for the love of god zoom out

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

Here's what I found interesting this week...

Baseline

We kicked off the show this week with Boo from Baseline Markets. We stumbled onto the project a month ago and were intrigued by the concept, we then talked to the team (previous contributors to Olympus and Yearn) and were even more intrigued by the concept, and then we slowly started hearing about more and more projects planning to use baseline to launch their tokens.

Their core insight (as I understand it) is that if you fully automate liquidity management, have a baked-in credit facility, and focus fees from trading / borrowing to increasing a floor price for the token, you can provide holders with meaningful price guarantees and drive more sustainable price growth over time from growing attention.

The source of my intrigue in it is in how elegantly it captures value from engagement with the token. I’ve always viewed tokens as products and recognized that a large percentage of a project’s community will primarily participate at the speculation layer (the 0.1% rule). The network not capturing meaningful value from that product consumption is ridiculous (it’s like redbull giving away their drinks for free), but that’s how the majority of token models are designed today.

It’s a bit confusing and hard to wrap your head around so we figured we’d just bring them on to properly unpack it for everyone. You should listen to our chat.

I’ve been reading Pattern Breakers by Mike Maples and the theory he shares for how breakthrough companies get built is so timely for where we’re at in consumer crypto. 

His core idea, which he arrived at by studying his outlier successes and trying to understand why 85% of his returns had come from pivots, is that for ideas to truly be worldchanging and have runaway outcomes they need to be grounded in a non-obvious insight for how an external event (an inflection) is creating the potential for radical change in how people think, feel, and act.

Airbnb, twitch, and lyft are examples he leans on to illustrate this:

• Airbnb recognized that online reviews had reached a tipping point where they were now universally accepted as a real source of trust, and facebook had also just opened up their API to allow other sites to pull in profile data which further allowed for trust building. Their insight was that this could be leveraged to give people confidence to book stays in other people’s homes.

• Twitch recognized that internet bandwidth and CDN improvements were reaching a point where they could support live streaming for the first time, as well as a growing cultural desire to build audiences and become internet famous. Their insight was that livestreaming would be as engaging and entertaining as recorded content.

• Lyft recognized that with the addition of GPS chips in the iPhone 4s you could now pinpoint people’s location within a few meters. Their insight was that this could be used to do Airbnb for cars.

This may sound obvious, but the vast majority of startup ideas don’t actually have this. Most are discovered from the perspectives of existing markets and finding problems that exist within them. These are often credible sounding ideas, but you’re competing directly with incumbents on their turf and you end up fighting for share of an existing market instead of defining an entirely new one where you’re the only option.

I didn’t have this language at my disposal until reading the book, but looking back it’s exactly how we’ve been selecting projects for our accelerator. The projects that have gotten us the most excited have recognized inflections that crypto is creating, have unique insights into how they can be harnessed to create radically new consumer behaviors, and have a compelling initial idea they think is a good starting point to start exploring it.

I highly recommend reading the book, but wanted to take a stab at proposing some inflections that exist within crypto that have been top of mind for me.

The new existence of low cost global permissionless payment rails. For the first time you can now send or accept money from anyone on earth for fractions of a penny. With the improving UX of crypto wallets this is becoming rapidly more accessible to every internet user on the planet.

The introduction of tokens as a tool for at scale network coordination. You can use tokens to overcome the cold start problem of networks and incentivize participation. This allows previously inaccessible networks to exist for the first time.

The discovery of tokens as stores of cultural and social value. For the first time social and cultural value can be directly captured, stored, owned, and used. This is unlocking an entirely new economy and markets for internet assets.

Looking forward there will also inevitably be inflections around regulatory clarity as well as various mainstream adoption milestones.

The biggest opportunities are likely going to come from pairing these crypto-created inflections with external inflections. Crumbling trust in traditional institutions, the ubiquity of AI-generated content, growing financial nihilism, and the disappearance of physical / local communities are a few I’m seeing increasing signs of.

If you're a founder it’s well worth your time to stress test your ideas to make sure you’re building on top of an inflection and have a real insight into how it can be packaged to change consumer behaviors. 

EtherVista received a ton of hype this week, and honestly I have no idea why. I mean, I do know why. It’s because the Ethereum community is so desperate for something new to get built on mainnet that literally anything is exciting. And they launched the product with a native token to fuel some speculation and drive attention. But the product is pretty meh.

What it is a new AMM with a built-in token launcher. The AMM has a few tweaks on the Uniswap model, namely fees getting paid out in ETH instead of tokens as well as some deeper pool customization options. There’s also a 5 day liquidity lock-up period on new pool creations to try and disincentivize ruggers. These are cool but feel pretty minor.

It’s getting touted as the pump fun of Ethereum which I just don’t see at all. In its current form it’s much more of a DeFi product than a social memecoin trading product.

All protocol fees from the product go to buying and burning their native token, and the early attention has led to 2.5% of the supply burned and a peak market cap of almost 40M. It’s down to 22M today though and seems like trading and token launching activity has cooled off significantly.

It’s hard for me to see this catching on, but maybe I’m missing something or there’s a cracked team behind it that’s worth betting on. It’s crazy how little DeFi innovation we have this cycle compared to last cycle. It’s like everyone is distracted building new chains that don’t actually give us anything new to play with instead.

Anyways, things are generally not looking great across the launchpad ecosystem. Pump activity is down to march levels, Moonshot is trending to zero, Ape.store (the pump of base) is way down.

I did manage to dig up a cool new launchpad experiment called moonke.biz. They’ve called their mechanism stake to meme, but it’s really just focused on giving people a risk free way to participate in new memecoin launches and providing tokens with better starting conditions to succeed.

Here’s how it works:

1. Tokens are launched essentially as crowdfunding proposals. There’s a SOL goal set, people can pool capital if they want to support the meme, and once it reaches its goal the token actually gets created. You can withdraw your deposited SOL at any point during the period.

2. When the token gets created the SOL from the crowdfund gets paired with the token and a Raydium liquidity pool gets deployed.

3. Then once the token hits a 5x, 20% of the liquidity from the pool gets taken out and distributed back to the initial supporters. So they get their original SOL back as well as their pro rata share of the tokens.

4. If the token doesn’t hit a 5x after 30 days, the initial supporters are able to claim their SOL back.

The platform launched with a trial run token, but they haven’t opened up token creation yet. I don’t know the team behind it so DYOR, but it’s weird and new. Doubt it’s enough to displace the network effects of pump or create a new memecoin meta, but may get the creative juices flowing for people.

Dub and LMAO are two other pretty hyped up memecoin products that I’m keeping an eye on.

Pudgy Penguin Luca wrote an article this week that provided a fresh framing for the stages of consumer crypto adoption.

He outlined 3 stages of mass adoption; discretionary spending, necessary spending, and essential spending.

He says we’re in the discretionary spending phase right now where we’re attracting people with applications that occupy their free time and are built to serve leisure desires. Examples he provides are gaming, social, casinos, betting, memecoins.

In the necessary spending phase is where he says more utility focused products get adopted. DeFi, DePin, commerce, payments.

And finally we enter the essential spending phase where more and more of our critical products like insurance, voting, identity, credit all move onchain.

I think this is kinda right, but not entirely. I’d argue DePIN, Payments, and DeFi are closer to meaningful adoption than social or gaming. 

I’m just shooting from the hip here so this also isn’t quite right, but I’d use something more like Financial Phase, Social Phase, and Identity Phase. All of the most obviously differentiated crypto products today have financial or speculative wedges into the outside world (Payments, DePIN, memecoins, prediction markets).

As more people start doing more things onchain it’ll allow more meaningful social experiences to be built. And eventually once everyone has growing onchain identities and assets we can bring all the boring stuff onchain as well.

He finishes by stating that one of crypto’s most valuable companies could be a pump.fun meets Bitclout, meets Polymarket, meets an Instagram-style product. I have no idea what that means but let’s get it.

This guy telling me everyone has quit crypto while my weeks are full of talking to people who have never been more excited is amusing. 

But I get it of course. Price is down, summer is over, sentiment is bad. But we should probably all try to stop carrying the burden of an entire industry and just focus on building our thing. That’s all we can control.

But if you insist on leaving your well-being up to the discretion of market forces, the least you could do is zoom out and try to remember how good things are. We’re right on the freaking brink.

But don’t take it from me, listen to Jon.

This is such an important inflection that I still feel is flying under the radar. Or at least most people haven’t grasped how wide reaching the implications of it are going to be and how fast it’s going to arrive.

We are heading towards a world where all value flows to brand and community. The era of sterile opinionated products and platforms is behind us. People increasingly want to see themselves in the things they use and find a sense of belonging in the internet worlds they inhabit. 

The kings and queens of the new internet will be the cult leaders of movements leaning on new AI superpowers to world build and serve their community in shockingly expansive ways. The people building things others really want to be a part of.

PuffPaw announced their $6M fundraise yesterday and it was the most polarizing announcement since Story Protocol’s fundraise two weeks ago lol. 

I’ve had some conversations with the founder and find it a very worthy experiment to go run.

The big adventure they’re on is to try and get vapers off their nicotine addictions, reduce the amount they’re consuming, and transition them into healthier vaping alternatives. The team has deep vape industry and pharmaceutical expertise so are well suited to go after changing things from the inside.

Apparently 1 in 4 Gen Z vapes regularly and building a cool vaping brand with tech-enabled vapes and crypto incentives gamifying people’s usage reduction seems like the most plausible path to making an impact. 

I also think they’ll take a good run at picking up where StepN and Sweatcoin left off and continue pushing forward our understanding of how to design token models to reward real world activity. It’s a compelling memecoin and mechanism backed by a real business launching into a novelty and economic game receptive community.

They’ll have a good shot at aggregating a real scene, creating a meaningful social and identity context, and building a digital native brand and attention network people want to be a part of.

Let’s see.

Alright I’ve been trying on some updated language when describing Seed Club and I’d love some feedback on how this lands…

Seed Club is a participant-owned venture network. It’s a bet that doing venture capital from the first principles of a network instead of the first principles of a firm will create dramatically more interesting outcomes.

It’s a subtle but fundamental shift. It means that instead of the organization at large being narrowly focused on investing activities, Seed Club has a more expansive goal of aggregating a scene of passionate internet enthusiasts and driving network value.

We’re doing this because we think it’s the highest leverage and most valuable thing we can do for founders and the crypto ecosystem at large. It unlocks powerful flywheels that will accumulate financial, social, and cultural capital in abundance, create the ideal conditions to build a startup within, and ultimately allow anyone to participate in the value creation of innovation. 

Alright let’s get more specific about how this actually works.

Seed Club is a DAO orbited by thin business units.

Within the DAO we focus on building communities, experiences, and media that creates participation pathways for existing crypto believers, and converts people still on the edges into believers and participants.

We help people make money, get smart, have fun, and find belonging along the path to collectively building the next version of the internet.

Within the thin business layers are where we do our investing activity. This includes Seed Club Ventures, our accelerator, and any new network-aligned businesses we launch in the future.

We do this because venture capital needs to be done within conditions that optimize for speed, agency, and non-consensus decision making to be effective. Not to mention the regulatory requirements of today’s world.

These businesses are in a tight economic relationship with the DAO where we effectively license the brand and distribution of the network, and in return contribute 50% of the carry from the funds back to the treasury. 

So the DAO is focused on the things that networks are good at, namely at scale coordination and participation, and the business units are focused on the things that require small, nimble, high-agency teams.

If we’re able to create participation offerings that people en masse really want to be a part of and build businesses that effectively leverage the resulting scene, we’re going to build a big and very valuable network.

Is that exciting? confusing? Still have questions? Let me know pls.

Thanks for reading ❤