Thread by @1sat1c

The community component of network value, a bull and some frogs:🧵

Evaluating investment propositions entails many aspects. Ppl tend to spend more time on the quantifiable ones b/c they are easier to measure and track.

However the reality is qualitative aspects have equal, if not larger, bearing on the outcome.

Measuring the value of a community, absolutely or relatively, is a complex task: for one, communities aren’t static. They r fluid creatures, changing, sometime significantly, in invisible and erratic fashion.

Some characteristics are quantifiable, like community size. Others are not, either b/c the data is lacking, or b/c they can’t be measured quantitatively. This thread will focus on the latter.

In a world transitioning from the equity/debt pillar to the token pillar, the community holding the token plays a larger role in the value of the network.

The identity of the shareholders of a stock isn’t void of significance, but their characteristics r different from token holders, their duties and rights r different, the way they perceive their role within the ecosystem is different, and their incentives are aligned differently.

In a tokenised ecosystem, where governance is sufficiently distributed, control is decentralised, & proposals can gain steam on discord and voted on within days without reading 1000 pages carefully crafted by an army of lawyers, the community & its characteristics r more critical

Even with the aforementioned diminished importance, smart owners realised the identity and characteristics of their shareholders matter. A lot.

Buffet&Munger for example, stressed that importance from the early days of BH, and did their best to control who their shareholders would be, either by conveying their plans for BH post acquisition to their preferred owners from previous exploits,

or via the capital structure that catered to a very high share price not everyone could afford, among other methods.

In gripto, a strong, supportive, community will draw on itself 2 survive hard times, evangelise the mission, create conviction, develop memes to spread the word, lure outsiders to join, protect the protocol from external attacks, develop a unique culture, and enrich the ecosystem

And ofcourse, community members provide support to the price of the coin, and depending on their level of conviction limit circulating supply.

All of the above translates at some point to the ecosystem value as a whole. And with an architecture that mandates that value be divided by coin total, to the value of the coin as well.

There are very few communities that have managed to build and sustain such ecosystems so far: btc and eth would be prime examples. (True, younger protocols haven’t had the time to develop that yet)

Sheer community Size can be misleading at times in this sense, as holders could jump in based on trend or marketing, and leave once the price heads south. Examples are abundant. When examining communities, relative size is a relevant metric when comparing mature communities.

When comparing new ones, I prefer to focus on other, qualitative components.

4 demonstrative purposes, lets use Metcalf’s law, which became popular for valuing networks, particularly in the crypto context lately: It stipulates that the value of a network is (n-1)^2, I.e equal to the number of possible connections between participants squared.

This is an approach that over emphasises size, and ignores 2 critical factors imo:

1. What I like to call available transmittable value: metcalf’s law referred to a telephone network. That’s incomparable to the multidimensional networks of today, in particular in crypto. A telephone network could transmit voice.

A crypto network like eth can transmit monetary value, images, culture, title, knowledge, the list is long.

2. The actual identity of the network members matters. The available transmittable value of a network hosting 100 Fortune 500 CEOs is orders of magnitudes higher than a network of 100 high school kids.

The access to information, funds, experience, IQ, relationships with other networks are all on a diff. level and much more value is shared and exchanged within the network.

Point being, beyond network size, the identities of network participants and the total available transmittable value on it are equally, if not more, accountable for its value.

To sum up the prelude: the ability to build, attract, harness and grow a community is an important component in the probability of success of a gripto protocol imo. It’s one of the key parameters I track, and it’s weight in my overall assessment is high.

How does Dopex community stack up? Very favourably. I’d state I think the Dopex community shows unique components that while not yet apparent have the potential to develop into an attractive, strong, culturally driven, based community.

In the early stage of my interest in Dopex, it was too premature to judge as an established community. So the focus of my examination became answering the question: “Does it have the components in place and does it show the signs of a will and ability to build a strong community?

The answer is yes, and I’ll detail my reasoning below:

I’ll start with the negatives: Size. The community is small, but that could be expected considering the stage of development of the platform. More relevant than absolute size is pace of growth, which is also still on the low side.

That would be something to watch when the product matures, mainnet is launched, and more SSOVs come online.

Options as the backdrop: options are not the most trivial topic. They tend to attract the members of the more sophisticated side of the spectrum. However, those who begin using them rarely stop, as the advantages become clear with usage. This ensures:

A. The platform will mint some of the more sophisticated actors in the space as community members.

B. The popularisation of such a powerful financial tool is a VERY powerful wand, as the difference between utilisers to non utilisers will become gigantic and APPARENT over time (not hidden in comparisons b/w institutions) and flexed abt on CT.

This creates powerful motivation to join the community at any stage, if not as an early adapter, then to close the gap.

Overall IQ: from the design of the platform, tokenomics, choice of medium, choice of early backers, and conversation level on community forums, one thing is clear: this is a collection of high IQ, high conviction, 💎 hands ppl.

Leadership choices: the single most important factor in the direction of a team, group, community, army, state is the leadership. In Dopex case it has an individual that:

⁃Chose to remain anon, points to low interest in personal fame, ego in check, less attack surface.
⁃Managed to bootstrap some of the most sophisticated actors in the space as early backers.
⁃Avoided VCs completely.

- Demonstrated thorough understanding of the subject matter as well as crypto landscape in general.
- Chose a field of expertise which is a white space in Defi and gained early mover advantage.
- Recognises the importance of cooperation with other communities and harnesses that

- Avoided any token marketing and emphasised the product and culture.
- Emphasises methodical, accurate progression and execution over speed.
- Inclusive, active in community forums and often consults community prior to floating propositions and decisions.

- Consistently demonstrates accountability and transparency as it pertains to the platform.
- Generous in sharing the wealth.
- Quick to recognise and utilise developments in the space (Dopex quick deployment on arb1 for example).

The path to success isn’t exclusive. Bezos’ “move fast and break things” was the best fit for Amazon’s product, environment and time.

In a fast developing, fast changing, narratives driven environment, TZ’s style is a refreshing emphasis on quality. A lesson we all learned from Larry Bird was: if you can’t do something faster than others, your best shot is doing it slower.

Other projects, with 10x Dopexs’ FDV, have great marketing, a clever idea, some vc backing, but are manned by very average ppl. A lifetime of investment taught me the best bets are on brilliant founder leaders. We have that here.

Culture building, colour, memetic intensity, fun component: very high. Team and community very colourful, recognise the importance of ongoing intellectual and emotional stimulation, strong emphasis on bonding, support, intellectual capital (sometimes financial capital as well)

…sharing, symbolism and memes of the highest quality and a tall camp fire everyone gathers around.

When the product itself isn’t intuitive, like options, it’s important to make the overall experience engaging, colourful and fun. It appears the team understands that and is emphasising it, which bares fruit with the community.

Community engagement frequency: high. This is a parameter that req tracking over time. Dopex community shows stickiness, most members that join stay active, the frequency of conversations on different channels is high…

the amount of time spent in the channels by the average participant is long, a steady growth of participant is apparent and a low loss rate.

Over a period characterised with the highest rate of new theme introduction in the history of the space (NFTs, Stable farming, alternative L1s, Gamefi), such a low loss rate and sustained high engagement by existing participants is impressive and demonstrates community strength.

Backers: Who will be there wen price down 90%? Who backstops? This is where TZs choice to create a leadership team of crypto native whales rather than VCs is outstanding, b/c their incentive structure is totally different.

In one of the early AMAs TZ was asked about the lack of VCs in the seed round and gave a response I found interesting: he said the backers, while individuals, have VC firepower but better incentives.

This is key: The whales backing Dopex aren’t constrained by mandates, allocation limits, investment committees etc. They don’t have temptation to dump to show results or save face, they don’t have layers of beaurocracy mitigating their decision making.

And they have their online cred (increasingly important) (partially) tied to the protocols’s success. They won’t supply the liquidity to dump and can swiftly support the token if need be and at a level they determine.

When the protocol matures it won’t need that support. But through its childhood and adolescence that type of support is golden, and a HUGE advantage over VC backed protocols: similar fire power, but better incentives, focus and ethos.

Key members are an important part of any community. Imo crypto native 🐳 are a better LT key members than VCs, with a higher probability of acting in the community’s best interest. There’s no limited liability to hide behind.

And this is where the Brilliance of the 2 token design comes in: the perpetrators had the foresight, self awareness and healthy Machiavellism, & figured out dpx will pretty quickly be concentrated in the hands of high iq, long time horizon, 💎 hand players,

and incentive to sell only decreases over time as use case & value manifest themselves.

So if that’s the case, a mechanism needed to be created to still draw and facilitate new entrants, including strong, large players, to enter the ecosystem: That’s where rdpx comes in.

rDPX’s addition and design, as it will serve not only as the oil to Dopex ecosystem, but also as another entry for institutions and tradfi players, is nothing short of brilliant, b/c what the core team figured out was:

b/c this is an option platform we’re talking about here, a dpx/rdpx market will always exist within Dopex.

This wouldn’t work if it was any other product. But for an option platform that accommodates high utilisation, high volume, a utility token with no governance rights attached has enormous value, enough to maintain a market with a governance/fee accrual token.

So any dpx a large institution can’t obtain by bidding up the price, it can via accumulating rdpx, which it needs to anyway. This is the type of multilayer multidimensional thinking that is extremely rare, and incomparable in the space with the exception of very few protocols.

The result of the combination of such gigabrainism is a huge pull for degens, plebs, frogs, other whales and noobs.

It will take some time but as more and more aspects of the brilliance become apparent it will draw in multiple types of members, which will create a diversified, rich and heterogeneous ecosystem, and they’ll be joining for more than the coin. For more than an option platform.

They’ll join to share a space with a brilliant, funny, committed, colourful and profitable group of ppl.

When other communities notice this, I expect other ecosystem to start revolving around Dopex looking for ways to cooperate. Gripto cooperation is going to become a trend, and I expect @dopex_io will be a big part of it.

In summary, we have a community of high IQ, high firepower, high conviction individuals, who emphasise fun, democratising investment acumen, camaraderie, with high levels of memetic abilities, possessing multiple levers for growth.

I expect these facts to reveal themselves over time to more and more actors. And the rational conclusion of those actors would be to join this group of 🐸.