Newsletter: Beyond "de facto" Ownership

Welcome to issue 135: This week we cover ownership in crypto feat Li Jin and Patrick Rivera latest essays, Variant's Jesse Walden with stateful network framework, Elon Musk's "love affair" with doge, Opensea takes on Blur with Opensea Pro (prev Gem), plus latest mainstream news and more...

Welcome to edition 135:

▹ NFT wave mint strategy via a16z
▹ Jesse Walden on stateful networks in crypto
▹ Twitter "embraces" Doge
▹ Sobol on Daos Power <> Trust Dynamics
▹ Opensea Pro Launch
▹ Mainstream latest and more...

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Week’s Highlight

Beyond "de facto" Ownership

This week, Patrick Rivera wrote a short, fantastic piece on entertainment as the killer feature of NFTs. Around the same time, Li Jin published an essay on "psychological ownership" in the Harvard Business Review. Together, these two pieces serve as a great thesis for the direction that NFT culture and consumer crypto is headed.

In the world of startups, the "right" problem to solve is usually associated with saving time or making money, but the reality is that most people are very bored and very lonely, presenting a significant opportunity to build new types of entertainment experiences. Entertainment is a killer feature, and it's evident in the success of platforms like TikTok and YouTube, as well as through the popularity of meme accounts, video games, and NFTs. Patrick argues that the real power of NFTs is the culture that has emerged around them, which is all about entertainment, and that NFTs enable a new way to start and scale an internet-native brand through entertainment.

Part of the reason NFTs are such powerful modes of entertainment, though, is due to ownership. Li Jin writes that "psychological ownership" is the key ingredient for many successful products, especially in the internet era when countless alternatives are just a click away. The products we all feel a strong sense of "mineness" over have shored up their stickiness through the cultivation of our effort, control, intimate knowledge, and alignment with our values and self-identity.

Eugene Wei argues that real, de facto ownership, represented by tokens, is actually a net detriment for many crypto projects. He agrees with Li that the sense of mineness is much more important than the actual, legal ownership, at least from a consumer experience perspective.

This aligns with Rivera's thesis: if entertainment is the killer feature, then the feeling of ownership is important insofar as it makes things fun.

Take Note

None of this is to say that true ownership isn't an important and critical component of crypto moving forward. However, consumer experiences will be built on ensuring that people feel a sense of "mineness" and are having fun along the way.

What's Poppin'

A new NFT launch strategy: The Wave Mint. This piece from a16z crypto outlines a new NFT launch strategy: the wave mint. The success of an NFT project heavily relies on the minting process and the community it attracts. The traditional approach of giving away NFTs for free to involve people in a project often leads to problems such as botnets and "tourists" who have no interest in engaging with the project. A wave mint is a new minting strategy that invites members of different NFT communities to mint in a series of waves, starting with closely overlapping communities and gradually expanding outwards. This mechanism leverages people's on-chain data and reputation to select holders who are well matched to a project's culture and goals while avoiding problems associated with free mints. However, executing a wave mint can be complex and requires careful synchronization between front- and back-end teams, and there are security risks associated with it.

Navigating the Murky Waters of DAOs. This essay from the Sobol team discusses the challenges that DAOs face in relation to power and trust dynamics, and the importance of transparent governance. DAOs offer a unique approach to decision-making with their transparent governance and token-based power distribution, but the off-chain decision-making processes that frequently occur to navigate day-to-day challenges can be problematic. Mapping the power and value distributions within DAOs can help identify power imbalances and improve trust within the community. Tokenizing the structure of a DAO can establish a more transparent system of power distribution and create more trustless power and value flows, but it is important not to lose sight of the human aspect.

Twitter goes Doge. Twitter's new mascot is... the doge? This week, the Twitter logo on the website was changed to the doge icon, a move that many Twitter users speculate was an April Fool's joke that went live several days too late because of Twitter's shortage of engineers. The price of Dogecoin spiked almost 30% in light of the news. Some are also speculating that the change could be a sign that Twitter will start supporting Dogecoin payments on the platform. Regardless, this is yet another bump on Elon's wild ride as Twitter CEO. Case to say Elon is once again "Seizing the memes of production" in real time, like we've never seen before.

Libraries vs. Networks. Jesse Walden discusses the difference between stateless code patterns/libraries and stateful networks in crypto. While open source libraries have been successful in the past, the author believes that the most value creation and excitement lies in building open, stateful networks using blockchain technology. Stateful networks are characterized by their network effects, where independent parties can be incentivized to maintain state through tokens. Walden suggests that builders in crypto should consider whether they are building a library or an open, stateful network, with the latter being the more valuable opportunity. This is an interesting framework through which we can view the crypto market and its value proposition at large.

Why Bitcoin Ordinals May Be The Greatest Collectibles Ever Created. After years of the Bitcoin community dismissing Ethereum NFTs as a fad, many Bitcoiners are loving Ordinals. Ordinals are a NFT collection that are built directly on top of Bitcoin's blockchain. They are embedded directly on-chain and, according to the author, are more standardized and straightforward to create than NFTs on Ethereum. Ordinals also imbue pieces with a chronological significance due to their serialized nature, which some say means they could become the greatest collectibles of all time. Additionally, the launch of ordinals positions Bitcoin as the world's most important permanent "cloud hosting" platform, and the author believes that a single ordinals collection will flip Ethereum's most valuable collections and never look back. This is a maxi take at its finest, but still a very interesting read to learn more about Bitcoin NFTs.

Latest on Mainstream...

First off this week, someone has hidden the Bitcoin white paper inside every copy of MacOS shipped since 2017. Back in April 2021, a user by the name of bernd178 on the MacOS Community Forum noticed that buried within the Image Capture Utility is a function called Virtual Scanner II, which is not enabled by default. Hidden within Virtual Scanner II is a nondescript image of a bay in San Francisco, and a PDF copy of the Bitcoin white paper. Nobody is quite sure why or how it got there, but it's a cool story nonetheless.

Next, Coin Center published a response to the DeFi Illicit Risk Finance Assessment published by the US Treasury Dept. this week. While the report does not announce any new or changed policy, and correctly acknowledges the much larger illicit finance threat posed by the traditional banking sector, it engages at length in an unhelpful centralization versus decentralization analysis that is confusing and irrelevant to the actual legal questions at stake. Worryingly, the assessment appears to prejudge all DeFi applications as non-compliant with anti-money-laundering rules without ever explaining which actual activities performed by which DeFi-related actors do and do not trigger compliance obligations.

Signal Bites

▹ Read - Turing Complete Social Protocol
▹ Deep Dives - Crypto x Sports Sector
▹ NFT - OpenSea Pro
▹ Collab - Poolsuite x Ralph Lauren
▹ Interesting - Ticketmaster NFT-Gated Tickets
▹ Listen - The Evolution of Boys Club
▹ Crypto x AI - Governatooorr
▹ Happening - DAO Global Hackathon
▹ Tooling - Debt DAO
▹ Techy - Restaking Protocols
▹ Fresh Take - Movie Tickets NFTs

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The information in this newsletter is not intended to constitute legal, financial or investment advice and should not be construed or relied upon as such. Any opinions reflected are the opinion of the author(s) of the newsletter only and not necessarily of Forefront. Please DYOR.