Thesis: Mindspace is the token sink of DeSocial
Thesis: Mindspace is the token sink of DeSocial
Value accrual will be skewed towards immersive experiences
Crypto social apps today are largely uninspiring and boring. The focus & capital flow has largely been towards infrastructure as there’s less perceived risk, and the apps don’t have to compete with web 2 products for attention.
Cyberconnect, Lens and Farcaster have built open social graphs, but much of it is transactional data & doesn’t capture a user’s intent. We’re seeing a trend of skeuomorphic apps that are trying to replicate the success of web 2.0 apps by leveraging tokens. Whilst incentives & financialization help bootstrap the network it often doesn’t translate into product stickiness.
In the long run, my argument is crypto native apps which can capture mindshare are the ones that will accrue value. Mindspace & not blockspace is the token sink of DeSocial.
What is it that crypto social apps get wrong?
The community and content on an app will always reign over design. But, here's the thing, if you put aside the community aspect of an app, one of the biggest moats a social app can have is having a never ending inventory of content. Whilst many apps have managed to build a thriving community, most of them suffer from a content inventory problem.
Having an inventory of content & an active community increases the total time spent on an app, which is a function of frequency and depth, i.e how often the app is used and how long the app is used for. This is illustrated in the graph below, where Minecraft occupies the upper-right quadrant, displaying both the highest frequency and depth of engagement.
With crypto native social apps, the focus always tends to be towards marginal infrastructural improvements over solving the content treadmill problem. There are two ways a crypto native social apps can solve this problem.
User Generated Content- One way to solve the content treadmill problem is by building the infrastructure for user generated content for the community. A good example of this is the CS:GO skins marketplace, where players can design, vote, and sell custom skins for their guns. A crypto native example of the same is RTFKT giving the community full commercial rights & access to 3D files of Clone X. The challenge with this model is it only works if you already have a community who are highly invested in the success of the platform.
Capitalizing on Established Content: The second way to have an abundance of content is by leveraging content from an existing community. A very good example of this is r/soccer community on reddit which revolves around content from soccer matches. With this model, you have an evergreen inventory of recurring content, keeping community engaged everyday.
Whilst content & community can lead to product stickiness, it still doesn’t translate to value accrual.
Where does the value accrue?
Value will accrue to the apps that manages to capture mindshare. Any crypto native social app with a sticky community will become a token sink. This principle of attention and engagement as a token sink was the driving force in the success of Web 2 social giants like Facebook, where the more users engaged, the more valuable the platform became, allowing for effective monetization of user interactions.
A crypto native example of the same is Degods’s new product- Points Parlour. It’s a mini game where you can win prizes in exchange for your points. Points Parlour acts as a token sink for $ dust. Brands wanting to leverage Points Parlour will have to pay sponsorship money in $ dust, creating demand and utility for the token. Over time, we’ll see brands leveraging Points Parlour in creative ways to drive growth.
Value accrual will be skewed towards immersive experiences
Whilst Points Parlour was able to engage the community through gamification & incentives, much of the value accrual in DeSocial will be skewed towards immersive experiences.
Over the years, there has been a notable shift in the way we socialise online, transitioning from platforms like Facebook to immersive environments like Minecraft & Fortnite. With over 400 million registered players, and a MAU of 230 million, Fortnite generated over $6 billion in revenue in 2022 alone. That’s discounting the fact that it was banned from Apple’s Appstore. Which is why my firm thesis is value accrual will be skewed towards immersive experiences.
In the case of crypto native social apps, Yuga Labs is building an MMO which combines gameplay elements of world of warcraft & the creative aspects of Roblox. With the Otherside, not only value will be unlocked but created Which is why there’ll be massive value that will accrue to the Otherside with $ APE as the token sink, as the vision for an open interoperable metaverse comes to life.