Consumer Crypto M&A Themes

Over the past few months and in particular the past few weeks, we’ve seen a string of higher profile M&A moves in crypto. Some that came across my radar: Republic acquired exchange INX for $60M, Kraken acquired crypto futures trading platform NinjaTrader for $1.5B, Coinbase acquired ad platform Spindl, and Ripple acquired institutional service provider Hidden Road for $1.25B.

Talk about big numbers! 🤑

Among all those eye-watering figures and headlines there has also been a string of acquisitions on the crypto-native consumer side as well:

• Jupiter acquired a majority stake in memecoin trading app Moonshot

• Jupiter acquired collectible platform Drip Labs

• Yesterday Magic Eden announced that they acquired token trading app Slingshot.

Naturally, these headlines got me thinking about how the landscape is evolving.

Aggregation Theory

The term aggregators and the concept of Aggregation Theory was coined by Ben Thompson from Stratechery, and they have the following characteristics:

• Direct relationship with user: No intermediaries; they own the user experience

• Zero marginal costs for serving users: Adding users doesn’t significantly increase costs

• Demand-driven advantage: They accumulate supply (content, goods, services) by owning demand

• Network effects: The more users, the more valuable the platform becomes

• Data feedback loops: Better personalization and targeting as usage increases

And outside of the crypto/web3, we’ve seen aggregators dominate:

• Google: Direct access to user search data, aggregates content from across the web (email, websites, images, shopping), integrates ads into each product, Gemini AI integrations

• Meta: Aggregates content created by users across multiple properties (Facebook, Instagram, Threads, Whatsapp) and monetizes via ads

• Amazon: Owns the supply chain and distribution channels for physical ecomm (Amazon, Alexa, Whole Foods, Pharmacy) and digital content (Amazon Prime Video, Amazon Music, Kindle, Twitch)

• Netflix: Aggregates in-house and third-party content and distributes it through the app as well as IRL experiences

• Apple App Store: Controls and curates app discovery while taking a 15-30% cut of developer in-app purchase revenue.

And we may be starting to see a new wave of early aggregators emerge with the recent acquisitions by Jupiter and Magic Eden, not to mention the larger acquisitions from exchanges and networks I shared in the first list.

I don’t think it’s fair to call either Magic Eden or Jupiter aggregators quite yet, but they’re certainly showing aggregator-esque behavior.

NFT marketplaces —> Token marketplaces

Specifically with Magic Eden, we’re seeing one direction NFT marketplaces are evolving: Into token marketplaces. And it makes sense too since NFTs are just one flavor under the token umbrella anyway.

When Jack (Magic Eden’s CEO) shared the Slingshot acquisition news, there were some nuggets if you read between the lines.

Slingshot’s app is great because it allows users to trade any asset on any chain just like a centralized exchange, but in a decentralized manner with self-custody. And as Jack is alluding to, the same can (and should!) happen with NFTs, with one universal balance.

In other words, there will be a future state where users will be able to ‘Trade ANYTHING with ANYTHING’. In this future state, the aggregator becomes stronger with the network effects of one combined balance.

Opensea realizes this as well, and we can see this in their OS2 redesign. Profiles show an aggregate net worth across NFTs and tokens, and you can swap tokens directly in their app.

NFT marketplaces are moving from a single-use case platform, to vertically integrating the actions associated with trading NFTs, such as swapping tokens.

Do you like aggregators? Whether you do or don’t, help me aggregate by sharing this!

Another airdrop observations

Following up on last week’s piece on where airdrops are trending, there was another anecdote this week worth sharing with Pirate Nation’s S3 rewards claiming experience.

As a Pirate Nation NFT holder, it’s been interesting to observe how their questing platform and PIRATE token airdrop methodology have evolved over time. Nothing like some skin in the game, amirite? 😜

Season 3 concluded this week, and that meant one thing: More PIRATE for players to claim (and probably dump), woohoo!

However, as eager claimers went to the page they were met with an unpleasant surprise:

• The claim has a gradual vesting schedule over 180 days

• Vested amount starts at 10% and vests evenly with an additional 0.5% per day until day 180

• Unvested rewards at the time of claim are burnt

• Accounts claiming PIRATE (the Pirate Nation game token) after the whole 180-day vesting period will receive Proof of Play Points (for their eventual ecosystem token) equivalent to being fully staked for the entire 180-day period

• Claims before 180 days will not earn Proof of Play Points

So what that looks like is this:

I’ve seen various claim and incentivized staking mechanics, like Layer3’s layered staking model, but this is more like a fractional claim with delayed claiming incentives.

Instead of using the more traditional approach of claiming as a default and the optional staking action as a carrot (incentive), claiming is now a stick (punishment), staking is the default, and a ballooned incentive is provided at the end of the fully vested staking period.

Naturally, many Pirate Nation farmers players were upset to learn about this because this wasn’t the typical approach for airdrops and the details of the claim weren’t communicated beforehand. Fortunately, the team took in the feedback and addressed it.

I believe this type of claiming experience will become more common as teams continue to experiment with and delicately balance the levers around incentivizing delayed claims vs. punishing/slashing (which will be worded in a nicer way 😉) immediate claims.

See you next week!