When you think about crypto or web3 or [insert fabulous marketing term here], you think about tokens. Tokens have been the foundation of each evolution and cycle of crypto, serving as the floorboards for everything to build on top of. But in this process, we’ve yet to take a breath and ask ourselves whether our attention — and intention — is going to the right place.
In web2, the framing was ‘if the product is free, you (human!) are the product.’ Sure, there is grander access and opportunity than ever before, with services and systems affordable and provable to virtually anyone with an internet connection. In exchange, you gave your attention and data, which was the lifeblood for these platforms and services to drive revenue that fed the experiences you were now so easily able to access and enjoy. For many this is still fine. While many champion and resist against such a violating and intrusive model, most are happy with the exchange especially if it means less money coming out of their pocket. But still, the model is imbalanced, when we realize how this data is leveraged, frequently (mis)used and capitalized on to drive an insane amount of power and wealth to a particular few.
In web3, the framing is that the product is yours, and so is the risk. All held in a token. But this mantra has had the effect of positioning the token (or NFT) as the end in itself, and this has driven misaligned incentives. The thing is the token isn’t the thing. The token is the catalyst. The thing is what happens because of the token. And that as a community is what we need to concentrate on now.
Instead of looking at tokens as THE thing, they should be looked at as the 0-1 of THE thing. Tokens enable a new way of organizing and compensating the collective that is building something -- and is uniquely suited to concepts where the 'classic' startup org and comp model don't work as well. Its ability to form consensus and energy around an idea quickly is the unique advantage it brings to the market. This highlights a massive gap that exists within the existing web3 development ecosystem — most builders are putting all of their energy on making the token the product, when actually the product is what is funded, enabled and/or governed by the token. Knowing that tokens could drive a very strong bootstrapping method to embrace the hardest challenges that (hopefully) crypto can solve, that method should reflect this. Come for the tokens, stay for the product.
Making the impossible possible.
The folk tale of the Stone Soup provides a useful metaphor.
As the story goes, a mysterious stranger came to a small, sad town. Everyone in this town kept to themselves and everybody was poor. The stranger walked to the center of town and flourished a beautiful black bag. He made it seem like there was something very special inside. A small crowd gathered, waiting to see what he would do next. He pulled out an oddly shaped rock and showed it to the assembled townspeople. The stranger told them it was a magic stone that could produce a delicious soup, enough to feed the whole town. The curious townspeople begged for a demonstration. He asked someone to bring some wood for a fire, some water and a large pot. Then he lit the fire, filled the pot, and dropped in the stone. After a few minutes, the stranger took out a spoon, dipped it into the water and tasted it.
“It’s already pretty good,” he announced. “But you know what would make it better? A few herbs.”
One of the townspeople went back to her house and brought back some herbs. The stranger tossed them in, stirred and tasted again.
“Mmm!” he licked his lips. “But it would be even better if we added one or two vegetables.”
Somebody ran back to their house and brought out some carrots and celery. These were also added, the soup was stirred and once again tasted.
“Wonderful! Now, if only we had just a tiny bit of chicken….”
This process was repeated several times. The crowd around the cooking pot grew and more ingredients contributed until finally the stranger declared it perfect and done. He ladled out the soup to everyone around him and, as they ate, each person marveled that all this wonderful food had been created from one little magic stone.
Now, the point of the story, of course, is that there’s nothing magical about the stone at all. The stone is simply a mechanism for convincing the townspeople to contribute their food to a common project. The soup is composed of the donated food, not the stone.
And this is the purpose of tokens: to provide a novel set of tools for the improved coordination of labor and/or capital. Importantly, with the exception of Bitcoin and stable-coins, tokens are not designed to be an ‘end product.’ Just as the stone is not the soup, so too are tokens intended to be a means to an end.
This is perhaps obvious, but not what is happening today. Due to the frequently successful practice of selling and speculating on tokens without much practical detail or progress on a product, our crypto universe is essentially offering customers just the flavorless stone and not the delicious soup.
But it’s also clear that this all-stone/no-soup strategy has its limits and they are fast approaching. We can see this in the increasingly frantic efforts by PFP and gaming NFT collections to assure their buyers that there really is a product being built, an ‘MCU’ that will be commercialized, a videogame that will be as fun to play as AAA-quality titles. The notion that you can sell tokens and figure out their purpose later will soon be seen as a hilarious example of bubble-stage enthusiasm. Or rank speculation.
So what projects are worth doing? The answer is: everything but especially the impossible. In a world where we think of tokens as a true 0-1, we have a newfound ability to drive interest in arenas that previously required different fundraising, team-building and marketing dynamics. A focus now doesn’t mean that there is broad interest, but a select few willing to contribute time and capital to kickstart a market. Let’s look at music. Turning music into NFTs is interesting, but it’s nowhere near enough. There’s nothing remarkable about moving a collector's behavior from the physical to the digital. It’s a market to capture, but it’s not impossible. It’s not a dream.
Tokens should drive the creation of products and platforms that open accessibility to individual’s that was near impossible without them. In the case of music, instead of tokens just being the asset, tokens should drive the opportunity to give dream roles and responsibilities to individuals that they’d never get prior. This means that you, human, should now be able to become, through DAOs, a record producer. Or a talent manager. Or an actual artist yourself. It completely changes the way opportunities can be obtained. The traditional path of experience is no longer a prerequisite for participation.
Tokens have the ability to drive interest and coordination like never before. In order to capitalize on this opportunity, we need to put our collective energy against developing for the impossible. And that means putting a lot less emphasis on the token being the product and more around how we build products as an extension of the tokens. And when we do that, we’ll see development and opportunities that we could have never dreamt prior.