Running for money, learning for money, sleeping for money, eating for money, meditating for money, etc., while X to Earn started with gaming (i.e. P2E), it has since expanded to other activities since 2022.
As we head towards a cryptocurrency correction phase, crises like this create opportunities for new consumer tech companies to emerge, and I think a few of the following tracks will look very different in a year’s time.
Each major technological change eventually gave rise to a new breed of consumer technology companies, with the advent of the Internet giving rise to information apps like AOL and Yahoo, online supermarkets like Amazon and eBay, and entertainment services like Netflix and Pandora. The shift to mobile devices has led to the rise of Twitter, Uber, Facebook, and Snap, among others.
We are now on the cusp of a third major structural shift to blockchain-based applications and services (Web3), and the potential of blockchain is enormous, as it solves many of the problems about identity, transparency, and trust that currently plague the Internet.
Today, crypto consumer tech companies are driven by applications in art, music, and sports, but despite having a place in pop culture, not many mass-market breakthrough branding projects have become household names, with the exception of Coinbase, OpenSea, Yuga Labs/BAYC, and Metamask.
Consumer products are so unique and difficult to build – you have a few seconds to capture the user’s attention, and after successfully engaging them, driving repeat use and engagement is going to be even harder.
Building an enduring crypto brand that meets these needs is both a challenge and an opportunity, and crypto-native companies will need to deal with the trade-offs between how much the average consumer values decentralization and whether it creates a trade-off for user experience. At the same time, crypto companies are still adopting some of the principles that consumer products are built on (trust and security, silky smooth user experience, surprise, and delight) – they excel at community building, and a strong community leads to a sense of belonging.
There are many competitors vying to seize this opportunity, and I’ve outlined below 9 areas where crypto-native products have been adopted at scale (wallets, NFT marketplaces) and several emerging areas that have the potential to become mainstream soon.
Trading / NFT Marketplace
Whether you specialize in NFT (non-homogenized tokens) related to video, art, gaming, or music – there is a market for it.
What is an NFT marketplace?
NFT markets are the town squares, the trading hubs of cryptocurrencies, and they have a major impact on both the popularity and perceived success of the category.
● Before NFT can become a trusted mass-market brand, they need to overcome mass-market distrust of cryptocurrencies and improve the buying experience.
● There is still a tremendous opportunity to pioneer a new niche NFT platform with world-class trust, safety, and security. Utility-driven NFTs can appeal to the mass market, and we may also see more implantation and platform commerce opportunities as off-site commerce happens.
Which Nft Marketplace Is Best?
CeFi / DeFi, An Upgrade for Wallets
What Is Defi In The Crypto World?
The full name of Defi is Decentralized Finance, also known as “Open Finance”. Compared to traditional finance, Defi is more open and inclusive: First, Defi does not rely on any centralized entity to provide credit intermediation or endorsement; Second, there are no access restrictions, i.e., anyone who is connected can enter; and third, no third party can block any one transaction or reverse any one transaction.
Consumer FinTech products are arguably one of the biggest successes to date – look at Coinbase, Blockchain.com, Uniswap, Metamask, and the high participation in Zerion, Zapper. One area of centralized and decentralized finance that I am excited to see is wallets.
Do I Really Need A Crypto Wallet?
Wallets are to encryption what email was to the first days of the Internet. They are the way we connect, individually log into services and authenticate to the crypto-native world, but these products are not yet mass consumer-grade products.
● Wallet usability and user experience design are not ideal. You need to create a wallet, remember a very long helper word, or risk being locked out, and then transfer funds.
● Once this is done, you have to pay a large Gas fee before you can purchase anything, so the whole system is not ready for the mass market.
● The good news is that there is a huge market opportunity to improve this process. I’m excited to see improvements being made by big companies like Blockchain, Metamask, WalletConnect, Phantom, and Rainbow, and how new wallet-as-a-service providers like Triangle and Slaz are redefining the market.
Games / Meta-Universe
Do You Agree That We Need A Metaverse?
You can’t deny the impact of cryptocurrency-native meta-universes like Sandbox and Decentraland, in addition to the more influential Web2 meta-universe of Roblox, Minecraft, VRchat, RecRoom, and others. RecRoom and the like, and there is already a generation of players who see these platforms as their primary social experience:
● Open-world social games are how young people want to pass the time. That’s enough, it’s the fastest-growing media category.
● Cryptocurrencies allow these platforms to connect to real-world currencies for the first time, greatly expanding the potential and utility for players
● The crypto-native meta world still faces P2E issues and other blockchain gaming companies where the game is simply not fun.
Which Is The Best Metaverse Project?
● I’m excited to see companies like Faraway, Star Atlas, Defi Kingdoms, Harvest, and many other blockchain gaming startups making crypto games really fun.
Digital IP / Encrypted Native Disney
What Are Some Of The Best NFTs To Invest In Right Now?
Probably the most notable and successful crypto products to date are NFT profile avatars such as BAYC, Cryptopunks, World of Women, Azuki and more. In 2021, the top 3 NFT collections alone drove 40% of OpenSea’s sales. These projects create communities and shared identities around art and bring online characters to life like Disney and Pixar.
● Digital-first IP brands have many advantages over traditional media IP development – they can iterate quickly through social media and monetize through Tokens as community engagement strengthens before their narratives unfold.
● That said, these companies understand that compelling storylines are key to engagement – just look at Crypto Coven or Invisible Universe – and in Web3, projects are not just about passive consumption, but about interaction and collaboration between community holders – active Stories live in the lives of your audience.
● The best digital IP participants are profiting from a sustainable portfolio approach, working with games and royalties that don’t rely on one-time deals. Companies I follow in this space include Recur, Yuga Labs (BAYC), Invisible Universe, and others.
Creator / Media – Entertainment / Collectibles
Entertainment and sports have been one of the biggest bridges for cryptocurrencies to mass-market audiences, and everyone knows that the Staples Center (Lakers Arena) is now a Crypto.com arena. Some are reinventing the music or TV space, others are monetizing the experience and generating revenue for fan tokens.
What Is A Fan Token?
● Fan tokens allow fans to invest in individuals, turning their fan community into financial backers and someone’s personal brand into a form of currency.
● Tokens, NFTs and crypto assets are perfect for creatives with fluctuating incomes who need to keep producing new content or increasing their visibility to continue generating income. It helps turn their fans into a profitable community, with fans knowing they have a unique and rare piece of that creator’s history.
● There are also creator tool companies that give creators the tools to publish, create music, etc. on cryptocurrency-native platforms like Mirror and Mayk.
● Sports have always been closely related to collectibles. Entertainment collectibles companies are taking existing Web2 behavior and implementing it in a Web3 way – trusted, verifiable and scalable
What Are The Top Fan Token Crypto Projects With Big Potential?
● Players in this space include HumanIPO, Mad Realities, Dapper/NBA TopShot, Audius, Rally, Fan Controlled Football, Royal, and Autograph, etc.
Aggregation of Search/Discovery and Interest-Driven DAO
What Is A Decentralised Autonomous Organisation (Dao)?
DAOs (decentralized autonomous organizations) allow communities to form and act collectively around interests without hierarchy or bureaucracy. And because they rely on smart contracts (code), they are arguably more transparent and trustworthy. These will be among the leading consumer applications for the following reasons.
What Are The Benefits Of A Dao?
DAOs can be created for almost any purpose – from supporting Ukraine (UkraineDAO) to studying aging and longevity (VitaDAO), from social clubs (Friends With Benefits) to owning sports leagues (Fan Controlled Football)
Whoever can aggregate all of these DAOs and enable discovery across social groups can replace Facebook groups with an embedded financial system that rewards people for their contributions to each community.
Some candidates to enable this aggregation could be DAO tool companies that add discovery capabilities, such as CollabLand, Superdao, Syndicate, or analytics companies like DeepDAO. DAO tool companies are interesting candidates because they already support networks of DAOs.
Contact/Encrypted Native Messaging
● The ability to send messages to a wallet based on the assets in that wallet – because you want to buy assets or simply because you want to connect with people who have similar interests – is difficult to do today.
● Sending messages directly to wallets and paying people for access eliminates the middleman and allows the premium for connecting with the middleman to flow directly to the wallet.
● Companies such as XMTP, Dialect, Waku, web3mq and Satellite are developing the core infrastructure that will enable this, while companies such as Blockscan, Metalink and Mailchain are trying to enable on-chain messaging at the application layer.
Real-world utilities / X to Earn
What Is X To Earn?
The success of NFT in the arts is often met with the question, “What can I do with them? What do they really do?” The answer to these questions is X to Earn, NFT credentials/experiences, and task-based rewards, which combine cryptocurrency purchases with IRL activities and real-world tasks with crypto rewards.
If the Voucher + Experience is “pay for cryptocurrency, get value”, then another interesting part is “work, get cryptocurrency”. These platforms and apps allow consumers to complete small tasks in exchange for rewards (NFTs, stablecoins, native tokens for projects).
What’s The Problem With X To Earn?
The problem with X to Earn is sustainability. Our experience has been that speculators seek quick returns, so token prices rise quickly and then lose value over time. Until this problem is solved, there is no such thing as sustainability.
●NFT Tokens + Experience will help increase utility by providing access to special events and an exclusive loyalty program. Some are one-time events, others give you access to ongoing rewards, benefits and social space.
There are many challengers in this space – notable projects include Axie Infinity, Stepn, Sweatcoin, and Layer3 – while Percs, Afterparty, TokenProof, Mintgate, Rabbithole, Coordinape, Bitsports, and others are all working on the same project. Coordinape, Bitsports, and other new projects will soon be added.
Digital Identity / Social Networks
People’s crypto wallets reveal a great deal about who they are and what they do on the chain – provided you know their wallet address. But right now, on-chain identity doesn’t have a good way to show all of a person’s activities, and there are a handful of startups working to solve this problem.
● Proof of Attendance Protocols (POAP) allows you to generate NFT tokens that show which conferences, concerts, or sporting events you’ve attended and which DAOs you’re a member of. Minting them presents some barriers to adoption, but perhaps this is a feature rather than a bug.
●Entre, a kind of LinkedIn for the blockchain, shows your professional affiliations, while ENS (Ethernet Name Service) provides an easy-to-remember domain name for long, complex wallet addresses.
● Projects in this space will need to address the challenge of how to selectively share elements of your identity while maintaining the privacy that cryptocurrencies most welcome.
An Evolving Industry
It’s clear that we are still very early in the world of cryptocurrency-native consumer startups – it’s too early to tell exactly where the next great cryptocurrency product will come from.
Some of the backward-looking sectors I mentioned above (Encrypted Native Messaging, X to Earn) are still very early.
The space needs more founders with experience building products that consumers love, people who know how to build consumer companies in this space – people who can encourage positive spending habits, understand behavioral psychology, design delightful user experiences, etc. I believe we will get there.