Thesis: The Consumer Crypto Opportunity

First originally presented to @1kxnetwork's LPs last year on why we take consumer crypto so seriously. This is the opportunity that we see. 1. Whenever a new platform emerges, new winners are always created, whereas incumbents misunderstand the opportunity, are too slow, or simply misexecute. New paradigms require new mental models and new playbooks.

We saw this with games and video over the last decade.

Thesis: Blockchains are an entirely new content medium for entertainment They are games naturally, and we already know how to play them.

At 1kx, we have never been more excited to back teams building products at the forefront of consumer crypto.

To date, we've written 30 checks into consumer teams and continue to invest very actively, even today.

#0 / Overview of what we've backed (below) #1 / But what is next and what are excited about?...

Social. Creator. IP. Spatial. Autonomous Worlds. Luxury. Art. Gen Art. Casual games. NPCs. Multiplayer Creativity. Music. Collectibles.

Digital ownership.

Let's dive a bit deeper here...

Most token network's operating focus be summed down to 3 focuses:

▫️Generating supply
▫️Generating demand
▫️Resource allocation

#1 / Network building is hard. And every network needs to solve the same problems. Some observations and thoughts on addressing them: #2 / We can model most token networks as marketplaces (supply & demand) made up of participants that coordinate work to produce an end market that would not be possible alone whether: product, service, economy, or platform (that serves both suppliers and consumers).

The broader an organization’s scope is, the greater the coordination cost required to maintain a baseline level of output across the organization. The more an org is occupied with coordination overhead, the less time and energy they have to build, experiment, and innovate. For DAOs, this was exaggerated by the fact that so many DAOs were scaling their number of contributors before they have clarity on their key objectives and how they will be measuring progress towards those goals.

*cough* *cough* 2021 *cough*

I'm consistently blown away by the thoughtfulness and creativity that goes into onchain games and the collective effort to bring autonomous worlds to life.

#1 / Thread: A compilation of the best content I've found to be critical in building an understanding of Autonomous Worlds. #2 / Autonomous Worlds Pt.1

A must-read canonical piece outlining what an autonomous world is.

Author: @l_udens

0xparc.org/blog/autonomou…

Onchain games and autonomous worlds are the real whitespace that will enable net new virtual worlds to emerge, not web 2.5 games that lazily implement NFTs and stop at that.

#0 / Here's why I and many others believe this to be the case: #1.1 / Economic significance: By having all game logic and state of a game on-chain we're able to create permanence around the world that is ultimately dependent on a blockchain, not any centralized company. This is why community governance is critical to the longevity of worlds.

Back in early 2019, I applied to every job listing available in web3 that I would be able to fill from: product manager to social media marketing manager. No one really ever returned a message.

It was a weird feeling to be straight up hardcore unemployed. Since then I had to fight for every inch and right to be in web3.

All I wished for was to just have a job so I can more steadily participate in web3. In hindsight, this turned out to become the most creative and high output period in my life as a result.

On-chain games ⮕ Autonomous worlds

On-chain games are where all game state & logic are stored on-chain and are able to be accessed by anyone.

#1 / Autonomous worlds are a vision of on-chain games that enable the participants of such a world to shape what it ultimately becomes. #2 / AWs are much more than just about on-chain game state but instead more about a philosophy of how we should be designing the rules and laws of onchain worlds and realities.

I remember heavily regretting that I did not work harder in the last bear market once I realized that it was over.

I had a front-row seat to innovation and was able to build relationships with people who would go on to change the face of the internet. It was a real privilege. I had regret not because I didn't work hard, but bc I didn't make the most of being in the middle of everything, amongst a sea of opportunities, and getting to rub shoulders & work with the smartest hardest working people in web3.

To compete against IP giants such as Disney, new players are held against incredibly high barriers of entry (capital, content, distribution)

Web3 is disrupting this.

🔮 Thesis: We believe that the next generation of the world's valuable IP will emerge first as crypto-native IP. @nounsdao @LucaNetz @notthreadguy @DianacBiggs @AxieInfinity @Jihoz_Axie @andr3w @wabdoteth @rektmando @sgsand1 #2 / It takes 5-6+ years, 100+ employees, and $80+ million to build an AAA game. Millions and years to produce a 12-episode anime series. $50-$100 million to produce a Hollywood movie.

With NFTs, teams are able to go to market with a new piece of IP from day 0.

Similar to most organizations, DAOs are games made up of end goals, processes, work, rules, and incentives.

The more complex a game loop is for an org the harder it is to build one that is effective for a DAO. Simpler game loops:

Collecting NFTs together (collector DAOs), investing together (investment DAOs), services (service DAOs), governing resources (protocol DAOs)

Harder game loops:

Product development (product DAOs), creating together (creator DAOs), curation (TCR DAOs), etc.

#1 / A thesis on the emerging multiplayer creator economy of web3.

With web3 acting as a coordination layer, creators are able to co-create with others as well as their own communities in a deeper and more multiplayer way than we've seen before.

Multiplayer is the future. #2 / Why does this matter?

With a singplayer creative process, the artist is in full control of the end-to-end process with the end audience fully removed.

As a result, it's generally pretty hard to predict how well creative output will resonate with an end audience.

Haven't been this inspired by web3 in years since the last bear market in 2019.

During the hype/bull cycle, everyone is mostly copying one another optimizing for the same financial feedback loops a market first mover created off the back of an incomplete operating model. It's only in the bear market that teams start to break free of immediate financial feedback loops and begin to truly innovate and drive progress in net new experimental white space.

and this continues until one of these teams stumbles upon the next major operating unlock

We are on the brink of a revolution in venture capital.

This is @1kxnetwork's vision of a future cryptonative venture capital ecosystem that we want to accelerate.

> Investment DAOs
> Incubation DAOs
> Service DAOs

medium.com/1kxnetwork/unb… Community aligned capital.

@VENTURE_DAO @TheLAOOfficial @SpaceshipDAO @Globalcoinrsrch @PleasrDAO @FingerprintsDAO @FLAMINGODAO @seedclubvc @alliancedao @RED___DAO @neon_dao @ReadyPlayerDAO @KomorebiFund @XooglerCo @OrangeDAOxyz

GTM via Supply and demand side DAOs (Thread🌿)

Most decentralized networks are marketplaces that coordinate supply and demand to produce a product, service, economy, or platform. Instead of thinking about DAOs as monolithic organizations, we can think of them as a set of microservices that power a tokenized marketplace.

https://twitter.com/pet3rpan_/status/1502020212136185857

DAO Org architecture <> Microservices (SubDAOs)

In order to scale contribution towards DAOs, we need to move away from a monolithic organizational architecture where decisions are concentrated under a single bottleneck and instead operate as a set of ‘microservices’... Microservices is a computer systems architecture that structures an application as a collection of services as opposed to a single monolithic service.

microservices.io

Instead of thinking about play to earn (P2E) as building standalone games or 'apps', we believe it is about building economies that community members can trust, collectively operate, own, and build on top of.

This is @1kxnetwork's thesis on play to earn.

medium.com/1kxnetwork/pla… In addition to this, we believe that we are witnessing a shift in how gaming ecosystems will be built.

Iterative via minimum viable games (MVGs) in live economic environments as opposed to rigid waterfall development models.

9 Years ago joined a community known as the Logic networks, initially joined as a contributor but then would proudly make it my own.

Edited by @jacob_resch

This was the first community I'd say I'd help grow and kick start in a major way. It opened my eyes to how powerful communities can be and how much impact they could have on the lives of those involved.

Tutorial island for DAOs.

(community builder path)

Ways to get involved + contribute to DAOs when you are fairly new to crypto and just want to learn.

1. Take notes for the DAO's regular community calls

... 2. Publish and summarise those meeting notes alongside other project or community issues/items into a weekly newsletter.

3. Help core contributors run surveys to gauge community sentiment and feedback on new draft DAO proposals.

Even after 3 years of being in this space, I still feel like a complete beginner with most weeks trying to keep up with what is going on. It is a space that can wear you down over time, but at the same time so rewarding too.

Some reflections on my experiences so far... Late 2017, first discovered Ethereum, bought some and didn't think much about it, started reading through what space was about. This was when the crypto meetup scene in Sydney was at its peak. Hundreds packed venues.

I learned what I could, but I still never 'got' it.