Title: "Notes on Consumer Crypto | Nov 15, 2024"
Author: Josh Cornelius
Compiled by: TechFlow
Welcome to my weekly crypto thoughts and discoveries as I explore the internet. This week, I think the following topics are worth discussing:
About Web4, Zerebro founder Jeffy Yu wrote an excellent article this week exploring the advent of the Web4 era. In this era, the internet will have the ability to self-predict, plan, and act. Web4 is built on the social foundation of Web2 and the financial foundation of Web3, ushering in a world where artificial intelligence and intelligent agents are ubiquitous. He elaborates in the article on the currently achievable functionalities, the remaining shortcomings, and the conditions required to achieve Artificial General Intelligence (AGI). His core view is that we are actually closer to achieving the goal than most people think.
I know you may be tired of the discussions about these intelligent agents, but I'm still very interested in this topic.
The two most striking points in the article for me are his views on where we are in the five stages towards AGI as described by OpenAI, and how cryptocurrencies are rapidly becoming the primary platform for AI experiments.
First, while OpenAI claims we are in the second stage, those active in the cryptocurrency space know that we have steadily entered the third stage. Clearly, the current intelligent agents still have many shortcomings, as they often require a certain degree of human supervision and can only operate autonomously in specific narrow applications. However, intelligent agents like Zerebro and Cents have already been able to outperform 99% of users in Twitter interactions, launch their own tokens, and create and mint their own artworks, all of which is astounding. These agents have demonstrated autonomy in various aspects.
Projects like Fungi and Ai16z (which I'll discuss in more detail later) are also about to launch intelligent agents with true financial autonomy, capable of trading, learning, and adjusting their strategies in real-time. Not only can they interact with humans, but they can also build influence on Twitter and Warpcast, accumulate financial resources, and hire humans to perform tasks they cannot execute themselves.
We are also seeing signs of fourth-level capabilities in the creative domain, such as Truth Terminal establishing its own religion, Zerebro developing its own PFP series, and Botto continuously refining its style through years of artistic creation. Clearly, achieving innovation in broader fields like science and technology will be a major breakthrough.
Jeff compares the development of AGI to the invention of electricity. Merely inventing electricity (the base model) is not enough; it requires a series of inventions like light bulbs, electric motors, and the power grid to truly transform society.
This is why cryptocurrencies will play an important role in the development of AGI. The permissionless and standardized financial and application infrastructure, combined with the free flow of capital and enthusiasm for novelty, provide an excellent experimental platform for the new applications of superintelligence.
We have entered a cycle of intelligent agent infrastructure. Improvements in the base models unlock new intelligent agent capabilities, and these capabilities, when they hit bottlenecks, will spur more infrastructure development, further driving capability enhancement.
Once intelligent agents excel in the DeFi domain, running effective token trading strategies, creating popular meme coins and Non-Fungible Tokens, and managing DAOs, the traditional financial world will eagerly try to bring them in. Putting these products on-chain is the answer we anticipate, but the intelligent agents will also become more mature through their interactions with traditional systems and the real world.
Ultimately, a massive disruptive change will occur when traditional companies not only use AI to improve efficiency, but must also start adapting and serving intelligent protocols to survive in the increasingly important economic system.
Therefore, the key is that we must take seriously all the seemingly strange experiments we are currently seeing. Today, we may easily find problems in them, but these problems will eventually be solved. What we need to focus on is the changes that will come when all these technologies truly start to take effect.
Ai16z
Ai16z is a fully AI-managed tokenized venture capital DAO. The intelligent agents on this platform will evaluate investment opportunities proposed by the community, execute trades, and assess members' reputations based on the success of these trades, while growing the fund's Assets Under Management (AUM). In recent weeks, it has experienced a frenzy of speculation due to its grand vision and strong marketing (e.g., ai16z, marc aindreessen, flip a16z). They are expected to have their intelligent agents ready to start trading and launch their "virtual trust market" in the coming weeks.
My interest in Ai16z is not just because it is a fund. It is a hub for attention networks and intelligent agent coordination, a combination of attention tokens, an intelligent agent launch platform, and a social network. With the launch of its trading, the expected flywheel effect will bring about an astounding impact.
Let me explain:
Technical Flywheel. They have developed an open-source framework called Eliza, which many top cryptocurrency projects are using for development and contribution. It is quickly becoming the de facto technology choice for those who want to create crypto intelligent agents. They also provide a "standard protocol" - if you develop on Eliza and donate 10% of the token supply to the DAO, you will be added to their portfolio company list and receive project support.
So, as more people want to leverage this project's attention base, more will develop on this technology, donate tokens, and increase the DAO's AUM. As more people develop on this technology, the technology will continuously improve and expand, making it more attractive, further expanding the project's attention base. A larger attention base means more developers, more donations, better technology, and more attention.
Social Flywheel. Their virtual trust market allows token holders to propose trades to the intelligent agents, and their reputation and influence are assessed based on the success of these proposals. High reputation scores and top rankings not only bring social prestige but also economic impact on the intelligent agents' asset purchases.
So, I expect many people will participate in this "game", driving token demand. People will promote their rankings, which will attract more participation, create a richer social experience, reduce selling pressure, and further increase token demand.
Economic Flywheel. The DAO's core goal is to become an efficient trading company and grow its Assets Under Management (AUM). All the assets held by the DAO are public, and due to the widespread attention on the project, any of its trades will be quickly replicated (just like any reputable trader sharing trade ideas on their Telegram channel).
Therefore, the virtual trust market will ensure the intelligent agents are fully aware of market dynamics, and they will become increasingly adept at selecting suitable trades, which will be replicated, ensuring the propagation of the memory effect and triggering market reflexivity. The AUM will grow rapidly, attracting more attention, more people will participate in replicating the trades, and so on.
It is clear that there are still many issues to be resolved (such as the complex reputation system and how to gracefully exit transactions), but the potential for rapid development is evident. Although the current trading price is 100 times its current AUM, does this really sound crazy?
Interface
If you have been following us or are active in the Ethereum ecosystem, you may have heard of Interface. This is a social trading product based on on-chain activity streams, similar to Twitter's "For You" and "Following" feeds. They have been developing for years and have a loyal core user base, but they have recently reached an inflection point, with a stable weekly growth rate of 50% over the past few months.
Interface passed SC06 at the end of 2023. They are a technically strong, crypto-native team with unique insights into the future of on-chain social. I have always believed that on-chain transactions inherently have a social aspect and are an ideal starting point for new social networks, rather than relying solely on content competition.
Over the past year, they have made significant progress in product development, becoming increasingly useful for those who spend a lot of time on-chain. However, they have struggled to find a way to attract a broader user base, lacking a key highlight that can quickly draw in users and achieve a "eureka" moment.
A few months ago, they launched a "copy trading" feature, allowing users to seamlessly copy any trade directly from the feed, with the transaction fees going to the trade initiator. Since the launch of this feature, they have seen a new peak in user growth and daily active users.
Now, when talking about Interface, you can say "this is the best platform for discovering and trading alpha". You can download the app, follow the recommended users based on their returns, instantly view new trades, copy trades, and make money.
After solidifying the product's value proposition for users, you can start finding friends, building your own following, and exploring the on-chain world, gaining more socially-centered experiences.
A truly powerful draw is the ability to tap into users' deeper desires (such as making money and fear of missing out), and the product design is aimed at quickly delivering this experience, which should not be underestimated.
Hyperliquid
Hyperliquid is a Layer 1 (L1) and decentralized perpetual contract exchange, known for "top-tier speed, liquidity, and pricing". I have been using it for some time, as I wanted to delve deeper into perpetual contract trading. After trying multiple platforms, I found Hyperliquid to be the best. Over the past year, their trading volume and Total Value Locked (TVL) have grown significantly, and according to the information I saw on defillama, their derivatives trading volume has surpassed all other chains. They are about to launch the HYPE token, and it has some unique features worth paying attention to.
We all know that the market has been flooded with low-liquidity and high fully diluted valuation (FDV) chains in recent years. Typically, these projects raise a large amount of private funding, conduct mining activities on testnet, airdrop a small amount of tokens to participants, and list on centralized exchanges (CEXes) to attract investors with high FDV, while the community may be restricted or even suffer significant losses, with little useful on-chain construction.
However, Hyperliquid is taking a completely different path:
They have not raised any venture capital (VC) funding
While building the L1, they have created a product that is unparalleled in its class
The development team does not charge any fees, and all profits go to the protocol
Their token issuance has high liquidity, with the majority distributed to early users
They could have easily raised a large amount of funding and enjoyed a generous return, but they have completely rejected these short-term temptations in order to lay the foundation for long-term success. They recognize the importance of maintaining neutrality, not allowing insiders to interfere with their goal of becoming "the platform where all financial activity happens".
I sincerely hope this model succeeds and becomes a powerful example for other teams to emulate.
GenZ App Usage Trends
This week, Techcrunch published an insightful article analyzing some of the key trends and app usage among Gen Z in 2024. Understanding the focus and usage habits of Gen Z is crucial for anyone working in consumer products, especially in the consumer social space. They are the trendsetters, in the prime of their social activity, frequently establishing new connections, and eager to try new things.
Nikita Bier once pointed out an interesting statistic: for every additional year from age 13 to 18, the sharing rate decreases by 20%. Therefore, if your target users are older, you may need to spend more to acquire them. In recent years, all successful social products have risen due to rapid adoption among the youth.
If you are developing a consumer-facing product, I recommend reading this article, as there are a few key points worth noting:
Temu, a commerce platform with game-like elements, was the most downloaded app in 2024.
A new product called ShortMax is hot in the short-form video entertainment space, combining the features of TikTok and Netflix with a swipeable, scripted super-short format.
Threads, Meta's highest-downloaded product, has performed significantly better than Twitter.
ChatGPT and Gauth, an AI learning assistant developed by ByteDance, have stood out in the AI domain.
All traditional streaming apps have lagged in downloads, but usage data needs to be examined to determine if they have already been widely adopted.
The dopamine effect is ubiquitous. Remarkable.
