Chaotic Good - The Daily Gwei #245
A radical new social experiment has just emerged.
There was a new token launched out of the Yearn ecosystem yesterday called ‘Woofy’ and this token is very unique because it doesn’t have its own price - rather its simply pegged to the YFI token but at 1 millionth of the price. This may seem confusing at first but allow me to explain why I believe this is an ingenious psychological experiment.
So we’re all well aware of the recent “dog coin” phenomenon playing out in the markets - that is, lots of people (particularly new retail investors) have been bidding up various dog-themed tokens off the back of the recent Dogecoin surge. These tokens usually have a very large supply which means their unit price is very low - for example, the most well known of these, SHIB, has a total token supply of 1 quadrillion and a current price of $0.00002836. As you may be aware, these sorts of tokens are very appealing to newer investors because they are able to buy lots of them with little amounts of capital (unlike having to spend over $4,000 to buy 1 ETH, for example). Obviously this is all really silly because the market cap of an asset is what really matters, not unit price, but what if we could harness this silliness for the greater ‘chaotic good’?
Well that’s exactly what Yearn has done by issuing the Woofy token - they’ve taken this unit bias and pegged it to YFI. What this means practically is that anyone who is buying Woofy (a low unit price token) is in essence buying YFI (a token priced at ~$80,000) and vice versa (because of the bidirectional peg). So essentially what is happening is that Woofy is harnessing the extreme speculation around dog coins for the ‘chaotic good’ because it’s a backdoor way to get these users to buy YFI (which they normally wouldn’t because of its very high unit price).
The implications of something like this are quite crazy to consider because think about it - the Woofy token essentially “tricks” these people into buying YFI via their desire to buy low unit price dog-themed coins. Now the reason I call it ‘chaotic good’ instead of ‘chaotic evil’ is because tricking users into buy YFI through a dog coin is, in my view, much better than users going out there and buying pump and dumps (and outright scams). This, of course, brings into question whether this is actually the morally right to do - it’s definitely a slippery slope. Personally I believe that the intent matters here and from what I can tell, the intent of launching Woofy was to simply see if something like this would actually work.
I want to see more of these experiments play out because it’s just so damn fascinating - we can essentially perform behavioral economics tests at a global scale with potentially millions of participants. We can also harness the results of these experiments in as little as just a few hours - can you imagine how much more we can do here? How many possibilities there are? What kind of secrets we can uncover? Okay, okay, maybe I’m getting a little too far ahead of myself here - but I’m excited to see more of these experiments come to life in the near future.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.