Author: Matti 👾
Compiled by: Deep Tide TechFlow
So you left in 2022. Or you didn't leave, but you were drawn into the superficial narrative of chasing generational wealth, hype around memecoin. Or maybe you just occasionally browsed some articles. Now you want to figure out what actually happened. What do you think you missed?
In today's era, it seems there are two phenomena dominating the world.
Elon's Razor: The most entertaining outcome is the most likely to occur.
What was once entertaining becomes serious, and what was once serious becomes entertainment.
The first point is easy to understand. The mere fact that Elon Musk runs a U.S. department called DOGE was unimaginable by 2016 standards. This was only 8 years ago.
The second point is a manifestation of the first. The U.S. election feels like the season finale of the reality show 'America'. Politics has turned into entertainment. War casualties are live-streamed. Jokes are canceled. Movie plots are used to convey agendas. Social media posts are litigated.
A niche manifestation of 'what was once serious becomes entertainment' is money, specifically memecoin. People call it 'magic internet currency' or 'funny money', like a meme lottery available 24/7 online.
Not everyone can become a meme to extract benefits, but everyone can emulate memes to get closer to it.
Clearly, sovereign nations will acquire large BTC reserves (following innovators like El Salvador and Bhutan), merely to express discontent towards Germany, which is eager to sell in August. In retrospect, expecting a country that decided to continue shutting down nuclear power plants in a proxy war with its largest previous energy supplier to make economically rational decisions is clearly unrealistic.
Meanwhile, Michael Saylor is orchestrating the largest bubble in history, positioning Wall Street ahead of sovereign nations in this race. But these are the kinds of news (Financial Times) that readers don’t really care about. So, what is really happening behind the scenes? What is brewing in the apparent bull market that could drive the market?
If you don’t know who the users are—then you are the user.
For insiders, cryptocurrency has become a lifestyle. Acknowledging this is unsettling, but it is true. It is a lifestyle of consuming high-end products from various crypto brands. It is a lifestyle based on cash flow, losses, and a hope for effortless retirement. Mable expresses it more optimistically:
'This is a lifestyle where only the 'now' and 'present' matter, as the impact of anyone or anything is almost instantly reflected in our experiences. The concept of an ultimate outcome is almost outdated, as the world truly becomes an infinite game.'
The pace of change in cryptocurrency is accelerating, with 'seasons' becoming weeks. The performance period of altcoins is now only a week, and the narrative rotation is faster than ever. There are too many distractions to choose from.
Cryptocurrency has truly entered what Kevin Kelly calls 'gradual utopia'; 'Today's problems are caused by yesterday's technological successes, and today's technological solutions will lead to tomorrow's problems.'
Cryptocurrency is in a state of endless evolution. In the long run, incremental improvements may not be obvious, but just a little push, some liquidity, and expectations of political tailwinds can turn the totality of these increments into a financial frenzy.
Everything in cryptocurrency is driven by money. It is money. It is the super-financialization of attention.
Even if you don’t know, you are a user. Living in a gradual utopia, in a constantly evolving state, you may not even realize you are in it, as you are forced to upgrade every day.
Every day you are a novice, even if you feel you are not:
'The rapid development of technology forces us to constantly chase the latest things, and these new things are always replaced by even newer ones, making satisfaction always out of reach.'
Back in 2017, trading on-chain through order books (hats off to Ethredelta) was a terrible experience, and automated market makers (AMMs) were considered inefficient. By 2018, the problem shifted to no one wanting tokens. However, by 2020, the market suddenly realized they could swap tokens on Uniswap without permission while earning rewards by providing liquidity.
Well, then tell me what the code is?
What I know is that every situation will be different, yet similar. The difference is that every wave of frenzy exceeds the imagination and expectations of most people. We cannot predict where this will lead us, especially with so many ecosystems and applications thriving in various directions.
I suspect that the speed of market rotation will continue to accelerate, with certain trends returning multiple times, and in such an environment, 'breaking free from path dependence' will become the most important capability. As trends increasingly become driven by specific applications and use cases, the importance of underlying ecosystems (L1/2s) may gradually diminish.
'Agent' and 'Decentralized Science (DeSci)' are particularly interesting to me because they are closely tied to the existing DeFi and memecoin industries. This synergy might lead to a 'Cambrian explosion' of new use cases—some of which may be more prominent, while others have the potential to genuinely change the world.
If value can flow freely between DeFi, DeSci, and agents, we might be able to productize 'investments in progress' and package it in meme form. This would create a self-reinforcing loop and expand the crypto market into realms we never anticipated.
We need to drive positive-sum games in cryptocurrency by creating new markets. Perhaps this is why the big players in the industry are exploring themes that can quickly create real-world impact. No one expected that memecoin would actually become real-world assets (RWAs).
Like every frenzy, the craving for genius ideas always brings a plethora of fakes, gimmicks, and scams.
The so-called 'cult' is not a real cult.
The triggers of innovation are often only visible in retrospect, as incremental progress accumulates in a gradual utopia and suddenly manifests in a short time. Next comes the validation phase, which blinds people, and the desire for success breeds a sense of entitlement, ultimately evolving into hubris.
Bitcoin was once the 'gateway drug' to enter the crypto world, but it is no longer, at least not for the average investor. Memecoin, as a monetized attention market, is becoming the entry point for new users. However, they are fundamentally a form of momentum trading that cannot look to the future.
This phenomenon is like the old shock value being replaced by new shock value, with no insights to predict it. The speed of these changes is as swift as posts on social media, and they have become a new form of media. Memecoin has redefined the possibilities of social media posts.
Recently, people have realized that memecoin can be attached to a vision and given a unique personality. The loose association of GOAT with the 'truth terminal' is an instance of memecoin first linking to the personality of an AI entity, followed by LUNA. Although their expressions are rather ordinary, it indicates a design space that can be explored.
A few days ago, I was shocked by a memecoin related to agents that controls robots globally for driving and streaming (Disclaimer: Frodobots is one of our portfolio companies, and we purchased SAM). If people continue to innovate at this pace, this game will remain interesting. It also confirms that we are in the peak era of crypto entertainment. (Meme) coin has become a new media for people's consumption.
Currently, the agent elements are mostly just superficial decorations and a form of automated marketing. But they bring freshness and expand our imagination. They drive a certain level of innovation, not just a commitment to the 'cult'.
Some people casually use terms like 'religious following' and 'cult'. But in the crypto space, the only 'cult' is the belief in 'only up, never down'. Strangely, this belief pursues maximizing rational economic choices while making irrational financial decisions. However, real cults never call themselves a cult.
So, whether you participated or not, what you might have missed is that crypto is actually evolving into a consumer product. In this age of short attention spans and the pursuit of quick gratification, it has created a new medium of consumption whose value seems somewhat ephemeral. At the same time, it is moving forward in the political and economic tailwinds.
The most interesting outcomes will develop bidirectionally, with wealth potentially vanishing in an instant, and the greatest opportunities always existing in asymmetric outcomes. What seems most promising today may have seemed insignificant yesterday, while the greatest threats are often overlooked.
In the crypto space, opportunism is the real powerful 'cult'.
