Jan 28, 2022

Summarizing Balaji's DeFi Matrix

Order books, but for everything

Core ideas taken from Balaji Srinivasan's appearence on the Tim Ferris Show

What is it?#

  • Order books for everything.
  • A way to represent each asset digitally, and trade them like coin pairs.

What it allows#

  • The wallet enables competition between all assets.
  • They allow us to price, compare, and trade things we never could. Example: a byte on my hard-disk for a minute of your CPU?

How is this different from existing markets?#

  • Everything is liquid: everything can be exchanged for everything else without having to convert to cash.
  • This reduces the amount of wealth held in cash because it depreciates.


Google News indexed all newspapers and made every local newspaper compete against every other. This killed newspapers that didn't do real reporting. The DeFi matrix will make every digital asset compete against every other. It will work as a check on the power of institutions that control fiat.

What's so big about this?#

  • Order books offer a first principles view of how supply and demand work.
  • Tokens enable measurement and representation of things like space and time.
  • Wallets and digital markets combine these two by enabling live comparison and liquidity between these assets.
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