Notes on Consumer Crypto | Nov 23, 2024

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

Here's what I found worth talking about this week...

We had Tyler on the show this week to dive into what’s happening in DeSci. He’s a trained molecular biologist and a co-founder of a few of the leading DeSci projects. He recently joined Seed Club Ventures (our network’s $25M venture DAO) to lead a new DeSci focused SubDAO, which we announced this week.

I’ve admittedly been sleeping on DeSci, but finally took some time to look into it and it’s pretty fucking cool. I’ve been talking a lot about how tokens are removing gatekeepers to capital, breaking down old world power structures, and allowing anyone on the internet to determine what’s valuable. And science is one of the most gatekept and overly bureaucratic enterprises out there.

As Zee Prime laid out in their recent post on it, science used to be done by genuinely curious entrepreneurs and tinkerers until the government and academia took it over and turned it into a bureaucratic hierarchy game more focused on status building and regulation than markets and truth discovery. Tokens are unbundling existing power structures across the board and have the potential to bring markets into science and incentivize radical experimentation. As Matti said, “the frontiers should never be a credentialled walled garden”.

One of the most explicit examples of this so far is pump.science. It combines the speculative degeneracy of memecoins with new molecule discovery and funding for experimental clinical trials focused on longevity. Citizen scientists can propose new molecules, people can trade these molecules on pump.fun, and as marketcap milestones get hit it unlocks funding for running trials on the molecule which get streamed on the platform. It’s gamifying funding and participation in longevity research.

It sounds insane, why would your average person speculate on molecules, but that’s besides the point because they are. It’s like hamster races but betting on worm lifespans instead of the speed of little mammals. All that really matters to unlock speculation is that there’s enough attention and degenerate liquidity for there to be a high-upside game to be played, and their recent investment from Binance has provided that.

I’m generally excited about people harnessing the attentive power and capital formation capabilities of memecoins and tokens towards more productive goals. Andrew Kang tweeted an idea about doing this towards charitable causes which is interesting as well.

VitaDAO (longevity) and HairDAO (hair loss) are two other leading DeSci projects funding research through more traditional DAO mechanisms (pool capital into a treasury, vote on what to fund, and aggregate expertise to support funded projects).

As the crypto wealth effect continues growing, trust in institutions continues diminishing, and AI puts superintelligence into the hands of everybody, I expect DeSci to continue getting more financial interest, attention, and participation.

Giving the smartest people on earth a path out of the restrictive grant-writing rat race so they can focus on experimenting is a very worthwhile endeavor.

Distribution-first software is a term Nicolas on our team uses all the time to describe this shift from being focused on pulling people into an owned platform and retaining them there, to focusing on distributing your software into the social contexts that already exist. Farcaster has created a great playground for this approach with frames, the programmability of the network, and wallet-connected accounts, and Clanker and Anoncast have caught fire this week running this strategy.

Clanker is a product built by Proxy Studio that lets anyone on farcaster launch a token directly in the feed simply by tagging the bot and providing a ticker, name, and image. It sounds simple, but the impact of the built in distribution, reputation, and social context is profound. 

I experienced this first hand yesterday when I decided the farcaster community should have its own cultural index asset like $BITCOIN. All I had to do was send this cast and the distribution did the rest. People resonated with the meme so the post went semi-viral (for farcaster standards), people immediately discovered it and started buying, this kicked off a bunch of interface notifications and people copy swapping each other, frens groups saw everyone else buying it so jumped in, it started trending on terminal, etc, etc. 

Clanker has a website, but it’s a very secondary piece of the product strategy. If you compare this to the challenges wow.xyz has aggregating attention on their platform, or pump.fun competitors have trying to disrupt the network effects they have, it’s clear how powerful it is. 

Thousands of tokens have been launched in the week since Clanker was released and they’ve already done $300+ million of trading volume. People are launching tokens in the replies to memetically-strong casts, autonomous agents are easily launching their own tokens, and there was even a token launched from an anonymous posting account.

The latter, $ANON, sparked the creation of Anoncast which is another great example of distribution-first software. Anoncast is an anonymous posting product that uses zk proofs to allow $ANON holders to anonymously post, promote, and delete posts based on how many tokens they have. 

It’s like YikYak, but collectively managed by token holders and integrated into the social platforms everyone is already using. If you like some posts and want to dive deeper you can go to the site, but they don’t need you to provide value and grow the attention base.

This is a powerful go to market strategy any crypto founders building today should consider, but as the big distribution platforms continue owning attention it may just become an entire new product category. Moxie, Perl, and many others have used this effectively.

I’ve had a bunch of conversations over the past few weeks with founders and investors trying to make sense of what opportunities look like in this age of increasingly dominant distribution channels, where startup building has become a widespread cultural phenomenon, and we have rapidly increasing speed and ease of software creation.

One of these conversations was with Mike Maples. He said in the early days of his investing it was like shooting fish in a barrel and you would have literally had to try to not make money. Being a startup founder was still a weird subcultural thing to do, software was hard to create, and there weren’t massive social products that owned attention at the magnitude we have today. 

But now there are more things getting built everyday than anyone can keep up with, and waves of seemingly instant competition for any new idea that is showing signs of promise. And this is only accelerating. 

Another investor that Jess talked to this week stated that a very easy and reasonable thing to do soon will be to build a killer go to market team, look at all the startups accepted into YC, and front run them. It’s almost like memecoin cabals (who are behind most of the very successful breakout tokens) are a precursor to the inevitable software cabals. 

So how do you deal with this as a founder? And how do you make sense of this as an investor?

I obviously don’t have the answers, but I do think a few things are pretty clear. Brand, community, and distribution are the only moats. You need to have an audacious mission that people want to be a part of. You want to make heavily opinionated software that a distinct group of people see themselves strongly represented in. You need to be willing and operationally set up to constantly reinvent yourself. And you’ll need to be committed to creating financial outcomes for your users and community, or someone else will.

You all know this, but $CHILLGUY ran rampant on tiktok this week and onboarded a ton of people into crypto. It surpassed almost all of the recent viral memecoins in holder count within a few days, drove consecutive record days for moonshot as the easiest way to buy it, and my hairdresser and multiple friends were asking me about it. 

It’s been obvious for a while that memecoins were going to be the core driver of crypto adoption this cycle. I don’t know why $CHILLGUY was the one to finally break out and go properly viral on tiktok but it finally happened. And what’s become immediately obvious is how much weirder this is going to get as memecoins continue infiltrating mainstream culture and new participants take them in new directions.

Already just this week we’ve had: 

• a 13 year old kid rug on a livestream, the token pumping to $80M afterwards in response, and someone kidnapping his dog.

• someone committing to streaming until their token hits $100M, is currently on hour 47, and has kicked off a bunch of copy cats taking it in weirder directions like living in a chicken coop and staying on the toilet.

• countless other things I’m not going to comment on.

It’s clearly the start of a new insane category of content creation. The incentives that memecoins create are so strong, and the ability to use them to get a bunch of attention, go direct to viewers, and sidestep traditional content moderation is going to drive people to do some very weird things.

Stepping out it really highlights the distribution power of tokens and the massive impact they can have in the path to potentially unseating incumbent networks.

The big questions that are top of mind for me in response to this are (1) what will the impact of this be on general public sentiment of crypto, and (2) how do founders tap into this growing awareness base.

I’m optimistic that this will be net good for consumer crypto. There’s something here for everybody and people getting more comfortable with the tech and the concept of digital ownership will seed the ground for easier user acquisition. 

And I think founders just need to get more comfortable and less precious around launching tokens. Obviously they bring challenges, but you’re fighting a hard battle against obscurity and they’re an incredible way to combat that.

Ian Rogers wrote a great post this week answering the question of “why collect digital art?”. NFTs have obviously taken a back seat to memecoins in the attention arena, but there continues to be great art getting released and a subculture of hardcore digital art collectors excited to buy them. It’s very easy to get swept up in all the crazy speculative use cases that are rampant today, but it’s always nice to step away from that for a moment and remember how profound this technology is, and will continue to be, for digital artists and art enjoyers. 

I always appreciate Ian’s love of subcultures, personal expression, and the humanness of a value exchange between a creator and collector. Those are at the core of his appreciation for digital art.

But the thesis Ian shares for why early Art NFTs will hold their value over time is pretty clear. We’re in a world where our lives are firmly digital-first where the ownership of digital value is becoming ubiquitous and digital identities matter more than physical identities. So a transition of the art market from being dominated by physical works to being dominated by digital works is inevitable.

And the value of art is a function of time and storytelling. The longer a piece of art exists alongside a powerful story for why it matters, the more people will know about it, and the more valuable it becomes. It’s an attention game just as everything else is. The stories from the pioneers of the NFT art movement will be powerful and lindy so it’s easy to see why the canonical works will continue growing in value.

It’s of course never going to compete with memecoins or stablecoins in market size, but it doesn’t need to. Participant numbers in the traditional art market, or even the luxury goods market, are relatively very small compared to mass market products, but they’re still hugely valuable because of the scarcity of good stories and the willingness from buyers to pay for them.

So anyways Marfa was last week and it sounded like it was great, Joe Pease dropped an awesome collection this week that did $1M+ in primary sales, the Punks price is loosely tracking the price of Bitcoin, Botto works continue selling for solid prices, etc. Demand for Art NFTs and participating in digital art culture hasn’t gone away.

We won’t ever get back to the days where every ArtBlocks or Braindrops collection was instantly selling out, but this continues to be a nice corner of crypto culture and can provide a very refreshing break from the charts and trenches.