will the players of infinite games please stand up

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...

Through two announcements this week Friend.tech effectively announced that they were discontinuing further development of the product. The product generated almost $90 million in fees over the course of the year it was live, with the vast majority of them coming from the first few months of wild activity, as well as a little spike when they launched V2 and their $FRIEND token. Crypto twitter is furious about the fact that the dev team is walking away with an estimated $44 million while making very little attempt to drive any value to the token.

Yea this is a very disappointing outcome, and Hasu captured it well. The problem isn’t that they failed, that’s a high probability for any new startup. It’s that they launched a token, hyped it up, made very little effort to drive any value to it, and then gave up entirely while still sitting on a pile of cash extracted from users of the platform. 

People clearly bought the token with the expectation that Racer and team were committed to seeing the vision through and that it would be a schelling point for the attention being created by the brand and product. But at this point it’s difficult to conclude anything other than the token launch simply being a mechanism to pump excitement to generate more fees and squeeze all possible value out of the attention they had for themselves before running away.

When they launched V2 I had a pet theory that they were intentionally holding back features to manage momentum because I couldn’t believe it was the thing that they’d spent 6 months building and hyping up, but alas here we are.

Hasu mentioned that it would have been better if fees went into a DAO, but in reality that wouldn’t really change much. Let’s say half of the fees went to the DAO and the token value settled around the NAV of the treasury (or likely a discount to NAV), that’s only a 2x from where it is now.  

All these short term minded people playing short term games is tiring. And it’s crazy that a paradigm investment is no signal whatsoever that you can trust the long term intentions of a project.

Also this is completely unverified information, but I’ve been told they’re working on a crypto OnlyFans now lol. Will be interesting to see if people have learned anything.

DRiP, the solana-based NFT platform, announced an $8M seed round this week. They’re focused on helping artists get distribution and build community, and have onboarded over 800 artists, have 100k+ DAUs, and distributed millions of NFTs over the past few years. They’re building towards the release of their mobile app which is expected to drop within the next few months.

Jess participated in the round as an angel so we chatted about why he invested and talked through the bull case for DRiP on the show today. 

The most interesting pieces of it from my outside perspective is their evolution from the artist subscription model they pioneered to the more active collecting they have now, as well as primarily leaning on tipping for artist monetization.

When DRiP first launched you would just subscribe to the product and get constant airdrops of new art directly into your wallet. This was awesome for collectors, you'd just get a constant stream of new art. But for artists, the lower intent collecting likely wasn't driving a ton of awareness for them. They were also bumping up against the limits of what the chain could handle.

They’ve now shifted the product entirely towards active collecting where you need to purchase droplets (their in-app currency) and use them to “secure” drops. Securing drops costs about a penny so they’re still targeting making them as accessible as possible while trying to make sure there’s some level of intent and artist discovery in the process. Big fan of the evolution.

It's also worth nothing that the onchain distribution ecosystem on Solana is bit less developed compared to Ethereum. On Ethereum you can mint on Zora, incentivize mints on Layer3 or Boost, and then get distribution through Daylight, Interface, Coinbase Wallet, Mint.Fun, etc. There aren't equivalents on Solana yet as far as I know that support driving mints and distribution beyond NFT trading marketplaces.

I do think Incentivized mints are going to be critical to bootstrapping this new consumer behavior and help answer the “why mint” question while the social contexts continue getting built out.

Ultimately I think a strategy closer to what Zora is running (they just fully released their mobile app this week btw) will be a winning playbook for crypto-native artist distribution. You need to own attention, and higher frequency social products will have a huge advantage there. 

I’m excited to see the DRiP mobile app though which will be a big step forward for the product.

Decentralized music streaming platform Tune.fm announced a $50M fundraise this week, bringing its total funding to date to $80M. The platform allows artists to receive streamed micropayments as their songs get streamed, users can earn tokens by discovering new music, and it has an integrated NFT marketplace.

I wanted to talk about this because the ideals of a decentralized music streaming platform are great. Artists can own the relationship with their fans, algorithms are open source, developers can build on top of the protocol without fear of getting rugged, and more of the value created can be shared with users.

But I really struggle to see how you get anywhere by trying to go compete in streaming directly. Users just want all the world’s music at their fingertips and Spotify and Apple Music are so effectively doing that job, and as Tune.FM you have nothing novel to show to users that can empower them with entirely new behaviors to better serve that job.

It’s going to take a completely new vision for what the future of music and artist / fan relationships look like, and an insight into what radically new consumer behaviors exist there, to build a product with the potential to change the industry. And maybe from there once you’re in a position of strength you can eventually take on streaming.

So in my opinion Sound, Catalog, Crate, Volume (freshly launched yesterday), etc have much more potential to build something that truly breaks out because they’re starting from insights into what new consumer behaviors exist here. I’m not saying they’re right, and they’re likely not in their current forms, but building non-consensus products and creating entirely new markets is how we get world changing companies.

There were two good articles this week, one from Nemesis and the other from Matti at Zee Prime, that explored our collective obsession with being early, how brands (in and out of crypto) started using it as a cultural strategy, how crypto has increasingly financialized it and compressed it into absolute essence with memecoins, and leave us with the question of where we go from here.

It’s hard not to think that the “be early” meta has been completely played out at this point. At the lowest level, tokens are being launched by the second on pump.fun and pumping and dumping before you can hit your Puff Paw. And at the highest level crypto is not a subcultural thing you can be broadly early to anymore. It’s effectively mainstream.

If anything, being early is increasingly a liability. The cost of creating new tokens has gone to zero so the expected value of any of them has as well. This is good. 

This game, along with the worshiping of the four year cycle, has incentivized people to just build low effort things, attach themselves to hot narratives, and launch a token (or be platforms for launching tokens) and capitalize instead of actually creating anything novel.

Now that we’ve taken it to the absolute extreme, hopefully the pendulum will swing back towards interest in things with substance and enduring value. I don’t want this game to go away, it absolutely has a place, but it clearly shouldn’t be the only game in town.

The reality is that the vast majority of people don’t want to play these “be early” games and anchoring our entire industry around products focused on them is a massive turn off to the people looking in. 

We’ve seen this first hand through working with Sofamon, the tradable chat sticker world. They’ve been focused on infiltrating mainstream culture since the beginning, and they realized after a few drops how unattractive bonding-curve based “be early” games were to the people they were targeting. 

They’ve since changed their drop model to a “be lucky” game using a gacha machine-like mechanic and their adoption inflected, particularly with new-to-crypto users. This change has also been critical to them getting partnerships with icons like tripleS.

As Matti suggests, we need to refocus on bottoms up innovation instead of being obsessed with imminent top down inflows to come and save us. The best narratives aren’t brute forced, they’re the result of “innovation inspiring enthusiasm turning into extrapolated hubris”.

0xAdrianzy wrote a good post this week, titled Make Applications Great Again, that revisits the Fat Protocol Thesis and shares his perspective on why he thinks applications are the main beneficiary of the shift towards increasingly modular infrastructure. He looks at overflow exclusivity and the revenue opportunities it’ll provide, as well as the proven lindyness and moats of good UX and brand. 

I’ve talked endlessly about all the leverage attention-dominating and transaction-driving applications are going to have to capture value and consume infrastructure as it makes economic sense to do so. 

It’s been more of an intuitive high-level belief though than something I’ve spent a lot of time thinking through the intricacies of. Until we actually have novel applications built on unique insights for how crypto can radically change consumer behavior en masse none of this really matters, so that’s where I spend my time.

But it was nice to see a more technical perspective on it. Give it a read. 

The Guardian wrote a good article this week highlighting the shift away from mass market social media platforms and dating apps (twitter, tiktok, tinder) towards niche social networks and hobby apps (goodreads, strava, letterboxd, ravelry). They cite their cozier, less performative, and more focused nature as core drivers of this trend, as well as growing disillusionment with algorithmic feeds.

This is a trend I talk about a lot, have deep conviction in its acceleration, and see as a potential major inflection for consumer crypto products to build on top of. People will want niche social networks that feel like walled gardens amidst the external chaos of infinite content and meaningless interactions. People will want to see themselves in the products they use, and retention will increasingly be a function of how quickly people are able to find meaning and a sense of belonging in the worlds founders are building.

It’s also a core part of the Full Stack Brand vision that we talked about with Ryan from Slow Rodeo a few weeks ago and I wrote about here. Being the source of belonging for a scene is going to offer a ton of leverage and opportunity going forward, and I think these things are going to surprise everyone with how valuable they can be.

The growing disillusionment with mass market social media, the shifting of trust from institutions to individuals, and the diminishing cost of creating software are going to drive a rapid transition into this restructuring of our social internet.

Perhaps the most interesting thing to think about here is how useful interoperable identities and open social graphs are going to be in a world of thousands of niche social networks. If people are participants in a bunch of scenes and each have their own native social products, having connections you make, assets you own/collect, and reputation you earn in one reflected across all of them (or at least available across all of them) is a huge user experience improvement. 

It’s fun to also think about the business models that could power these products. Ads, subscriptions, and memberships are the current and easy answers. But transaction fees from facilitating peer to peer value transfer and token engagement is the more interesting (and larger imo) opportunity.

Community isn’t about what you give to your users, it’s about what your users give to each other. Empowering your users with the tools to be economically successful while serving others in your community is a recipe for success. It’s easy to dismiss the OnlyFans model as only making sense for adult creators, but they may just be hinting at a new business model for consumer social as a whole.

And don’t underestimate the potential implications of fast, cheap, global payments.

Thanks for reading! If you like my weekly rundowns please share this with your consumer crypto nerd friends.