{"id":123143,"date":"2023-07-16T12:16:02","date_gmt":"2023-07-16T12:16:02","guid":{"rendered":"https:\/\/dripp.zone\/news\/come-for-the-token-stay-for-the-product-right-crypto-news\/"},"modified":"2023-07-16T12:16:04","modified_gmt":"2023-07-16T12:16:04","slug":"come-for-the-token-stay-for-the-product-right-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/come-for-the-token-stay-for-the-product-right-crypto-news\/","title":{"rendered":"Come for the Token, Stay for the Product.  Right?\n &#8211; Crypto News"},"content":{"rendered":"<p><\/p>\n<div style=\"position:relative;overflow:visible;font-size:1.2em;line-height:1.58\">\n<figure class=\"w-full max-w-full mt-4 overflow-hidden\"><span style=\"box-sizing:border-box;display:block;overflow:hidden;width:initial;height:initial;background:none;opacity:1;border:0;margin:0;padding:0;position:relative\"><span style=\"box-sizing:border-box;display:block;width:initial;height:initial;background:none;opacity:1;border:0;margin:0;padding:0;padding-top:40.755627009646304%\"\/><noscript><img alt=\"decrypting defi newsletter header\" loading=\"lazy\" decoding=\"async\" data-nimg=\"responsive\" style=\"position:absolute;top:0;left:0;bottom:0;right:0;box-sizing:border-box;padding:0;border:none;margin:auto;display:block;width:0;height:0;min-width:100%;max-width:100%;min-height:100%;max-height:100%;object-fit:contain\" class=\"absolute inset-0 box-border p-0 border-0 m-auto block w-0 h-0 min-w-full max-w-full min-h-full max-h-full object-contain\" sizes=\"(min-width: 640px) 950px, 384px\" srcset=\"https:\/\/img.decrypt.co\/insecure\/rs:fit:16:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 16w, https:\/\/img.decrypt.co\/insecure\/rs:fit:32:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 32w, https:\/\/img.decrypt.co\/insecure\/rs:fit:48:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 48w, https:\/\/img.decrypt.co\/insecure\/rs:fit:64:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 64w, https:\/\/img.decrypt.co\/insecure\/rs:fit:96:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 96w, https:\/\/img.decrypt.co\/insecure\/rs:fit:128:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 128w, https:\/\/img.decrypt.co\/insecure\/rs:fit:256:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 256w, https:\/\/img.decrypt.co\/insecure\/rs:fit:384:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 384w, https:\/\/img.decrypt.co\/insecure\/rs:fit:640:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 640w, https:\/\/img.decrypt.co\/insecure\/rs:fit:768:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 768w, https:\/\/img.decrypt.co\/insecure\/rs:fit:1024:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 1024w, https:\/\/img.decrypt.co\/insecure\/rs:fit:1280:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 1280w, https:\/\/img.decrypt.co\/insecure\/rs:fit:1536:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp 1536w\" src=\"https:\/\/img.decrypt.co\/insecure\/rs:fit:1536:0:0:0\/plain\/https:\/\/cdn.decrypt.co\/wp-content\/uploads\/2021\/10\/decrypting-defi-2.png@webp\"\/><\/noscript><\/span><figcaption class=\"m-0 text-left gg-dark:text-neutral-200 scene:font-itc-avant-garde-gothic-pro scene:text-neutral-700 scene:font-light scene:mt-1\">Decrypting DeFi is Decrypt&#8217;s DeFi email newsletter.  (art: Grant Kempster)<\/figcaption><\/figure>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">Launching a token is a delicate task.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">On the one hand, you&#8217;ll thrill your die-hard audience of early adopters, rewarding them for sticking it out for so long.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">On the other, you invite hungry whales to come and harvest your project for its incentives, often hogging the lion&#8217;s share of the tokens being dished out (before flipping them for a profit shortly after).<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">This latter outcome is especially bad if these tokens also serve as a voting mechanism in determining the future of your project.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">&#8220;Eventually, the core team has to begin to shed some power, and would want to do that in a way where that power goes to an aligned community with skin in the game,&#8221; Delphi Digital&#8217;s director of research Ashwath Balakrishnan told <i>decrypt<\/i>,  &#8220;Eventually, token holders govern how the DAO and protocol move forward.&#8221;<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">There is, however, another potential consequence of clumsily launching a token: Failing to first assess your product-market fit (or, as the biz dev folks call it, PMF).<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">When essentially giving out free money to anyone who uses your protocol, it can be super difficult to figure out whether people are there for the token or for the product.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">\u201cWithout PMF you get a lot of mercenary capital and flash-in-the-pan metrics,\u201d DAO researcher at Flipside Crypto Raphael Spannocchi told <i>decrypt<\/i>,  &#8220;You can see that in many alts.&#8221;<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">Still, combining both a token with PMF can &#8220;really get the flywheel of decentralization going,&#8221; said Spannocchi, adding that &#8220;tokens are one of the most powerful things in crypto.&#8221;<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">Without PMF, though, projects could end up dealing with <i>token blindness<\/i> in some cases, where real activity is masked by <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/decrypt.co\/resources\/what-is-yield-farming-beginners-guide\/#:~:text=Yield%20farming%20lets%20you%20lock,in%20such%20a%20volatile%20market.\" class=\"sc-adb616fe-0 ePvUAp\">yield farmers<\/a>,<\/p>\n<p><span class=\"\" style=\"display:inline-block\"\/><\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">So, how do you get around it?<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">With data, at least according to founder of data firm ARCx Kerman Kohli.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">\u201cIf you have the right data to understand the origin identity of your users in the aggregate, you can start to see very clear trends,\u201d he told <i>decrypt<\/i>,<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">One of the key metrics he sees as a flag for a project getting farmed is when the net worth of the aggregate of users is less than $100.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">Similarly, says Kohli, when the majority of traffic is coming from questing platforms like Layer 3 or Rabbit Hole.  \u201cThey&#8217;re generally tracking very low-quality users,\u201d he said.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">These platforms offer payouts for small tasks in crypto for doing simple things like buying an <span class=\"link\"><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/decrypt.co\/resources\/non-fungible-tokens-nfts-explained-guide-learn-blockchain\" class=\"sc-adb616fe-0 ePvUAp\">NFT<\/a><\/span>  on OpenSea or making a swap on a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/decrypt.co\/resources\/what-is-decentralized-exchange-dex\/#:~:text=A%20decentralized%20exchange%20facilitates%20trading,transaction%20settled%20on%20the%20blockchain.\" class=\"sc-adb616fe-0 ePvUAp\">decentralized exchange<\/a>,  Pitched as a learning and onboarding mechanism, these platforms have essentially become a variety of mechanical turk.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">With these trends in mind, so-called <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/decrypt.co\/143231\/hop-protocols-sybil-hunter-payout-unveils-powerful-new-airdrop-tool\/\" class=\"sc-adb616fe-0 ePvUAp\">sybil hunters<\/a>\u2013those tracking down malicious airdrop farmers, and eliminating them from an airdrop\u2013can execute their work.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">Besides metrics, there is also an ontological concern about what exactly a token is.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">\u201cThe issue is that a token represents two things: ownership of the protocol (which implies governance rights) and a financial vehicle correlated to the success of the protocol,\u201d Snapshot&#8217;s growth lead Nathan van der Heyden told <i>decrypt<\/i>,<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">Though most people are likely grabbing a token for the second reason (ie number go up), Heyden says that \u201creason one is really important as the value of a protocol is linked to how censorship resistant it is;  the decentralization of a protocol is a huge value-add in some cases.\u201d<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">In terms of practical solutions, he proposes staking contracts, though most are &#8220;poorly implemented,&#8221; or even vesting schedules for airdrops.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">These concerns are all clear, and the <span class=\"link\"><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/decrypt.co\/resources\/defi-ultimate-beginners-guide-decentralized-finance\" class=\"sc-adb616fe-0 ePvUAp\">DeFi<\/a><\/span>  The sector has been busy wrangling with best practices.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">But what if the entire thesis isn&#8217;t actually correct?<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">As for those pesky whales looting all your incentives, says Delphi&#8217;s Balakrishnan, well, in a free market, it&#8217;s nobody&#8217;s business what people decide to do with a project&#8217;s precious governance token.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">\u201cBlaming tokens for the failings of certain protocols to find PMF is a cop-out\u2014some protocol teams make the right decisions, some don&#8217;t,\u201d he said.  &#8220;We&#8217;re still in a stage of experimenting with different playbooks to figure out what token go-to-market strategies work for specific kinds of protocols.&#8221;<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">Instead of thinking of tokens and PMF as two sides of the same coin, they may be more diametrically opposed than the industry thinks.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">One is rallying a community and the other is providing the rails for the future of finance.  How well it all works depends on how a project launches the token in the first place.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">\u201cToken-driven incentive programs are definitely an easy way to overcome cold starts, but that&#8217;s not where it ends,\u201d said Balakrishnan.  ,<span class=\"link\"><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/decrypt.co\/resources\/what-is-synthetix-explained-ethereum-trading-learn\" class=\"sc-adb616fe-0 ePvUAp\">Synthetix<\/a><\/span>  has used the SNX token to become the backbone for platform liquidity. <span class=\"link\"><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/decrypt.co\/resources\/what-is-aave-inside-the-defi-lending-protocol\" class=\"sc-adb616fe-0 ePvUAp\">Avee<\/a><\/span>  uses AAVE token stakers as &#8216;insurers-of-last-resort.'&#8221;<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">Other tokens, notably Uniswap, haven&#8217;t had nearly the same effect.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">\u201cOn the flipside, you have Uniswap which found PMF and then launched a token.  And two years on, the token doesn&#8217;t do much or actually afford any power over Uniswap.  It&#8217;s a permissionless protocol and fairly immutable, so governance doesn&#8217;t have that much power.&#8221;<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">Ultimately, all projects can do when experimenting with tokenomics to supercharge a community around its product is taking things really slowly.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\">And when done right, a token \u201ccan unlock a lot of utility and efficiency for DeFi,\u201d said Balakrishnan.<\/p>\n<p class=\"font-meta-serif-pro scene:font-noto-sans scene:text-base scene:sm:text-lg font-normal text-lg md:text-xl md:leading-9 tracking-px text-body gg-dark:text-neutral-100\"><i>Decrypting DeFi is our DeFi newsletter, led by this essay.  Subscribers to our emails get to read the essay before it goes on the site.  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(art: Grant Kempster) Launching a token is a delicate task. On the one hand, you&#8217;ll thrill your die-hard audience of early adopters, rewarding them for sticking it out for so long. On the other, you invite hungry whales to come and harvest your project for its incentives, often [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":123144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[230,225,221,227,226,228,229,60,223,224,222],"class_list":["post-123143","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency","tag-brave","tag-coinbase","tag-crypto","tag-decentralised","tag-decentralized","tag-decentralized-exchange","tag-erc-20","tag-featured","tag-meme-coin","tag-robinhood","tag-solana"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/123143","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=123143"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/123143\/revisions"}],"predecessor-version":[{"id":123145,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/123143\/revisions\/123145"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/123144"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=123143"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=123143"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=123143"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}