Notes on Consumer Crypto | March 29, 2024

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Things are getting crazy. 2 months ago I was scraping the internet for interesting consumer crypto news and topics to look at, now I'm struggling to be able to trim the list down enough to make it manageable to write about every week. We're back.

Anyways, here's what I found interesting this week in consumer crypto...

We kicked off the show this week with Vibhu from Drip, a platform for onchain media collecting. It’s a really compelling product as they’ve managed to both simplify the experience for passive collectors by allowing you to subscribe to weekly drops from creators you like for free, while also creating a bunch of games people can play to earn rare pieces if you want a more active experience. 

And they’ve been doing numbers. They have 150k DAUs, 10s of millions of collectibles distributed weekly, and artists with 200k+ subscribers. He was also evidently excited by their revenue, though he didn’t share details.

Interestingly, the scale that they’re operating at is bumping up against the limits of Solana and he’s been calling for the need for L2s and rollups.

He’s one of the marquee builders in consumer crypto, and we had a great conversation digging into all of this. You can watch it here.

We announced SC07 this week! We’ve accepted 8 teams building category-defining consumer crypto projects to join the 3 month program. We use “program” lightly, we’re not trying to teach you how to build a start up, but instead focus on creating an incredible context for you to build within. You get to build and learn alongside other visionary founders, get deep hands on support from Jess, Ben, and I, and tap into the attention and connections of The Seed Club Network.

We have teams building headless (and headed) marketplaces, building on top of memecoins, building consumer ai agents, building on top of decentralized social, exploring the next evolution of DAOs. This cohort is really covering a bunch of the emerging areas of big opportunity that we’re seeing in consumer crypto today.

You can read the full announcement and see all the teams here, and we’re going to bring a founder onto Internet Explorers each week to dig in deeper so you’ll get lots of opportunities to tap into their brains.

One thing I did want to touch on here was the emphasis we put on “category creation”. We think we’re entering a golden age for crypto startup building where the infrastructure is ready but the big opportunities and markets haven’t been captured yet. Our focus for this batch was to work with founding teams that have recognized those market opportunities and are running at capturing them.

Many of the largest consumer internet companies of today came out a couple year period in the late 2000s when everyone was coming online and the infrastructure was finally good enough to build new applications cheaply and easily. That’s the new few years in crypto.

This was a great post by Mark Beylin where he describes why the token is the product. He thinks that “for anyone trying to build a valuable company in crypto, your first and primary goal should be to attract permanent attention and liquidity to your token”.

The increased efficiency and fairness blockchains offer by being open and interoperable also makes building sustainable moats much harder. The network effects that can be created around a valuable token with an attractive narrative are a critical defense against this. 

Mark think that “on a long enough time horizon, any successful crypto product which doesn’t launch a token will eventually have their margins competed away, and/or will be beaten by competitors who do launch a token”.

He uses a great example of airlines to show how this dynamic already plays out in hyper competitive low margin markets, as the majority of airline value today is derived from their loyalty programs. Delta points is the core product and key point of leverage for Delta, not their flights. Airlines without successful loyalty programs barely hang on and are forced to become low cost carriers with terrible businesses. Though loyalty dramatically downplays the opportunity with tokens.

He goes on to talk about the importance of the attention, token value, useful product feedback loop and how the best founders weaponize it to build valuable and disruptive networks, using Helium as an example. Keeping this spinning is ultimately the core function of crypto projects.

I strongly agree, and actually talked about the same idea in my Meme-Utility Spectrum post from a year (!!) ago. It covered the idea that the more tangible utility a token has the less effective it is at capturing the narrative-value and shared belief of a mission, and vice versa. 

In the early days of a project when the product inevitably sucks and you’re trying to attract your early supporters and believers it’s critical that you skew heavily towards the meme-side of the spectrum in your attention-getting techniques and token design. As the product improves and you start delivering on your earlier promises you’ll naturally need to provide more utility to the token, but maintaining meme-value continues to be critical to a great token product experience.

Anyways, tokens are products.

$DEGEN, the scenecoin of farcaster, announced the launch of their L3 yesterday. The market really liked it and the token was up 80% on the news.

First for some details. The L3 is built with Arbitrum Orbit, uses Base for settlement, and Arbitrum’s AnyTrust for data availability. More importantly though, the chain uses $DEGEN as its native gas token.

This is so sick. As $DEGEN aggregates the attention of more and more of the Farcaster scene  we’ve seen growing interest in projects wanting to use it as their native in-game currency (Drakula, Perl, Bracket.game). Both because it’s smart for go to market, and also gives them much of the benefits of having their own liquid token without having to deal with that complexity up front.

So the $DEGEN app ecosystem is emerging, and with that comes the opportunity to further own the stack it exists on. Now projects wanting to tap into the $DEGEN mindshare can launch their project on Degen Chain in a much lower cost environment that unlocks use cases that weren’t feasible even on base. I also expect the core $DEGEN team will release some products on it shortly, likely including native onchain tipping.

The biggest outcome from this though is the improved narrative. The token is the product, and now the token isn’t only capturing the attention and cultural value of the scene, but is also a gas token on a chain that people want to build on? Yea that feels great. 

This is the start of a new playbook for scenecoins and I’m really excited to see how it plays out.

There’s a hot new memestock in town. Trump’s media company went public this week and is trading under DJT, his initials. It’s trading at an $8B market cap on $5M of revenue lmao.

It’s so fun reading traditional media takes on the stock, they’re midcurving this harder than anything we see in crypto. It’s getting compared to the GameStop and Bed Bath & Beyond sagas, and is getting the “its valuation is completely dissociated from its underlying fundamentals” treatment.

Do we even really need to talk about how much they’re missing the point here? The stock is the product. People want to own a piece of Trump, whether because they love him or because they think he’s going to attract a ton of attention this year, and now they can. 

One analyst trying to paint a bearish outlook on the stock was highlighting that “the maximum addressable market for Truth Social is only about 75 million people who like Trump.” 75 million people who really fucking love Trump and are already onboarded onto the stock market?! My god that’s bullish, makes our little memecoin market seem laughable.

I’m certainly not endorsing the stock, I despise the man, but I’d be surprised if it didn’t do well this year.

Sofamon launched their tradable telegram sticker product this week and it’s gone crazy.

When they joined SC06 they were building a browser companion that made it cuter and more enjoyable to navigate life onchain. During the cohort they realized that what people really wanted to do with the product was use it to socialize with each other. This was also when Friend.tech was having a moment, and the opportunity to combine their lovable character, their obsession with streetwear, and fun bonding curve mechanics into a social product came into view.

Fast forward 6 months and they’ve crushed the product release. The entire experience is so well done, you just need to go give it a go yourself. Here’s my invite code…

Zora launched ERC20 minting this week allowing creators to choose any token to price their mints and receive payment in. I mentioned this when talking about Drakula a few weeks ago, but I think creators signaling community allegiance through pricing work in memecoins is going to be a common behavior. This is another proof point towards that.

We’re going to be collecting a bunch of work minted in $enjoy over the next few days so why don’t you try it out :). 

That's all, Ciao