Trying to work something out.
Protocols have Centralized planning + decentralized economics
Platforms have Decentralized planning + centralized economics
I’ve been reading a lot about Chinese high speed rail construction. Couple of things that stood out to me:
- There is a lot of centralized planning involved in the form of five year plans. The planning phase involves consultation with all the involved stakeholders (provinces, design consultancies, contractors). Once the plan is finalized, its never revisited or changed (this paper claims that this is unique to China). Since the plan is never changed, it almost feels like a protocol - you can imagine decision making to be something like “does this new rail extension follow the five year plan?Y/N”
- The incentives of HSR construction and management are decentralized: The Chinese state takes 50% equity in the joint venture and the other 50% goes to the province. The state provides financing, the provinces provide land. As the project matures, various parts of it are privatized or sub contracted.
- Kind of struck by how this is similar to L1 and L2s in crypto. L2s have different properties and incentives but still depends on the trust/security of the L1. Also parallels with how Farcaster decentralization has progressed - lot of centralized planning + BDFXing by the founders right now with carefully considered decentralization.
web2 platforms on the other hand are synonymous with the 2010s ZIRP days. You can think of ZIRP as decentralized finanancing of venture capital by the federal government (capital is available for cheap and there is no centralized planning on how it should be allocated). This produced competing platforms that all did the same thing which encouraged zero sum/winner takes all dynamics.
is there a there there here?