Farther had a nice post-mortem today called The Next Chapter, which highlights a number of shortcomings with the tipping mechanic introduced by Degen.
In my view, most (all?) Farcaster tipping tokens aren't sustainable. They require massive inflation and create constant sell pressure that can only be temporarily countered during a perfect speculative storm like Degen experienced. Eventually the music stops.
This is especially true if those getting tipped immediately swap it out for more stable assets. Memecoins aside, this last point is a challenge for our entire space as we try to transition the Internet to user Owned and Operated Networks.
When you are rewarded OP for impact you've had on the Superchain, this is meant to represent ownership in the Superchain. The ideal position for the network (3,3) is that you believe in the Superchain and its growth, will hold on to the tokens and delegate them to someone focused on Governance (the operated part). As a long-term owner, the theory is that you will generate a lot more wealth for yourself if the Superchain is a smash hit.
It is widely accepted in both academic literature and practical financial planning that equity ownership can generate more wealth for individuals than salary. Of course this is only true if you have equity in something valuable that can grow over the course of a long timeline. Memecoins don't fit that description but Protocols do. Does anyone reading this think Uniswap won't be a more central part of the Internet 10 years from now?
Projects have struggled with ways to distribute ownership to the community. Airdrops are one attempt to solve this. Early Airdrops made the mistake of airdropping it to users who did not even use the network. Many of them, had no plans to use the network and just cashed out. Airdrops based on network activity is better but notoriously hard to make sybil. It also perverts organic usage and makes it hard to tell if you are anywhere near PMF. Maybe worse then airdropping it on random real humans who don't use your network is to airdrop it on a bunch of bots.
Optimism has a working mechanic in Retroactive Funding which gives tokens to those who have provably demonstrated impact to the network, including those who deploy apps onchain and those who participate in Governance. This is particularly effective the more it moves into onchain metrics to show provably, onchain, impact. This however won't work in all cases as many networks don't require people building on top of them or the highest contribution to the network isn't an onchain transaction.
What if you could give the power of distributing equity ownership to the community itself? As a community member in good standing, each day you have an allocation of equity you can gift to other members in the community doing good work. This is the essence of Farcaster tipping and what I'm most excited about. SuperRare is doing this well. SuperRare tokens Govern a real thing! Members of the SuperRare community are given a daily tip allocation, ala Degen, to tip others via Warpcast and the end result is a more decentralized SuperRare network. The SuperRare team is building a real platform, DAO and network around onchain art. There is less pressure on the token from people who immediately swap since they are building something people believe in and want to be a part of. Its hard to spam or game or just to show up to participate since being a member of the SuperRare community means you are an artists, collector or otherwise real contributor to what they are doing.
So while I think the meta for most people is that tipping = free money, which is inherently unsustainable, its an important mechanic to explore in regards to progressive decentralization by giving your network's most valuable members tokens to give to the people they think are contributing to the network.
