CRYPTO'S ENDGAME: PROOFS AND PRAGMATISM

Summary from the TLDR Crypto newsletter

Zero-knowledge proofs excel in specific contexts like rollup security and high-stakes nation-state protection but are overkill for everyday transactions, with proof generation costing around ten cents per simple action versus near-free signatures, leading to adoption primarily as invisible infrastructure rather than user-demanded features. ZKML compounds this problem by stacking GPU-intensive proof generation on top of GPU-intensive inference, creating costly solutions seeking problems to solve, while fully homomorphic encryption still depends on MPC/TSS for distributed key control to avoid centralized trust points. Smart accounts face fundamental limitations by trapping automation inside single blockchain state machines, unable to enforce simple cross-chain rules like daily spending limits that span multiple networks and contexts where real user identities operate. The pragmatic alternative uses threshold cryptography with MPC/TSS+TEE as a layered model where smart accounts handle narrow on-chain guardrails while threshold systems enforce sophisticated cross-chain policies, multi-context identity, and higher-order automation above individual blockchains.