The next phase of tokens in web3
Rise of brand tokens and the opportunity for curation
|Brian Flynn||May 17|| 2|
NFTY is a newsletter about the latest trends and stories of crypto & gaming. Each week, I analyze the latest trends and happenings of how the story is unfolding.
As smart contract platforms launch and new DeFi protocols battle for liquidity, tokens are making a huge comeback. In the past few weeks, SAFG governance tokens have become popular with new DeFi protocols to attract liquidity:
However, the more exciting story is not what’s happening in DeFi, but personal/brand tokens. Roll and Zora are the two marketplaces leading the charge.
Roll as a platform to raise money for individuals
Roll, a social money platform, has positioned itself as a way to raise capital for individuals. Similar to ISA platforms, the individuals who raise on the Roll platform try to find unique ways to provide returns for investors, except with a personal token, there is more flexibility. Two notable examples are:
Kerman Kohli launched his presale of $KERMAN last week to raise ~$23,000. Kerman’s newsletter and “labor” revenue is attributed directly to buying tokens back from the circulating supply and burning them.
Alex Masmej, who launched his personal token earlier this month, is creating value for his token by doing things like cloning himself with Alethia AI and selling himself for $99. Revenue is being funneled back to $ALEX token holders.
Zora as a platform to raise money for creators
Adjacent to Roll is Zora—a platform for creators to tokenize their physical goods. There are two significant differences between Roll and Zora.
1) Zora focuses on brands with a redeemable item as opposed to a personal token. By having a redeemable item as part of the value, it gives the inherent token value at the time of purchase.
2) Zora takes a fee on each trade on the marketplace built on top of Uniswap, encouraging users to speculate and draw hype for each product sold.
Last week, Zora officially launched the first product on their marketplace: an album by the grammy-award winning artist, RAC. $TAPE is an ERC20 token with a limited supply of 100. $TAPE went from $20 to $800 in less than 12 hours as investors quickly bought up shares.
What does this trend mean for crypto?
The question on everyone’s mind is what do brand and personal tokens mean for crypto? Here’s my best guess at how this will play out:
As centralized exchanges continue to see success with leveraged trading, most of the trading volume will flock to the top few currencies (BTC/ETH)
DEXs will start to specialize in niches and begin to become a game of curation. Similarly to how we saw the emergence of Coinbase as a quality curator and Binance as a quantity curator, we’ll see a similar pattern for brand tokens. Zora and Roll will continue to list “quality” to drive interest and demand.
As it becomes easier to create and mint these tokens, avg market cap and hype will decrease and become more normalized. Secondary marketplaces/aggregators built on top of exchange contracts like 0x and Uniswap will emerge that focus on quantity and have these brand tokens downstream (e.g., 1inch exchange)
The opportunity for curation
As more tokens start to emerge, the opportunity for curation arises. While aggregators like 1nch are already beginning to take advantage of DeFi, other moves are being made in the NFT space. Just last week Immutable announced Immutable X, a non-fungible token marketplace that can supposedly power millions of transactions per day, up from the current 150,000 transactions per day.
Of course, this also starts to affect many wallets as well. Instead of wallets showing all possibilities for users to invest, they’ll want to surface the most relevant opportunities or the potential for the highest return.
As some of you know, I announced my new project RabbitHole last week. As it becomes easier to create contracts with more accessible infrastructure, we need aggregators curating the most critical applications for new users.
We shouldn’t look at success by the number of funds locked into contracts, but the number of unique users using smart contracts (Richard Chen from 1confirmation did an excellent study on # unique users using the most popular DeFi smart contracts)
I’ve been waiting for the right time to start this company and it’s never been a better time. The middleware needed is built out, the application ecosystem is maturing, but along with security, we still lack general education on what makes crypto special.
That’s the gap RabbitHole will fill.
P.S. - I really wanted to write about the Reddit happenings this week since it’s related. However, there’s so much on this topic that it deserves its own post. Stay tuned!
I’m currently working on RabbitHole, a platform for new users to learn and earn by using crypto applications. If you’re interested in jamming on topics I mention in my newsletter or on RabbitHole, hit me up on Twitter @flynnjamm.