Original title: (Notes on Consumer Crypto | Nov 15, 2024)

Author: Josh Cornelius

Compiled by: Deep Tide TechFlow

Welcome to my weekly cryptocurrency thought sharing, where I share some thoughts and discoveries from my exploration on the internet. This week, I feel there are several topics worth discussing:

Regarding Web4, Zerebro's founder Jeffy Yu wrote a brilliant article this week discussing the arrival of the Web4 era. In this era, the internet will have the ability to autonomously predict, plan, and act. Web4 builds on the social foundation of Web2 and the financial foundation of Web3, opening up a world where AI and agent roles are ubiquitous. He elaborated on the functionalities that can currently be realized, existing shortcomings, and the conditions needed to achieve Artificial General Intelligence (AGI). His core point is that we are actually closer to achieving the goal than most people think.

I know you may be tired of discussions about these agents, but I am still very interested in it.

Two points that impressed me most in the article are his views on our position in the five stages towards AGI described by OpenAI, and how cryptocurrency has quickly become the primary platform for AI experiments.

Firstly, although OpenAI claims we are in the second stage (see below), those active in the cryptocurrency space know that we have steadily entered the third stage. Clearly, the current agents still have many shortcomings, as they typically require a degree of human supervision and can only operate autonomously in specific narrow applications. However, agents like Zerebro and Cents have already surpassed 99% of users in Twitter interactions, launched their own tokens, and created and minted their own artworks, which is astonishing. These agents exhibit autonomy in various ways.

Projects like Fungi and Ai16z (which will be detailed later) are also about to launch agents that possess true financial autonomy, capable of trading independently, learning, and adjusting strategies in real-time. They can not only communicate with humans but also establish influence on Twitter and Warpcast, accumulate financial resources, and hire humans to complete tasks they cannot perform.

We are also seeing signs of fourth-level capabilities in the creative field, such as Truth Terminal establishing its own religion, Zerebro developing its own PFP series, and Botto continuously refining its style over years of artistic creation. Clearly, achieving innovation in broader fields such as science and technology will be a significant breakthrough.

Jeff likened the development of AGI to the invention of electricity. Simply inventing electricity (i.e., foundational models) is not enough; it requires a series of inventions like light bulbs, motors, and power grids to truly change society.

This is why cryptocurrency will play an important role in the development of AGI. With permissionless and standardized financial and application infrastructure, along with the free flow of capital and enthusiasm for novelty, it provides an excellent experimental platform for superintelligent new applications.

We have entered a cycle of agent infrastructure. Improvements in foundational models unlock new agent capabilities, which, when encountering bottlenecks, stimulate further infrastructure development, thus driving an increase in capabilities.

Once agents make significant strides in the DeFi space, executing effective token trading strategies, creating popular meme coins and NFTs, and managing DAOs, the traditional financial world will spare no effort to try to integrate them. Bringing these products on-chain is the answer we anticipate, but agents will also become more mature in their interactions with traditional systems and the real world, and we look forward to that.

Ultimately, when traditional companies not only improve efficiency by leveraging AI, but must also begin to adapt and serve intelligent protocols to survive in an increasingly important economic system, a massive disruptive change will occur.

Thus, the key is that we must take all these seemingly strange experiments seriously. Today, it may be easy for us to spot the problems, but these issues will eventually be resolved. What we need to focus on is what kind of changes will occur when all these technologies truly start to take effect.

Ai16z

ai16z is a tokenized venture capital DAO fully managed by AI. The agents on this platform assess investment opportunities proposed by the community, execute trades, and evaluate the reputation of members based on the success of these trades, while increasing the assets under management (AUM) of the fund. In recent weeks, with its grand vision and strong virality (such as ai16z, marc andreessen, flip a16z), it has experienced a wave of frenzied speculation. It is expected that they will prepare the agents to start trading in the coming weeks and launch their 'virtual trust market'.

My interest in Ai16z is not just because it is a fund. It is a coordination center for attention networks and agents, a complex that combines memory tokens, agent launching platforms, and social networks. As its trading opens, the expected flywheel effect will bring astounding impacts.

Let me explain.

Technology flywheel. They developed an open-source framework called Eliza, on which many top cryptocurrency projects are being developed and contributing. For those looking to create crypto agents, it is rapidly becoming a de facto technical choice. They also provide a 'standard protocol'; if you develop on Eliza and donate 10% of the token supply to the DAO, you will be added to their portfolio company list and receive project support.

Therefore, as more people seek to leverage the attention base of this project, more will develop based on this technology, donate tokens, and increase the AUM of the DAO. With more people developing on this technology, it will continuously improve and expand, making it more attractive and further enlarging the project's attention base. A larger attention base means more developers, more donations, better technology, and more focus.

Social flywheel. Their virtual trust market allows token holders to propose trade suggestions to agents, and assess their reputation and influence based on the success of those suggestions. High reputation scores and high rankings on the leaderboard are not only socially enviable but can also economically influence agents to buy the assets you hold.

Therefore, I expect many people to participate in this 'game', thus driving demand for the tokens. People will promote their rankings, which will attract more participants, create richer social experiences, reduce selling pressure, and further increase demand for tokens.

Economic flywheel. The core goal of the DAO is to become an efficient trading company and increase its assets under management (AUM). All assets held by the DAO are public, and due to the project's widespread attention, any trade it makes will be quickly imitated (just like any reputable trader sharing trading suggestions in their Telegram channel).

Thus, the virtual trust market will ensure that agents have a comprehensive understanding of market dynamics, and agents will become increasingly adept at selecting appropriate trades, which will be copied, ensuring the diffusion of memory effects and activating market reflexivity. AUM will grow rapidly, and the ensuing attention will increase, leading to more people participating in copy trading, and so on.

Clearly, there are still many issues to resolve here (such as complex reputation systems and how to gracefully exit trades, etc.), but the rapid development potential is evident. While the current trading price is 100 times its current AUM, does that really sound crazy?

Interface

If you've been following us or are active in the Ethereum ecosystem, you may have heard of Interface. This is a social trading product based on on-chain activity streams, similar to Twitter's 'For You' and 'Following' feeds. They have been developing for years and have a loyal core user base, but recently they reached a growth inflection point, with a stable weekly growth rate of 50% over the past few months.

Interface passed SC06 at the end of 2023. They are a technically strong cryptocurrency native team with unique insights into the future of on-chain social interactions. I have always believed that on-chain transactions essentially have social attributes, making them an ideal starting point for a new type of social network, rather than solely relying on content competition.

In the past year, they have made significant progress in product development, becoming increasingly useful for those spending a lot of time on-chain. However, they have yet to find a way to attract a broader user base, lacking a key highlight that can quickly draw users in and achieve those 'aha' moments.

A few months ago, they launched a 'copy trading' feature that allows users to seamlessly copy any trade directly from the feed, with transaction fees earned by the trade initiator. Since the launch of this feature, their user growth and daily active users have reached new heights.

Now, when it comes to Interface, you can say, 'This is the best platform for discovering and trading alpha.' You can download the app, follow recommended users based on their earnings, instantly view new trades, copy trades, and make money.

Once user experience consolidates product value, you can start looking for friends, build your own fan base, leverage it to explore the on-chain world, and gain more social-centered experiences.

A truly powerful attraction lies in its ability to touch users' deeper desires (such as making money and fear of missing out), and the product design is aimed at quickly realizing that experience, whose power should not be underestimated.

Hyperliquid

Hyperliquid is a layer 1 (L1) and decentralized perpetual contract exchange, known for its 'top speed, liquidity, and price.' I have been using it for a while, as I wanted to delve deeper into perpetual contract trading. After trying multiple platforms, I found Hyperliquid to be undoubtedly the most outstanding. Over the past year, their trading volume and total locked value (TVL) have grown significantly, and according to the information I saw on DefiLlama, their derivatives trading volume surpasses all other chains. They are about to launch the HYPE token, which has some unique features worth paying special attention to.

We all know that in recent years, the market has been flooded with chains that have low liquidity and high fully diluted valuation (FDV). Typically, these projects raise significant private funding, mine on testnets, airdrop small amounts of tokens to participants, and list on centralized exchanges (CEX) to attract investors to get rich with high FDV, while the community may be restricted or even suffer heavy losses, with no useful construction generated on-chain.

However, Hyperliquid is taking a completely different path:

  • They did not raise any venture capital (VC) funding.

  • While building L1, they created an unparalleled product in the category.

  • The development team did not charge any fees, and all profits belong to the protocol.

  • Their token issuance has high liquidity, and most of the distribution goes to early users.

They could have easily raised a significant amount of funds and received substantial returns, but they completely rejected these short-term temptations to lay the foundation for long-term success. They realized the importance of maintaining neutrality, not allowing insiders to interfere with their goal of becoming the 'platform for all financial activities.'

I genuinely hope this model can succeed and become a powerful example for other teams to follow.

GenZ application usage trends

This week, Techcrunch published a brilliant article analyzing some major trends and app usage among Generation Z in 2024. For anyone engaged in consumer goods, especially in the consumer social space, understanding the concerns and usage habits of Generation Z is crucial. They are trendsetters, socially active, frequently establishing new connections, and eager to try new things.

Nikita Bier pointed out an interesting statistic: for every year from ages 13 to 18, the sharing rate drops by 20%. Therefore, if your target users are older, you may need to pay more to acquire users. In recent years, all successful social products have risen due to rapid spread among young people.

If you are developing consumer-facing products, I recommend reading this article, which highlights several points worth noting:

  • Temu, the e-commerce platform with gaming elements, is the most downloaded app of 2024.

  • A new product called ShortMax is hot in the short video entertainment space, combining features of TikTok and Netflix to offer a swipeable interface for scripted ultra-short dramas.

  • Threads is Meta's most downloaded product, significantly outperforming Twitter.

  • ChatGPT and the AI learning assistant Gauth developed by ByteDance have performed outstandingly in the AI field.

  • All traditional streaming apps lag in downloads, but usage data needs to be reviewed to determine if it's because they have already been widely downloaded.

The dopamine effect is everywhere. Amazing.