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I write this newsletter every week as I explore the world of consumer crypto alongside building Seed Club, supporting consumer crypto founders, and preparing for the weekly Friday rundown show Internet Explorers I do with Jess and Peacenode.
Here are the things I found interesting this week…
Chris dropped a thread this week highlighting the challenges of building in consumer crypto and why he wouldn’t build in the space as a founder right now.
I agree with most of the challenges he outlines. Market size is currently small, many crypto users are mercenary, it’s hard to balance financial incentives with other forms of motivation, there’s so much noise, etc.
But I disagree with his conclusion that this makes it not a good time to build in consumer crypto. In fact, it’s exactly because of this that it’s an incredible time.
We’re all here because we believe there’s a fundamental platform shift happening where all digital value, objects, and applications will move onto blockchain rails. Yet because of all the uncertainty and nascency of the infrastructure very little has been built that actually proves this.
This creates so much opportunity across every category for founders that can see where this is all going. And I believe we’re at a cultural (growing dissatisfaction with the current internet) and technological (infra finally making it cheap and easy to bring a consumer product to market) tipping point that’ll kick off a golden age of consumer crypto startup building over the next few years.
The thing that’ll grow the market size is building useful products. The thing that’ll attract non-mercenary users is useful products. The thing that’ll help us find an effective balance between financial incentives and other forms of motivation is more attempts.
Do you want to wait until that has all happened so you can play catch up, or do you want to be the one to do it? I’ll take the challenges of leading a new platform-shift over the competition of an oversaturated and ossified market any day.
Zee Prime dropped a great post this week making the case for people to stop hating speculation-focused products.
The majority of physical objects have had digital representations for years, and these are now moving onto blockchains alongside a proliferation of new digital-native objects. This is exploding the ease and speed that we can speculate on anything and everything.
They argue, and I passionately agree, that this shouldn’t be taken as a blanket bad thing. Of course there are downsides, but greed and the desire for wealth/status at the individual level scales to very useful properties on a societal level (innovation, quality of life, job creation, taxes, etc). The same is true at a product level.
Take prediction markets. The desire to make money on a prediction incentivizes an individual to search for signals among a sea of noise, and when hundreds or thousands of people do this you end up with a great approximation of the odds of an outcome. The opinions of an individual journalist are dramatically less truthful and accurate in comparison.
Or take memecoins. Memes are the language of the internet and are incredibly useful coordination and communication tools. Being able to bet on a thing’s cultural importance can incentivize more people to participate in the creation of culture, and the increased legibility and capital formation can improve their usefulness as coordination and communication tools.
Effectively facilitating speculation on anything may be a key part of solving many of the challenges that exist with creator monetization, content attribution, content filtering, truth discovery, and more. The majority of the experiments we run won’t effectively do this of course, but they need to be run to inform the ones that ultimately will.
I’m all here for the weird and uncomfortable experiments that expose what new forms incentives can enable. They shared a handful of products building in this area in the post that are worth checking out.
Notcoin is an interesting experiment focused on onboarding people into crypto and onto TON through a simple telegram-based game. The game is crazy simple, you literally just tap a coin to mine Notcoin. You can buy boosts, form squads, do stuff to earn more, but the core of it is just tapping the coin.
What’s interesting is that they don’t require a wallet, gas tokens, or literally anything up front and fully optimize for the ease of people earning coins. At some point in the future they’ll mint the token, people will have something of value in their wallet, and be strongly incentivized to onboard and figure out what to do with them. Here’s a video of the builder announcing it.
The participation numbers are crazy with 8.8M total players and 2.7M DAUs. It’s hard to know how many uniques there are of course, but with the incentive to do everything under one account (earning potential grows as you progress) it’s certainly a huge number.
I don’t know much about TON, but I could see this becoming a leading memecoin on the network because of how widely it’s being distributed, the story of it onboarding millions onto TON if it succeeds, and potentially ongoing gameplay continuing to drive attention.
It’s definitely worth checking out if you’re building consumer crypto products.
Optimism just announced the recipients of their massive 3rd round of RetroPGF, where they distributed over $120M worth of $OP to ecosystem builders.
I haven’t spent a ton of time around public goods funding to understand the nuances of it, but it strikes me as both absolutely amazing that we have networks and mechanisms that are able to support business-model-less yet valuable work at this scale, and also pretty inefficient considering the amount given to venture backed startups and things few people are using.
Regardless, it's clearly a win for the network (especially when you consider the attention it creates) and its builders, and a great use case of governance. I’m excited to see networks continue to iterate on the mechanisms they use to execute ecosystem grants.
Berachain, a new EVM-compatible L1, released their docs alongside their testnet launch this week and it has a cool new mechanism called Proof of Liquidity to secure the chain, incentivize deeper onchain liquidity, and improve the capital efficiency of the native token.
They have a 3 token system where $BERA is the liquid gas token, $HONEY is a native stablecoin, and $BGT is a non-transferable token earned through staking/providing liquidity and used for governance.
There’s a bunch that’s interesting about it:
Staking is also providing liquidity for the chain’s native DeFi products, improving capital efficiency and reducing liquidity fragmentation.
You can’t buy the governance token and have to earn it over time. Of course more capital will still mean more governance, but the time-based emissions eliminates the mercenary purchasing of governance.
Eliminates the need for liquid staking tokens and centralized staking providers.
I only have a surface level understanding of it and need to dig in more, but it looks very cool at quick glance. I also think the multi-token model could be interesting for DAOs to consider. Imagine having a liquid meme-heavy token that you can use within the network and people can play with, and a governance token that accrues to a narrower set of contribution activities over time. Kinda interesting…
I saw a handful of requests for startups come out over the past week (alliance, variant) that had a bunch of solid ideas in them, and wanted to throw in a few I’ve been thinking about.
Social Memecoin Trading
Memecoins continue proving to be incredible social products, but the experience of trading and coordinating around them is so janky. I think there’s a really interesting opportunity in building a social memecoin trading product that lightly curates coins (no rugs), has leaderboards (global, friends), shows feeds of memes associated with tokens, and generally just demystifies them for wider audiences.
Memecoins as Primitives
I also think memecoins are really interesting primitives for more narrowly focused products. Imagine a product for sports fans where you’re competing against other teams fans to have the most valuable memecoins ($LEAFS), or an app for new music discovery using artist memecoins as a core curation/game mechanic.
Anything Apps
Composability is a killer feature of blockchain protocols, but nobody is really composing in interesting consumer-friendly ways. I think one of these interesting ways would be to create branded/memetic apps that bundle protocols into a single product experience for a specific user type. Imagine a Boys Club App that curates DeFi protocols, onchain games, onchain media for their community with the vibes intact where fees/protocol rewards flow back to the community. Anyone with large attention bases and a passionate community could be well positioned to try this.
A Taylor Swift finance app that yields concert tickets and merch? Why not…
That's it, see ya next week ❤️
Josh Cornelius
