Controversial crypto statements & opinions: end of 2019 edition
I WAS LITERALLY RETARDED THIS WAS ALL WRONG
Aloha! I’ve been working in the space full-time since the end of 2017. For over 2 years I ‘ve been exposed to developers, communities, media agencies — and even more so to VCs and projects, especially as CMO of LTO Network. I wanted to make some engaging opinionated content, so here is an attempt on some of the things which could spike discussions.
I hope you find some of these interesting! Join the chat 🦐
Notable writeups I’ve recently seen: CZ of Binance, Brian of Coinbase.
1. Ethereum killers are good for Ethereum… & BTC
A huge number of projects throughout 2017–2019 have been launching with the premise of a more scalable {insert TPS number} and usable Ethereum alternative. Most haven’t even gone live, other exit scammed, and some did launch — but that made no difference. But did that have any impact? [would be ideal to have a chart of such competitors here]
Some dApps tried EOS and alternatives, but those all come back eventually [need a citation here, but saw a few twitter confessions]. That’s because clout chasing and pay-to-build-on-me don't have long-lasting value. What it did create, is Ethereum killers sponsoring events and hackathons which eventually lead to more ETH developers instead. So while the attention gets drawn away from Ethereum, it’s just temporary.
Although Cosmos did capture a big part of what developers like to do, so that’s one is obviously outstanding. But in general, what some like to refer to as “ICO scams spoiled ETH purity” actually led to more research FOR Ethereum, exposure for ETH worldwide, and cash flow into BTC.
I don’t believe in other copycat general-purpose L1 solutions, apart from Ethereum and Cosmos, and all those fast-cheap-cool Smart Contract platforms. They might get some usage, but it will be 1000 times below what they envision. There is absolutely nothing unique they offer, so they fail to stand out.
You can’t pay for a community, you have to build one.
VC 0–1 Reality. But no, they already sold to you :P
2. DeFi is currently JUST on-chain BitMex
DeFi has definitely been THE narrative of 2019 across all public blockchains, no doubt about that. The idea of programmable money and making it re-interact is what Smart Contracts enabled in the first place. In fact, there was no reason to try to make SCs solve your love life, that was never the intention of the technology {probably, the idea of SCs was the opposite of that}
DeFi had wrong narratives and still does, and that’s not good:
- huge interest rates ❌ those were ONLY because MKR had a high rate itself, as no one really borrowed on the other side of lending due to over-collateralization required. As the huge rates are now gone, there is no longer this “wow bigger than bank interest” bullshit.
- banking unbanked ❌ it was never really a thing, there are some onramps which work, but it still required to buy Dai first somehow. So all of that stuff was really just dust in your face for marketing.
- alternative to banking ❌ no, if you do all of this incompliant, even if the rates are a bit higher, you still lose even more on fiat in-off conversions. Don’t expect the entire world to magically migrate to the blockchain.
Over-collateralization prevents growth and value creation
You can’t facilitate new projects growing, borrowing at low rates, and so on — without “borrowing money from the future”. Don’t hate me for embracing capitalism here, but otherwise, it's just zero-sum game. Find some on insurance here. So far DeFi did prove to be growing fast, but it’s mostly rich founders and projects which raised ETH back in the days and are now trying their own dogfood. Which is acceptable, but it’s far from reality. I like how Fantom is trying to change that with XAR, extracting potential out of “over”.
Currently, the borrowing side is almost empty, because it requires over-collateralization. The large interest rates were enabled by the strong USP of MakerDao where people literally gambled on ETH as leverage. If the idea is to replicate traditional finance tools and make them better, you can’t strip away the basic premise of how it works. Nevertheless, absolutely amazing:
Maybe real people need privacy dApps?
3. As weird as it is, no one needs privacy dApps 😥
Facebook being hacked for data. Data, data, data… users didn’t care, they don’t, they won’t. If we think everyone is worried about their data privacy, it’s simply because we are in a blockchain or IT bubble. That’s like what… not even a percent of the world population.
I am not a fan of articles in big publications as they are often very biased, but this one is decent… There is simply no demand for privacy-preserving apps. And there won’t be. Databases have been hacked for years, and users don’t care. And those that do mind, are very small in numbers. As it happens with any product or service abuse, there is always an alternative, but it’s small.
4. Poorly-tokenized media platforms are bad
Not much explanation needed.
If you want a tokenized new youtube, you will end up with large token holders turning it into a shillfest with bots. What you see in the world, media is simply being influenced by those who own it — except that there is an extra layer which is the credibility of journalists.
If you apply ONLY economics to a media platform content distribution and popularity, it will be a disaster. There is a reason why governance hasn’t been solved yet, and the effects would be even worse here. {hi, Vlad}
5. Alt season will not be back. Muh familie 💩
“But father, people never learn, they will gamble again!” — while this is true, the effects of that will be much smaller. You see, it’s really about supply/demand, and nothing else. Previously people bought and wanted x100 from ICON. It was a new industry those ICOs, so it worked wonders.
It was going up because no one was selling. But since the market turned, everyone was burned: VC, pleb like me and you, every investor. It is also impossible to exit coins for big investors, so less $ being poured in the first place as a result of that. No secondary market> no primary market.
So the next time something goes up, people will wait for x10 instead, and sell x5… At best, the alt season will feel very small, and very illiquid. Don't wait for a magician to save your fortune, take responsibility for your choices.
Would DAO or STO be the new thing people would hold x100?
6. Fake DAO resurrection in 2020
The company structure doesn’t matter if the company is useless by itself.
Okay, DAO allows you to align incentives, transparent governance (whatever the heck that can mean) but they still have no cash flow or revenue-generating ways. Staking-as-a-Service was one, but it’s getting saturated and taken over by exchanges. There are very limited ways of growth here.
However, MetaCartel and MolochDAO especially led a cool movement which many have noted as interested. Surely, it fuels the development of wallets, onboarding application layer tools, but it doesn’t mean the DAO shareholders will be happy… after all, there is a seller and a buyer. And right now, it’s only sellers, with no clear idea who the buyer might be.
7. STO & market-driven narratives 🤥
STOs, the new ICOs, the savior of crypto… no, there are so many legal problems and logistical issues that it would still take years to even begin with this. It’s like trying to breed a lion with a hamster… oh fuck. The thing with market narratives is that green candles can even make you believe it’s Putin or aliens buying BTC. Looking at you, Tezos memes.
That’s absolutely retarded, also because as soon as the candle stops going up — it’s “Bitcoin is dead”. My advice is to ignore all these things unless you are trying to trade on sentiment {by which point you would already be too late} and focus on user and value creation narratives instead.
Eventually, value drives price.
If there is any value, it drives price after all. Otherwise, you are just betting on “red”. It’s an art to make market and value narratives align.
8. Figure out what your dApp does, THEN its UX
First the decentralized social media dApps, then blockchain games, then something else… nothing was getting users. Twitter was blaming speed, so they made high TPS. Fack, doesn’t work still. Maybe we fix marketing and get more funding? Still no. — Oh, we need great UX!
That still doesn’t fix it. People used EtherDelta with the worst UX ever when they wanted something they needed. It’s just that dApps: privacy-preserving, new blockchain games, and so on — don’t create any value for users. It doesn’t matter if you make the UX super sexy, it’s still a useless thing you are making.
My app lets you on-chain leverage your ETH to gain more twitter tokens so you can lock them in a liquidity pool and measure your coffee intake with incentives.
Guys, this is not a startup idea. Please don’t make this.
9. Stop with the BTC WW3 memes, seriously 🤐
“If there is war, there will be no USD-denominated value flow, so sovereign currency like BTC will win and moon”…
At first, it could make sense from some ideological perspective. But what you need to remember is that the same way data privacy is needed by the few… you got it. There is much more potential in being in the regulated markets and playing alongside with the traditional finance.
I know, it’s not crypto-anarchistic, and I don’t like that. But if you are all for “orange coin go up” it’s probably better for you to not want a huge economic crisis where the entire wealth gets cut by a few decades and even your house goes down in price by over 2 times.
If there is no easy onboarding, and it’s all illegal — you simply won’t have an influx of people into the industry. Normies money is out, big capital is out. Don’t fool yourself with revolutionist ideas.
10. Don’t call holder-airdrops “staking”
2019 molested the word staking from all the sides possible. Listen, if you send tokens to a contract and then get more tokens after a few weeks — that’s not bloody staking! That’s an airdrop for holding.
It was done back in 2017 and before. But because staking gained legitimacy as a term via Cosmos and other networks, it’s now being abused to dump on uneducated people. Be careful sirs. Staking has a much stronger economic purpose, a stronger community sentiment, and much higher retention.
11. Crypto M&A — but not the same
Enterprise projects grow, while community-funded projects mostly go to 0, despite tons of innovation being there! But they have no funding. So what would usually happen? Wealthier organizations would M&A them.
I am not sure if it makes sense in crypto. Since most of the stuff is open-source, one can just take it. Besides, how costly would it be to M&A a failed company that otherwise would die out anyway? I see potential with this, and we actually look into some of these options ourselves, but so far little stuff actually seems truly valuable to spend time and money on.
On the other hand, we see exchanges M&A other smaller exchanges, because those have users as they are “centralized” companies. This makes sense then. It could also happen that big staking pools would be acquired. Then the idea would be not the technology — but actually the audience.
Since already a couple of years, the audience has a much higher value than a product. If you have an audience, you can pivot, change, upsale anything. And that’s because of how information noise functions. Read more:
That’s it for now. If any of these seemed interesting to you, jump in the chat to discuss. Hopefully, I didn’t offend anyone’s feelings. After all, it’s a startup scene, and all predictions-criticisms can be overruled by actual results.
Create value and try to read more!
