Last week, with the launch of YAM, many new people in the community got a taste of what I like to call “Ethereum Money Games” aka “ponzi games”. I’m not going to beat around the bush here - these things have more in common with ponzis than they do anything else but I don’t think that’s necessarily bad thing.
Although these money games rely on “ponzinomics” to work, it doesn’t mean that they are a scam or not worthwhile - it just depends on how the whole show has been set up to run. For example, with YAM, the project tapped into a bunch of hardcore communities (SNX Spartans, LINK Marines, YFI Waifus etc) and relied on ponzi-like mechanics (rebasing) in order to bootstrap both liquidity and awareness. This resulted in the fastest formation of a global community that I have ever witnessed and it was all achieved via monetary incentives. As I said in my World of Yamcraft piece last week, these money games are very similar to massively multiplayer online games that some of you reading may have played in the past.
Taking this idea further, we can start to look at how the community is reacting to all of the different money games being deployed to Ethereum. With YAM, the community poured in over $700 million into unaudited smart contracts in order to chase an extremely high yield and a hardcore community was formed around this. With CRV, people plowed in hundreds of millions of dollars because the price of CRV went astronomical for the first few hours (though this was a bad thing since price has been crashing ever since). We can also look at pioneers in this space like Synthetix that has had liquidity mining since early last year which basically incentivized people to provide liquidity to the platform in order to earn a reward (in SNX) that was locked for a year. This game is unique in that it plays on delayed gratification rather than instant access to tokens so that instead of speculators constantly dumping, they are slowly turned into community members while waiting for their tokens to unlock - this makes the entire game a lot more sticky for all participants.
A post about money games would be remiss if I didn’t discuss YFI and how even after the liquidity mining program ended for the token, people are still as involved as ever with the project. The community are constantly building out tools to track stats and metrics, the governance forum is extremely active and Andre Cronje (the creator) is constantly shipping new and exciting products. I don’t think the community would be nearly this active if it wasn’t for the original money game that Andre set up with the week-long farming rewards that has now created an army of YFI holders who are deeply committed to seeing the project grow and prosper.
I feel that we’re going to see plenty more of these money games spun up on Ethereum in the coming months. Some of them will be scams and some will be just be outright bad ideas but through all of this wild experimentation I believe that some of them will turn out to be the next billion dollar protocols that deliver real value to Ethereum. One thing I’m particular excited about is seeing a money game spun up that donates 1% or more of its tokens to a “public goods” platform such as Gitcoin.
Have a great day everyone,
All information presented above is for educational purposes only and should not be taken as investment advice.
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