Notes on Consumer Crypto | June 7, 2024

Ayyyyy

It's a meaty one this week, so let's just get into it. Here's what I found interesting this week...

We kicked the show off this week with Chris from Floor. I was still anchored on Floor being the NFT portfolio tracking product it started out as a few years ago, but it’s evolved a ton since so was fun to hear the renewed vision for it.

They’re now building what I’ve seen them call “the home for web3” and “the onchain everything app”. This includes a wallet, social feed, portfolio tracker, trending tokens, news headlines, and more all bundled into a single mobile product.

It’s sitting right at the intersection of a bunch of pretty crowded markets so it was fun chatting about what he thought it was going to take to win, and how Floor is differentiating itself. He also previously led mobile engineering at Venmo so we got into some insights and lessons he’s carrying with him from there, as well as a bunch more on the state of crypto today.

Watch our chat here.

It’s been an insane week on the timeline as people try to make sense of what the hell is happening in consumer crypto. $MOTHER performance has crypto purists in shambles, people are using friend tech struggles to make broad generalizations about the crypto social opportunity, and there’s just a general sentiment right now that you can’t build lasting consumer products here and it’s all just going to be gambling in rotating casinos forever.

There’s a lot to dig into here. First of all, the speculation and financialization of anything is the most tangible killer feature of crypto, and it unlocks experiences that are just more obviously differentiated from web2 than any other property of blockchains. 

So I think everyone needs to accept that memecoins, as the most accessible version of this, are probably going to be responsible for attracting way more people to crypto than anything else over the next year. They also happen to be a decent way to learn about digital ownership, wallets, markets, and participate in internet culture and make internet friends, so I don’t think this is a bad thing.

We also need to accept that we don’t have nearly enough people doing stuff onchain yet for the real promise of social products built on shared data, interoperable identity, and digital ownership to be better than twitter, instagram, tiktok, etc. Most of our friends aren’t here yet, and as long as that’s true the web2 experiences where they are will be better. 

I think the way we get there is better products that lean on the stark differentiation of memecoins and other speculative digital assets, create increasingly meaningful social contexts around them, and then overtime the social job these products are serving will be able to start outweighing the financial job. 

The last thing I wanted to talk about here was the idea that you can’t build apps with retention in crypto, which I just think is crap. I think the reason we’ve seen so many ephemeral products is a combination of the people they’re serving (novelty-seeking degenerate dopamine addicts), the infrastructure just recently being good enough (products haven’t had time to be great), and the pure financial focus of them (there’s always a shinier casino).

I think once we have founders start to intentionally target audiences that aren’t crypto twitter, have more time to build great products, and get better at serving social desires alongside financial desires this is going to change.

The products in our current cohort are doing this. They’re not going after loud big bang launches out of the gate and are more thoughtfully building real communities that care about the mission they’re on. You can hear from them all at demo day in 2 weeks.

Mark Beylin wrote a good article this week about Token-Market Fit, building off of The Token is The Product article he wrote a few months ago. In it he explores how you make a token people want, looking at it through the frames of narrative discovery and more efficient venture capital.

He talks about the challenges of balancing narratives that appeal to the broad market and will drive token demand, with the reality that the largest opportunities are often contrarian and misunderstood. And ultimately summarizes the big goal of tokens being to attract high value contributors and participants who believe in the mission and are willing and capable to support it with their capital and energy.

So there’s nothing groundbreaking in here but I do think the perspective of tokens as products is still very underappreciated, but is getting increasingly important. It was fine for tokens to be treated as de facto equity during the previous infrastructure cycles, and governance mechanisms and narratives were effective for serving that desire.

But now that we’re moving into a consumer-dominated cycle and retail participation grows, the tokens that most effectively speak to the beliefs and aspirations of people and give them access to experiences they actially want are going to capture outsized attention. And you do this by actively going and creating a market for your token, making it feel great to own, and creating meaningful social contexts for it to exist and provide value within.

So I very much agree the core focus of a tokenized crypto project is for your token to be a great and desirable product to own and consume, and to find token-market fit with it where it has a passionate community around it and runaway demand.

Polymarket had their best month ever in May, doing $63M in trading volume, and it looks like June is on pace to beat that so far. The volume is heavily concentrated on a few presidential election markets, but it’s great to see them find some fit within that vertical.

The question of course is what happens after the election, and I’ve struggled to see the path to broad appeal for general prediction market platforms. I think the idea of them and what they unlock is awesome, but have always been more interested in vertical-specific implementations of them that can concentrate liquidity and ultimately create better social experiences.

I’ve been playing around with Kizzy, which is essentially a social media prediction market platform where you can bet on how influencer posts or follower counts are going to perform. It’s in closed alpha so don’t want to give too much away before they’re ready to share, but the product they’re able to build by being vertically focused is just clearly going to be so much more appealing to people interested in betting on influencers than polymarket.

I think the same opportunity exists in a bunch of different verticals, with politics being a pretty obvious one. If someone came out with a well designed social political betting product, how would polymarket fare against them?

I talked about Notcoin earlier this year when it was first catching steam as a telegram coin tapping game, and the “mining” period just concluded last week with the launch of $NOT. It’s been an insane thing to watch.

At the time I talked about how stupidly simple the onboarding and gameplay was, and how that coupled with the promise of a token and massive user numbers on telegram was sure to hit some level of virality. Well the game had over 35 million users and peaked at 6 million DAUs. 

What’s even more interesting is the impact that immense attention base and broad distribution is having on token performance. A week-ish after launch it’s trading at $2.2B FDV and has done > $5 billion in volume. That’s wild man, it was a coin tapping game.

But they’re now leaning into this distribution to partner with other projects and launch quests where you can earn more $NOT by using products in the TON ecosystem, essentially becoming the TON Layer3 or Galxe.

It speaks to both the power of tokens as a starting point for expansive business opportunities (the scenecoin thesis), as well as just the scale and distribution power of Telegram.

Hamster Kombat is the latest Telegram sensation by the way, and is already dwarfing Notcoin with 116 million players.

What the hell is happening on TON.

I really liked this post by Anu about the inevitable rise of “software creators” in the age of AI. She talked about how just as the democratization of media creation led to content creators, the democratization of software is going to lead to software creators. 

To quote her, “Software will no longer be built just by a professional class for a professional class. Just like content, software will now be created by everyone, for everyone and to serve every kind of need, big or small.”.

It highlights so many of the opportunities I’ve been obsessed with that crypto uniquely enables. 

One is the opportunity to lean into the episodic nature of the internet and our attention and build companies around launching intentionally ephemeral apps. Build a great brand, get really good at launching things into high attention, and drop transaction-based short-lived entertainment experiences and take fees. There are big businesses to build here.

Another one is the opportunity for individuals and communities to build “anything apps” that bundle protocols and identity data in ways that uniquely serve their audience or members. Every community will have its own bank, social network, art gallery, marketplaces, etc that are owned by token holders. Launch a token for a specific scene, build an anything app that serves them in unique ways, and then launch a network that allows others to build for the scene. That’s the path to billion dollar scenecoins.

The world we’re heading towards is wild.

So some UK Football Club is selling 10% of the team to investors, including fans. This is somewhat common practice in the UK, but what’s unique about this one is they’re allowing fans to receive digital shares as tokens with plans to make them tradable.

Why this gets me excited is a deep conviction that only a small percentage of the social and cultural value of sports teams is actually captured in equity, and that globally accessible, liquid tokens are going to make that very obvious. 

I imagine that team and player related memecoins are probably going to be the starting point for this in most leagues, and once they’re trading at multiples of the actual organizations it’s going to be impossible to ignore.

It’s going to take a while, but fun that it’s starting.

Happy friday ✌