it's a beautiful day to believe in something

Welcome to my weekly consumer crypto-focused braindump of things I'm thinking about and have bumped into during my internet travels.

Here's what I found interesting this week...

Last week I talked a bit about the growing number of legitimate chain options founders have when choosing where to build, each with distinct cultures, distribution into unique audiences, and varying levels of support offerings. It was focused on the short term, and this week I wanted to look further out and explore what the landscape may look like on a bit of a longer time frame.

It was Mert’s tweet about Ethereum L2s not being competitive to Solana that sent me down this path, as this is entirely contradictory to my experience working with early stage founders. Almost every week I have conversations with pre-product teams that are considering L2s and alternative L1s alongside Solana. 

It continues to surprise me how people anchored into the Solana ecosystem consider it in a league of its own and act like it has won. I love the ecosystem, there’s a ton of great stuff getting built there, but I also remember a year and a half ago when it felt like it was dead and recognize that in another year once these new chains are in market that the landscape may look very different again. 

I also tend to think, because of the open source tech and power of token incentives, we’re going to move towards a future with hundreds of legitimate chains. I could see it going two ways:

1. A world where chains get completely abstracted away, they truly just become infrastructure providers, and people don’t even know which one the app they’re using is built on. In this world consumer founders will just park on whatever makes the most technical and economic sense, with incentives and revenue sharing being a big piece of the decision.

2. A world where chains continue being sources of culture, community, and distribution. There will still be many chains as there will always be new tech narratives, endless niches to serve, and tokens to rally around, and consumer founders will want to be on any chain that has attention from a community aligned with what they’re building.

The real answer is probably somewhere in the middle, with people that are deep and crypto-native caring that something is integrated with their “home chain” but your average person not caring or needing to know. But regardless, the idea that one ecosystem will win or is all you need to pay attention to feels deeply flawed to me.

For example, nobody really cares that Polymarket is on Polygon because it’s a good product that people want to use. I would personally prefer it if it was on a chain where I had more assets so I didn’t have to deal with bridging, but it’s an easy barrier to overcome for a product I want to use that serves a need. And most users will probably just directly onboard onto Polymarket via apple pay, etc. 

Also I know it’s against their ethos, but from my vantage point I think it would make a ton of sense for pump.fun to go cross-chain, be early movers onto new chains with meaningful attention, and more defensibly capture the market. Betting your business on a single ecosystem being long term dominant at this stage seems risky.

I was talking to Flex this week in New York who reminded me about all the passionate debates developers used to have about what database technologies were best, and today it’s been abstracted away to the point that application developers themselves don’t even really need to know. 

Tokens obviously change the dynamics here significantly, but infrastructure wants to be abstracted.

Our weird little token production industry is in an interesting place. There continues to be disgusting games played by infrastructure VCs and teams, people are accepting that crypto is fundamentally a consumer technology, and there’s growing conviction that the memecoin supercycle is real. Many are wondering what comes next.

Calling crypto a token production industry is obviously drastically over-reductive for the potential of the tech, but it’s also easy to argue that it’s what we’ve done most effectively to date. Every cycle has been kickstarted and dominated by a new token mechanism. We had the rise of altcoins in 2011, ICOs in 2017, liquidity mining and yield farming in 2020, NFTs in 2021, point farming in 2023, and now memecoins in 2024.

Consumer demand for making money and having fun has driven everything, and alongside all the chaotic usage and energy from each cycle, real, useful, and sustainable products emerged.  Ethereum and Filecoin came out of ICOs, Compound and Uniswap and Aave came out of DeFi summer, points farming and memecoins contributed to the resurgence of Solana, its DeFi ecosystem, and Pump.fun.

And now, I think what comes next is real consumer tokens. Tokens that combine the expansive ambitions of top infrastructure projects, with the belief systems, cultural value, and social properties of memecoins. Tokens connected to product and social experiences that people actually care about instead of vaporware. Tokens from projects that are trying to change the world, but don’t need to raise hundreds of millions of dollars from dump-happy VCs to do it.

As there are more and more consumer tokens (memecoins, scenecoins, product tokens) connected to things people actually understand and care about, retail demand for infrastructure tokens is going to plummet. 

Increasingly infrastructure will trade at revenue multiples, and consumer tokens will trade at much more valuable memetic multiples.

As crypto evolves there’s a constant struggle between the values that it was started on and where the market opportunities are pulling it. We see this emerge in conversations about how much crypto should be abstracted, how decentralized chains are vs others, the pushback against memecoins and speculation, and many other places. This week Vitalk and Jesse Walden shared posts that explored this tension, and I found Jesse’s particularly good.

Let’s start with Vitalik’s, which was a response to all the conversations about “Ethereum alignment”. He thinks it very important that Ethereum feels like a cohesive ecosystem, and suggests that the way it’ll get there is by being more explicit with the specific properties that represent alignment with the values and mission of the ecosystem at large. 

He highlights open source, open standard, decentralization & security, and positive sum behavior as starting points for these properties, and is calling on more projects like L2Beat that add legibility to which projects are exhibiting alignment in practice. He’s essentially asking for a BCorp-like certification of Ethereum alignment.

I think this is great, staying true to values is important, but if it isn’t done in a way that also effectively serves market demands then Ethereum is going to continue losing ground to new ecosystems that do. The majority of BCorp certified companies toil away in obscurity because they hold onto their values too tightly, but also companies like Patagonia that have realized they can have the largest impact by compromising on some of their values and becoming massive businesses.

And this is the core idea of Jesse’s post. He states that the next ten years of smart contract platforms will continue to get pulled away from the cypherpunk values of bitcoin to better serve the mainstream market demands of performance, cost, profitability, and compliance. Increasingly the successful emerging products and applications are just using blockchains for their interoperability and settlement, and are not in any way centralized, permissionless, or censorship resistant.

He likened this to what he saw participating in the wildly productive creative scene of Montreal 15 years ago. As the scene started mixing with the mainstream market it was the people that compromised just enough between the values of the original movement and things that were palpable to the masses that ended up the most successful. People that compromised too much didn’t create anything of substance, and people that didn’t compromise at all remained in obscurity.

This is an idea that we hold tightly when evaluating early stage teams, and where the framework of purist vs tourists is really useful. The people that are going to create the breakout crypto products are deep believers in the potential of blockchains who will persevere through the user experience and cultural challenges we’re dealing with, but aren’t too ideological to recognize that compromises will need to be made to create products that have mass market appeal.

Venture capital broadly is at an interesting point. Public market demand for factory-farmed SaaS unicorns has caused the production line to fall apart, late stage VCs are returning capital or not raising new funds as the IPO and acquisition market is slogging, AI has everyone wondering whether it’s a disruptive technology or an incumbent strengthening technology and scrambling to make bets, and everyone is trying to go early stage even when it doesn’t make sense for their fund sizes.

And crypto is far from immune to this uncertainty. Lattice published their State of Seed report that showed of the ~1200 companies that raised in 2022, while 80% are still operating, only 1% have found some form of product market fit (unsure how they’re measuring this though). 

Another wild stat is that 13% of Ethereum and Solana teams have been able to raise follow-on rounds, but only 5% of Avalanche teams and 0% (!!) of NEAR teams. Also $700M went into gaming and metaverse seed rounds with essentially nothing to show for it.

And of course the majority of investment continues to go into infrastructure where VCs can play their stupid games that get them predictable returns without creating anything of real value.

We’re in an industry plagued by short-term greed that is both distracting capital and talent towards things that push us forward. We have a real deficit of investors and founders that actually have insights into the new and potentially world changing things this technology unlocks, who believe in something more than making money, and who are ready to do their life’s work for decades instead of hoping for liquidity in a year.

This is a big reason why our cohorts are so small, and why we’re not trying to index early stage opportunities like YC did for web2. Most people aren’t here for investible reasons.

Multiplier 

Multiplier is a soon to launch betting app that lets people play games to get outsized positions in microcaps and memecoins. The way it works is you pick a token you want to win, choose an ETH amount to bet, select how big of a payout multiplier you want, and roll the dice. If you win, the protocol market buys the memecoin you selected and pays you out while creating a green candle for the community.

So instead of just gambling on memecoin, you can hypergamble on a memecoin with a leveraged payout. You can also post content to earn tokens which allow you to play for free. So yes it’s completely degenerate, but it’s also going to be very fun. 

I talked to Lauris the founder last week and am confident that this is one you pay attention to, if not just for entertainment. They also interestingly announced they’re launching on Abstract after incubating the idea initially on Blast.

Rug.Fun V3

The rug.fun team has been constantly experimenting over the past year at the intersection of social and memecoins, and this week they announced their latest iteration.

In this version people need to shill Dotto, an AI coin oracle disguised as a bear, to try to earn 1,000,000 points for their token which triggers the deployment to Uniswap with bonus liquidity from the prize pool. Tokens have 6 hours to earn enough points, and if they don’t the liquidity gets rugged and added to the pool.

It’s pretty fun, you can see everyone’s shills on a token and how many points it earned. It’s certainly more of a cool ephemeral experience than a mainstay product, but I love anyone keeping crypto weird.

Drakula

Drakula officially went live on the app store this week so I checked it out for the first time since it launched as a PWA earlier this year and it has become significantly more interesting.

It’s essentially tiktok with two fundamental differences. First, all videos are minted on Zora so they can be collected and traded. This use case pairs very well with Zora’s new liquid secondary markets and something going viral (assuming this reached a meaningful level of adoption) could create a ton of value for the creator.

The second is that creators can pin a memecoin (or any token) to their profile and it gets prominently displayed on all their content. It’s a cool way to signal allegiance with a token community, and I’m assuming creators earn fees for any trades that happen from their video.

Obviously their challenge remains attracting content that’s actually interesting and differentiated, but it’s definitely worth checking out.

Interface

Interface continues to push on a unique edge of what it means to build an onchain social platform. Today they announced Trades where you can see the trading PnL for any user or address and decide who to follow or copy trade based on it.

The product is a critical companion during bull markets so might as well download it now and start getting familiar.

Thanks for reading kings and queens.