gm friends,
I want to go surfing so let's jump right into it. Here's what I found interesting this week...
Lens
We kicked off the show this week talking to Stani, cofounder of Aave and Lens. Lens went completely permissionless a few weeks ago and they’ve seen an explosion in sign ups since.
They’re running a very different strategy than Farcaster by focusing entirely on the protocol and pushing application development into the ecosystem, and it was great getting to chat with Stani to understand the thinking behind it, and where the most exciting experiments and pockets of activity are happening right now.
You can listen to our chat here.
Hypersub
We also had Jonny Mack from Fabric on the show this week to talk about their NFT-based subscription product Hypersub. We’ve been fascinated by protocol rewards and how they’ve unlocked an entire onchain transaction distribution ecosystem, and Hypersub is building on a similar premise to bring these economic alignment superpowers to subscriptions.
They’re doing this through two mechanisms; Referral Rewards and Subscriber Rewards. Referral Rewards are pretty standard, refer someone who buys a subscription and earn a % of the revenue.
Subscriber rewards are where things get more interesting. Subscription creators are able to allocate a % of their revenue to distribute to a subscriber pool. A subscriber’s share of the pool is based on how early they subscribed and how long they’ve subscribed for. You can look at 0xen’s rewards page as an example.
This is cool not only because subscribers get to share in the upside of their favourite artists, newsletter writers, etc, but a little added speculation fundamentally changes the mental math people do when they subscribe.
It’s a novel economic primitive that people are already experimenting with in a variety of ways, and excited to watch it evolve.
It was a fun convo with Jonny diving deeper into the product and the insights that are behind it.
Attention Theory of Value
Multicoin dropped a good post this week. They outlined how the proven ability for crypto-assets to capture, store, and value attention is creating an opportunity to build a new class of apps that are what they call “Publisher-Exchanges”.
In the same way that the consumer internet made the atomic units of information dramatically smaller and more fluid, crypto is doing for value. This is blowing open the design space for what can be traded and where it can be traded.
They think the big consumer crypto opportunity, which I agree with, is in building things that will allow marketplaces of attention (TikTok, Instagram, Netflix, etc) to collide with the new crypto-powered marketplaces of value. Apps that control both the flow of attention through content, media, information and the flows of value alongside it.
They highlighted messengers (tg bots as an early example), content networks (unlonely), information markets (polymarket), and special-interest communities (ConstitutionDAO) as categories of these they’re excited by.
This is another framing for the opportunity that I’ve been outlining as “create contexts people want to transact within”. All novel consumer behaviors (collecting, predicting, speculating) and business models (transaction fees, protocol rewards, mints) that crypto unlocks stems from the desire to transact.
Transactions being done for social reasons will need to be presented within a meaningful social context for people to want to do them at scale, and transactions being done for speculative reasons will benefit from being presented alongside the sources of information.
It’s also interesting to consider what the dominant form of these atomic units of value will be, and I tend to think they’ll be memecoins. They’re proving to be the purest, most flexible, and most entertaining form of value carrying assets.
If that’s true, and we’re moving towards a world where every brand, celebrity, sports team, political party, news event, belief system, movie, school, city will have associated memecoins that their believers rally around, then on top of being the place where transactions happen there is also a big opportunity to be the place where consensus gets created.
Anyone can create a memecoin for anything, but all the value and upside is dependent on becoming the consensus schelling point for a given meme. Being the place that has the attention and social context to consistently create the consensus memecoins within one or many of these categories has immense opportunity.
For example, it’s obvious to me that a consensus memecoin for a sports team will be more valuable than the organizations themselves. Building the defining product that sports fans use to socialize and speculate around sports-related memecoins could allow that product to have exposure (the mechanism design here gets interesting) to billions of dollars of cultural assets and their related trading activity.
Drakula
Drakula is a fresh example of a “Publisher-Exchange '' that was just launched this week by Alex Masmej and team. They’re taking the publishing model of TikTok and coupling it with an engagement points system and native creator speculation.
It’s early and raw but what’s interesting about it and worth talking about is how they’re leveraging $DEGEN in their go to market. Instead of immediately launching their own token and dealing with the complications of that, or just using ETH, they chose to price all creator shares in $DEGEN.
This is smart, and has allowed them to really effectively tap into a meaningful existing social context to incubate the product alongside. The $DEGEN community loves it because it’s giving them a new social and economic playground for their native currency and driving meaningful new demand and attention for their beloved token.
This feels like a meaningful innovation in how you get the attention of crypto scenes. The old model was to just include token holders of aligned communities in airdrops, but natively integrating their token and providing them new desired experiences is way better.
You could see them continue doing this with new tokens and even giving creators the opportunity to choose what token they price their shares in. A creator pricing their shares in $ZYN or $TRUMP or $ENJOY to be able to signal identity/community alignment would be very interesting.
Know Thy Markets
I liked this response from Joel John to Nader tweeting that it’s a red flag when a founder spends time talking about their market or their token price instead of just focusing on building.
It’s a short-ish post with lots of nuggets of wisdom from his years of working with founders so read it, but his tldr is that founders need to be narrative engineers, stay very close to the meta, and constantly make sure market structures are in their favor.
We’ve seen time and time again how easy it is to get investor and user attention when you’re sitting on a hot narrative, and how much of a struggle it is when you’re not. You can hate that, but attention and high valuations are a very important ingredient in attracting the talent and capital that ultimately builds great products with sustainable moats.
This is a big part of what we think about when selecting teams for our cohorts. If we can see a clear market narrative for what they’re building and how we can position their product within it, it gives us way more confidence that we’ll be able to attract the attention, capital, and usage they need to succeed.
Apps vs Infra
Regan’s thread this week asking whether applications will finally have their day or if we’re just going to keep running back the infra play is a good follow up to this.
Since Joel Monegro’s Fat Protocol Thesis in 2016 infrastructure has dominated investments as they’ve continued to attract sky high FDVs and consumer applications largely have not. The vast majority of the Top 100 tokens on coingecko are still just new types of block space.
Regan shows that even though more consumer-focused products like LDO, UNI, GMX, DYDX throw off a ton of cash flow they’re not top 50 coins. Dymension, an app-chain focused L2, trades at $8B FDV with $27M in TVL whereas Rocket Pool trades at $750M FDV with $5B in TVL. It’s clear the market gives a huge premium to projects that are further down the stack.
Even though there’s a ton of increased excitement around consumer crypto, it continues to look like infrastructure is going to attract the vast majority of investment capital and dominate the token charts for another cycle.
Going back to what Joel John said above, good founders don’t fight market structures. And as a result of these narratives we’re seeing consumer founders explore vertically integrating and building their own infra. If you can launch an L2/L3 today, 10x your FDV (or justify a token), and attract a bunch of new attention should you not do this?
Well, maybe. Depends on what you’re trying to build. Think it’s inevitable that this corrects at some point, how much more commodity infrastructure can the market really handle, but there also may still be a lot more juice in the lemon. It’s certainly a fun consideration.
Have a great weekend!
