I Took the Crypto Red Pill: Week Six
Originally a thread on X/Twitter:
It’s been 6+ weeks since taking the Red Pill and what’s impressed me the most is the energy and talent pouring into the space.
And I can truly say that it’s undeniable that there’s a common superpower at the heart of everything web3!
The superpower:
IMHO web3’s common superpower is the ability for passionate Founders to spin up communities with no spend.
Ideas are self-contained powder kegs of possibility.
Social media is the tinderbox that can create a spark.
Strong Ideas + Strong Social Media = Community Adoption = BOOM!
Two weeks ago I wrote about how web3 adopters are expressing their views through Mass Civil Disobedience.
The implication is that the web3 community is predisposed to try alternatives to web2 solutions. They just need to be made aware and they’ll back the ideas they like.
This “bias towards early adoption” is a feature of the entire ecosystem and is fueling innovation. The minimum viable product in web3 is much less developed than the minimum viable product in web2.
This is amazing for web3 companies and extremely frustrating for web2 natives.
It’s about fellowship and belonging. It’s about embracing the art of the possible. It’s about decrying the past and embracing the future. It’s about cheering for the home team and wearing the proper gear to show your support. It’s about going to war for what you believe in.
And if I’m honest, it reminds me of the St. Crispin’s Day speech from Henry V:
“We few, we happy few, we band of brothers; For he to-day that sheds his blood with me shall be my brother; be he ne’er so vile, this day shale gentle his condition.”
“And gentlemen in England now a-bed shall think themselves accursed that they were not here and hold their manhoods cheap whiles any speaks that fought with us upon Saint Crispin’s day.”
web2 = a-bed and accursed.
web3 = Band of Brothers.
Good ideas with potential attract talent and capital.
And even the early web3 players aren’t immune.
Challenging the V1.0 web3 players is completely acceptable. It all starts and ends with the quality of the idea.
Look at the early adoption of layer 1 chains: @avalancheavax, @Cardano, @solana
Look at the how quickly DAOs are being formed to accomplish specific goals: @ConstitutionDAO, @MonkeDAO, @FWBtweets
Look at the passion coming from the NFT community: @BoredApeYC, @thecryptopunks
Case in point, I found out about @_cryptoapes 3 days ago on Twitter. It was started by a solo Creator who launched with zero marketing or fanfare. The roadmap was thin but minting was FREE. He just wanted to launch his project and work with the community to make it their own.
People really liked the art and spread the word. The project sold out. Three days later and there’s already a vibrant community on Discord (1,300+), the team and roadmap are being built out, over 50 ETH has been traded and the energy is tangibly building.
Overnight community.
But in the immortal words of Uncle Ben: “With Great Power Comes Great Responsibility”.
The community wants to believe and embraces shiny objects for their potential. But this means the community is susceptible to hacks, fraudsters and promises that are too good to be true.
Take music NFTs as an example. They have the potential to solve many critical issues in the music industry. They could fuel a renaissance in the industry that will shatter the old norms and allow the community to participate in the value chain.
But with great power comes great responsibility.
A few months ago @join_royal were happy with their “proof of concept” after @3LAU gave away 333 limited digital assets (Royal’s extended version of an NFT) representing 50% streaming ownership in his latest single, Worst Case.
According to @join_royal, within the first two weeks, the song reached “an implied value” of over $6MM with fans holding half of the value.
What’s amazing is that @3LAU gave half the revenue to his fans. HE GAVE IT AWAY.
But the implied value is based on sales from fan-to-fan. This means that some portion the “gifted NFTs” were re-sold which in turn created the “implied value”. Did they get a good deal? Were they equipped to understand what the royalty rights are worth?
I had an industry insider dig into the data and answer this question because they DID have the knowledge and insight to evaluate what a Worst Case NFT was worth.
I won’t run through the math, but the value of a royalty stream of a music track is a function of the # of times its streamed, the rev share per stream, its popularity ranking, the # of playlists it’s appeared on, the # stations it’s been added to, its decay rate, etc.
When the insider crunched the numbers, they didn’t come up with an implied value for the stream of $6MM. I really love what @3LAU and @join_royal are doing so I won’t share the deets but it wasn’t even close. Not by a longshot.
So when a fan sells a Worst Week NFT for 3.1ETH (the current floor) and it’s likely only worth a fraction of this price, is this good or bad for the community? @3LAU isn’t benefitting at all. He did an amazing thing allowing his fans to participate in the success of his track!
The broader implications of this issue are profound:
A risk seeking community willing to try new things paired with a lack of transparency around risk and reward is problematic.
Making it worse is the fact that the bad guys understand this and have come out to play!
TLDR: So while I think the ability to quickly build receptive communities around rough ideas is amazing, it’s also going to be a source of pain and loss along the way. This makes me super bullish about the destination and sad for the inevitable causalities of the pilgrimage.