NFTY #50: physical scarcity

Driving FOMO from a centralized server

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore non-fungible tokens, dApps, and the ecosystem affecting consumer crypto applications.


Last week, Nike released Travis Scott x Air Jordan 1s on their SNKRs app but an uproar ensued when consumers had trouble processing their payment. 100Thieves, an esports team, also released their newest streetwear and it was sold out in five minutes. This isn’t anything new - the same thing happens with event tickets. Brokers use bots to buy up tickets and sell them on a premium on secondary markets.

As craiglist continues to become unbundled, consumers are buying as much as the supply as possible just to re-sell on a secondary market. The trend of drastically limiting physical supply and driving FOMO with conspicuous consumption is only increasing as software becomes infinitely abundant. Suppliers and content creators are looking elsewhere to enforce scarcity.

The playbook is always the same:

  1. Content creator announces a time for limited supply product to be released

  2. Consumers rush to purchase the product at a fixed cost, often causing servers to break down

  3. Consumers often feel frustrated with the content creator or purchase on a secondary market

Blockchains offer a new mechanism for distributing physical goods by turning them into redeemable tokens. Over the course of New York Blockchain Week, there’s been three different typer of experiments that played out.

  1. Price Curve Distribution Experiments

There’s been one interesting interesting experiment on Ethereum reinventing the model: Unisocks.

The price of a token that can be redeemed for a pair of socks started around $12 and are tied to a price curve. Only 500 pairs of socks will ever exist. Users can buy a token and sell it back at any time, before the tokens even exist.

This is not only a clever way to crowdfund physical goods, but it also represents a large opportunity for influencers to have optimal price discovery.

  1. Luxurious Digital Fashion Experiments

One of the other interesting experiments during New York Blockchain Week was the auctioning of Iridescence, a digital fashion collectible. The digital clothing itself was sold at $9,500. The major piece of this event was that this is the first time we’re saying a token representing the blending of physical reality & digital utility. The clothing can be displayed on the owner on Instagram for one photo, while simultaneously being used and programmable in digital realities by third-party developers (because it is an NFT).

I suspect that you’ll start to see more experiments being done with digital luxurious goods. Interoperability & Scarcity are positively correlated - if something is more scarce, it will be used and carefully programmed in ways more than one, similar to many physically scarce resources today.

  1. Experiments with new ways to auction goods using cryptoeconomic mechanisms

Last week the Weird-eth.auction took place. It experimented with a new way to auction a unique item.

Here’s how it worked:

1) users bid on 1 ETH, starting the bid at .001 ETH.

2) If a user bid, the time would extend by 6 hours.

3) The second highest bidder will lose the amount they bid, but all those who bid but did not win would be refunded.

Overall, the experiment didn’t seem to take off, but it’s a showcase of what’s possible with new models to auction items. I’d love to see some element of FOMO3D added to this model - the minimum bid should increase with some fees being paid out to those who bid before. I wonder how a model like this would play out with physical goods.

We should keep an eye on new distribution mechanisms as physical consumer goods and media starts to leverage blockchain.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

NFTY #49: mini-DAOs 👹

Sustaining the development of open ecosystems through guild banks

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore non-fungible tokens, dApps, and the ecosystem affecting consumer crypto applications.


It’s been a big week for MolochDAO, the community-run bank to fund projects on Ethereum.

While the UI has been greatly improved over these past few months, I’m skeptical on two specific issues:

  • Will members of the MolochDAO be able to agree on what problems should be tackled? If the scope of proposals are too wide, members of the guild might either be biased on one particular problem or even not have the knowledge on voting on a particular proposal.

  • The MolochDAO requires 100 ETH to enter as member. Will this system run into plutocracy? Should requirements be more dependent on if they have demonstrated use of the protocol or ecosystem?

I’ve been thinking about how these problems get solved, and the answer might be to have forks of Moloch with more specific use-cases of funding for open ecosystems. However, the problem with more granular DAOs is determining if the ecosystems are even worth governing. Some ecosystems already have governance built in (like MakerDAO) but suffer from a lack of voter turnout.

An ecosystem is worth governing depending on if community has started to build & demonstrate a demand for tools to support that ecosystem. Developers who wish to apply for grant funding from these proposals would also need to demonstrate skin-in-the-game before applying for a grant.

Here are some ecosystems within a protocol that I believe would benefit with a forked Moloch, along with some of its potential uses:

  1. Prediction Markets (eg. Augur) - projects determine which tools are needed for prediction markets, use a prediction market to determine which members should get voted in/kicked. Market maker fee is fed back into the DAO.

  2. Blockchain games with an ecosystem (eg. KittyVerse from CryptoKitties) - the hardcore players could govern which second-layer of games are funded and determine if it’s an appropriate use of IP so that the ecosystem is sustained. Players must own an NFT from a contract with a specific property in addition to be voted in.

  3. Standards (eg. 1155) - projects building on new standards should deploy capital in which further increase the adoption of the standard. More projects receiving funding means more ways contracts are used across a protocol.

Granularity of cryptonetworks is something I’m particularly interested in. I’ve wrote about mini-dApps (third or fourth layer) and the unbundling of relayers in previous issues. Interested in talking more about granularity and how it affects adoption of crypto? DM me on Twitter @flynnjamm.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

NFTY #48: grabbit 🥕

How Facebook's crypto can improve human relationships

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore non-fungible tokens, dApps, and the ecosystem affecting consumer crypto applications.


My startup in college was called Grabbit. The idea was simple: users can start a group order to pickup from a retailer and friends can place orders. The user picking up the items (called the grabber) will receive a discount on their order based upon how much business was brought into the store.

The goal was to increase human relationships through the use of technology. Incentives for the grabber were double-sided: financial & social. Grabbit gave people an excuse to be social.

Retail stores used Grabbit as a way to lower customer acquisition cost and determine which customers had a higher LTV. Unfortunately, because it had to be sold to every individual retailer coupled with payment processing difficulties, we had to shut it down.

Now Facebook might be up to something similar with its own stablecoin. It was reported by Wired this week that Facebook has been talking to multiple payment processors in an effort to give its stablecoin some utility. Facebook has been trying to push for real meaningful interaction between friends for years but still hasn’t found the killer product. With Facebook’s stablecoin, friends might be able to pay for retail goods (and maybe digital goods with Oculus) using point-of-sale systems. Third-party developers could build a Grabbit-like application directly inside of Messenger.

If Facebook wants to earn back trust with its customers, there’s no better way than strengthening relationships between friends through the alignment of incentives. It’s worth nothing that Apple Cash is also positioned to do this and it already has the point-of-sale network. The tipping point between both Apple Cash and Facebook’s coin will be the ability to create an ecosystem.

Questions remain: Can Facebook create an ecosystem of developers with its stablecoin, similar to how MakerDAO created an ecosystem of projects building on top of it? Will third-party developers have incentives to create markets using FaceCoin and open programmability in Facebook’s products (WhatsApp & Oculus) or will they be drawn to creating entirely new platforms with censorship-resistant money?

Questions that made me think

1)

Overwhelmingly, people responded that it was a bad user experience holding dApps back from usage. But I want to challenge that line of thinking. Coinbase had a really great user experience for first time users in 2017 but the real money was made on exchanges which had a worse user experience. The killer app was the ability to create new markets, rather than stick to quality. Similarly today, even if gas & public keys were abstracted, what would be the incentive for non-crypto users to use dApps? They can already gamble without crypto. They can already get loans without crypto.

I don’t think a user experience is the real issue here. Either we haven’t found the killer app yet, or the decentralized ecosystem is still broken into pieces and hasn’t had the compounding benefits yet to make it better than what exists today.

2)

The price of Ethereum is a compounding benefit of knowing the top dApp on Ethereum. Since dApps are also considered markets, the volatility (and thus potential upside) on dApps are greater knowledge than the price of Ethereum. To put this in perspective: Would you rather have known that NFTs were going to be a thing in late 2017, or that the price of Ethereum was going to be $1300? The inverse is true as well. If the top dApp in Ethereum is nonexistent (meaning everything has moved to a different protocol) you would know that nothing has been built.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

NFTY #47: cryptokicks 👟

Why might Nike use cryptocollectibles?

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore non-fungible tokens, dApps, and the ecosystem affecting consumer crypto applications.

This week Nike filed a trademark for an intent to use with the word “CryptoKicks”.

Here’s one of the provisions that stood out from the trademark:

IC 041. US 100 101 107. G & S: Provision of online blogs in the field of crypto-collectibles; entertainment services, namely, providing an online computer game; entertainment services, namely, curated scavenger hunts, obstacle courses or treasure hunts; entertainment services, namely, providing interactive online mobile gaming applications; providing information on-line relating to crypto-collectible customization for hobby or entertainment purposes

It’s looking like Nike is considering a marketplace for customizable sneakers, taking a play from Goat or even similar to what WAX did with vIRLs. Nike could use a gaming platform as a way to engage consumers to win a cryptocurrency to be used in its own marketplace, potentially waiving fees for the marketplace.

Coincidentally, I wrote a post last year about a theoretical Nike “Swoosh” ERC20 token in order to describe how a company can decentralize the minting of non-fungible tokens. Using a fungible token, a brand can give fans the ability to vote on which fan-created assets should be added to the main catalog. When these assets are purchased from the main catalog, the third-party creators would earn royalties.

Nike CFO Andrew Campion mentioned in a Q4 call that Nike is executing a three-year roadmap pivot to a purely digital footprint. The roadmap discussed includes having more exclusive memberships & loyalty rewards for consumers, something also covered in the CryptoKicks trademark for exclusive messaging.

This isn’t anything radically new, having been tried more than one can count in crypto. But Nike has a moat that many of these projects didn’t have - brand power & an existing fanbase. You can’t fork a community, but you can progressively decentralize it by bootstrapping financial rewards with a cryptocurrency in order to earn back consumers’ trust.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

NFTY #46: mini-dApps

Turning markets into a dApps & turning wallets into portals

The NFTY News tracks the ever-evolving narrative of how the mainstream will enter crypto through user applications. In each edition I explore non-fungible tokens, dApps, and the ecosystem affecting consumer crypto applications.

What better way of being a market maker than creating your own interface for a specific prediction market? You can predict Andrew Yang’s Twitter followers on this site which uses Veil’s API.

It’s one of many of what I call, “mini-dApps”' (even though I hate the name for it). Mini dApps take existing contracts on Ethereum and make contracts easier to read and write from using a new interface. AndrewYang.io is breeding a new category of mini-dApps for prediction markets - taking a single market and turning it into a standalone application in order to get more liquidity. As Veil continues to open up the gates for anyone to create markets, more interfaces for single markets will continue to created. With Veil’s API, you can create your own site for a market and make it easier to bet for users within seconds, increasing the amount of ETH you receive for being a market maker for Augur.

We’ve already seen mini-dApps with NFTs and DeFi.

NFT mini-dApps - The KittyVerse is renown of creating an ecosystem of mini-dApps so any developer can get an instant user base. The KittyVerse continuously had several applications pop up in the past year, with the most recent ones being Kotowars & Mythereum’s trading card game.

DeFi mini-dApps - InstaDapp makes DeFi easier to use (eg. MakerDAO) within their own interface, allowing a user to create a CDP in seconds as opposed to MakerDAO’s CDP portal. Ambo is another wallet built to make decentralized finance applications easier to use.

🐰🕳️

Allen Hsu wrote an article on how to define “dApps inside of dApps” as a form of memetics. The “deepness” of dApps can be defined even further. If we take the example of AndrewYang.io, an interface can force users to use the “buy” function so users can only long the market. Allen writes that besides NFTs, DeFi, and prediction markets, the concept of mini-dApps can also apply to DAOs. It’s possible to create a DAO on top of MolochDAO to perhaps govern how a certain member of the guild should vote.

The Wallet Opportunity - making a portal of mini-dApps

This week we saw the launch of Alice, a “super-dApp” that encompasses a bunch of mini-dApps. Alice makes it easy to interact with a contract, taking only a few clicks as opposed to navigating a clunky web interface. Between NFTs, DeFi, and prediction markets, Alice has a great opportunity in surfacing markets and taking affiliate fees as a market maker.

Rainbow and Ambo are in a similar boat. These wallets are not solely meant to make cryptocurrency easier to hold and transact with as a wallet, but rather being able to make contracts and the blockchain more easy to write to.

Layer-2 wallet games

There’s been some interest in creating layer-two games to onboard users into blockchain.

The trade-off these applications are making are a big one - third-party developers can’t create mini-dApps on top of these layer two solutions using existing contracts, because the standards don’t exist yet. The difference between a non-blockchain application and second-layer blockchain application are minimal, and it’s difficult to explain the value proposition to a new user.

That’s why I’m confident in the concept of a “super-dApp” interface that encompasses dApps, making them much more simpler to use for the consumer, while being a market maker in the process.

Alice & Rainbow just launched recently, while Ambo launches next week. Should be interesting to see how they differentiate.


Disclaimer: I work on helping create a world of infinite possibility at Dapper Labs. All opinions are my own and don’t represent the opinions of Dapper Labs.

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