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Speculation Nation - The Daily Gwei #511
We're an ecosystem of speculators - but we don't have to be.
I’ve written previously about how I think the crypto industry is currently too concentrated on speculative activity & apps and about how this is the main reason why crypto cycles are so violent. Now, this isn’t to say there is anything necessarily wrong with speculative activity, but if we want the crypto ecosystem to be more sustainable and also start to get get rid of these violent market cycles, we need to build more non-speculative apps.
As I mentioned in my tweet above, the most popular non-speculative Ethereum apps right now are Gitcoin, POAP and ENS. Gitcoin is an ecosystem of apps that aim to build a more open source internet and fund public goods, POAPs are NFTs that are meant to be collected and used in various ways (NFT-gating, raffles, voting etc), and ENS allows anyone to register a unique .eth name for themselves and then tie it to an Ethereum address they own. Obviously there are some speculative aspects to each of these apps (such as hoarding rare ENS’ or donating to projects on Gitcoin in hopes of an airdrop), but the apps themselves are not inherently speculative.
I think the reason why we haven’t seen more non-speculative apps on Ethereum is due to a lack of scale. Think about it - all of the “low transaction value” apps got crowded out of Ethereum layer 1 by the higher value ones - and what’s higher value than speculative activity? For example, it makes sense to pay a $50 gas fee to claim an airdrop worth $1,000 but it makes no sense to pay a $50 fee to mint a POAP. Due to this, POAP was crowded out of Ethereum layer 1 and had to find a new home on chains like xDai (and they are not the only app that had to do this).
Long-term I don’t think scale is going to be an issue so another major blocker will simply be good old product/market fit. For example, decentralized social media has been talked about for a long time with various attempts being made over the years (with almost all of them failing for various reasons). The latest one, Lens Protocol, lives on the Polygon PoS chain and tackles decentralized social media from first principles - I’m not sure if it will succeed or obtain product/market fit, but it’s great to see more experimentation with some of the “moonshot” crypto ideas.
I think we’ve really only seen the very tip of the iceberg of non-speculative apps that will go live over the coming years. Armed with more scale, better infrastructure and a more educated developer base (that doesn’t repeat the mistakesof the past), I think we’ll have some very large breakout apps that take everyone by surprise. And maybe eventually we can move passed this industry being dominated by speculative activity and apps - a man can dream!
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.