, and builds the case for what a digital wallet / bank will need to be able to do in order to succeed on the way to this alien destination.
Instead, we are going to tap again into a new development in Art and Neural Networks as a metaphor of where AI progress sits today, and what is feasible in the years to come. For our 2019 “initiation” on this topic with foundational concepts, see here. Today, let’s talk about OpenAI’s CLIP model, connecting natural language inputs with image search navigation, and the generative neural art models like VQ-GAN.
Compared to GPT-3, which is really good at generating language, CLIP is really good at associating language with images through adjacent categories, rather than by training on an entire image data set.
Luxury and fashion markets are structurally different from finance or commodity markets in that they seek to limit supply in order to generate value. This increases price and social status. We can analogize these brand dynamics to what is happening in NFT digital object markets and better understand their function as a result.
We’re not cool. That’s why we’re in finance.
But people want to be cool. As highly social and intelligent animals, we want and need to belong, differentiate against each other, and negotiate for status. We create signals and hierarchies to create pockets of relational capital, which we then cash in for real world benefits.
Such mammalian realities are contrary to the economic rendering of the homo economicus, the abstracted rational agent making choices in financial models. In 2021, our financial models are waking up and instantiating themselves, becoming Decentralized Autonomous Organizations (DAOs), spun up by DeFi and NFT industry insiders, and implemented into commercial actions onchain.
This week, we look at a breakthrough artificial intelligence release from OpenAI, called GPT-3. It is powered by a machine learning algorithm called a Transformer Model, and has been trained on 8 years of web-crawled text data across 175 billion parameters. GPT-3 likes to do arithmetic, solve SAT analogy questions, write Harry Potter fan fiction, and code CSS and SQL queries. We anchor the analysis of these development in the changing $8 trillion landscape of our public companies, and the tech cold war with China.
Today, we’re joined by Angela Dalton to explore the fun and fantastical world that sits at the intersection of gaming, immersive technology, crypto and economics, namely, the Metaverse.
Angela is the Founder and CEO of Signum Growth Capital, an M&A advisory firm focused on emerging opportunities in fintech, especially blockchain, and digital media.
In this conversation, we discuss expectations for both recreation and work in a digital future, technological advances in recent years that underpin coming changes to immersive virtual experiences, the economics of virtual worlds and more.
This week, we look at:
The nature of innovation hubs, and how close groups of actors within a particular environment can be massively, fundamentally productive. Take for example the 30 million years of the Cambrian explosion.
The difficulty of experimenting with banking and money frameworks, the limits of traditional econometrics, and an overview of “free banking” in the 1840s.
How evolutionary theory can help us think about selection of economic models, and the hyper-competition and hyper-mutation that we see in crypto. DeFi protocols, like BadgerDAO and ArcX among hundreds of others, are experiments in designing different monetary policies and banking regime experiments in real time.
We have never before had such acceleration in the design space of the economic machine, subject to evolutionary pressures, built by a closely-wound nexus of developers. It is a fortune for the curious.
In this conversation, we chat with Erick Calderon is the founder and CEO at Art Blocks, a platform for creating on-demand, generative art pieces. Since its launch a year ago, Art Blocks has garnered the attention of many, including auction house Sotheby’s, which recently sold 19 of the platform’s pieces in a deal totaling $81,000. Calderon, a native Houstonian, uses the online handle Snowfro, which stems from a snow cone stand he used to own.
More specifically, we touch on projection mapping, generative vs. algorithmic art, machine learning, smart contracts, the constructivist art movement, Artblocks’ unique approach to NFT algorithms and minting, NFT flipping vs. scalping, gas price wars, flashbots, dutch auctions, and the massive demand for anything Artblocks in the world today and the justifcations behind such demand.
What we know intuitively, and what the software shows, is that the pixelated image can be expanded into a cone of multiple probable outcomes. The same pixelated face can yield millions of various, uncanny permutations. These mathematical permutations of our human flesh exit in an area which is called “latent space”. The way to pick one out of the many is called “gradient descent”.
Imagine you are standing in an open field, and see many beautiful hills nearby. Or alternately, imagine you are standing on a hill, looking across the rolling valleys. You decide to pick one of these valleys, based on how popular or how close it is. This is gradient descent, and the valley is the generated face. Which way would you go?
Facebook is building towards a Metaverse version of the Internet, in both its hardware and software efforts. What are the implications? And further, how does one acquire status, work, and social capital in such a world? We explore the recent NFT avatar projects through the lens of Ivy League universities and CFA exams to understand some timeless cultural trends.
This week, we look at:
Hashmasks, CryptoPunks, and other large NFT / crypto art projects generating tens of millions of USD trading volume
Perceptions of financial value, as well as whether it matters to have an “original” digital art piece relative to its digital copy
The intersection of collectibles with decentralized finance, and its collateralization, tranching, lending, and trading, as well as a view on 2021
