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This is a segment from the 0xResearch newsletter. To read full editions, <\/em>subscribe<\/em><\/a>.<\/em><\/p>\n When I interview Web3 founders, I like to ask one question: \u201cWhich thinkers in history inspire you?\u201d<\/p>\n One name invariably comes up more than any other: Friedrich Hayek.<\/p>\n Aave\u2019s Stani Kulechov, Base\u2019s Jesse Powell and many more said the same.<\/p>\n Polymarket founder Shayne Coplan even mandates Hayek\u2019s famous essay \u201cThe Use of Knowledge in Society\u201d as compulsory reading for employees, according to Forbes<\/a>.<\/p>\n I don\u2019t know what Vitalik would say. But given his close association with many George Mason scholars \u2014 like Tyler Cowen<\/a> and Robin Hanson<\/a> \u2014 it wouldn\u2019t be a stretch to consider him something of a Hayekian (George Mason is a university renowned for its Hayekian scholarship).<\/p>\n For the uninitiated, Hayek was a 1974 Nobel Laureate and a pioneer of the Austrian School of Economics, a school of thought closely associated with free market libertarianism and early Bitcoin thinking.<\/p>\n Hayek\u2019s key insight was that markets work best when individuals can freely act on their local knowledge.\u00a0<\/p>\n For individuals to do so requires economic certainty provided by a rule of law, a free price system, robust property rights and a profit-loss calculus that is not distorted by state regulation.<\/p>\n When this \u201crecipe\u201d of institutions is in place, the outcome is market innovation.<\/p>\n These ideas are consistently applied in crypto. For example:<\/p>\n The institutional design of the Ethereum protocol (or any other blockchain for that matter) is the furthest thing from \u201ccommunism,\u201d where market processes are controlled from the top-down and where people are outlawed from acting on individual information.<\/p>\n Even Ripple cannot unilaterally inflate the total token supply of XRP. That\u2019s the rule of law (immutable smart contracts) at work.<\/p>\n Ethereum critics<\/a> complain<\/a> that the \u201cculture\u201d of Ethereum is left-leaning. They point to the Ethereum Foundation or Gitcoin\u2019s initiatives on \u201cpublic goods\u201d funding.<\/p>\n But these public goods are crowdsourced by private funding. No taxpayers were fleeced.<\/p>\n Gitcoin\u2019s quadratic funding mechanism matches more central funds based on the amount of individual contributor funding.<\/em><\/p>\n That is a blatantly market-oriented idea. It\u2019s a fundraising process that works best when markets signal they want it \u2014 plus it\u2019s all onchain (property rights).<\/p>\n Contrary to popular belief, capitalism is not about unbridled greed. Neither is it against communal public goods. Both exist in all political systems.<\/p>\n Capitalism is a liberal archipelago<\/a>. You\u2019re free to work on Wall Street, or go live in a socialist commune.<\/p>\n Therein lies the beauty of the crypto industry. No one cares what your political identity is. You can be a raging Milton Friedman acolyte or a diehard 19th century Trotskyist.<\/p>\n But no matter which political tribe you preach, everyone has to abide by the blockchain\u2019s rule of law.<\/p>\n Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter<\/a>.<\/strong><\/p>\n Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter<\/a>.<\/strong><\/p>\n Get alpha directly in your inbox with the 0xResearch newsletter<\/a> \u2014 market highlights, charts, degen trade ideas, governance updates, and more.<\/strong><\/p>\n
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