Notes on Consumer Crypto | June 1, 2024

What up internet people!

First up, we announced and opened up RSVPs for SC07 demo day this week. If you’ve been before, you know we design an event that’s both entertaining as hell while also giving you a peek into the future of consumer crypto. You gotta be there, see you on June 20th.

Alright now on to what I found interesting this week…

We kicked the show off this week with Vijay from Superfluid and Alfa Frens. Superfluid is a money streaming protocol that lets you stream tokens to an address. It’s very sick but, as is so often the case with novel protocols, they hadn’t had the adoption they wanted so decided they had to build an application that demonstrates its capabilities. That’s where Alfa Frens comes in.

Alfra Frens is similar to Friend.tech, but native to farcaster and with different speculation games. You can subscribe to a person’s chat room by paying a monthly fee in $degen and while you’re subscribed to a creator you’re streamed $ALFA, the native token of the platform. Then with your $ALFA, you’re able to stake onto creators and earn a percentage of their room revenue. 

The app is well designed and has some nice feature additions on top of what friend.tech has, like displaying the chat leader’s transactions in context. It’s also really cool to see money streaming around the platform and ticking up by the second.

You should check it out, and listen to our chat here.

We also had Joey on the show this week who just launched Crate Place, a songcoin launchpad. The mechanics work similarly to pump dot fun where the token starts on a bonding curve and then graduates to a liquidity pool once a threshold has been reached, but instead of a jpeg and description it’s a song.

You can either upload a song you made off platform, or use AI to easily generate a song on platform. They did $300k in volume over the first week with just AI songs before allowing upload yesterday.

There are a few ways to look at the product. One is as an evolution of music NFTs, where it feels like a useful net new experiment. ERC20s probably have less collectible value, but are much better at enabling speculation and capturing memetic value, and the bonding curve solves any liquidity issues. Could see limited edition collectibles and an ERC20 as a great way to launch a song.

The other is just as a new starting point for memecoins. Does launching one alongside a song / audio file give it more memetic firepower to break through? 

The challenge I’ve seen with most of these alternate starting point token launchpads (videos for example) is that the memespace the tokens occupy are too narrowed onto a specific piece of content and isn’t broad enough to facilitate the endless community replay value you need to form cults. But if the track was fire while still being a great broadly relevant, accessible and extensible meme I could see that being true.

Regardless, it’s going to be a fun one to play around with and keep an eye on. Watch our chat with Joey here.

Alright now onto the biggest topic of the week. I’m just going to zoom right past the jenner, iggy, whatever headlines because I’m sick of them, and get right into some thinking on what the future of celebrity involvement in crypto looks like.

First, it should be obvious that an influential figure launching their own memecoin with their own name is a terrible idea. There’s going to be no opportunity for a real community to form around it, it’s going to pump and dump, and people will be mad and the celebrity will burn trust and lose credibility. (Iggy’s has a good storyline, meme, and kicked off this meta though so could see it doing well).

But a celebrity having a tokenized cult of fans creating memes about them, promoting their work, coordinating and socializing around their brand, and getting economic exposure to their cultural relevance would be awesome. 

I think there are two reasonable paths to getting there. One is just letting a bunch of other people create memecoins about them, see which one ends up building social consensus, and support it through jumping on spaces, sharing memes, buying some etc. They can just have fun with it without having any responsibility, and let it capture their memetic value.

Another interesting path is to launch a scenecoin. They would ticker it with a meme relevant to the identity of their fan base (not their name), airdrop it to past supporters (top spotify listeners / concert attendees), distribute it over time to people contributing to the community, and integrate it into a product with reputation and social games. They’d be able to capture and use the cultural value of the scene alongside their fans in productive ways. It would allow people that want to speculate on them to speculate on them, and allow their most hardcore fans to earn meaningful amounts of it. You can’t tell me a global swifties fandom leaderboard and social graph wouldn’t go crazy.

It’s pretty clear we’re going to see a bunch more of these over the next 6 months, so hopefully they’re not all low effort celebrity-names coins.

Pump.fun continues to crush. Over 750k memecoins have been launched on the platform, they’ve been at the center of the celebrity memecoin chaos, and they had their best day ever this week where they raked in $1.5M in fees. They’ve stumbled onto a fucking insane business.

It’s also starting to grow up a bit as a social product. They’ve been building out commenting, profiles, following, and then this week they announced the addition of native livestreaming to the platform. Now any token dev (person who clicks two buttons to launch a token) can go live at any moment directly in context with the trading interface.

They’d been seeing this behavior emerge naturally with twitch streamers launching tokens, and it obviously has a significant impact on trading activity and entertainment value, so it makes sense they’d want to enable this behavior within the product. 

I first talked to the founders early this year just after they launched and before any token had graduated off the platform yet, and they already knew they were building a social entertainment product. And memecoin launching is proving to be a hell of a foundation to build one on top of.

Our attention is episodic and we get tired of individual storylines quickly. The pump opportunity is in being the netflix of the memecoin entertainment vertical, not the show. To be a place that has an endless supply of unraveling storylines, not just one.

And now for a counter example. Fantasy.top had been cooking right alongside pump over the past month, but it looks like things have dramatically slowed down as their revenues are down 99% from the peak.

Important to note that a bunch of pack and card buying was front loaded and you can continue playing without spending any more money, so we’d need to see what DAUs look like to understand the full picture, but clearly things are not up and to the right.

I think they have plenty of opportunity to turn it around by launching new game types, expanding beyond twitter to other platforms, letting smaller accounts be heroes, etc so definitely not calling it dead, but it brings up a really interesting question of how you build lasting sustainable products in this industry.

It’s so easy to add the right speculative incentives to get a bunch of people to try a product out for a couple of weeks, but keeping those people around for even months let alone years is proving to be very difficult for consumer crypto builders. 

One opportunity I continue to be excited about is actually leaning into this reality, building intentionally ephemeral products, and designing an organization, brand, and token that’s able to capture and store the value that gets created in these moments of high attention.

Another opportunity is what I mentioned above with pump.fun and be the platform that aggregates a category of ephemeral experiences and creates a great social context for them to launch into and exist in. 

But I also think current crypto users are a special breed of novelty-seeking dopamine addicts that isn’t representative of the desires of the rest of the population, and that the next concentric circle of users will be more inclined to stick with products that are providing value to them. 

Fantasy influencers makes sense to me, just as fantasy sports makes sense. There’s an arena people love and fantasy games are a way to extend the surface area where they can express and engage with that love.

It’s clear that’s not why this batch of fantasy.top users are there though, they’re there because it’s a new crypto casino. And as soon as there’s a shinier one they’ll (we’ll) move on.

Starting here was obviously the right idea. They learned from a bunch of usage and made a bunch of money. But If I were them I’d get away from crypto twitter and focus on the intersection of crypto users and some other interest category (reality tv stars, artists, politicians, etc). Build a game a couple hundred of them really love for social reasons as much as economic reasons, and go from there.

Another week, another batch of new chain announcements. A Galxe L1, Aave / ENS / Friend.tech L2s, and word of 20 more coming soon to the superchain. We also know everyone and their $mother are considering L3s.

These are more interesting then general chain announcements since they’re consumer products with real users driving real transactions who are presumably seeing the value owning the execution environment and capturing sequencer fees for themselves. But it’s hard to not think it’s still mostly about the valuation bump you get by also being infrastructure. 

It feels like the days of getting that bump on just an announcement are numbered and it’ll be interesting to see if teams wait longer to do it once that’s the case. I absolutely see it as the end state for any dominant consumer crypto project, but it still just feels too early in the lifecycle of most projects (except ENS, it’s old and being on mainnet is bad).

Go build something millions of people are using, find clear PMF, bump into scaling issues with being on an L2, and then do it.

Damn feels good to be pragmatic for a minute.

Happy weekend ❤