Oddbean

So, just as a quick reminder—Nostr has actually had quite a lot of funding. Even with around $1M each month, it hasn’t really seen sustained growth, so we have to consider what might happen without that level of support. If the funding were to dry up, it’s quite likely we’d see a real drop-off in users. It feels like the relay network could have used more attention and funding early on. With that neglected, we’re seeing operators start to move on. And right now, there’s not much of a sustainable business model to rely on—practically no revenue streams. This makes it hard to envision a future without ongoing appeals for funding, especially to Jack, whose generosity has been key. I think part of the challenge is that scaling just hasn’t been factored in. Simplicity can be great, but it doesn’t inherently scale. Now there’s talk of adding complexity through negentropy, which may end up fragmenting the network rather than improving things. It’s also easy to assume things scale by default, but most systems don’t—scaling takes deliberate work and careful planning. Nostr has struggled in this regard, and the NIPs have grown more centralized, which has also limited the flexibility needed for use cases and architecture. Only #ditto has really made an effort there. The social graph portability in Nostr is actually very promising. It’s an elegant solution—using hashes to identify users is a technique we know well and can apply in many contexts. Other projects like #pubky are experimenting with similar approaches, and it’s encouraging to see the potential there. However, Nostr’s main challenge remains quite fundamental. For it to become financially viable, it would need to grow by a factor of 100, yet it’s currently at its limit in terms of capacity. And since investment in relays has been limited, the network is unfortunately in decline. That said, I can see Nostr’s relevance to the Bitcoin ecosystem, and supporting it can make sense from that perspective, even if it’s a philanthropic investment. But acknowledging the current challenges is essential if we’re ever going to fix them. Right now, the developer experience could be much better, and the relay network needs more focus. Some clients are hindering others, and the project’s leadership has room for improvement, especially compared to other open-source initiatives. And there are substantial opportunities we’re missing, particularly around taproot and financial markets, again due to centralization and group-think. In short, Nostr offers a rich space for innovation that’s still largely untapped. Proof of concepts are valuable, but they don’t necessarily scale. Generous donations have provided stability, yet a more targeted strategy could make a significant difference. At this point, though, it’s still a cost center with a limited runway, reliant on the goodwill of its supporters. #ditto, on the other hand, has potential because it’s built on a different architecture. And by focusing on Taproot-based solutions and market-driven models, we’d allow the free market to decide what works—letting successful ideas flourish while phasing out those that don’t.

These are great points. I hear you on the concern around what happens if Jack's funding dries up. To be clear though, I've also invested in a number of companies who are using nostr as a part of their core infrastructure even if it's not their primary focus. Many of these cos are making money (with paths to profitability) and do run relays (though focused on specific subsets of nostr). Examples include Fountain and Alby (in addition to more obvious ones like Primal). I'm seeing demand for specialized paid relays for use cases like Nostr Wallet Connect. No one (at least not me) could have predicted that relay infrastructure would be used for something like passing lightning invoices around when nostr got started. Lightspark recently announced that they've built their UMA stack on top of NWC and now have economic incentive to run or pay for relays (although again only storing specific subsets of nostr data). All that to say, I'm seeing companies with real revenue using and paying for at least some nostr infrastructure. This was not the case even 6 mos ago so seems like we're headed in an at least somewhat promising direction. Some of those experiments are starting to bear fruit. To be fair though, while I really like and appreciate the grant funding, I'm much more bullish on startup investing because startups are trying to become self sustainable. I agree things could certainly be better though. And I know I need to dive deper into #ditto. You like this model because it incentivizes communities to pay for relays? What else could we do to make sure relay operators are profitable? Again, pay to post relays make a lot of sense to me. I hope to see experimentation there.

And also on the funding point, our total funding is still a pittance compared to more centralized networks like Bluesky or Farcaster. I also think we generally lack CEOs (with a few exceptions). I love the hackers (truly I do!). But I'm trying my best to find the entrepreneurs who really want to make money. Most of these types that I'm speaking with are barely aware of nostr's existence. I'm hoping I can help change that at least on the margin ;)

Also, keep in mind that the relay network gets pretty much nothing in return. They're often overlooked, mistreated, and even pushed aside. But without them, Nostr wouldn’t exist. It's understandable that many are walking away, and I can't blame them. Funding is definitely a positive step, but it needs to be distributed fairly to those who actually keep Nostr running. Otherwise, we risk Nostr drifting toward centralization, and any claims of censorship resistance start sounding more like a catchy slogan than a reality.

Back to the original point. Bluesky started later than nostr but got to 13 million users. Hence the funding. They invested in infrastructure to do that. They are 100x bigger than nostr, and therefore, sustainable. Nostr is not sustainable, and has to rely on hand outs, for as long as they are given, and none of it is passed down to infrastructure. Can you see why they are two different things?

Yep, you’ve got it! The idea is that a traditional web service—something profitable and investable—can get a boost by adding a Nostr relay, like an extra feature. That’s why Ditto scales: Alex did this approach with Truth Social by layering in Nostr. It works because it’s the web with some Nostr sprinkled in, and that’s totally fine. Now, Nostr on its own, as we see it today, doesn’t really scale, nor is it bringing in a large user base. The scaling challenge is mostly about the relays. Think of it like this: Nostr is like a car radio, and the web is the car. A car radio makes the car experience better, but right now, people are treating the radio as if it’s the main event—sitting in the car, enjoying the tunes, but not even thinking of turning on the engine or driving anywhere. It’s as if they want the radio to be the focus, not just a part of a larger, more useful system. So, there’s no ‘moat’ in Nostr itself (the radio), but when you think about the car industry or even financing around it, there’s definitely investable opportunity there. The key is that we’re finding new, creative ways to enhance the web, and that’s a great thing for investment.

A notable quote from the thread: "Exactly, and that makes the cost of running one completely neglible. LXMF is so efficient that it can handle millions of users on a Raspberry Pi and a 256 GB SD card. When something is that cheap, how are you realistically going to monetise it? There's no point. Leaves you to focus on the things that are hard to provide for monetisation. ...a very general theme in everything I have implemented around Reticulum is to base reasoning on physical resource limits and prioritising how they are utilised. Within this conceptual framework, it's possible to create functional (truly) decentralised application where cost is so distributed that it is neglible for every user. Not using memory resources that are available is actually more costly than giving them away for free, on a societal level. When you have Reticulum fully deployed, there is no need for costly "servers" that centrally handle compute and memory demands. The concept is unneccesary when everyone can reach everyone. At our current level of technology, we have all the compute and memory we can possibly need, it's only the transport layer that is lacking immensely behind. There's no point in trying to monetise the water you swim in."