I wonder if APIs exposing such algos could be a type of "layer 2" for nostr. Since relays already have databases of events they may not be too hard to build on top.

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I had a different idea of using a domain specific language for doing Nostr queries. "Nostr scripts" that could be run by nostr clients to perform a specific sequence of actions for different views of your timeline.

Like queries that would get sent to relays, or this is purely a client-side thing?

(I may have misinderstood the convo here, I was thinking in terms of algos like say recommending new contacts or interesting posts, flagging fake accounts, search functionality, etc.)

purely a client side thing, a way of scripting queries, what to display, etc. no new layers or relay changes needed.