What seems most promising today may have been inconspicuous yesterday, and the greatest threats are often overlooked.
Author: Matti 👾
Compiled by: Deep Tide TechFlow
So you left in 2022. Or maybe you didn't leave, but you were drawn into the surface narrative of chasing generational wealth, speculating on memecoin. Or perhaps, you just casually browsed some articles. Now you want to figure out what actually happened. What do you think you missed?
In today's era, it seems two phenomena dominate the world.
Elon's Razor: The most entertaining outcome is the most likely to happen.
What was once entertaining becomes serious, and what was once serious becomes entertaining.
The first point is easy to understand. Just the fact that Elon Musk runs an American division called DOGE is unimaginable by 2016 standards. This was only eight years ago.
The second point is an embodiment of the first point. The U.S. elections are 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 'serious things turning into entertainment' is money, specifically memecoin. People call it 'magic internet money' or 'funny money', like a meme lottery that's online 24/7."
Not everyone can become a meme to extract value, but everyone can emulate memes to approach it.
Clearly, sovereign nations will amass significant BTC reserves (following the examples of innovators like El Salvador and Bhutan), simply to express dissatisfaction towards Germany, which is eager to sell in August. In hindsight, expecting a country that decided to continue shutting down nuclear power plants in a proxy war with its former largest energy supplier to make economically rational decisions is evidently unrealistic.
Meanwhile, Michael Saylor is orchestrating the largest bubble in history, getting Wall Street ahead of sovereign nations in this race. But these are the types of news (Financial Times) that readers actually don't 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 user is—then you are the user.
For those in the loop, cryptocurrency has become a lifestyle. Acknowledging this is unsettling, but it's true. It's a lifestyle of consuming high-end goods from various crypto brands. It's a lifestyle based on cash flow, losses, and hopes for an effortless retirement. Mable expresses this in a more optimistic way:
"This is a lifestyle where only the 'now' and 'present' matter, as the impact of anyone or anything is almost instantly reflected in our experience. The concept of an ultimate outcome is almost outdated, as the world has truly become an infinite game."
The pace of changes in cryptocurrency is accelerating, and 'seasons' have turned into weeks. The performance period for altcoins is now just a week, and narrative rotations are faster than ever. There are too many distractions to choose from.
Cryptocurrency has truly entered what Kevin Kelly calls 'progressive 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, a small amount of liquidity, and expectations of political tailwinds can turn 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 progressive 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 advancement of technology forces us to constantly chase the latest things, which are always replaced by newer ones, so satisfaction is always out of reach."
Back in 2017, trading on-chain through order books (shoutout 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 each situation will be different, yet similar. The difference is that each wave of fervor exceeds the imagination and expectations of most people. We cannot predict where this will lead us, especially with so many ecosystems and applications flourishing in all directions.
I speculate that the speed of market rotation will accelerate, with certain trends returning multiple times, and in this environment, 'escaping path dependence' will become the most important skill. As trends become increasingly dominated by specific applications and use cases, the significance of the underlying ecosystems (L1/2s) may gradually diminish.
"Agents" and "Decentralized Science (DeSci)" are particularly interesting themes for me, as they are closely tied to the existing DeFi and memecoin industries. This synergy could lead to a 'Cambrian explosion' of new use cases—some of which may be more notable, while others may genuinely change the world.
If value could flow freely between DeFi, DeSci, and agents, we might be able to productize 'investment in progress' and package it in the form of memes. This would create a self-reinforcing cycle and expand the crypto market into realms we had not anticipated.
We need to drive positive-sum games in cryptocurrency by creating new markets. Perhaps that's why the big players in the industry are exploring these themes that can quickly generate real-world impact. No one expected memecoin to become real-world assets (RWAs).
As with every mania, the desire for genius ideas always brings about a plethora of knockoffs, gimmicks, and scams.
The so-called 'cult' is not really a cult.
The triggers for innovation often become visible only in retrospect, as the accumulated incremental progress in a progressive utopia can suddenly manifest in a short period. Next comes the validation phase, which blinds people, while the desire for success breeds a sense of entitlement, ultimately evolving into hubris.
Bitcoin was once the 'gateway drug' into 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 essentially a form of momentum trading that cannot foresee the future.
This phenomenon is like the old shock value being replaced by new shock value, with no insight 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 redefines 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 being linked to the personality of AI agents, 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 worldwide for driving and streaming (disclaimer: Frodobots is one of our portfolio companies, and we purchased SAM). If people continue to innovate at this pace, the game will remain interesting. This also confirms that we are at the peak of crypto entertainment. (Meme)coin has become a new medium for consumption.
Currently, the elements of agents are mostly just superficial decorations and a form of automated marketing. But they bring freshness and expand our imagination. They drive a certain degree of innovation, not just a commitment to the 'cult'.
Some people downplay the use of 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 maximizes rational economic choices when making irrational financial decisions. However, true cults never self-identify as cults.
So, whether you are involved or not, what you may have missed is that crypto is actually evolving into a consumer product. In this age of short attention spans and pursuit of instant gratification, it creates a new medium of consumption, whose value seems somewhat ephemeral. At the same time, it also sails with the economic and political tailwinds.
The most interesting outcomes will evolve in both directions; wealth may disappear in an instant, and the greatest opportunities always exist in asymmetric results. What seems most promising today may have been inconspicuous yesterday, and the greatest threats are often overlooked.
In the crypto realm, opportunism is the real powerful 'cult'.
